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Federal Court Asks Georgia Justices to Address Scope of Uninsured Motorist Benefits

On September 3, a federal appeals court asked the Georgia Supreme Court to clarify whether an insurance company must pay out “uninsured motorist” (UM) benefits for an accident caused by an agent of the State of Georgia. The question arose from a federal judge’s ruling last December holding an insurer liable under such circumstances. The appeals court delayed considering the insurer’s appeal pending the Georgia Supreme Court’s clarification.

FCCI Insurance Company v. McLendon Enterprises, Inc.

This case began with a traffic accident. The plaintiffs are the driver and owner of a vehicle that collided with a school bus owned by Evans County, Georgia. After settling with Evans County for the maximum limit of its insurance policy, the plaintiffs sought uninsured motorist benefits from their own insurer, FCCI. FCCI balked, and asked a federal judge to declare it owed nothing to the plaintiffs.

FCCI’s argument is rooted in sovereign immunity. Normally, the State of Georgia and its subdivisions, such as Evans County, enjoy total immunity from civil lawsuits. This means that, absent a waiver of sovereign immunity, a person injured by a state agent cannot collect any damages. In 1994, the Georgia Court of Appeals, the state’s second-highest court, held UM insurers could be liable for torts committed by state officials. The Court of Appeals reasoned that, since total sovereign immunity barred all recovery from the state (the tortfeasor), public policy required UM insurers to provide coverage so that insured persons could still receive some form of compensation.

The dilemma in this case stems from the fact that Evans County partially waived its sovereign immunity when it took out its own insurance policy. The plaintiffs already received some compensation, though not as much as they could if Evans County were a private person. Both the Georgia Court of Appeals and the Georgia Supreme Court are yet to address this exact type of situation.

Last December, a U.S. district judge ruled against FCCI, reasoning that the Georgia Court of Appeals’ 1994 decision regarding total sovereign immunity should apply to partial sovereign immunity as well. This would make the insurer liable for paying UM benefits to the plaintiffs. FCCI appealed that decision to the U.S. 11th Circuit Court of Appeals in Atlanta. Although the 11th Circuit is a federal court, it is bound to apply Georgia law as definitively interpreted by its own courts. Given the lack of case law, with the exception of the 1994 Court of Appeals decision, the 11th Circuit chose to ask the Georgia Supreme Court to weigh on the issue.

The 11th Circuit phrased its question as follows: “Can an insured party recover under an uninsured-motorist insurance policy providing that the insurer will pay sums ‘the insured is legally entitled to recover as compensatory damages from the owner or driver of an uninsured motor vehicle’ despite the partial sovereign immunity of the tortfeasor?” This is only a suggested question, however, and the Georgia Supreme Court is free to reframe the issue as it sees fit.