Ga. Court of Appeals Holds State Insolvency Pool Entitled to “Offset” Claims Using Other “Primary” Insurance Coverage

All Georgia employers are required to have workers’ compensation insurance. This provides medical and wage replacement benefits to employees who are injured in the course of their employment. For example, if you are in a car accident while driving a company-owned vehicle to make a sales call, you would be eligible for workers’ compensation benefits.

What happens when your employer’s insurance company is insolvent, i.e., it cannot pay out your claim? In that case, the Georgia Insurers Insolvency Pool takes over. This is a nonprofit entity that effectively steps into the shoes of the insolvent insurer and pays any outstanding workers’ compensation claims.

Georgia Insurers Insolvency Pool v. Dubose

The Georgia Court of Appeals recently addressed a case involving the Insolvency Pool and its legal rights to “offset” any workers’ compensation benefit claims to account for other insurance payments received by an injured employee.

Here is the case in brief. The defendant is a woman who was injured in a car accident that occurred “while in the scope of her employment,” according to court records. The company insuring the defendant’s employer then became insolvent, requiring the Insolvency Pool to take over the claim.

The Insolvency Pool then sued the defendant, essentially asking a judge to declare that the amount of the workers’ compensation claim should be reduced by any amounts the defendant received from other insurance companies, such as the insurer for the negligent driver who caused the accident or even the defendant’s own uninsured/underinsured motorist coverage. The trial judge rejected the Insolvency Pool’s legal arguments and denied its motion for summary judgment.

The Georgia Court of Appeals reversed. Under Georgia law, a person having a “claim” against a workers’ compensation policy issued by an insolvent insurer must first “exhaust” her rights under any other policy that also covers the same “claim.” The issue in this case is what qualifies as a “covered claim.” The Insolvency Pool maintained the defendant’s “claim” covered both workers’ compensation and personal injury benefits arising from the same accident. The defendant, in contrast, argued the “claim” here was limited solely to workers’ compensation.

The Court of Appeals agreed with the Insolvency Pool’s definition. Noting that other state appellate courts had reached similar conclusions, the appeals court here said that the “primary” insurance policies in this case were the defendant’s own UM coverage and the negligent driver’s liability policy. The defendant was required to obtain benefits from those policies first, and any amounts received would “offset” what the Insolvency Pool owed her.

As the Court of Appeals explained, the Insolvency Pool was designed to be a “guarantor of last resort, providing benefits only when there is no other insurance available.” The goal is to ensure claimants like the defendant “would have received from a solvent insurer,” but no more than that. Accordingly, the appeals court returned the case to the trial judge for further proceedings.