Trecia Neal v. Georgia Department of Community Health , 350 Ga. App. 274 ( 2019 )

FOURTH DIVISION
DOYLE, P. J.,
MCMILLIAN and COOMER, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
May 28, 2019
In the Court of Appeals of Georgia
A19A0227. BOYD et al. v. NEAL
A19A0369. NEAL v. GEORGIA DEPT. OF COMMUNITY
HEALTH et al.
MCMILLIAN, Judge.
Trecia Neal,1 a DeKalb County school system employee who enrolled in the
State Health Benefits Plan for the calendar year 2014, initially filed this putative class
action against the Georgia Department of Community Health (the “Department”) for
breach of contract and breach of the covenant of good faith and fair dealing after the
Department changed the benefits that she had elected and for which she had agreed
to pay premiums. Neal subsequently amended the complaint to assert a petition for
1
Two other individuals also asserted claims, but they are not parties to this
appeal.
writ of mandamus against the Board of Community Health (the “Board”) members2
to require them to perform what Neal alleges was their official duty to conduct an
actuarial analysis and recalculate premiums before changing the plan benefits. These
related appeals arise from the trial court’s order granting summary judgment to the
Department on sovereign immunity grounds (Case No. A19A0369) and denying the
Board’s motion to dismiss Neal’s alternative claim for a writ of mandamus (Case No.
A19A0227).3 For the reasons that follow, we affirm the trial court’s order granting
summary judgment in favor of the Department but reverse its denial of the Board’s
motion to dismiss.
Case No. A19A0369
By statute, the Board is authorized to establish a health insurance plan for state
employees, public school teachers, and public school employees; this plan is called
the State Health Benefits Plan (“SHBP” or the “Plan”). See OCGA §§ 45-18-2; 20-2-
2
The individual Board members named as defendants are Norman Boyd, Russ
Childers, Russell Crutchfield, Allana Cummings, Roger Folsom, Donna Thomas
Moses, Mark Trail, and Anthony Williamson. We will refer to them collectively as
the Board or Board members.
3
Following our grant of the Board members’ application for interlocutory
review, Neal filed her notice of cross-appeal. Because the two cases arise from the
same set of facts and the same trial court order, we have consolidated them for
purposes of this appeal.
2
881; 20-2-911, respectively. During the open enrollment period in 2013, the
Department offered Plan members three coverage options for the 2014 calendar year:
Gold, Silver, and Bronze. In exchange for higher premiums, Gold and Silver members
would receive more money for their Health Reimbursement Accounts, lower
deductibles, lower co-insurance rates, and lower out-of-pocket maximums than
Bronze members.
Neal registered online for Gold coverage. By doing so, Neal accepted the
Plan’s “terms and conditions,” including her “responsibility to review any applicable
Plan documents.” The Plan documents included an “Active Decision Guide,” a
welcome letter from the Commissioner of the Department, and a “Summary Plan
Description,” which governed the terms of coverage. The Active Decision Guide
stated: “The material in this booklet is for information purposes only and is not a
contract. It is intended only to highlight the principal benefits of the SHBP plan
options.” The same page also clarified that “[a]vailability of SHBP options may
change based on federal or state law changes or as approved by the Board . . .” and
that “[p]remiums for SHBP options are established by the DCH Board and may be
changed at any time by the Board resolutions subject to advance notice.” Also, the
3
2013 Board resolution establishing the premium rates for 2014 included a notice
that:
The Board of Community Health sets all member premiums by
resolution and in accordance with the law and applicable revenue and
expense projections. Any subsidy policy adopted by the Board may be
changed at any time by Board resolution, and does not constitute a
contract or promise of any amount of subsidy.
When the Department faced financial shortfalls in the Plan, it eliminated the
three tiers of co-insurance for most health care services and established a single tier
of co-payments, a change made on January 27, 2014 and retroactive to January 1,
2014. Following this change, Gold and Silver Plan members were required to
continue paying higher premiums despite the fact that they no longer had the benefit
of better co-insurance rates as compared to the Bronze Plan.
In May 2014, Neal filed suit against the Department, seeking class certification
on behalf of Gold and Silver Plan members for breach of contract and breach of the
implied covenant of good faith and fair dealing. The Department moved to dismiss,
arguing that Neal was unable to prove a waiver of its sovereign immunity by written
contract. Neal then amended her complaint to attach the Active Decision Guide and
4
Summary Plan Description. The Department again filed a motion to dismiss on
sovereign immunity grounds, which the trial court denied.
On appeal, this Court reversed the trial court’s order, holding that even “[r]ead
as a whole, the documents at issue here do not show that the parties entered into a
signed, written contract.” Ga. Dept. of Community Health v. Neal, 334 Ga. App. 851,
855 (1) (780 SE2d 475) (2015) (“Neal I”). We further found that the relevant statutes
and regulations governing the Plan did not create a contract between Neal and the
Department and Neal was, therefore, unable to prove a waiver of sovereign
immunity. Id. at 856 (2). Following its grant of Neal’s petition for writ of certiorari,
our Supreme Court vacated this Court’s opinion and remanded the case for us to
reconsider our conclusion that we had jurisdiction over the Department’s direct
appeal in light of the Supreme Court’s intervening holding in Rivera v. Washington,
298 Ga. 770 (784 SE2d 775) (2016). After concluding on remand that we lacked
jurisdiction to hear the Department’s direct appeal under the collateral order
doctrine, we dismissed the appeal. Ga. Dept. of Community Health v. Neal, 340 Ga.
App. 94 (796 SE2d 482) (2017).
Once the case was remitted back to the trial court, the Department filed a
motion to set aside the prior order and enter a new order granting its motion to
5
dismiss. Neal opposed the motion and filed an amended complaint, adding an
alternative claim for mandamus against the individual members of the Board. The
Department then filed a motion for partial summary judgment related to the breach
of contract claims, and the Board filed a motion to dismiss the petition for mandamus.
Following a hearing, the trial court granted the Department’s motion on sovereign
immunity grounds, but denied the Board’s motion to dismiss. This appeal followed.
1. In her first two enumerations of error, Neal asserts that the trial court erred
in finding that neither the Plan documents nor the implementing statutes constitute
a written contract with the State sufficient to waive sovereign immunity.
We start our analysis by examining the doctrine of sovereign immunity as it
relates to contract actions. Generally, the Georgia Constitution provides broad
sovereign immunity for the State:
Except as specifically provided in this Paragraph, sovereign immunity
extends to the state and all of its departments and agencies. The
sovereign immunity of the state and its departments and agencies can
only be waived by an Act of the General Assembly which specifically
provides that sovereign immunity is thereby waived and the extent of
such waiver.
6
Ga. Const. of 1983, Art. I, Sec. II, Par. IX (e). But sovereign immunity is waived in
limited circumstances, and specifically, for contract actions, sovereign immunity is
waived: “as to any action ex contractu for the breach of any written contract now
existing or hereafter entered into by the state or its departments and agencies.” Ga.
Const. Art. I, § II, ¶ IX (c). See also OCGA § 50-21-1 (a) (“The defense of sovereign
immunity is waived as to any action ex contractu for the breach of any written
contract . . . entered into by the state, department and agencies of the state, and state
authorities.”).
Our Supreme Court has recently explained the relationship between common
law rules of contract and what constitutes a written contract sufficient to waive
sovereign immunity:
General rules of contract law that might otherwise support a claim for
breach of contract damages between private parties . . . will not support
a claim against the state or one of its agencies if the contract is not in
writing so as to trigger the waiver of sovereign immunity.
Ga. Dept. of Labor v. RTT Assoc., Inc., 299 Ga. 78, 82 (2) (786 SE2d 840) (2016).
Thus, a party may not recover for breach of contract against the State based on an
implied contract, on a theory of quantum meruit, or by the parties’ course of conduct
even if a document exists supplying the material terms of the alleged contract. Id. at
7
82-83 (2). RTT Assoc. demonstrates that our Supreme Court means what it says when
it has cautioned that “[t]he doctrine of sovereign immunity requires that the
conditions and limitations of the statute that waives immunity must be strictly
followed.” (Citation and punctuation omitted.) Id. at 83 (2). “The burden of
demonstrating a waiver of sovereign immunity rests upon the party asserting it.” Id.
at 82 (1).
The key question then is whether Neal has asserted the breach of a written
contract with the State sufficient to waive sovereign immunity. In her Third Amended
Complaint, Neal alleges that the Plan documents, including the Active Decision
Guide, welcome letter from the Commissioner, and Summary Plan Description
constitute a written contract between Neal and the State; that the Plan documents
expressly incorporate the duty as set out in statute and by regulation to perform an
actuarial analysis before changing Plan benefits and to recalculate premiums; and that
the Department breached this contract. Neal also alleges that “the contract” requires
rates to be based on actuarial costs of coverage without citing to any written
document. Notably, Neal does not challenge the Department’s right to change the
Plan’s benefit design according to the law but instead seeks “to enforce the
8
contractual and statutory obligations of [the Department] to recalculate the premiums
after changing the benefit design.”
On summary judgment, Neal cannot rely on mere allegations as she did in Neal
I, but must now point to evidence sufficient to create a genuine issue of material fact
that a written contract exists with the terms that Neal alleges have been breached in
order to support her burden that the State has waived its sovereign immunity. See SJN
Properties, LLC v. Fulton County Bd. of Assessors, 296 Ga. 793, 798 (2) (a) (770
SE2d 832) (2015) (once defendant on motion for summary judgment exposes an
absence of evidence to support plaintiff’s case, plaintiff must point to specific
evidence giving rise to triable issue). We, thus, turn to the evidence in the record of
a written contract.
In the trial court and on appeal, Neal has failed to point to any language in the
Plan documents that expressly incorporates the statute or regulations. Instead, Neal
relies on the SHBP regulations, which provide that the Plan documents are created
“pursuant to the Health Insurance Acts;” that she was offered the Plan benefits
“pursuant to the Health Insurance Acts;” and that the SHBP regulations are therefore
evidence of a contract. Suffice it to say, just because the Plan was authorized by
9
statute and created pursuant to statute does not mean that any particular statutory
duty is incorporated by reference into the Plan.
Although not directly on point, we find our recent decision in Cobb County
School Dist. v. Learning Center Foundation of Central Cobb, Inc., 348 Ga. App. 66
(821 SE2d 127) (2018) (physical precedent only), to be instructive. In Learning
Center, our Court, in a divided opinion, found that the State had waived sovereign
immunity for a claim that the school district had violated the Charter Schools Act
because the district had entered into a written charter and OCGA § 20-2-2062 (1)
expressly provided that “[b]y entering into a charter, a charter petitioner and local
board shall be deemed to have agreed to be bound to all the provisions of [the Act]
as if such terms were set forth in the charter.” Id. at 68-69. Then-Judge Ellington
dissented, finding that the Code section did not incorporate the Charter Schools Act
into the charter as terms of the contract and, therefore, concluded that the plaintiff had
“failed to carry its burden of demonstrating the existence of a written contract the
terms of which the District allegedly breached.” Id. at 72.
In contrast to the Charter Schools Act provision construed in Learning Center,
Neal has pointed to no language in the statute, regulations, or Plan documents
expressly incorporating any duty required by statute or regulation to perform an
10
actuarial analysis or recalculate premiums prior to changing benefits. The lack of any
term in a written document expressly establishing or incorporating a duty to perform
an actuarial analysis or recalculate premiums is particularly significant in this
context where a written contract is required to waive sovereign immunity.4
Accordingly, we find that Neal has failed to support her burden of showing that there
is at least a genuine issue of material fact supporting her claim for a breach of a
written contract sufficient to waive the State’s sovereign immunity.5 See RTT Assoc.,
299 Ga. at 82 (2).
We also reject Neal’s novel assertion that the SHBP statutes and regulations
themselves constitute a written contract.6 The Georgia Constitution makes it clear that
4
As described in Division 3, we also fail to find a statutory duty or duty
imposed by regulation to perform the actuarial analysis or recalculate premiums as
alleged by Neal.
5
Because Neal has failed to allege the breach of a written contract, we find it
unnecessary to determine whether the Plan documents may otherwise constitute a
written contract for sovereign immunity purposes. But see Neal I, 334 Ga. App. at
855 (1) (“Read as a whole, the documents at issue here do not show that the parties
entered into a signed, written contract.”).
6
Neal’s reliance on Fulton County v. Lord, 323 Ga. App. 384 (746 SE2d 188)
(2013), and Fulton County v. Andrews, 332 Ga. App. 473 (773 SE2d 432) (2015), is
misplaced. Those cases, which dealt with county employees’ claims for back pay
under the Civil Service Act, clearly have no relationship to Neal’s claims here under
the SHBP. See Neal I, 334 Ga. App. at 859 (2).
11
only the General Assembly has the authority to waive sovereign immunity. Ga. Dept.
of Natural Resources v. Center for a Sustainable Coast, Inc., 294 Ga. 593, 599 (2)
(755 SE2d 184) (2014). And nothing in the text of the SHBP statutes supports that
the statutes or regulations constitute a written contract. Notably, the SHBP
regulations actually provide for the opposite: “[i]n creating the SHBP, neither the
Georgia General Assembly nor the Board of Community Health has waived its
sovereign immunity.” Ga. Comp. R. & Regs. r. 111-4-1-.10 (3). When the plain
language of the statute does not provide for a specific waiver of government
immunity nor the extent of such a waiver, courts cannot imply a waiver. Sustainable
Coast, 294 Ga. at 603 (2). Accordingly, the trial court did not err in granting the
Department’s motion for partial summary judgment.
2. In her final enumeration of error, Neal asserts that the trial court erred in
dismissing her claim for breach of the covenant of good faith and fair dealing implied
in the parties’ contract. However, because we find that there is no contract as alleged
between Neal and the Department, this claim also fails. See U.S. Bank, N.A. v.
Phillips, 318 Ga. App. 819, 824 (2) (734 SE2d 799) (2012) (implied covenant of good
faith and fair dealing “cannot be breached apart from the contract provisions it
12
modifies and therefore cannot provide an independent basis for liability”) (citation
and emphasis omitted).
Case No. A19A0227
3. In this related case, the Board appeals after the trial court denied its motion
to dismiss Neal’s alternative claim for writ of mandamus. We review a trial court’s
ruling on a motion to dismiss de novo. RES-GA McDonough, LLC v. Taylor English
Duma LLP, 302 Ga. 444, 446 (807 SE2d 381) (2017).
At the outset, we note that although sovereign immunity is a bar to Neal’s
claims for breach of contract, sovereign immunity does not bar mandamus relief.
Layer v. Barrow County, 297 Ga. 871, 872 (1) (778 SE2d 156) (2015). Mandamus is
an extraordinary remedy, and a “writ of mandamus may issue to compel a due
performance if there is no other specific legal remedy for the legal rights.” OCGA §
9-6-20. Thus, as our Supreme Court has explained, “[t]o be entitled to mandamus
relief, a claimant must establish that (1) no other adequate legal remedy is available
to effectuate the relief sought; and (2) the applicant has a clear legal right to such
relief.” (Citation and punctuation omitted.) Ga. Motor Trucking Assn. v. Ga. Dept.
13
of Revenue, 301 Ga. 354, 364 (2) (B) (801 SE2d 9) (2017). The burden of proving a
clear legal right falls on the party seeking the writ of mandamus. Love v. Fulton
County Bd. of Tax Assessors, 348 Ga. App. 309, 317 (2) (821 SE2d 575) (2018).
“A clear legal right to the relief sought may be found only where the claimant
seeks to compel the performance of a public duty that an official or agency is required
by law to perform.” (Citation and punctuation omitted.) Id. at 364-65 (2) (B). See also
Ga. Assn. of Professional Process Servers v. Jackson, 302 Ga. 309, 312 (2) (806
SE2d 550) (2017) (“For mandamus to issue, the law must not only authorize the act
to be done, but must require its performance.”) (citation and punctuation omitted).
This duty must be “clear and well defined.” Love, 348 Ga. App. at 317 (2). “The
determination of whether official action is required depends on the law governing the
subject matter in question.” (Citation omitted.) Jackson, 302 Ga. at 313 (2).
We begin our analysis by examining what Neal claims were the Board’s clear
legal duties to perform. On remand from Neal I, Neal amended her complaint to add
a claim for writ of mandamus to compel the Board to recalculate the costs of coverage
to reflect the new actuarial value of the Gold and Silver levels and the increased
14
subsidy for the Bronze level members following the Board’s changes to the Plan.7
Neal alleged that this recalculation would entitle class members to a refund of
premiums paid in excess of the difference between (1) the actuarial cost of coverage
for the revised benefits of the Gold or Silver option and (2) the subsidy provided to
members at the same level of coverage under the Bronze level.
Turning to the relevant statutory and regulatory framework, our General
Assembly has authorized the Board to promulgate the SHBP under Chapter 18 of
Title 45 of the Official Code of Georgia Annotated. OCGA §§ 45-18-1 et seq.; 20-2-
880 et seq.; 20-2-910 et seq. Within Chapter 18 of Title 45, separate but similar
provisions govern the health benefit plan for state employees (OCGA § 45-18-2);
public school teachers (OCGA § 20-2-881); and public school employees (OCGA §
20-2-911), and permit the Board to adopt and promulgate rules and regulations for
the Plan’s administration, subject to delineated statutory limitations. See OCGA §§
45-18-2; 20-2-881; 20-2-911.
7
These changes included the addition of co-pays for pharmacy benefits and
certain medical visits for all Gold, Silver, and Bronze members instead of co-
insurance. No other changes, such as to HRA contributions, deductibles, or out-of-
pocket maximums, were made.
15
Neal relies on several statutes to support her claim that the Board failed to
comply with its statutory duty to recalculate the costs of coverage and premiums
before changing benefits. First, she points to OCGA § 45-18-5 (d), which provides
in relevant part:
In administering this Code section, it shall be the responsibility of the
board to develop rates for coverage based on the actual claims
experience of the individuals covered by this Code section.
The individuals covered by this Code section are county officers and employees
whose employers elect to contract for SHBP coverage under OCGA § 45-18-5 (a), as
opposed to individual Plan members such as Neal. However, she maintains that she
is nonetheless exercising her public right to enforce this section because the Board
operates a single Plan for all eligible members. Pretermitting whether Neal has
standing to enforce a statute that does not apply to her particular coverage, this statute
does not establish a clear and well-defined legal duty to conduct an actuarial analysis
and recalculate costs of coverage and premiums each time that the Board changes
Plan member benefits and certainly does not address the situation here where co-
16
insurance rates were converted to co-payments for certain services.8 See Jackson, 302
Ga. at 314 (2).
Next, citing OCGA §§ 45-18-3, 20-2-883, and 20-2-913, Neal asserts that the
Board cannot charge two different rates for the same coverage. These statutes
provide:9
The health insurance plan shall be designed by the board to:
(1) Provide a reasonable relationship between the hospital, surgical, and
medical benefits to be included and the expected distribution of
expenses of each such type to be incurred by the covered employees and
dependents; and
8
We also note that the governing regulations further provide what the Board
is to consider in establishing premium rates without limiting the Board’s discretion.
For example,
The Board shall consider the actuarial estimate of the SHBP costs and
funds appropriated to the various departments, boards, agencies, and
school systems in establishing the Employee Deduction amount.
Ga. Comp. R. & Regs. r. 111-4-1-.02 (1) (c) (emphasis added).
9
The three statutes are virtually identical. OCGA § 45-18-3 (2), however,
refers to “reinsurance” rather than “coinsurance.”
17
(2) Include reasonable controls, which may include deductible and
coinsurance provisions applicable to some or all of the benefits, to
reduce unnecessary utilization of the various hospital, surgical, and
medical services to be provided and to provide reasonable assurance of
stability in future years of the plan.
OCGA §§ 45-18-3; 20-2-883; 20-2-913. The plain language of these statutes
prescribes no particular process by which the Board is to develop the health insurance
plan or what constitutes a “reasonable relationship” between benefits and expenses,
and to the contrary, supports that the Board has wide discretion in establishing
reasonable controls for the Plan to remain economically viable. Thus, these statutes
cannot provide a basis for mandamus relief. See, e.g., Bibb County v. Monroe County,
294 Ga. 730, 737-38 (2) (755 SE2d 760) (2014) (“mandamus is proper to compel the
undertaking of some official action to which the petitioner has a clear legal right, but
it is not proper either to prescribe how that action is taken or to preordain its result”).
Finally, Neal relies on OCGA §§ 45-18-14 (a), 20-2-892 (b), and 20-2-920 (b)
to assert that because Plan members must receive the same employer contribution or
subsidy regardless of their Plan option, the premiums paid by the employee must
fluctuate according to the cost of coverage. However, these statutes authorize
premiums to be withheld from salary payments and govern contributions that
18
employers are required to make to the health insurance fund, which were not affected
by the Board’s 2014 changes. They do not require the sort of actuarial analysis or
recalculation of premiums that Neal argues the Board had a duty to undertake. See
Cochran v. Kendrick, 297 Ga. 655, 657 (1) (778 SE2d 1) (2015) (mandamus claim
fails where claimant fails to show a “clear legal duty”).
In sum, we agree with the Board that in seeking mandamus relief, Neal
attempts to impose requirements beyond the plain language of the statutes
themselves. And we find that, based on the facts of this case and the Board’s
statutorily granted discretion, that its actions were not arbitrary or capricious, such
that mandamus would lie. See Ga. DOT v. Peach Hill Props., Inc., 278 Ga. 198, 201
(2) (599 SE2d 167) (2004) (“mandamus is in order when a public officer grossly
abuses his or her discretion”). See Schrenko v. DeKalb County School Dist., 276 Ga.
786, 794 (3) (582 SE2d 109) (2003) (“In general, mandamus relief is not available to
compel officials to follow a general course of conduct, perform a discretionary act,
or undo a past act.”); Lansford v. Cook, 252 Ga. 414, 414 (314 SE2d 103) (1984)
(“Mandamus is a harsh remedy and ought not be granted unless a defect in legal
justice would ensure from failure to grant it.”). Accordingly, the trial court erred in
19
denying the Board’s motion to dismiss Neal’s petition for mandamus, and we reverse
that portion of its order.10
Judgment affirmed in Case No. A19A0369; judgment reversed in Case No.
A19A0227. Doyle, P. J., and Coomer, J., concur.
10
Because we find that Neal has failed to prove that she has a clear legal right
to the relief she seeks, we do not reach the Board’s remaining arguments that Neal
failed to make a formal demand; Neal improperly seeks to undo past acts; and Neal’s
claim is barred by laches.
20