Martin v. Hospital Authority

Hunt, Chief Justice.

We granted certiorari to the Court of Appeals in Hosp. Auth. of Clarke County v. Martin, 210 Ga. App. 893 (438 SE2d 103) (1993) to review that court’s majority opinion that under our holding in MARTA v. Boswell, 261 Ga. 427 (405 SE2d 869) (1991), the Hospital Authority, as a governmental entity, is not liable for punitive damages.¹ We affirm.

In MARTA v. Boswell, supra, we clearly and unequivocally held that MARTA could not be subjected to an award of punitive damages because such an award against a governmental entity would violate our state’s public policy. In so holding, we adopted the rationale of the United States Supreme Court in City of Newport v. Fact Concerts, 453 U. S. 247 (101 SC 2748, 69 LE2d 616) (1981) that punitive damages are not appropriate against governmental entities because neither of the twin purposes behind punitive damages — punishment and deterrence — is served by an assessment of those damages against such entities. Since a governmental entity can have no malice independent of its officials, damages for punitive purposes are not sensibly assessed against the entity itself.² MARTA v. Boswell, supra at 428, citing City of Newport, 453 U. S. at 267.³ The other purpose behind punitive damages, the prevention of future misconduct, is likewise not served by allowing those damages against a governmental entity because the “impact on the individual tortfeasor of this deterrence in the air is at best uncertain.” City of Newport, 453 U. S. at 269.

The dissent’s argument that simply because the Hospital Authority has contracted with an insurance company for coverage for punitive damages, the public policy expressed in MARTA v. Boswell, supra, does not apply, is flawed. The majority of the Court of Appeals correctly held that the public policy prohibiting punitive damage awards against governmental entities stands on independent grounds unaffected by the existence of insurance coverage. 210 Ga. App. at 894. As noted above, those independent grounds are that the purposes of punitive damages are not served by allowing those damages against a governmental entity. Contrary to the arguments of the dissent, the existence of insurance and the issue of sovereign immunity simply have no bearing in this case, and do not detract in any way from the policy expressed in MARTA v. Boswell, supra, and City of Newport, supra.

Judgment affirmed.

All the Justices concur, except Carley and Thompson, JJ., who dissent.

1 In Hosp. Auth. of Gwinnett County v. Jones, 261 Ga. 613, n. 1 (409 SE2d 501) (1991), we noted, as we had in the previous appearance of that case, that the issue of whether punitive damages are appropriately awarded against a hospital authority had not been raised in that case. See also Hosp. Auth. of Gwinnett County v. Jones, 259 Ga. 759, n. 1 (386 SE2d 120) (1989). Also, as noted by the Court of Appeals in this case, our case of MARTA v. Binns, 252 Ga. 289 (313 SE2d 104) (1984) is distinguishable because in that case MARTA was held liable for punitive damages not as a tortfeasor, but as a self-insurer liable for a bad faith refusal to pay no-fault benefits under OCGA § 33-34-6.

2 The dissent cites Greenwood Cemetery v. Travelers Indem. Co., 238 Ga. 313, 316-317 (232 SE2d 910) (1977) for the proposition that the fact that the tortfeasor will not be punished is not a public policy concern supporting the disallowance of enforcement of an insurance contract against an insurer. Greenwood, and other authority cited by the dissent on this issue, are simply beside the point. In those cases, the insurer, attempting to avoid its contractual obligations, argued that any insurance covering punitive damages was void as contrary to public policy because the deterrence effect would be lost where such coverage is permitted. In Greenwood, we rejected the argument that coverage for punitive damages is per se invalid. However, the question here is whether the punitive aspect of punitive damages is served by an award of those damages against a governmental entity, regardless of insurance. The error of the dissent’s reasoning is underscored by its admonition that “the insurer should not be allowed to escape its contractual obligation” in this case. There is no contractual obligation on the part of the insurer where there is no underlying liability.

3 In MARTA v. Boswell, again citing City of Newport, we noted that the purpose of punishment against a governmental entity also is not served because an award will come from the public purse, not the actual tortfeasor. MARTA v. Boswell, supra at 428. The dissent illogically extrapolates this language to reach the conclusion that because the public purse would be unaffected where insurance is available, punitive damages in these instances should be allowed. Of course, the availability of insurance and the fact that money for punitive damages would be paid by insurance rather than “the public purse,” does not have any bearing here because the actual tortfeasor remains unpunished. Also, the public purse would likely be affected through the payment of ever-increasing insurance premiums.