Mississippi Comp Choice Self-Insurers Fund v. Mississippi Workers' Compensation Group Self-Insur

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2013-IA-00666-SCT
THE FORMER BOARD OF TRUSTEES AND
MEMBERS OF MISSISSIPPI COMP CHOICE
SELF-INSURERS FUND
v.
MISSISSIPPI WORKERS’ COMPENSATION
GROUP SELF-INSURER GUARANTY
ASSOCIATION
DATE OF JUDGMENT: 04/02/2013
TRIAL JUDGE: HON. JOHN HUEY EMFINGER
TRIAL COURT ATTORNEYS: KATHRYN L. WHITE
JACK D. PRICE
JENNIFER H. SCOTT
ANDREW D. SWEAT
COURT FROM WHICH APPEALED: MADISON COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: KATHRYN LINDSEY WHITE
JAMES D. SHANNON
ATTORNEYS FOR APPELLEE: JENNIFER HUGHES SCOTT
ANDREW D. SWEAT
JOHN DAVID PRICE
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: REVERSED AND REMANDED - 11/20/2014
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
RANDOLPH, PRESIDING JUSTICE, FOR THE COURT:
¶1. The Madison County Circuit Court held that only the Mississippi Tort Claims Act
(“MTCA”) applies to suits against the Mississippi Workers’ Compensation Group Self-
Insurer Guaranty Association.1 The trial court dismissed all other claims, granting leave to
amend the complaint for an MTCA action only. We reverse.
FACTS
¶2. An action was initiated by certain former members and the board of Mississippi Comp
Choice Self-Insurers Fund (“Comp Choice”). Comp Choice was a workers’ compensation
group self-insurer operating under a certificate of authority granted by the Mississippi
Workers’ Compensation Commission (“Commission”). The Commission issues certificates
of authority to self-insurer groups pursuant to Mississippi Code Section 71-3-75(3).2
Defendant is the Mississippi Workers’ Compensation Group Self-Insurer Guaranty
Association (“GGA”).
¶3. In 2008, the Commission ordered a review of Comp Choice. Based on information
revealed in the review, the Commission required Comp Choice to execute a Memorandum
of Understanding outlining a plan to “strengthen the financial and operational aspects of the
1
The Mississippi Legislature created the Mississippi Workers’ Compensation Group
Self-insurer Guaranty Association by providing that “ . . . all group self-insurers shall be and
remain members of the group association as a condition of their authority under Section 71-
3-75[.]” Section 71-3-159 further states “ . . . any individual or group self-insurer composed
of the state, or any agency thereof, or county or municipal governments shall not be required
to be members of the individual association or the group association.” Miss. Code Ann. §
71-3-159 (Rev. 2011).
2
Under this subsection, upon the Commission’s approval, two or more employers
“engaged in a common type of business activity or pursuit, or having other reasons to
associate,” may agree to pool their liabilities. A self-insured group, as is present in the case
sub judice, shall consist of “employer members of the same bona fide trade association or
trade group.” Miss. Code Ann. § 71-3-75(3) (Rev. 2011).
2
[Comp Choice] Fund under the control and guidance of the Commission.” Six months later,
the Commission decided not to approve Comp Choice for future operation. Comp Choice
voluntarily surrendered its certificate of authority to operate as a group self-insurer in
January 2009. GGA stepped into the shoes of Comp Choice to protect claimants, inter alia.
See Miss. Code Ann. 71-3-153 (Rev. 2011).3
¶4. Comp Choice filed its complaint against GGA, alleging claims sounding in gross
negligence, breach of fiduciary duty, bad faith, conversion, and a demand for an accounting,
inter alia. GGA filed a motion to dismiss and claimed immunity under the MTCA and the
Mississippi Workers’ Compensation Self-Insurer Guaranty Association Law.
¶5. The trial court granted the motion, finding that GGA was “covered” by the MTCA,
sub silentio ruling that Plaintiffs could not pursue a “cause of action” as referenced in
Mississippi Code Section 71-3-179.4 The trial court held that Comp Choice had failed to
3
Guaranty associations’ raison d’être is to assume insurers’, not the government’s,
duties and obligations, in the event of insolvency of a member of the association. “[T]he sole
purpose of the Insurance Guaranty Act is to protect the insured from insolvent companies and
to require the financially healthy insurance companies to involuntarily contribute to protect
the public.” Owens Corning v. Miss. Ins. Guar. Ass’n, 947 So. 2d 944, 946 (Miss. 2007)
(citing Bobby Kitchens, Inc. v. Miss. Ins. Guar. Ass’n, 560 So. 2d 129, 135 (Miss. 1989)).
GGA shares a common purpose, i.e., to protect workers from insolvent insurers.
4
The language of the immunity granted by Mississippi Code Section 71-3-151, et seq.,
is different and significantly more restrictive than the immunities granted by the MTCA.
Specifically, Section 71-3-179 pertinently provides, “ . . . no cause of action . . . shall arise
against . . . [the] association . . . for any good faith, affirmative action taken by any of them[.]
Such immunity shall not extend to any acts of gross negligence by [the] association . . .
committed in the performance of their duties hereunder.” Miss. Code Ann. § 71-3-179 (Rev.
2011).
3
state a claim under the MTCA. The trial court gave Comp Choice twenty days to file an
amended complaint. Comp Choice filed a motion to stay the proceedings and petitioned the
Court for interlocutory appeal, which we granted. Comp Choice raises the following issues:
I. Did the trial court err in granting Defendant’s Motion to Dismiss
Plaintiff’s Amended Complaint founded upon the determination that the
Appellee, an unincorporated legal entity, was covered by the
Mississippi Tort Claims Act, and therefore, entitled to its various
protections, immunities and exceptions pursuant to Miss. Code Ann. §
11-46-7?
II. Did the trial court err in granting Defendant’s Motion to Dismiss
Plaintiff’s Amended Complaint based upon the determination that the
Appellee, an unincorporated legal entity, was covered by the
Mississippi Tort Claims Act, even where the immunity created in the
Mississippi Workers’ Compensation Self-Insurer Guaranty Association
in Miss. Code Ann. § 71-3-179 abrogated the immunity afforded under
the Mississippi Tort Claims Act in Miss. Code Ann. § 11-46-7? 5
STANDARD OF REVIEW
¶6. The grant of a motion to dismiss raises a question of law that is reviewed de novo.
Little v. Miss. Dep’t of Transp., 129 So. 3d 132, 135 (¶ 5) (Miss. 2013) (citation omitted).
A motion to dismiss under Mississippi Rule of Civil Procedure 12(b)(6) should not be
granted unless the court is certain that the plaintiff is not entitled to relief under any set of
facts. Id.5
GGA stated the issue as follows: “Did the trial court correctly determine that the
Mississippi Workers’ Compensation Group Self-Insurer Guaranty Association was an
instrumentality of the Mississippi Workers’ Compensation Commission relevant to the
actions underlying Plaintiffs’ claims; that the Guaranty Association was, therefore, a covered
entity under the MTCA relative to those actions; and that the MTCA provided the exclusive
means for Plaintiffs to bring their claims against the Guaranty Association based upon those
actions?”
4
ANALYSIS
I. Did the trial court err in granting Defendant’s Motion to Dismiss
Plaintiff’s Amended Complaint based upon the determination that
GGA was covered by the Mississippi Tort Claims Act?
¶7. Comp Choice filed an amended complaint, stating, inter alia, that GGA should not
be subject to the immunity provided in Mississippi Code Section 71-3-179 (Rev. 2011),
asserting that GGA’s actions were outside the immunity granted by the statute. GGA
responded by filing a nine-page Motion to Dismiss the Plaintiff’s Amended Complaint,
“pursuant to Mississippi Rule of Civil Procedure 12(b)(6),” with sixteen attached exhibits,
arguing that it was covered by the immunity granted under Section 71-3-179 and under the
MTCA pursuant to Mississippi Code Section 11-46-1, et seq, claiming to be an
instrumentality of the Commission. Thereafter, the trial court determined that GGA “ . . . is
an entity covered by the MTCA.” Whether GGA is an instrumentality of the Commission
cannot be determined by an examination of the amended complaint before this Court.6
¶8. Whether GGA is an instrumentality of the Commission is a fact-driven determination,
It cannot be made until all facts are developed and considered, as shown by our caselaw. In
Bolivar Leflore Medical Alliance, LLP v. Williams, this Court provided the first definition
of an instrumentality – “something that serves as an intermediary or agent through which one
or more functions of a controlling force are carried out: a part, organ, or subsidiary branch
6
If a court considers anything outside the complaint, an order of dismissal on a Rule
12(b)(6) motion will not lie. A trial court “shall only consider the allegations contained in
the pleading asserting the claim.” See Miss. R. Civ. P. 56, note.
5
esp. of a governing body.” Bolivar Leflore Med. Alliance, LLP v. Williams, 938 So. 2d
1222, 1228 (Miss. 2006). Bolivar offered a comparison of the facts in that case to the facts
in Watts v. Tsang, a case in which this Court held that medical practice group UAS was an
instrumentality of the University of Mississippi Medical Center (“UMMC”). Bolivar, 938
So. 2d at 1228 (citing Watts v. Tsang, 828 So. 2d 785, 793-94 (Miss. 2002)).
¶9. In Watts, this Court considered numerous facts in its determination: (1) UMMC
created UAS; (2) UAS was “overseen” by UMMC; (3) UAS supplemented income to
UMMC’s faculty; (4) the day-to-day activities were overseen by the department chair, who
“serve[d] at the pleasure of the chancellor of the medical school;” (5) UAS consisted only
of “full-time UMMC faculty-physicians;” (6) the faculty physicians could practice only in
locations approved by UMMC; and (7) “ . . . money [was] distributed only on a point system
based on factors other than mere patient service.” Watts, 828 So. 2d at 790, 794.
¶10. In Bolivar, this Court found that Bolivar Leflore Medical Alliance (“BLMA”) and its
employee, Dr. Warrington, were an instrumentality of Greenwood Leflore Hospital (“GLH”),
a community hospital, based on facts developed. Bolivar, 938 So. 2d at 1232. We found the
following facts: (1) GLH created and oversaw BLMA, (2) two-thirds of the Executive
Committee, which oversaw and controlled the “business affairs” of BLMA, was appointed
by GLH, (3) GLH retained 98% interest in BLMA’s “income and losses,” (4) pursuant to
contract, Warrington could provide services only for GLH or the partnership, and (5)
Warrington had entered into a covenant not to compete in the event that he left the
partnership. Bolivar, 938 So. 2d at 1228. Specifically, this Court determined that BLMA was
6
an instrumentality of GLH “[s]ince GLH . . . a ‘community hospital’ . . . maintains 98%
interest in the income and losses of BLMA and two-thirds (2/3) control over the Executive
Committee membership of BLMA.” Bolivar, 938 So. 2d at 1231.
¶11. In Estate of Frederick ex rel. Sykes v. Quorum Health Resources, Inc., 45 So. 3d
667 (Miss. Ct. App. 2009), reversed on other grounds by Estate of Frederick ex rel. Sykes
v. Quorum Health Resources, Inc., 45 So. 3d 641 (Miss. 2010), the Court of Appeals found
that Quorum Health Resources, Inc., was an instrumentality of Neshoba County Nursing
Home (“NCNH”). Estate of Frederick, 45 So. 3d at 675. The facts revealed Quorum and
NCNH had entered into an agreement which specifically stated that “ . . . Quorum [was]
acting solely as the agent of the Hospital.” Id. The agreement further stipulated that NCNH
was not relinquishing any of its “control or authority” to Quorum. Id. at 674. It was
undisputed that Quorum was an agent of NCNH, and therefore, it was clear from the
agreement that Quorum was an instrumentality of NCNH. All three cases are fact-specific
and are wholly unrelated to the success, vel non, of a Rule 12(b)(6) motion.
¶12. In the case sub judice, facts were and are still undeveloped, precluding the trial court
and this Court from determining whether Plaintiff’s claims, as alleged in its complaint, can
be pursued only under the MTCA, as ordered by the trial court, and Plaintiff may not pursue
a cause of action as contemplated by Section 71-3-151, et seq, or otherwise. Absent factual
development, no court at this stage of the proceedings could accurately discern whether GGA
is an instrumentality of the Commission, vel non, as argued by GGA.
CONCLUSION
7
¶13. Therefore, the judgment of the Madison County Circuit Court is reversed, and the case
is remanded to the trial court for further proceedings consistent with this opinion.
¶14. REVERSED AND REMANDED.
WALLER, C.J., KITCHENS, CHANDLER AND KING, JJ., CONCUR.
DICKINSON, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY
PIERCE AND COLEMAN, JJ.; LAMAR, J., JOINS IN PART. COLEMAN, J.,
DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY DICKINSON, P.J.,
LAMAR AND PIERCE, JJ.
DICKINSON, PRESIDING JUSTICE, DISSENTING:
¶15. The Mississippi Workers’ Compensation Group Self-Insurer Guaranty Association
(the Association) was created by statute,7 and, as an instrumentality of the State of
Mississippi, it clearly is covered by the Mississippi Tort Claims Act “MTCA”). Because that
is the only question before us, I respectfully dissent.
¶16. My reason for not fully joining Justice Coleman’s opinion is that I see no need for any
evaluation of whether the Association is also an instrumentality of the Workers’
Compensation Commission—although I agree with him that it is. Black’s Law Dictionary
defines an instrumentality as “1. A thing used to achieve an end or purpose. 2. A means or
agency through which a function of another entity is accomplished, such as a branch of a
governing body.” 8 So the question is whether the Legislature created the Association to
achieve “an end or purpose” properly within its purview.
7
Miss. Code Ann. § 71-3-159 (Rev. 2011).
8
Black’s Law Dictionary 681 (abr. 9th ed. 2010).
8
¶17. It seems obvious that every entity the Legislature statutorily creates is to achieve some
governmental end or purpose. Why would—and perhaps more importantly, how could—the
Legislature create an entity with absolutely no governmental purpose? When, as here, the
Legislature delegates to an entity enforcement powers that exceed those possessed by private
citizens, the entity is a governmental instrumentality.
¶18. That brings us to the statutorily created Association. Among its statutory purposes
is to protect citizens from financial loss caused by “the insolvency of a self-insurer . . . .” 9
The majority scoffs at the notion that the Association’s statutory purpose “to protect the
public” is a legitimate governmental purpose. If protecting the public is not a legitimate
governmental purpose, one wonders why the Attorney General has a Consumer Protection
Division, and why there are laws against fraud.
¶19. It cannot seriously be doubted that protection of the public is a legitimate
governmental purpose. And to further that purpose, the Legislature created the Association
to serve as its instrumentality and granted it enforcement powers, including the power to
assess “each individual self-insurer” in the State of Mississippi.10 So, clearly, the Association
was created as an instrumentality of the State of Mississippi to serve a legitimate
governmental purpose.
9
Miss. Code Ann. § 71-3-153 (Rev. 2011).
10
Miss. Code Ann. § 71-3-163(c) (Rev. 2011).
9
¶20. The MTCA applies to the State of Mississippi and all of its “political subdivision[s]” 11
and “instrumentalit[ies].” 12 There are no exceptions. So clearly it applies to the Association.
And because the Act applies to the Association, any lawsuit—including the one before us
today—must be filed, and must proceed according to the provisions of the MTCA.13 And
because that is the only question before us, we should affirm the trial judge.
¶21. The Guaranty Association Act does include a provision that provides certain immunity
from suits.14 But whether the Association is immune under the Guaranty Association Act or
the MTCA 15 —or both—is not before us in today’s case. The trial judge held no more than
that the Association is covered by the MTCA, and any suit against it must proceed according
to the requirements of that Act. The trial judge was exactly correct.
PIERCE AND COLEMAN, JJ., JOIN THIS OPINION. LAMAR, J., JOINS
THIS OPINION IN PART.
COLEMAN, JUSTICE, DISSENTING:
¶22. The purpose of an appeal from an interlocutory order is to obtain appellate resolution
on a question of law that may: “(1) [m]aterially advance the termination of the litigation and
avoid exceptional expense to the parties; or (2) [p]rotect a party from substantial and
11
Miss. Code Ann. §11-46-1(i) (Rev. 2012).
12
Miss. Code Ann. §11-46-1(j) (Rev. 2012).
13
Miss. Code Ann. §11-46-11 (Rev. 2012).
14
Miss. Code Ann. §71-3-179 (Rev. 2011).
15
Miss. Code Ann. §11-46-9 (Rev. 2012).
10
irreparable injury; or (3) [r]esolve an issue of general importance in the administration of
justice.” Miss. R. App. P. 5(a). See also Kilgore v. Barnes, 490 So. 2d 895, 896 (Miss.
1986) (the Court grants interlocutory appeals to “finally settle the controlling principles of
law in the case”).
¶23. Comp Choice petitioned the Court for interlocutory appeal because the trial court
reached a conclusion of law that the Mississippi Tort Claims Act applied to the Guaranty
Association and that conclusion of law controlled the litigation. We agreed, stayed the
litigation in the trial court, and granted the interlocutory appeal, purportedly for the purpose
of reviewing the trial court’s conclusion and answering a question of law important not only
to the general administration of justice but to the parties involved in the instant litigation.
However, the majority now disposes of the appeal without answering the question presented
regarding the controlling principle of law and fails to accomplish the purpose for which we
allow interlocutory appeals. In my opinion, the question can be answered based on the law
and record before us. I would answer the question posed by the parties, which would allow
the parties and court below to proceed along the correct legal path.16 Therefore, respectfully,
I dissent.
Facts and Procedural History
¶24. As explained by the majority, Comp Choice was a workers’ compensation group self-
insurer operating under a certificate of authority granted by the Mississippi Workers’
16
While I agree with the analysis offered by Presiding Justice Dickinson in his
dissent, the parties raised the arguments I address herein.
11
Compensation Commission (“Commission”). According to Mississippi Code Section 71-3-
159, all group self-insurers, like Comp Choice, are members of the Mississippi Workers’
Compensation Group Self-Insurer Guaranty Association (“Guaranty Association”). In
January 2009, Comp Choice surrendered its certificate of authority to operate as a group self-
insurer following a review by the Commission and the Commission’s decision not to approve
the Comp Choice Fund for future operation. Comp Choice claims that, when it surrendered
its certificate of authority, the Fund had $2,770,000 in cash, plus private investments, which
should have sufficed to pay the remaining claims and legal obligations.
¶25. In February 2009, the Commission entered an order giving the Guaranty Association
responsibility for operating the Comp Choice Fund. The Guaranty Association retained
AmFed to handle the pending claims. Comp Choice objected to hiring AmFed, because
AmFed charged a higher fee than the administrator Comp Choice had been using. In October
2009, Comp Choice was notified that certain assets of the Comp Choice Fund were being
liquidated. Comp Choice objected, saying that certain investments were long term
investments and that liquidating them prematurely would result in a loss. In April 2010, the
Commission assessed approximately $1,950,000 to be divided among the Comp Choice
members, claiming that amount was needed to close the outstanding claims against the Comp
Choice Fund. Comp Choice asserts that it made several requests for an accounting of
expenses and payments, but the Guaranty Association and AmFed never provided an
accounting.
12
¶26. Comp Choice sued the Guaranty Association alleging that it had acted negligently and
in bad faith in performing its duties and in operating the Comp Choice Fund. Specifically,
Comp Choice alleged that the Guaranty Association negligently and wastefully spent the
Comp Choice Fund’s money, which included paying AmFed an exorbitant fee; negligently
attempted to sell the Comp Choice Fund’s assets; negligently withheld premium deposits of
approximately $300,000 belonging to the members of the Comp Choice Fund; negligently
and in bad faith conducted and paid for an unnecessary investigation out of the Comp Choice
Fund’s assets needed for claims; negligently and in bad faith engaged in questionable hiring
practices and wasting assets of the Comp Choice Fund; and negligently and in bad faith
prepared premium audits without detailed underwriting data. The complaint included a
demand for an accounting and claims for negligence, gross negligence, breach of fiduciary
duty, bad faith, conversion, and intentional infliction of emotional distress.
¶27. The Guaranty Association filed a motion to dismiss, claiming it was exempt from
liability under the Mississippi Tort Claims Act and the Mississippi Workers’ Compensation
Self-Insurer Guaranty Association Law. The trial court granted the motion, finding that the
Guaranty Association was covered by the Tort Claims Act. Because the Tort Claims Act
provides the exclusive remedy for claims against covered entities, and the complaint did not
allege a cause of action pursuant to the Tort Claims Act, the trial court held that Comp
Choice had failed to state a claim for which relief could be granted. The trial court gave
Comp Choice twenty days to file an amended complaint under the Tort Claims Act. Instead,
Comp Choice petitioned the Court for interlocutory appeal. We granted Comp Choice’s
13
petition for interlocutory appeal to determine whether the trial court erred by dismissing
Comp Choice’s complaint on the grounds that the Guaranty Association was covered by the
Tort Claims Act.
Discussion
¶28. The only issue properly before the Court is whether the Guaranty Association is
entitled to protection under the Tort Claims Act, because that is the only issue the trial court
addressed. “[A]pplication of the MTCA is a question of a law that is reviewed de novo.”
Little v. Miss. Dep’t of Transp., 129 So. 3d 132, 135 (¶ 5) (Miss. 2013) (citation omitted).
The grant of a motion to dismiss also raises a question of law that is reviewed de novo. Id.Whether the Mississippi Workers’ Compensation Group Self-Insurer
Guaranty Association is a state agency, political subdivision, or
instrumentality thereof covered by the Mississippi Tort Claims Act.
¶29. The Tort Claims Act provides the exclusive remedy for civil claims against
governmental entities and employees. Miss. Code Ann. § 11-46-7 (Rev. 2012).
“Governmental entity” is defined as “the state and political subdivisions.” Miss. Code Ann.
§ 11-46-1(g) (Supp. 2014). The Tort Claims Act defines “state” and “political subdivision”
as follows:
(i) “Political subdivision” means any body politic or body corporate other than
the state responsible for governmental activities only in geographic areas
smaller than that of the state, including, but not limited to, any county,
municipality, school district, charter school, volunteer fire department that is
a chartered nonprofit corporation providing emergency services under contract
with a county or municipality, community hospital . . . , airport authority, or
other instrumentality of the state, whether or not the body or instrumentality
has the authority to levy taxes or to sue or be sued in its own name.
14
(j) “State” means the State of Mississippi and any office, department, agency,
division, bureau, commission, board, institution, hospital, college, university,
airport authority[,] or other instrumentality thereof, whether or not the body or
instrumentality has the authority to levy taxes or to sue or be sued in its own
name.
Miss. Code Ann. § 11-46-1(i), (j) (Supp. 2014).
¶30. Comp Choice asserts that the Guaranty Association is a statutorily created
unincorporated legal entity, which is not a state agency or political subdivision entitled to the
protections of the Tort Claims Act. Comp Choice posits that, because the Guaranty
Association was created by statute and not by the Commission, it does not derive its power
and authority from the Commission; thus, it is not an agent or instrumentality of the
Commission. Comp Choice likens the Guaranty Association to the Mississippi Insurance
Guaranty Association (“MIGA”), which the Court has said is not a state agency.
¶31. The Guaranty Association responds that it acts as an instrumentality of the
Commission, in that it acts pursuant to the Commission’s orders and carries out functions of
the Commission. The Guaranty Association asserts that its legal status is not relevant; rather,
the Court should look at its relationship with the Commission in determining whether it is
an instrumentality of the state. Both parties cite cases in which the Court has determined
whether certain entities are state agencies or instrumentalities of the state under the Tort
Claims Act, but the cases are not directly on point. Accordingly, the case sub judice presents
the Court with an issue of first impression.
A. Statutory Creation
15
¶32. The purpose of the Mississippi Workers’ Compensation Law and the coverage
requirement is to timely pay disability benefits and medical expenses to workers who suffer
work-related injuries and to encourage them to return to work. Miss. Code Ann. § 71-3-1(3)
(Supp. 2014). The Court has said that “the purpose behind the Workers’ Compensation Law
is to share amongst workers, employers, and consumers the burden of supporting those
whose ability to work is seriously diminished or eliminated.” Meridian Prof’l Baseball Club
v. Jensen, 828 So. 2d 740, 749 (¶ 24) (Miss. 2002) (citations omitted). Employers with at
least five employees are required to have workers’ compensation coverage. Miss. Code Ann.
§ 71-3-5 (Rev. 2011). Small companies “engaged in a common type of business” are
allowed to come together and form a group to “pool their liabilities.” Miss. Code Ann. § 71-
3-75(3) (Rev. 2011). Those groups are called “self-insured groups,” and they must be
approved by the Commission. Id. The Workers’ Compensation Law provides:
Pooling of liabilities: The commission may, under such rules and regulations
as it prescribes, permit two (2) or more employers engaged in a common type
of business activity or pursuit, or having other reasons to associate, to enter
into agreements to pool their liabilities under this section for the purpose of
qualifying as group self-insurers, and, in conjunction therewith, to enter into
agreements to pool any other liabilities to their employees, and each employer
member of such approved group shall be classified as a self-insurer. . . .
Miss. Code Ann. § 71-3-75(3) (Rev. 2011). Comp Choice was a group self-insurer
comprised of logging and timber companies.
¶33. In addition to the Workers’ Compensation Law, self-insurers are subject to the
Mississippi Workers’ Compensation Self-Insurer Guaranty Association Law. See Miss.
16
Code Ann. §§ 71-3-151-181 (Rev. 2011). The stated purpose of the Self-Insurer Guaranty
Association Law is:
. . . to provide a mechanism for the payment of the covered claims under the
Workers’ Compensation Law, to avoid excessive delay in payment and to
avoid financial loss to claimants because of the insolvency of a self-insurer, to
assist in the detection and prevention of self-insurer insolvencies, and to
provide associations to assess the cost of such protection among self-insurers.
Miss. Code Ann. § 71-3-153 (Rev. 2011). Comp Choice was a member of the Guaranty
Association pursuant to Mississippi Code Section 71-3-159.
¶34. Members of the Guaranty Association’s board of directors are selected by the
“member self-insurers, subject to the approval of the [C]ommission.” Miss. Code Ann. § 71-
3-161(1) (Rev. 2011). The Guaranty Association is required to submit a “plan of operation”
to the Commission for approval. Miss. Code Ann. § 71-3-165 (Rev. 2011). Section 71-3-
163 outlines the powers and duties of the Guaranty Association, and it has immunity for good
faith actions taken in the course of carrying out its statutory duties. Miss. Code Ann. § 71-3-
179 (Rev. 2011).
¶35. Comp Choice is correct that the Guaranty Association is statutorily created and
derives its authority from statutes. However, the fact that an entity acts pursuant to statute
does not preclude it from being an instrumentality of a state entity, as Comp Choice seems
to argue. In fact, the opposite is true. The Court has held that “[g]overnmental actions under
the MTCA are those which are performed pursuant to the act of statute [sic] or are a matter
of public necessity.” Spencer v. Greenwood/Leflore Airport Auth., 834 So. 2d 707, 711 (¶
12) (Miss. 2003) (citing Thomas v. Hilburn, 654 So. 2d 898, 900 (Miss. 1995)). Thus, the
17
Guaranty Association’s duties and responsibilities performed pursuant to statute could be
considered “governmental activities.” Further, by and large, much of the Guaranty
Association’s operation is subject to the Commission’s approval. The Guaranty Association
maintains that its legal status as a “statutorily created unincorporated legal entity” – as Comp
Choice labels it – is not relevant. The Guaranty Association asks the Court to look at its
relationship with the Commission to determine whether it is an instrumentality of the
Commission and, thus, of the state.
B. Instrumentality of the Commission
¶36. The Guaranty Association asserts that it is an instrumentality of the state because it
acts as an intermediary or agent of the Commission and carries out some of the
Commission’s functions at its direction. The Tort Claims Act does not define
“instrumentality” under Section 11-46-1, but the Court has held that the Legislature used
“‘instrumentality’ as an inclusive term so as not to limit the means by which the state could
carry out its governmental functions.” Mozingo v. Scharf, 828 So. 2d 1246, 1255 (¶ 26)
(Miss. 2002). The Court also has adopted the dictionary definition of “instrumentality,”
writing that it is defined as “something that serves as an intermediary or agent through which
one or more functions of a controlling force are carried out: a part, organ, or subsidiary
branch esp. of a governing body.” Bolivar Leflore Med. Alliance, LLP v. Williams, 938 So.
2d 1222, 1228 (¶ 16) (Miss. 2006) (quoting Webster’s Third New Int’l Dictionary 1172 (3d
ed. 1986)).
18
¶37. The Guaranty Association cites Estate of Fedrick ex rel. Sykes v. Quorum Health
Res., Inc., 45 So. 3d 667 (Miss. Ct. App. 2009), rev’d, 45 So. 3d 641 (Miss. 2010); Bolivar
Leflore Med. Alliance, LLP v. Williams, 938 So. 2d 1222 (Miss. 2006); and Mozingo v.
Scharf, 828 So. 2d 1246 (Miss. 2002), in support of its position that it is an instrumentality
of the state, like the entities in the above-listed cases, which were agents of community
hospitals. The Tort Claims Act definition of political subdivision specifically includes
community hospitals. See Miss. Code Ann. § 11-46-1(i) (Supp. 2014).
¶38. Estate of Fedrick was a Court of Appeals case that was overruled on other issues.
The entity in question, Quorum, was the management company for a nursing home, which
was a subsidiary of a community hospital owned by the county. Estate of Fedrick, 45 So.
3d at 669 (¶ 3). Quorum had entered a management agreement with the hospital, which
specifically provided that Quorum was an agent of the hospital, that the hospital did not
relegate any of its authority or control of operations to Quorum, that Quorum was required
to submit its budget and annual management plan to the hospital for approval, and that
Quorum could not hire or execute contracts without approval. Id. at 675 (¶¶ 26-30). Based
on the specific terms of the management agreement, the Court of Appeals held that Quorum
was an instrumentality of the state entitled to protection under the Tort Claims Act. Id. at
675 (¶ 31). The record in the instant case does not include a similar agreement between the
Guaranty Association and the Commission.
¶39. Bolivar Leflore Medical Alliance was a family medical clinic created by agreement
between Greenwood Leflore Hospital and several physicians. Bolivar Leflore, 938 So. 2d
19at 1223 (¶ 2). The Court held that Bolivar Leflore Medical Alliance was an instrumentality
of Greenwood Leflore Hospital, a community hospital. The decision was based on the fact
that Greenwood Leflore had a 98% interest in the clinic and majority control of the executive
committee for Bolivar Leflore, which executive committee in turn had authority and control
over its business affairs. Id. at 1232 (¶ 28). The Court found that Bolivar Leflore was “an
intermediary or agent through which certain functions of [Greenwood Leflore] are
accomplished” and, therefore, it was an “instrumentality” of Greenwood Leflore entitled to
the protections of the Tort Claims Act. Id. In the instant case, the Guaranty Association is
comprised of a group of private employers, and it is not owned or operated by the
Commission.
¶40. In Mozingo v. Scharf, the Mozingos sued Dr. Scharf for medical malpractice. Dr.
Scharf was a physician and professor employed by the University of Mississippi Medical
Center (UMMC) and University Anesthesia Services (UAS), which was a departmental
practice plan at UMMC.17 Mozingo, 828 So. 2d at 1249 (¶ 3). The Court applied a five-part
test, established in Miller v. Meeks, 762 So. 2d 302 (Miss. 2000), for determining whether
“a doctor is considered an independent contractor or a state employee for the purposes of the
MTCA.” Mozingo, 828 So. 2d at 1250 (¶ 8). As an employee of UMMC, Dr. Scharf was
17
“Medical practice plans are organized groups of physicians with medical school
faculty appointments who, in addition to research and medical education responsibilities,
provide patient care services to both insured and uninsured patients. Most of the medical
practice plans utilize UMMC departmental personnel within their respective departments to
perform work on behalf of the medical practice plans.” Mozingo, 828 So. 2d at 1254 (¶ 23).
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“required to participate in his department’s practice plan, UAS[,]” and he provided dual
services as an anesthesiologist and a professor. Id. at 1253 (¶ 21). Dr. Scharf was an
employee of both UMMC and UAS, and he received compensation from both. Id. The
Court held that Dr. Scharf was a state employee because he was employed by UMMC, and
he was entitled to immunity under the Tort Claims Act. Id. The instant case does not
involve any state employees. The Guaranty Association exercises its power through a board
of directors, who are volunteers not employed by the Commission. However, the
Commission must approve the members of the board. Miss. Code Ann. § 71-3-161(1) (Rev.
2011).
¶41. The entities in the cases cited by the Guaranty Association are not comparable. The
Court has established a separate test for determining whether doctors are state employees
under the Tort Claims Act, and it lacks applicability here. Mozingo, 828 So. 2d at 1250 (¶
8); Miller, 762 So. 2d 310 (¶ 20). In Estate of Fedrick, Quorum operated under a
management agreement that specifically named it an agent of the community hospital subject
to the hospital’s control and direction. Estate of Fedrick, 45 So. 3d at 675 (¶ 31). No similar
agreement is in the record here. In Bolivar Leflore, the entity at issue was akin to a
subsidiary of the community hospital, and it was owned and controlled by the hospital.
Bolivar Leflore, 938 So. 2d at 1232 (¶ 28). Community hospitals are defined in the Tort
Claims Act, thus, a definition can be applied to determine if they, or their agents or
intermediaries, fall within its scope. The Guaranty Association is an entirely different type
of organization.
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¶42. Comp Choice relies on several cases in which the Court held that the entities at issue
were not instrumentalities of the state: Poppenheimer v. Estate of Coyle, 98 So. 3d 1059(Miss. 2012), Flye v. Spotts, 94 So. 3d 240 (Miss. 2012), and Knight v. Terrell, 961 So. 2d
30 (Miss. 2007). Poppenheimer and Flye dealt with volunteer fire departments, and Knight
addressed a private security officer. In Flye, the Court held that the term “body corporate”
under the definition of “political subdivision” applied “only to governmental/public entities,
not private.” Flye, 94 So. 3d at 245 (¶ 9). The volunteer fire department was a private entity
that contracted with the county to provide fire protection services. Id. at 247 (¶ 15). The
Flye Court cited Knight v. Terrell, writing that it stood “for the proposition that a private
company and its employees who provide ‘governmental activities’ via contract with a
political subdivision are not immune from liability under the MTCA.” Id. at 247 (¶ 14). The
Knight Court held, “[u]nless or until the Legislature expressly crafts the statute to provide
constabulary immunity to independent contractors, we will not draft one where it does not
exist.” Knight, 961 So. 2d at 33 (¶ 12). Notably, Section 11-46-1 has since been amended
to include volunteer firefighters and volunteer fire departments in the definitions of
“employee” and “political subdivisions.” See Miss. Code Ann. § 11-46-1(f), (i) (Supp.
2014). In Poppenheimer, the Court relied almost exclusively on Flye and held that the
volunteer fire department was an independent contractor, and “as a private, nonprofit
organization, the volunteer fire department did not meet the definition of a ‘political
subdivision.’” Poppenheimer, 98 So. 3d at 1064 (¶¶ 14, 17) (citing Flye, 94 So. 3d at 244-
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48 (¶¶ 5-15)). Again, the Guaranty Association is quite different from a volunteer fire
department, making the comparison a difficult one.
¶43. Comp Choice also asserts that the Guaranty Association should be likened to MIGA,
which the Court has held is not a state agency. While Comp Choice is correct that the Court
has said “MIGA is not a state agency[,]” the cases cited by Comp Choice are not Tort Claims
Act cases and the contexts were very different from the case at hand. See Owens Corning
v. Miss. Ins. Guar. Ass’n, 947 So. 2d 944, 945-46 (¶ 5) (Miss. 2007). For instance, in
Owens Corning, the Court made the statement that MIGA was not a state agency in
determining whether deference should be given to MIGA’s interpretation of the Insurance
Association Guaranty Law. Id. The Court was not considering whether MIGA was subject
to the protections of the Tort Claims Act, and the case does not provide an analysis under the
Tort Claims Act.
¶44. Comp Choice boldly writes that “other numerous cases over the years adequately
suggest that [the Guaranty Association], as well as any other guaranty association in
Mississippi, is not entitled to the protections of Miss. Code Ann. § 11-46-1, et seq., as it is
not an instrumentality of the state or other political subdivision.” In support of its contention,
Comp Choice cites Mississippi Surplus Lines Association v. State of Mississippi, 442 F.
Supp. 2d 335 (S.D. Miss. 2006), and Bobby Kitchens, Inc. v. Mississippi Insurance
Guaranty Association, 560 So. 2d 129 (Miss. 1989). Neither case stands for Comp Choice’s
proposition, and neither is a Tort Claims Act case. In Mississippi Surplus Lines Association,
although the Southern District Court said MSLA was not a “public body,” it concluded that
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MSLA existed for the sole purpose of assisting the Insurance Commissioner, and the court’s
rationale actually supports the position that guaranty associations are agents or
instrumentalities of the entities they were created to assist. Miss. Surplus Lines Assoc., 442
F. Supp. 2d at 339.
¶45. While the cases cited by both parties present factual situations and address entities far
different from the Guaranty Association, some insight can be gleaned from analyzing them.
In each case, control by the state entity was an important factor in determining whether the
other entity was an instrumentality of the state. The Guaranty Association is not under the
complete control of the Commission, but it is required to get the Commission’s approval for
many actions. It also acts at the direction of the Commission, evidenced by its involvement
in the instant case, as the Commission directed the Guaranty Association to take over the
Comp Choice Fund. The Commission also acts on the recommendations of the Guaranty
Association. For instance, the Commission issued the order assessing $1,950,000 to be
divided among the Comp Choice members at the Guaranty Association’s request.
¶46. The Guaranty Association maintains that the Legislature intended it to act as an agent
of the Commission to carry out statutorily established activities. For example, by
administering Comp Choice pursuant to the Commission’s orders, the Guaranty Association
“carried out” some of the Commission’s regulatory functions. The Guaranty Association
claims that is an agent through which the Commission accomplishes the day-to-day
regulation of self-insurer groups, including: managing and administering the statutory fund
required under Section 71-3-163(c) to which all group self-insurers are required to
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contribute; aiding the Commission in detecting and preventing member insolvencies by
asking the Commission to examine groups that it believes are in a hazardous financial
condition pursuant to Section 71-3-173(a); and preparing reports and making
recommendations to the Commission regarding solvency or reorganization of group self-
insurers pursuant to Section 71-3-173(c) and (d).
¶47. The Guaranty Association maintains that it is an intermediary of the Commission
under its control, and it provides the following examples of oversight and control by the
Commission: the Commission must approve the Guaranty Association’s board of directors;
the Guaranty Association is required to submit a plan of operation to the Commission for
approval; the Guaranty Association is regulated by the Commission and subject to
examination by the Commission; the Guaranty Association must submit annual financial
reports to the Commission and make its minutes and records available to the Commission.
See Miss. Code Ann. §§ 71-3-161, 71-3-165, 71-3-175 (Rev. 2011). The evidence of
oversight by the Commission and examples of activities performed by the Guaranty
Association indicate that the Commission exerts a substantial amount of control over the
Guaranty Association and that the Guaranty Association assists the Commission with its day-
to-day regulatory functions.
¶48. The Guaranty Association furthers the purpose of the Commission and the Workers’
Compensation Law, which is to provide compensation for injured employees with the goal
of rehabilitation and restoration to work. Applying the broad definition of “instrumentality”
from Mozingo – that the Legislature intended it to be “an inclusive term so as not to limit the
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means by which the state could carry out its governmental functions,” in addition to the
dictionary definition adopted in Bolivar Leflore, that an instrumentality is something that
“serves as an intermediary or agent through which one or more functions of a controlling
force are carried out” – I would hold that the Guaranty Association is an instrumentality of
the Commission. See Mozingo, 828 So. 2d at 1255 (¶ 26); Bolivar Leflore, 938 So. 2d at
1228 (¶ 16).
C. Immunity under Section 71-3-179
¶49. Comp Choice claims that, because the Legislature included an immunity provision in
the Self-Insurers Guaranty Law, it did not intend for the Guaranty Association to be covered
under the Tort Claims Act as well. Section 71-3-179 addresses immunity afforded to the
Guaranty Association:
Subject to Section 71-3-174, there shall be no liability on the part of and no
cause of action of any nature shall arise against any individual self-insurer, any
group self-insurer, association, agents and employees of an association, board
of directors of an association, and the commission and its employees and
representatives, or any of them, for any good faith, affirmative action taken by
any of them in the performance of their powers and duties under Sections 71-
3-151 through 71-3-181. This section does not apply to individual employers
who are members of a group self-insurer. Such immunity shall not extend to
any acts of gross negligence by any such individual self-insurer, group self-
insurer, association, agents and employees of an association, board of directors
of an association and the commission and its employees and representative
committed in the performance of their duties hereunder.
Miss. Code Ann. § 71-3-179 (Rev. 2011). The Guaranty Association maintains that Section
71-3-179 adds to the immunity provided under the Tort Claims Act and that the two sections
can be read in harmony. The Guaranty Association cites Parsons v. Mississippi State Port
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Authority, 996 So. 2d 165 (Miss. Ct. App. 2008), in which the Court of Appeals held that an
immunity statute in the Mississippi Emergency Management Law could be read in
conjunction with the Tort Claims Act. The Court of Appeals wrote:
A detailed review of these statutes leads this Court to conclude that the MTCA
and the MEML can be read in conjunction with each other and that the MTCA
has not superseded the MEML. Statutes on the same subject, although in
apparent conflict, should if possible be construed in harmony with each other
to give effect to each. Roberts v. Miss. Republican Party State Executive
Comm., 465 So. 2d 1050, 1052 (Miss. 1985). The MTCA provides that it is the
exclusive remedy against the state and its agencies and, thus, is applicable in
the instant case. However, under Mississippi Code Annotated section 11-46-
9(1)(f), claims that are limited or barred by other provisions of law are
exempted from liability under the MTCA. The MEML is one such law that
allows the state and its agencies to be immune from liability stemming from
its activities during emergency situations. Following the rules of statutory
construction, the two statutes can be read together to provide immunity for the
state and its agencies for its activities during times of emergency management
while simultaneously being exempt from liability under the MTCA.
Parsons, 996 So. 2d at 169 (¶ 19).
¶50. Comp Choice asserts that, because the Self-Insurers Guaranty Association Law was
enacted after the Tort Claims Act and makes no mention of it, then the Legislature did not
intend for the Tort Claims Act to apply to the Guaranty Association. However, as the
Guaranty Association points out, the Court has said that “[i]f the subsequent statute does not
repeal the former, each statute cited must be given effect.” Tunica County v. Hampton Co.
Nat’l Sur., LLC, 27 So. 3d 1128, 1134 (¶ 16) (Miss. 2009). The Court has held repeatedly
that “statutes on the same subject, although in apparent conflict, should if possible be
construed in harmony with each other to give effect to each.” Miss. Gaming Comm’n v.
Imperial Palace of Miss., 751 So. 2d 1025, 1029 (Miss. 1999) (quoting Roberts v. Miss.
27
Republican Party State Executive Comm., 465 So. 2d 1050, 1052 (Miss. 1985)). The
statutes are, for the most part, redundant but are not in conflict, and each can be given effect.
Accordingly, in my opinion, the enactment of the immunity provision in the Guaranty
Association Law does not abrogate the immunity in the Tort Claims Act.
Conclusion
¶51. Considering the purpose of the Workers’ Compensation Law and the broad definition
of instrumentality – that the Legislature intended it to be “an inclusive term so as not to limit
the means by which the state could carry out its governmental functions” – I would hold that
the Guaranty Association serves as an intermediary or agent to carry out certain functions of
the Commission and that it is an instrumentality of the Commission protected by the
Mississippi Tort Claims Act. I would affirm the circuit court’s grant of the Guaranty
Association’s motion to dismiss.
¶52. The majority disposes of the appeal without answering the question presented
regarding the controlling principle of law and fails to accomplish the purpose for which we
grant interlocutory appeals. See Miss. R. App. P. 5(a); Kilgore, 490 So. 2d at 896. Because
the question can be answered with the facts before us, I would answer the question of law
posed by the parties, which would allow the parties and court below to proceed. Instead, the
majority leaves the parties in no better position, with no more clarity on the question of law
presented, than when they arrived before the Court. Respectfully, I dissent.
DICKINSON, P.J., LAMAR AND PIERCE, JJ., JOIN THIS OPINION.
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