Boyd v. Neal

350 Ga.App. 274

828 S.E.2d 650

BOYD et al.

v.NEAL

Neal

v.Georgia Dept. of Community Health et al.

A19A0227

A19A0369

Court of Appeals of Georgia.

May 28, 2019

Julie Adams Jacobs, William Wright Banks Jr., Christopher Michael Carr, Robin Joy Leigh, Atlanta, for Appellant in A19A0227.

Jeffrey L. Berhold, Atlanta, Peter Andrew Lampros, Allan Leroy Parks Jr., for Appellee in A19A0227.

Jeffrey L. Berhold, Atlanta, Michael Travis Foust, Peter Andrew Lampros, Allan Leroy Parks Jr., for Appellant in A19A0369.

Julie Adams Jacobs, William Wright Banks Jr., Christopher Michael Carr, Robin Joy Leigh, Atlanta, for Appellee in A19A0369.

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 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 ; 20-2-881; 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 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 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 S.E.2d 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), 780 S.E.2d 475. 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 S.E.2d 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 S.E.2d 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 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.

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 S.E.2d 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 82-83 (2), 786 S.E.2d 840. 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), 786 S.E.2d 840. "The burden of demonstrating a waiver of sovereign immunity rests upon the party asserting it." Id. at 82 (1), 786 S.E.2d 840.

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...