Georgia: Uninsured Fund May Not Challenge Constitutionality of Statutory Amendment Expanding “Covered Claims”

A public entity, such as the Georgia Insurers Insolvency Pool, created as it was by the Georgia legislature to pay the covered claim of an insolvent insurance company for the protection and benefit of the company's named insured, could not bring constitutional challenges to legislative acts, held the Supreme Court of Georgia recently.  In 2010, the state legislature enacted OCGA § 33-36-20 to expand GIIP's "covered claims" to include certain insureds who obtained insurance from a captive issuer that later became insolvent. The effect of the 2010 amendment was to retroactively cover previously excluded claims of a particular carrier. Claiming the extension of coverage would decrease GIIP's reserves and increase the assessments levied on member insurance companies, GIIP brought a declaratory judgment action against two insureds that purchased workers compensation insurance from the insolvent carrier seeking a declaration that the 2010 amendment was unconstitutional.  The high court held that GIIP had not been given the power to challenge its own enabling legislation or amendments to it. Nor was it given the power to question the wisdom of statutes designed to accomplish its remedial purpose.

Reported by Thomas A. Robinson, J.D.

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See Georgia Insurers Insolvency Pool v. Hulsey Environmental Servs., Inc., 2013 Ga. LEXIS 631 (Sept. 9, 2013) [2013 Ga. LEXIS 631 (Sept. 9, 2013)]

See generally Larson’s Workers’ Compensation Law, § 102.04 [102.04]

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law.

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