Georgia Case Law Update - Canal Ins. Co. v. ProSearch
On June 26, 2007, the Georgia Court of Appeals issued its decision in Canal Insurance Company v. Pro Search. The case dealt with a dispute between a Workers’ Compensation Insurer and an Employer, centering on the nonpayment of deductibles by the Employer to the Insurer. In this case, the Employer, as part of its Workers’ Compensation insurance policy, opted to have a deductible in each claim in the amount of $2,500.00. When the insurance company sent a bill for $42,755.54, the Employer refused to pay the bill and the Insurer filed a lawsuit. The Court held that the claim was not bared by the statues of limitations which started to run when the Insurer demanded payment for the deductibles from the Employer.
This case illustrates several important issues. First, under O.C.G.A. §34-9-124.1, workers’ compensation insurance companies are allowed to write policies with deductibles in the amount of $100.00, $200.00, $300.00, $400.00, $500.00, or increments of $500.00 up to a maximum of $2,500.00 per compensable claim. The total deductible for each claim can not be any higher than $2,500.00. Second, there is misinformation floating around about policy limits and workers’ compensation insurance policies. I have spoken to numerous insurance adjusters who believe that workers’ compensation insurance policies have policy limits. While some insurance policies have reinsurers for losses above a certain amount, the law is clear that no policy or contract of insurance shall be issued unless it contains the agreement of the insurer or insurers that it or they will promptly pay all benefits conferred by this chapter and installments of the compensation that may be awarded or agreed upon to the person entitled to them. O.C.G.A. §34-9-124(a) Another misconception is insurers can deduct workers’ compensation premium from an employees’ paycheck. According to my research, the law is clear that workers’ compensation insurance cost are not deductible from an employees’ paycheck even if the employee agreed to a deduction, as such deduction would violate public policy and therefore, be unenforceable. Morgan S. Inc. v. Lee, 190 GA App 410 (1989).
