304 Ga. 224
Ga.2018Background
- National Casualty issued professional liability policies to PAGE members for 2012–13 and 2013–14 that included an "Other Insurance" clause making National specifically excess over other insurance, including state pools and self-insurance programs.
- Georgia School Boards Association – Risk Management Fund (Risk Fund) is an interlocal risk management agency created under OCGA § 20-2-2002 that provides pooled liability coverage to school boards and their employees, including PAGE members, and its Coverage Agreements contain an "insurance is excess" clause making Risk Fund excess over valid collectible insurance.
- Multiple suits were filed against PAGE members covered by both National and Risk Fund; National refused to defend or indemnify until Risk Fund’s coverage was exhausted, asserting its policies were excess.
- Risk Fund contended National was primary (or, if clauses conflicted, the insurers must share pro rata) and defended, indemnified, and paid settlements for covered members; National sued for declaratory relief.
- The federal district court found the two "other insurance" clauses irreconcilable and applied Holton to require pro rata sharing; it certified the question to the Georgia Supreme Court whether Georgia law or public policy precludes a commercial insurer from issuing a policy that is excess to coverage provided under OCGA § 20-2-2002 or otherwise alters the Holton analysis.
Issues
| Issue | Plaintiff's Argument (National) | Defendant's Argument (Risk Fund) | Held |
|---|---|---|---|
| Whether Holton’s irreconcilable-other-insurance rule applies when one insurer is a public interlocal risk management agency | Holton applies: irreconcilable excess clauses cancel and require pro rata sharing | Holton should not apply to publicly funded pools because public policy requires commercial insurance to be exhausted before public funds are used | Holton applies; no Georgia law or public policy requires treating public pools differently or forcing commercial insurers to exhaust first |
| Whether Georgia public policy or statutes (OCGA § 20-2-2002 et seq.) prohibit commercial insurers from contracting to be excess over public risk pools | Commercial insurer is free to contract and rely on excess provision; no statute voids such clause | Public-policy concern: protecting public purse favors requiring commercial exhaustion | No statute or public policy invalidates commercial excess provisions; freedom of contract controls |
| Whether sovereign-immunity cases (Googe, Martin) dictate priority of payment favoring public funds | Such cases do not apply here to alter priority between insurers | Risk Fund relies on those precedents to support protecting public funds | Court rejects that reliance: those cases concerned constitutional sovereign-immunity context and are inapposite; OCGA 20-2-990 et seq. preserves immunities and contemplates public funding for coverage |
| Whether legislative scheme requires public pools to be treated as primary | National: legislative scheme permits interlocal pools but does not mandate they be primary | Risk Fund: legislative purpose to protect education professionals implies public funds should be conserved | Court: statute authorizes public funds for coverage but does not mandate priority over commercial insurance; no basis to depart from contract rules |
Key Cases Cited
- State Farm Fire & Cas. Co. v. Holton, 131 Ga. App. 247 (Ga. App. 1974) (irreconcilable other-insurance excess clauses cancel; insurers share liability)
- York Ins. Co. v. Williams Seafood of Albany, 273 Ga. 710 (Ga. 2001) (insurance contracts construed to effect parties’ intent; harmonize provisions)
- Reed v. Auto-Owners Ins. Co., 284 Ga. 286 (Ga. 2008) (insurers free to set policy terms unless prohibited by law or public policy)
- Googe v. Fla. Intl. Indem. Co., 262 Ga. 546 (Ga. 1992) (sovereign-immunity context addressing interaction of state immunity and liability insurance)
- Martin v. Ga. Dept. of Pub. Safety, 257 Ga. 300 (Ga. 1987) (sovereign-immunity/insurance context)
- Hartley v. Agnes Scott College, 295 Ga. 458 (Ga. 2014) (scope of Georgia Tort Claims Act immunity)