Class Action Challenging the State Health Benefit Plan’s Refusal to Provide Promised Benefits Continues

November 3, 2014

Ruling in favor of the Plaintiff, who is represented by Parks, Chesin & Walbert, along with co-counsel, Fulton County Superior Court Judge Cynthia D. Wright rejected the Attorney General’s contention that the Georgia State Health Benefit Plan (the “Plan”) is immune from suit. Order (D) 2014.10.09 Def’s Motion to Dismiss. The Plan is administered by the Defendant Department of Community Health (“DCH”), and it provides health care coverage to hundreds of thousands of state employees, teachers and administrators of the State’s local public school systems. The Court found the Plaintiff can sue DCH for breach of contract for failing to provide the benefits it promised once it accepted premiums from its members for enhanced levels of coverage under the Plan.

Angry Plan members filed a class-action lawsuit on May 14, 2014, contending that the State used “bait and switch tactics” to lure over 200,000 members into buying high-priced health care packages, called Gold and Silver level benefit plans, and then reneged on the promise to provide the enhanced benefits. As a result, the Plan has wrongly collected many millions of dollars in enhanced premiums without providing the enhanced coverage. The class-action lawsuit seeks reimbursement of those premiums together with other damages suffered by the Plan members.

DCH moved to dismiss the lawsuit on the grounds that the claim was barred by sovereign immunity. Plaintiff argued that DCH waived sovereign immunity by entering into a contract with the Plan members to provide them with health care coverage. Plaintiff asserted that the contract was created by statute as well as established by the Plan documents DCH provided to the members. DCH incredibly asserted that the voluminous Plan documents and governing statutes that contain the controlling terms and conditions of the Plan coverage, including requiring the payment of specific premiums in exchange for differing levels of coverage, did not create a written contract. During oral argument on the State’s motion to dismiss, apparently sensing the futility of the “no contract” argument, the Assistant Attorney General representing DCH switched gears. The State responded to the Court’s concerns about the unfairness of allowing the Plan to keep the higher premiums without providing the enhanced levels of coverage with an unprecedented argument, stunning onlookers:

“(When) You (Are) Contracting with the State, You Take It at Your Peril”

The Court had little trouble rejecting this extreme position and accepted Plaintiff’s claims, holding that “DCH, as an agency of the State of Georgia waived sovereign immunity as to any action arising out of breach of a written contract to which DCH is a party. Although DCH contends that no valid contract ever existed between DCH and the Plaintiff and other members of the… class, the Court finds no merit in this argument.” The State’s contention that individuals and companies who contract with the State do so at their own peril because the State has no obligation to live up to its promises is an extremely dangerous position. It is completely out of step with modern day government. Plaintiff and the class she represents intend to hold the State liable for its failed promise to provide Plan members with one of, if not the most, important employment benefit in today’s world: enhanced health insurance.

DCH has now appealed Judge Wright’s decision denying the State’s motion to dismiss. Plaintiff will ask the Georgia Court of Appeals to affirm the Court’s ruling on the existence of a contract so that the case can proceed as a class-action before the trial court.

Plan members interested in participating in the lawsuit should contact Parks, Chesin & Walbert, PC, for further information.

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