author: Adams, Judge. BARNES, Presiding Judge,

text:
    A11A1871.
    A11A1872.
    NORTHEAST GEORGIA CANCER CARE, LLC v. BLUE CROSS AND BLUE SHIELD OF GEORGIA, INC. et al. HUDGENS v. BLUE CROSS AND BLUE SHIELD OF GEORGIA, INC. et al.
    (726 SE2d 714)
   Adams, Judge.

Relying on the “Any Willing Provider” statute codified at OCGA § 33-20-16 (the “AWP statute”), Georgia’s Commissioner of Insurance ruled that Blue Cross and Blue Shield of Georgia, Inc. (“Blue Cross”) was required to admit “any willing provider” that wished to join its preferred provider arrangement, and that Blue Cross Blue Shield Healthcare Plan of Georgia, Inc. (“BC Healthcare”) was required to admit “any willing provider” that wished to join its health maintenance organization. The superior court reversed the Commissioner. Northeast Georgia Cancer Care, LLC and the Commissioner then sought discretionary review of the superior court’s order, and we granted the applications, leading to these companion appeals. Based upon the plain language and structure of the Insurance Code, and giving proper deference to the ruling of the Commissioner, we conclude that the Commissioner correctly concluded that the Insurance Code does not bar application of the AWP statute to Blue Cross’s preferred provider arrangement. But he erred by applying the AWP statute to BC Healthcare’s HMO network.

The record reflects certain undisputed facts. In 1985, two separate healthcare companies merged and created Appellee Blue Cross. Blue Cross was licensed by Georgia’s Commissioner of Insurance as a nonprofit “health care corporation” governed by what is now Chapter 20 of the Insurance Code, Title 33. Among other things, Blue Cross, as authorized by Chapter 30 of the Insurance Code, offers a preferred provider network plan to its insureds, which it refers to as a “Preferred Provider Organization” or PPO. In 1985, Blue Cross created, organized, and capitalized a for-profit wholly owned subsidiary, Appellee BC Healthcare. BC Healthcare, which began operation in 1986, is separately licensed by the Commissioner to operate as a health maintenance organization (“HMO”). BC Healthcare offers an HMO network plan to its insureds.

In 1996, Blue Cross converted to a for-profit organization with the approval of the Commissioner. As a result of legislative amendments, Blue Cross continued to be licensed as a “health care corporation” governed by Chapter 20 of the Insurance Code. See OCGA §§ 33-20-3 (12) (B); 33-20-31; 33-20-34; Ga. L. 1995, p. 745. As part of the conversion process, Blue Cross became a wholly owned subsidiary of the newly formed Cerulean Companies, Inc. In December 1997, Blue Cross distributed to Cerulean its 100 percent ownership interest in BC Healthcare, making the latter corporation a wholly owned subsidiary of Cerulean and an affiliate of Blue Cross.

Appellant Northeast Georgia Cancer Care, LLC is a medical practice group consisting of medical and radiation oncologists. Northeast I, 297 Ga. App. at 29. From 2002 to 2007, Northeast was an approved health care provider in the PPO plan offered by Blue Cross and the HMO plan offered by BC Healthcare. Id. However, a dispute over payments and reimbursements arose between the parties, leading Northeast to terminate its provider contracts with Blue Cross and BC Healthcare in 2007. Id. The parties settled their dispute, and, as part of the settlement, they began negotiating new provider contracts. Id. Ultimately, Blue Cross allowed Northeast’s individual physicians to participate as providers in its PPO network, but not Northeast as a group medical practice. BC Healthcare allowed Northeast’s individual radiation oncologists to participate as providers in its HMO network, but not Northeast as a group medical practice or its individual medical oncologists. This remaining unresolved dispute between the parties over access to the PPO and HMO networks led to the instant litigation.

At the heart of the parties’ dispute is Georgia’s AWP statute, OCGA § 33-20-16, which provides:

Every doctor of medicine, every doctor of dental surgery, every podiatrist, and every health care provider within a class approved by the health care corporation who is appropriately licensed to practice and who is reputable and in good standing shall have the right to become a participating physician or approved health care provider for medical or surgical care, or both, as the case may be, under such terms or conditions as are imposed on other participating physicians or approved health care providers within such approved class under similar circumstances in accordance with this chapter.

The parties disagree over whether the AWP statute applies to the PPO network offered by Blue Cross and to the HMO network offered by BC Healthcare.

Northeast filed suit in superior court against Blue Cross and BC Healthcare, seeking, among other things, a declaratory judgment as to its right to participate as a provider in the PPO network and the HMO network under the AWP statute. The superior court dismissed the declaratory judgment count and several of Northeast’s other claims, ruling that the AWP statute was inapplicable. In the earlier appeal, we affirmed the superior court’s order of dismissal, but in part on the alternative ground that Northeast had failed to exhaust its administrative remedies. See Northeast I, 297 Ga. App. at 30-31 (1). We held that Northeast was first required to submit its dispute over the application of the AWP statute to the Commissioner. See id.

Accordingly, Northeast filed a petition with the Commissioner. On December 17, 2009, in a procedural order, the Commissioner bifurcated the legal and factual issues. On January 27, 2010, the Commissioner ordered that there would be two hearings: the first on legal issues followed by an evidentiary hearing within 30 days thereafter; he ordered that no final ruling would be issued until the parties had an opportunity to present evidence. On February 18, 2010, after receiving submissions from the parties, the Commissioner held the first hearing; he expressly stated at the beginning of the hearing that he was not taking evidence. Later during the hearing, however, the Commissioner stated that he was going to consider the Department’s file in order to address four factual points. On April 7, 2010, the Commissioner issued two rulings “on the legal issues presented to me by the parties.” In the first, the Commissioner concluded the AWP statute applied to Blue Cross’s PPO network; in the second, he concluded it applied to BC Healthcare’s HMO network. The Commissioner expressly limited his ruling to the two Blue Cross entities. On April 19, 2010, upon request, the Commissioner issued an order clarifying that his rulings were effective as of April 7, 2010; that he would not stay the rulings pending an appeal; and that if no one appealed, he would schedule the contemplated evidentiary hearing by May 7, 2010. The Commissioner concluded with this: “If an appeal is timely filed, the evidentiary hearing shall be stayed in accordance with the provisions of § 5 (b) of the Procedural Order. The effectiveness of the rulings, however, will not be stayed.” The intended purpose of the remaining hearing is unclear from the record.

Blue Cross and BC Healthcare appealed the Commissioner’s two rulings to the superior court and moved for a stay of those rulings, which the superior court granted. The superior court later reversed both rulings based on the language and structure of the Insurance Code. Although the superior court’s written order was composed of a single page, it incorporated by reference its lengthy oral ruling at a prior hearing. Northeast and the Commissioner sought discretionary review of the superior court’s order, and we granted the applications.

Case No. AllA1871

1. In several related enumerations of error, Northeast contends the superior court erred by failing to appropriately defer to the Commissioner’s interpretation of the Insurance Code, including the AWP statute, and by concluding that the AWP statute did not apply in either situation.

A thorough discussion of the complete standard of review of a decision by an administrative agency has recently been set out by the Supreme Court:

Judicial review of an administrative decision requires the court to determine that the findings of fact are supported by “any evidence” and to examine the soundness of the conclusions of law that are based upon the findings of fact. OCGA § 50-13-19 (h). As to the first step, OCGA § 50-13-19 (h) provides that “[t]he court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact [but] . .. [t]he court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings . . . are: . . . (5) [c]learly erroneous....” “Thus, the statute prevents a de novo determination of the evidentiary questions leaving only a determination of whether the facts found by the [agency] are supported by ‘any evidence.’ ” [Cit.]
OCGA § 50-13-19 (h) also sets out the parameters of a court’s review of the legal conclusions made in the agency decision. While the judiciary accepts the findings of fact if there is any evidence to support the findings, the court “may reverse or modify the [agency] decision if substantial rights of the appellant have been prejudiced because the administrative . . . decision[ ] . . . [is]: (1) in violation of constitutional or statutory provisions; (2) in excess of the statutory authority of the agency; (3) made upon unlawful procedure; (4) affected by other error of law.” OCGA § 50-13-19 (h).

Pruitt Corp. v. Ga. Dept. of Community Health, 284 Ga. 158, 160-161 (3) (664 SE2d 223) (2008). In sum, “the court is statutorily required to examine the soundness of the conclusions of law drawn from the findings of fact supported by any evidence, and is authorized to reverse or modify the agency decision upon a determination that the agency’s application of the law to the facts is erroneous.” Id. In this case, our review will focus on the legal conclusions and the factual questions the Commissioner considered.

The Supreme Court also explained the proper amount of deference to be applied to the agency’s interpretation of relevant statutes and rules and regulations:

When an administrative agency decision is the subject of judicial review, judicial deference is to be afforded the agency’s interpretation of statutes it is charged with enforcing or administering and the agency’s interpretation of rules and regulations it has enacted to fulfill the function given it by the legislative branch. [Cits.]

Pruitt Corp., 284 Ga. at 159 (2).

(a) The Blue Cross Preferred Provider Arrangement, or PPO. Following the hearing, the Commissioner held that the AWP statute applied to Blue Cross’s PPO network. We agree that the plain and unambiguous language of the relevant statutes, when read together, comports with the Commissioner’s decision.

“In all interpretations of statutes, the courts shall look diligently for the intention of the General Assembly[.]” (Citation and punctuation omitted.) Moore v. Moore-McKinney, 297 Ga. App. 703, 706 (1) (678 SE2d 152) (2009). ‘When the language of a statute is plain and unambiguous and not leading to an absurd result, it evidences the legislative intent which is not to be contravened.” Ga. Dept. of Transp. v. Evans, 269 Ga. 400, 401 (499 SE2d 321) (1998). We also must endeavor “to give each part of the statute meaning and avoid constructions that make some language mere surplusage” or meaningless. (Citation omitted.) J. Kinson Cook, Inc. v. Weaver, 252 Ga. App. 868, 870 (1) (556 SE2d 831) (2001). See Footstar, Inc. v. Liberty Mut. Ins. Co., 281 Ga. 448, 450 (637 SE2d 692) (2006). Furthermore,

[a] statute must be construed in relation to other statutes of which it is a part, and all statutes relating to the same subject-matter, briefly called statutes “in pari materia,” are construed together, and harmonized wherever possible, so as to ascertain the legislative intendment and give effect thereto.

(Citations and punctuation omitted.) City of Buchanan v. Pope, 222 Ga. App. 716, 717 (1) (476 SE2d 53) (1996). Finally, OCGA § 33-1-5 provides:

Provisions of this title relating to a particular kind of insurance or to a particular type of insurer or to a particular matter prevail over provisions relating to insurance in general or to insurers in general.

As noted by the Commissioner, Blue Cross admits that it “is and since its founding has been licensed by the Department [of Insurance] as a ‘health care corporation’ under Chapter 20 of the Insurance Code.” Our plain reading of the relevant statutes shows the following: The AWP statute is a part of Chapter 20 of the Insurance Code, and it expressly applies to health care corporations. OCGA § 33-20-16. Health care corporations are authorized to administer one or more “health care plans.” OCGA§§ 33-20-3 (2); 33-20-4; 33-20-5. A health care plan is defined as “a plan or arrangement under which health care services are or may be rendered... at the expense of a health care corporation in consideration of periodical payments. .. .” (Emphasis supplied.) OCGA § 33-20-3 (3). It follows that under the plain wording of Chapter 20, the AWP statute applies to Blue Cross and its health care plans. The next question is whether the PPO operated by Blue Cross constitutes one of those plans or something separate that is not governed by the AWP statute.

Chapter 20 health care plans, along with several other types of “insurers” established by the Insurance Code, are specifically defined as authorized “health care insurer[s]” under the Preferred Provider Arrangements Act (PPA Act) found in Chapter 30, Article 2. OCGA § 33-30-22 (3). Under that act, any specified health care insurer is authorized to enter into preferred provider “arrangements,” OCGA § 33-30-23 (a), which are simply defined as contracts with providers:

“Preferred provider arrangement” means a contract between or on behalf of the health care insurer and a preferred provider which complies with all the requirements of this article.

OCGA § 33-30-22 (7). Likewise, a “preferred provider” is simply a “provider or group of providers who have contracted to provide specified covered services.” OCGA § 33-30-22 (6). Finally, a “health benefit plan” under the PPA Act is the “policy or subscriber agreement between the . . . policyholder and the health care insurer. . . .” OCGA § 33-30-22 (2). Thus, under the PPA Act, health care insurers, including health care plans operated by health care corporations governed by Chapter 20, can enter into preferred provider arrangements with providers and enter into health benefit plans, i.e., policies or subscriber agreements, with people desiring that type of plan. It necessarily follows that Blue Cross, a health care corporation, is authorized to administer a health care plan that is in fact a preferred provider arrangement, and that the relationship with covered persons is the associated “health benefit plan.”

Next, there is nothing in Chapter 20 to suggest that its provisions, including the AWP statute, do not apply to preferred provider arrangements operated by Chapter 20 health care corporations. We also defer to the Commissioner’s interpretation of the AWP statute: that the language employed therein is consistent with managed care plans, such as Blue Cross’s PPO. In the words of the Commissioner:

[T]he [AWP] statute references “participating provider” and “classes approved,” which are terms and concepts that are at the heart of a managed care plan, such as those described in OCGA §[ ] 33-30-20 et seq. This is no coincidence. [Blue Cross], as an HCC, has long had the express authority to create different classes of providers and different payment levels for participating and nonparticipating facilities. See OCGA§ 33-20-13.

Moreover, the PPA Act provides, without express caveat, that Chapter 30, Article 2 health care insurers must comply with all other applicable provisions of the Insurance Code:

Health care insurers as defined in this article shall be subject to and shall be required to comply with all other applicable provisions of this title and rules and regulations promulgated pursuant to this title.

OCGA§ 33-30-26. The plain and unambiguous meaning of this Code section when read with Chapter 20 allows that the AWP statute applies to Chapter 20 health care corporations, including their preferred provider arrangements. This conclusion would obviously encompass Blue Cross and its preferred provider arrangement, i.e., its PPO.

What remains is the idea that application of the AWP statute to preferred provider arrangements is fundamentally inconsistent with the nature of such arrangements as defined in the PPA Act. Specifically, the appellees argue that OCGA § 33-30-25 reveals that inconsistency. But that Code section, which expressly permits insurers operating preferred provider arrangements to place reasonable limits on the number or classes of preferred providers, plainly and unambiguously provides that insurers may do so only upon approval of the Insurance Commissioner:

Subject to the approval of the Commissioner under such procedures as he may develop, health care insurers may place reasonable limits on the number or classes of preferred providers which satisfy the standards set forth by the health care insurer, provided that there be no discrimination against providers on the basis of religion, race, color, national origin, age, sex, or marital or corporate status, and provided, further, that all health care providers within any defined service area who are licensed and qualified to render the services covered by the preferred provider arrangement and who satisfy the standards set forth by the health care insurer shall be given the opportunity to apply and to become a preferred provider.

OCGA § 33-30-25. This provision can be construed in a manner consistent and harmonious with the AWP statute, as we are duty-bound to do. Ramos-Silva v. State Farm Mut. Ins. Co., 300 Ga. App. 699, 702 (686 SE2d 345) (2009). Health care insurers who are Chapter 20 health care plans/corporations administering preferred provider arrangements are subject to the AWP statute unless and until they take advantage of the terms of OCGA § 33-30-25 by seeking the approval of the Insurance Commissioner for reasonable limits on the number or classes of proffered providers. Under any such approved limitations, the final portion of OCGA § 33-30-25 kicks in: even though the Insurance Commissioner has approved a limitation on the number of providers, all health care providers meeting the statutorily defined criteria “shall be given the opportunity to apply and to become a preferred provider,” and they cannot be discriminated against for the specified improper reasons.

Although Blue Cross strongly argues that an insurer cannot operate a PPO without limiting the number or classes of preferred providers, the plain language of Chapter 30 actually allows an insurer to do just that. Nothing in the PPA Act requires an insurer to implement such limits. And it would appear that an insurer could begin by offering a plan without such limits and later decide to seek the Commissioner’s approval for reasonable limitations pursuant to OCGA § 33-30-25; or it could seek the Commissioner’s approval of a plan with such limitations when it seeks initial approval of a preferred provider arrangement. Here, it is not clear from the record how Blue Cross operates its PPO in this regard, nor whether, prior to the events that precipitated this litigation, it ever prohibited a provider from joining its network.

In conclusion, we agree with the Insurance Commissioner’s interpretation of the relevant statutes and his conclusion that Blue Cross, as a Chapter 20 health care corporation operating a health care plan that is, in fact, a preferred provider arrangement authorized by Chapter 30, Article 2, must seek approval of limits on the number or classes of preferred providers under procedures developed by the Insurance Commissioner in order to deviate from the requirements of the AWP statute. Therefore, we reverse the superior court and uphold the Commissioner’s ruling that there is nothing in the statutory scheme prohibiting application of the AWP statute to the PPO plan offered by Blue Cross.

(b) The HMO Network Offered By BC Healthcare. The Commissioner determined the AWP statute applied to the HMO network offered by BC Healthcare even though BC Healthcare is not a Chapter 20 health care corporation. First, the Commissioner reasoned that pursuant to OCGA § 33-21-28 (a), any provision in Title 33 that did not conflict with the provisions of Chapter 21 applied to HMOs; and he found no such conflict. Second, the Commissioner concluded that because BC Healthcare was organized and capitalized by Blue Cross, it was subject to the same statutes as Blue Cross itself, including the AWP statute, regardless of whether it was a separate for-profit entity. Third, the Commissioner viewed this Court’s prior decision in Northeast I as ultimately controlling its decision to apply the AWP statute to the HMO network. We find aspects of the Commissioner’s analysis to be legally flawed.

(i) HMOs are governed principally by Chapter 21 of the Insurance Code. See OCGA § 33-21-1 et seq. An important distinction with the above analysis regarding preferred provider arrangements is that, by an express provision of Chapter 21, other provisions of the Insurance Code, such as the AWP statute, are applicable to HMOs only “[ejxcept as otherwise provided by law” and only if they are “not in conflict with [Chapter 21]”:

Except as otherwise provided by law, all provisions of this title which are not in conflict with this chapter shall apply to health maintenance organizations and all other persons subject to this chapter, and specifically, the requirements and restrictions of Code Sections 33-20A-6, 33-20A-7, 33-20A-8, and 33-20A-9.1 shall apply to health maintenance organizations and all other persons subject to this chapter.

OCGA § 33-21-28 (a). As pointed out above, the similar provision of the PPA Act, OCGA § 33-30-26, contains no such caveat.

A plain reading of the relevant statutes shows that application of the AWP statute to the HMO network offered by BC Healthcare is otherwise prohibited by law because the AWP statute is inapplicable to for-profit corporations, such as BC Healthcare, that are not statutorily defined “surviving corporations.” Specifically, the AWP statute provides that application of its provisions must be “in accordance with this chapter,” i.e., Chapter 20 of the Insurance Code. See OCGA § 33-20-16. Chapter 20 expressly states that its provisions “shall not apply to nor govern any corporation which is organized for profit or which contemplates any pecuniary gain to its shareholders or members,” unless the corporation is a “surviving corporation.” OCGA § 33-20-31. Because BC Healthcare has always been a for-profit entity, we turn to the definition of “surviving corporation”:

“Surviving corporation” means a health care corporation which is:
(A) The surviving corporation in a merger which includes one or more health care corporations;
(B) A health care corporation which has amended its articles of incorporation to become a corporation governed by Chapter 2 of Title 14, the “Georgia Business Corporation Code”; or
(C) The subsidiary of a corporation described in sub-paragraph (A) or (B) of this paragraph.

(Emphasis supplied.) OCGA § 33-20-3 (12). Thus, the plain language shows that to qualify as a “surviving corporation,” a corporation must first be a “health care corporation”; then it must also satisfy one of the three conditions set forth in subsections (A)-(C).

A “health care corporation” is defined as “a corporation established in accordance with the provisions of [Chapter 20] to administer one or more health care plans.” OCGA § 33-20-3 (2). It is undisputed that BC Healthcare is not and has never been a Chapter 20 health care corporation; it is a for-profit entity licensed as a health maintenance organization. Accordingly, BC Healthcare is not a surviving corporation, and the plain language of OCGA § 33-21-28 (a) bars the application of the AWP statute to the HMO network offered by BC Healthcare because it is otherwise prohibited by law. Even if we were to read out of the definition the requirement that a surviving corporation must be a health care corporation, the argument that BC Healthcare is a “surviving corporation” under subsection (C) of the definition also fails because BC Healthcare is no longer a subsidiary of Blue Cross.

Because the meaning of the statute is clear, the Insurance Commissioner’s conclusion that the AWP statute applies to BC Healthcare was clearly erroneous.

(ii) Perhaps to get around this problem, the Commissioner concluded that because BC Healthcare was created, organized and capitalized by Blue Cross, which he found as a matter of fact, it was and is subject to the same statutes as Blue Cross itself, including the AWP statute. But the Commissioner offered no legal basis for this conclusion other than citing provisions of Chapters 20 and 21 of the Insurance Code that do not directly answer the question, and therefore we owe no deference to that determination. Similarly, Northeast argues that the simple fact that a health care corporation subject to the AWP statute may operate an HMO through an affiliate (like, as it alleges, Blue Cross operates BC Healthcare), means that the affiliate is subject to the AWP statute, as well. But, we agree with the superior court that nothing in Chapter 21 provides a legal basis for ignoring the separate legal identities of Blue Cross and BC Healthcare for the purpose of applying OCGA § 33-21-28 (a). In sum, whether and to what extent the AWP statute applies to BC Healthcare is specifically answered by OCGA § 33-21-28 (a).

(iii) Finally, the Commissioner erred by concluding that our decision in Northeast I controls the question of whether the AWP statute applies to BC Healthcare. In Northeast I, we did not purport to address the underlying substantive merits of the action; rather, we simply concluded that, pursuant to OCGA § 33-20-30 — the administrative exhaustion provision — Northeast was required to exhaust its administrative remedies by first submitting its dispute with Blue Cross and BC Healthcare to the Commissioner. Northeast I, 297 Ga. App. at 30-32 (1).

The Commissioner appears to have concluded that in Northeast I this Court implicitly determined that BC Healthcare was a “surviving corporation” under OCGA § 33-20-31 because otherwise OCGA § 33-21-28 (a) would have barred application of OCGA § 33-20-30 in this case. But Northeast I did not discuss OCGA § 33-20-31 or “surviving corporations,” and “[q]uestions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.” (Citations and punctuation omitted.) Jackson v. City of College Park, 230 Ga. App. 487, 490 (1) (496 SE2d 777) (1998).

Furthermore, OCGA § 33-20-30, unlike the substantive provisions of Chapter 20 such as the AWP statute, is merely a jurisdictional provision addressing how to handle disputes that arise over the statutory framework imposed by Chapter 20, including whether the disputes fall into that framework. It follows that the Commissioner erred in assuming that OCGA § 33-20-30 had any bearing on the application of OCGA § 33-20-31 to the parties’ dispute in this case.

For the reasons set forth above, the Commissioner correctly concluded that the Insurance Code does not bar application of the AWP statute to Blue Cross’s PPO plan. But it erred by applying the AWP statute to BC Healthcare’s HMO network. We therefore affirm in part and reverse in part the decision of the superior court and remand this case to that court with instruction to remand the case to the Insurance Commissioner for further proceedings, if necessary, consistent with this opinion.

Case No. A11A1872

2. In this companion appeal, the Commissioner likewise argues that the superior court erred by failing to appropriately defer to his interpretation of the Insurance Code and by concluding that the AWP statute did not apply to the relevant PPO or HMO network. The Commissioner raises the same essential arguments as Northeast. For the reasons set forth in Case No. A11A1871, we agree the Commissioner correctly concluded that the Insurance Code does not bar application of the AWP statute to Blue Cross’s PPO plan. But it erred by applying the AWP statute to BC Healthcare’s HMO network. We therefore affirm in part and reverse in part the decision of the superior court and remand this case to that court with instruction to remand the case to the Insurance Commissioner for further proceedings, if necessary, consistent with this opinion.

Judgments affirmed in part and reversed in part, and cases remanded with direction.

Ellington, C. J., Doyle, P. J., and Blackwell, J., concur. Barnes, P. J., Phipps, P. J., and Miller, J., concur in part and dissent in part.

BARNES, Presiding Judge,

concurring in part and dissenting in part.

The majority reverses the superior court in part and holds that Blue Cross and Blue Shield of Georgia, Inc. must admit “any willing provider” into its health plan utilizing a preferred provider arrangement (“PPO plan”). But OCGA § 33-30-25 of the Preferred Provider Arrangements Act clearly permits health care insurers like Blue Cross to place reasonable limits on the number or classes of their preferred providers. Furthermore, Georgia’s Commissioner of Insurance has exercised his discretion and chosen not to require health care insurers to seek and obtain preapproval of the limits they wish to impose on the number or classes of their preferred providers. Under these circumstances, Georgia’s Any Willing Provider (“AWP”) statute is inapplicable to the PPO plan offered by Blue Cross, as the superior court properly concluded. Because the superior court should be affirmed on the PPO issue, I respectfully dissent in part to the majority’s decision in these companion appeals. (Citations and punctuation omitted.) Palmyra Park Hosp. v. Phoebe Sumter Med. Center, 310 Ga. App. 487, 491 (1) (714 SE2d 71) (2011). See OCGA§ 33-2-28 (c); Handel v. Powell, 284 Ga. 550, 553 (670 SE2d 62) (2008).

While reviewing courts defer to agency interpretations of the statutes they are charged with administering, that deference applies only as far as the agency interpretation is consistent with the statute. Administrative agencies may not change a statute by interpretation, or establish different standards within a statute that are not established by a legislative body. . . . The judicial branch determines independently whether the agency’s interpretation correctly reflects the plain language of the statute and comports with the legislative intent.

When interpreting a statute, this court must “apply the fundamental rules of statutory construction that require us to construe the statute according to its terms, to give words their plain and ordinary meaning, and to avoid a construction that makes some language mere surplusage.” (Punctuation and footnote omitted.) Ga. Transmission Corp. v. Worley, 312 Ga. App. 855, 856 (720 SE2d 305) (2011). Moreover, when two statutes conflict, “later statutes prevail over earlier statutes, and specific statutes govern over more general statutes.” (Citations omitted.) Glinton v. And R, Inc., 271 Ga. 864, 866-867 (524 SE2d 481) (1999). In the context of conflicts within the Insurance Code, “[provisions . . . relating to a particular kind of insurance or to a particular type of insurer or to a particular matter prevail over provisions relating to insurance in general or to insurers in general.” OCGA§ 33-1-5.

At the center of the parties’ dispute over statutory interpretation is the AWP statute, OCGA § 33-20-16, which provides:

Every doctor of medicine, every doctor of dental surgery, every podiatrist, and every health care provider within a class approved by the health care corporation who is appropriately licensed to practice and who is reputable and in good standing shall have the right to become a participating physician or approved health care provider for medical or surgical care, or both, as the case may be, under such terms or conditions as are imposed on other participating physicians or approved health care providers within such approved class under similar circumstances in accordance with this chapter.

The parties disagree over whether the AWP statute applies to Blue Cross’s PPO plan. The superior court was correct in concluding that the AWP statute does not apply.

Under Georgia law, PPO plans are governed principally by the Preferred Provider Arrangements Act, OCGA§ 33-30-20 et seq. (the “Preferred Provider Act”). When enacting the Preferred Provider Act, the General Assembly announced its intent “to encourage health care cost containment while preserving quality of care by allowing health care insurers to enter into preferred provider arrangements.” OCGA § 33-30-21. In other words, the General Assembly expressed its intention that health care insurers be allowed to contract with their “preferred” providers to offer specified covered services, rather than be forced to admit “every” qualified provider, as would be required under the AWP statute.

The intent of the General Assembly is further spelled out in OCGA § 33-30-25, entitled “Reasonable limits on number or classes of preferred providers,” which states:

Subject to the approval of the Commissioner under such procedures as he may develop, health care insurers may place reasonable limits on the number or classes of preferred providers which satisfy the standards set forth by the health care insurer, provided that there be no discrimination against providers on the basis of religion, race, color, national origin, age, sex, or marital or corporate status, and provided, further, that all health care providers within any defined service area who are licensed and qualified to render the services covered by the preferred provider arrangement and who satisfy the standards set forth by the health care insurer shall be given the opportunity to apply and to become a preferred provider.

There is a clear conflict between the AWP statute and OCGA § 33-30-25: the AWP statute requires the admission of “every” qualified provider, while OCGA § 33-30-25 permits health care insurers offering PPO plans to impose reasonable limits on the number or classes of their preferred providers. Furthermore, the AWP statute affords qualified providers with the “right” to participate, while OCGA § 33-30-25 affords only an “opportunity” to participate in a PPO plan. In sum, the express authority given to health care insurers in OCGA § 33-30-25 to limit the number or classes of providers participating in their PPO plans cannot be reconciled with the notion that “any willing provider” has a right to participate.

In light of this clear conflict between the AWP statute and OCGA § 33-30-25, the terms of OCGA § 33-30-25 must take precedence in the context of preferred provider arrangements. First, given that OCGA § 33-30-25 is the more specific statute addressing restrictions that can be placed on the number or classes of preferred providers in PPO plans, its terms must prevail over those of the more general AWP statute. See OCGA § 33-1-5; Glinton, 271 Ga. at 867. Second, given the conflict between the two statutes, the terms of the later statute, OCGA § 33-30-25, see Ga. L. 1988, p. 1483, § 1, must prevail over the terms of the earlier AWP statute. See Ga. L. 1976, p. 1461, § 1; Glinton, 271 Ga. at 866-867.

The majority, however, concludes that there are circumstances under which the AWP statute, rather than OCGA§ 33-30-25, should be applied to PPO plans offered by Chapter 20 health care corporations. In reaching this conclusion, the majority relies upon the initial phrase of OCGA § 33-30-25 — “Subject to the approval of the Commissioner under such procedures as he may develop” — to argue that an insurer cannot limit the number or classes of its preferred providers until it first seeks and obtains the Commissioner’s preapproval. The majority then reasons that the AWP statute applies to a PPO plan offered by a Chapter 20 health care corporation (such as Blue Cross) unless the health care corporation obtains preapproval from the Commissioner to place a limit on the number or classes of its preferred providers pursuant to OCGA § 33-30-25. In other words, in the majority’s view, the AWP statute serves as the default statutory framework for a PPO plan offered by a Chapter 20 health care corporation unless and until the Commissioner gives his preapproval to the specific limitations the corporation seeks to impose under OCGA § 33-30-25.

I disagree with the majority because OCGA § 33-30-25 requires health care insurers to seek and obtain preapproval from the Commissioner for the specific limitations they wish to impose on their preferred provider arrangements only if the Commissioner exercises his discretion and decides that preapproval is necessary. The initial phrase of OCGA § 33-30-25 states that the reasonable limits placed by health care insurers on the number or classes of their preferred providers are “[s]ubject to the approval of the Commissioner under such procedures as he may develop.” (Emphasis supplied.) OCGA § 33-30-25. The word “may” is a term of permissiveness, which authorizes the Commissioner in his discretion to develop preapproval procedures but does not require him to do so. See generally McCorquodale v. State, 233 Ga. 369, 374 (3) (211 SE2d 577) (1974). Hence, the Commissioner is afforded discretion in deciding whether agency preapproval of the specific limitations placed by health care insurers on the number or classes of their preferred providers should be required.

It is undisputed that the Commissioner has not promulgated administrative procedures, pursuant to OCGA§ 33-30-25, requiring health care insurers to seek and obtain preapproval of the specific limitations they wish to place on the number or classes of their preferred providers. The Commissioner, therefore, has exercised his discretion and chosen not to require preapproval. Accordingly, health care insurers are not required to seek and obtain preapproval from the Commissioner because the Commissioner has chosen not to require it as a precondition to an insurer imposing specific limitations on the number or classes of its preferred providers. Hence, the majority’s argument that Chapter 20 health care corporations like Blue Cross must seek and obtain the preapproval of the Commissioner to avoid application of the AWP statute to their preferred provider arrangements is misplaced.

Decided March 28, 2012

Reconsideration denied April 12, 2012

King & Spalding, James W. Boswell III, Jessica M. Eames, Chilton D. Varner, for appellant (case no. A11A1871).

Samuel S. Olens, Attorney General, Amy M. Burns, Assistant Attorney General, for appellant (case no. A11A1872).

McKenna, Long & Aldridge, James A. Washburn, Jeffrey R. Baxter, Weissman, Nowack, Curry & Wilco, Ned Blumenthal, Nelson, Mullins, Riley & Scarborough, Jeffrey L. Mapen, for appellees.

Lawson & Moseley, Matthew I. Dowling, Holland & Knight, Robert S. Highsmith, Elizabeth C. Whitworth, amici curiae.

In sum, the AWP statute directly conflicts with OCGA § 33-30-25, which permits Chapter 20 health care corporations and other health care insurers to impose reasonable limits on the number or classes of their preferred providers rather than “any willing provider.” And while OCGA § 33-30-25 affords the Commissioner the discretion to require preapproval of those limits, the Commissioner has chosen not to require preapproval. Consequently, the superior court properly concluded that the AWP statute did not apply to the PPO plan offered by Blue Cross. Because the majority arrives at the opposite conclusion, I respectfully dissent.

I am authorized to state that Presiding Judge Phipps and Judge Miller join in this dissent.

       This is the second appearance of this case before us. See Northeast Ga. Cancer Care v. Blue Cross & Blue Shield of Ga., 297 Ga. App. 28 (676 SE2d 428) (2009) (“Northeast I”). In Northeast I, we concluded that the parties’ dispute over application of the AWP statute had to he submitted to the Commissioner for resolution in the first instance. See id. at 30-32 (1).

       The Commissioner indicated that he was going to accept “all documents in the ordinary course of business of the Department of Insurance.” He stated that he intended to consider (1) how BC Healthcare was capitalized; (2) how Cerulean was capitalized; (3) how BC Healthcare was transferred from Blue Cross to Cerulean; and (4) what compensation, if any, did Blue Cross receive as a result of that transfer.

       In a separate enumeration of error, Northeast asserts that the superior court erred in holding that “a health plan insurer/HMO can walk away from promises it made in order to obtain special treatment under the Georgia insurance laws”; Northeast was referring to alleged promises made by Blue Cross during the hearings regarding its conversion from nonprofit to for-profit status. But Northeast does not address this enumeration in the argument section of its brief and thus has abandoned it. See Court of Appeals Rule 25 (a) (3) and (c) (2) (i).

       The full text of OCGA § 50-13-19 (h) is as follows:
      The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are: (1) In violation of constitutional or statutory provisions; (2) In excess of the statutory authority of the agency; (3) Made upon unlawful procedure; (4) Affected by other error of law; (5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

       Although referring to a health care plan as an insurer sounds odd, the term is equated with an insurer or issuer of insurance policies quite frequently in the Insurance Code. For example, Chapter 1 of the Code defines “insurer” and adds that “Hospital service nonprofit corporations, nonprofit medical service corporations, burial associations, health care plans, and health maintenance organizations are insurers within the meaning of this title.” (Emphasis supplied.) OCGA§ 33-1-2 (4). See also OCGA§§ 33-9-3 (b) (2); 33-20B-2 (4); 33-24-21.1 (a) (6); 33-24-21.2 (a) (3); 33-24-28.1 (d); 33-24-28.2 (d); 33-24-28.3; 33-24-29 (e) (1); 33-24-29.1 (e) (1); 33-29-3.1 (c); 33-29-3.2 (e); 33-29-3.3 (c); 33-30-4.1 (c); 33-30-4.2 (e); 33-30-4.3 (a), and others.

       To be more clear, the PPA Act neither defines nor establishes something called a “preferred provider organization.” The term is not even used in the PPA Act. In other words, the PPA Act does not establish an entity, i.e., an insurer, that must be licensed and regulated by the Insurance Commissioner. See OCGA § 33-8-1. Compare OCGA §§ 33-20-8 (health care plans); 33-21-2 (health maintenance organizations). Rather, it is an “arrangement” with certain providers or a “plan” for the covered persons that a “health care insurer,” such as a health care plan administered by a Chapter 20 health care corporation, may provide. The term preferred provider organization is used elsewhere in the Insurance Code, but nowhere does the Insurance Code define the term, although it is frequently used to describe one of the kinds of insurers subject to a provision of the Code. See, e.g., OCGA §§ 33-9-3 (b) (1), (2); 33-20A-9.1 (d) (2) (C); 33-24-56.1 (a) (1); 33-24-56.2 (a) (3); 33-24-56.4 (b) (2); 33-24-57.1 (a) (2); 33-24-58.2 (a) (2); 33-24-59.3 (a); 33-24-59.6 (b) (1); 33-24-59.7 (c) (1) (A); 33-24-59.9 (c) (1); 33-24-59.12 (b) (5); 33-24-59.15 (a) (3); 33-24-72 (a) (2); 33-30A-5 (3); 33-43-1 (6.1) (A); 33-46-2 (8).

       The lack of express caveats in this Insurance Code section stands in contrast to OCGA § 33-21-28 (a), a similar incorporation statute found in Chapter 21 applicable to health maintenance organizations, in which there are two caveats, as emphasized infra.

       OCGA §§ 33-20A-6; 33-20A-7; 33-20A-8; and 33-20A-9.1 are part of the Patient Protection Act of 1996, OCGA§ 33-20A-1 et seq.

       Another important distinction is that HMOs and health care corporations are entities that require certificates of authority from the Insurance Commissioner. See OCGA §§ 33-8-1 (1) (I.1), (J); 33-20-8; 33-21-2. Preferred provider arrangements are simply contractual arrangements that many types of insurers may offer.

       It is undisputed that BC Healthcare is and always has been a for-profit corporation.

       Northeast asserts that the legislature enacted the “surviving corporation” provision and other amendments to Chapter 20 of the Insurance Code as a result of lobbying by Blue Cross conducted as part of its efforts to convert to a for-profit corporation in the 1990s; and it attempts to use this fact to alter the construction of the statute. But “[w]here the language of a statute is clear and does not lead to absurd or impracticable consequences, its legislative history may not be used to support a construction that adds to or takes from the significance of the words employed.” (Citation and punctuation omitted.) Standard Oil Co. of Kentucky v. State Revenue Comm., 179 Ga. 371, 377 (176 SE 1) (1934).

       See note 2, supra.

       OCGA§ 33-21-25 provides:
      Notwithstanding any other law which may be inconsistent with this Code section, an insurer, a hospital service nonprofit corporation, a nonprofit medical service corporation, or a health care corporation licensed in this state may directly or through a subsidiary or affiliate organize and operate a health maintenance organization.

       Northeast does not rely upon any common law principles for ignoring the separate legal identities of Blue Cross and BC Healthcare, such as an alter ego or piercing the corporate veil theory of liability.

       OCGA § 33-20-30 provides:
      Any dispute arising within the purview of this chapter with reference to the regulation and supervision of any health care corporation shall within 30 days after such dispute arises be submitted by the aggrieved person to the Commissioner for his decision with reference thereto, provided nothing in this Code section shall authorize or require the Commissioner to determine the contractual rights between the parties interested in any such corporations. After proper notice and hearing, any decisions and order of the Commissioner made pursuant to this chapter shall be binding on the persons involved unless set aside on review as provided by this Code section.

       Specifically, I dissent to Division 1 (a) and to Division 2 to the extent that the majority holds that the AWP statute applies to Blue Cross’s PPO plan. I concur fully in Division 1 (b) and to Division 2 to the extent that the majority holds that the AWP statute is inapplicable to the health maintenance organization operated by Blue Cross Blue Shield Healthcare Plan of Georgia, Inc.


source: Caselaw Access Project

author: BARNES, Presiding Judge.

license: Public Domain

text:
    A11A1916.
    BANK OF THE OZARKS v. DKK DEVELOPMENT COMPANY.
    (726 SE2d 608)
   BARNES, Presiding Judge.

DKK Development Company petitioned the superior court for a declaratory judgment against Oglethorpe Bank Holding Company, Inc. (the “Holding Company”) and Oglethorpe Bank, seeking to have DKK’s $930,000 debt to the bank set off against DKK’s $2 million loan to the Holding Company. After a hearing, the trial court granted the declaratory judgment, finding that DKK was entitled to an equitable set-off of its debt to the bank. In its order, the court “deemed” DKK’s $930,000 note to the bank to be paid in full and ordered that the Holding Company’s $2.25 million promissory note to DKKbe reduced accordingly. The trial court also directed the Clerk of the Superior Court to cancel and mark as satisfied the bank’s deeds to secure DKK’s debt, and to attach a copy of the court’s order to the original DKK promissory note and deed to secure debt.

Oglethorpe Bank and the holding company appealed. Less than a month later, the Georgia Department of Banking and Finance (“GDBF”) closed Oglethorpe Bank, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed receiver. The FDIC then transferred assets of Oglethorpe Bank to Bank of the Ozarks, including the loan to DKK, and the trial court substituted Bank of the Ozarks as the defendant successor in interest to Oglethorpe Bank. Bank of the Ozarks then filed an amended notice of appeal, noting the substitution, and the Holding Company, which was already insolvent when the trial court held its hearing in this case, withdrew from the appeal.

Bank of the Ozarks (“the Bank”) argues on appeal that the trial court erred in offsetting its loan to DKK against DKK’s loan to the Holding Company because the set-off violated federal banking regulations, specifically Federal Reserve Regulation W, 12 CFR Part 223, limiting the transactions between a holding company and its wholly-owned subsidiary bank. See 12 CFR § 223.11. The Bank also argues that the set-off violated the Bank’s consent order from the GDBF and the FDIC, DKK had “unclean hands” and was not entitled to equitable relief, and the set-off was not permissible because the Bank was not the same entity as the Holding Company. We agree that the set-off was improper because the Bank and the Holding Company were separate entities, and therefore reverse the trial court. We need not decide whether the set-off was also improper for other reasons.

A trial court’s findings of fact after a declaratory judgment hearing “are analogous to a jury verdict and will not be interfered with if there is any evidence to support them. However, we review the trial court’s conclusions of law de novo.” (Citation and punctuation omitted.) Burnette v. Caplan, 287 Ga. App. 142, 143 (650 SE2d 798) (2007).

A set-off “allows the defendant to set off a debt owed him by the plaintiff against the claim of the plaintiff.” OCGA § 13-7-1. “Between the parties themselves any mutual demands, existing at the time of the commencement of the suit, may be set off.” (Punctuation omitted.) Nixon v. Nixon, 194 Ga. 301, 303 (2) (21 SE2d 702) (1942). OCGA §§ 13-7-7 through 13-7-11 provide specific legal grounds for which set-off is available. “The right to set off one legal demand against another, other than in cases covered by our statute, is itself an equitable right.” (Punctuation omitted.) Gormley v. Chance, 55 Ga. App. 838, 841 (191 SE 701) (1937) (codified in OCGA § 23-2-76). That statute provides that, “[rjegarding a setoff, equity generally follows the law; but, if there is an intervening equity not reached by the law or if the setoff is of an equitable nature, equity shall take jurisdiction to enforce the setoff.” OCGA § 23-2-76. Whether the claim for a set-off is legal or equitable in nature, however, it must be between the same parties and in their own right. OCGA § 13-7-4; Shingler v. Furst, 176 Ga. 497 (168 SE 557) (1933).

The material facts about these transactions are not in dispute. In 2005, DKK obtained a development loan from the Bank which was secured by real property on St. Simon’s Island. The bank renewed the loan several times. The loan was last renewed in February 2010 for $930,000.

In 2007, the Bank reorganized, redeemed its shareholders’ stock, and issued shares of the Holding Company to the former shareholders of the Bank. The same individuals served as the officers and directors of both the Holding Company and its wholly owned subsidiary, the Bank. DKK’s attorney explained that “the holding company was formed solely for the purpose of acquiring cash either by borrowing it or selling stock and passing it down to the bank as capital for the bank.” If the Bank borrowed money, its capital or equity did not increase because the loan was offset by a debt. But money transferred from the Holding Company to the Bank constituted an equity contribution which the Bank was not required to repay.

In March 2009, the Holding Company was solvent, but the Bank needed an infusion of capital to avoid falling below a capital-to-asset ratio that would have triggered regulatory action, which would in turn have made it more difficult for the Bank to raise funds in the future. See 12 CFR §§ 325.4 (b), 325.6 (b). Frank Deloach was the vice chair of the Board of Directors of both the Bank and the Holding Company, and owned half of DKK’s stock. He was also “the chief architect of the bank,” one of its organizers and its largest shareholder. DKK borrowed $2.5 million from another bank at 6 percent interest, drew out $2.25 million, and on March 31, 2009, lent it to the Holding Company for one year at 8.5 percent interest and a fee of $ 100,000. The Holding Company in turn made an equity contribution of $2 million to the Bank, retaining $250,000 of DKK’s loan in reserve.

After the infusion of $2 million in capital to the bank, the parties anticipated that economic conditions would improve to the point that the Bank would be able to start paying dividends again to the Holding Company, which would enable the Holding Company to repay DKK. Instead, economic conditions worsened',* ánd the Bank’s value “declined precipitously’ over the next year. The Holding Company’s loan from DKK matured in March 2010, but the Holding Company did not repay the loan.

The Bank’s capital-to-asset ratio fell below six percent, and in June 2010 the Bank entered into a consent order with the GDBF and FDIC. Among other things, the consent order provided that the Bank could not enter into any “covered transactions” with an affiliate. Pursuant to the regulators’ suggestions, the Holding Company transferred its remaining $200,000 to the Bank to keep its reserves above two percent and delay the issuance of a “prompt corrective action letter,” which would give the Bank 90 days to raise its capital above four percent or face closure. In July 2010, the FDIC issued a letter to the Holding Company notifying it that its financial condition was unsatisfactory with insufficient capital, cash flow, and liquidity, to which the Holding Company’s Board of Directors responded in August 2010 by issuing a resolution that it would not issue dividends to its shareholders without the consent of the GDBF and FDIC. Also in August 2010, DKK’s loan from the Bank matured and became due and payable.

In October 2010, DKK sued the Holding Company and the Bank, seeking a declaratory judgment that it was entitled to set off its secured debt to the Bank against the Holding Company’s debt to DKK. The Holding Company and the Bank answered and objected to the proposed set-off.

In November 2010, the Bank received a corrective action letter from the FDIC, notifying it that the Bank was “critically undercapitalized” and restricting it from taking certain actions.

As of the hearing on December 9, 2010, the Bank was still operating and was attempting to raise enough capital to “stave off” being placed in receivership, but its counsel acknowledged that the capital market was “very fragile” at that time. DKK’s counsel stated that “[tjhere [was] no question about the fact in reality” that the Bank was going to fail, be closed, and have its assets sold to someone else by the end of January 2011, including its loan to DKK. The Holding Company was insolvent. DKK represented in its hearing brief that if the bank'failed, the Holding Company would declare bankruptcy and discharge its loan to DKK. DKK would thus be liable to repay its loan from the Bank and the loan DKK obtained from another bank for the $2.25 million it lent to the Holding Company, but unable to recoup anything from its loan to the Holding Company.

DKK argued that because the Bank and the Holding Company operated as a single entity, abused their corporate forms, and were alter egos of each other, DKK was entitled to set off its debt to the Bank against the Holding Company’s debt to DKK. It also argued that it was entitled to the set-off because the Holding Company had acted as the Bank’s agent in accepting DKK’s loan.

The Bank responded that DKK understood when it made the loan to the Holding Company that the money would be transferred to the Bank, and that the Bank would not be liable to DKK for repayment, a fact Deloach affirmed in his deposition testimony. The Bank argued that if the trial court set off DKK’s loan from the Bank against its loan to the Holding Company, “then the bank suddenly needs to raise a lot more money in order to survive because [the set-off] will have affected the balance sheet drastically.” The Bank would “suddenly be worth nine hundred and thirty thousand dollars less ... and it would have to get that much more in new funding to survive.”

During the hearing, the trial court made it clear that, while it did not want to accelerate the Bank’s decline, it also did not want Deloach and DKK to have to repay the creditor from which it obtained the $2.25 million it lent to the Holding Company and also have to repay its secured loan to the Bank, while losing any hope of recovering money from the Holding Company. It asked the parties to attempt to “craft something to help keep the bank afloat and also be fair to DKK about this matter,” noting that if the FDIC took over the Bank, “then Mr. Deloach [was] going to be worse off than anybody out there.” The parties conferred, but when court reconvened they had not reached a settlement, so the trial court continued with the hearing.

At the end of the hearing, the trial court announced that after reviewing the documentary evidence, reading the depositions in the record, and hearing the argument, stipulations, and testimony, it was “not convinced” that anything the court did would jeopardize the bank or affect its imminent decline and granted DKK the relief it requested. Two weeks later, on December 20, 2010, the trial court issued its order granting DKK an equitable set-off of its loan from the Bank against DKK’s loan to the Holding Company.

“[M]utuality of obligation ... is required for a valid set-off.” Brunson v. Bridges, 130 Ga. App. 102, 103 (1) (202 SE2d 553) (1973). “[A] debt due [from] a partnership cannot be set off against a debt due by a third person to one of the firm. The firm and its individual members are different contractors; each is, in the eye of the law, a separate person. The rule is not different in equity.” Metcalf v. Peoples Grocery Co., 24 Ga. App. 663 (a) (101 SE 768) (1920). See Wayne County Bd. of Commrs. v. Reddish, 220 Ga. 262, 264 (138 SE2d 375) (1964). Conversely, in Gormley, 55 Ga. App. 838, we held that a man was entitled to set off his portion of a sum deposited into a subsequently insolvent bank against his debt to the bank, although we reversed the granted set-off because the city court which heard the case had no jurisdiction to grant affirmative equitable relief. Id. at 841-842.

Decided March 23, 2012

Reconsideration denied April 12, 2012

Taylor, English & Duma, William G. Leonard, James A. Bishop, for appellant.

Gilbert, Harrell, Sumerford & Martin, Wallace E. Harrell, James L. Roberts IV, for appellee.

While this court is not unsympathetic to the personal losses resulting from the demise of Oglethorpe Bank and the Holding Company, DKK knew the risks involved when it made the Holding Company loan and cannot now obtain relief unavailable to any other entities who lent money to the Holding Company simply because it borrowed money from the Bank years ago.

For these reasons, we conclude that the trial court erred in granting DKK’s request for a declaratory judgment, directing the Bank to deem DKK’s note to the Bank paid in full, and ordering the superior court clerk to cancel, release, and mark satisfied the deeds securing DKK’s debt to the Bank.

Judgment reversed.

Adams and Blackwell, JJ., concur.

       We will refer to the appellant/defendant throughout the opinion simply as the Bank, recognizing that in the trial court Oglethorpe Bank was the party and in this court it is Bank of the Ozarks.


author: Blackwell, Judge.

text:
    A11A1932.
    THE STATE v. BROWN.
    (726 SE2d 500)
   Blackwell, Judge.

More than six years after he was arrested, Xavios Brown still had not been brought to trial, so he moved to dismiss his indictment, arguing that he had been deprived of his constitutional right to a speedy trial. The court below granted his motion, and the State now appeals. The principles that guide a court in its consideration of whether a delay in bringing an accused to trial works a deprivation of the right to a speedy trial are set out in Barker v. Wingo, 407 U. S. 514 (92 SC 2182, 33 LE2d 101) (1972), and Doggett v. United States, 505 U. S. 647 (112 SC 2686, 120 LE2d 520) (1992), and the State contends that, when the court below considered the delay in bringing Brown to trial, it misapplied these principles and made findings of fact that the record does not sustain. We agree that the court mistakenly found a fact that does not appear from the record, but in this case, that one mistake is no reason for us to conclude that the court below abused its discretion when it found that Brown was deprived of his right to a speedy trial, nor is it a reason for us to remand the case for further proceedings. Consequently, we affirm the judgment below.

Brown was arrested in June 2002 for several crimes, all relating to the alleged molestation of a young boy, and he posted a bond and was released from custody soon thereafter. Nothing much happened for several years, until a Fulton County grand jury indicted Brown in July 2006 on charges of aggravated child molestation and false imprisonment. About five months later, a lawyer entered an appearance for Brown, and Brown demanded discovery of the State. The State apparently did not respond to the discovery demand, and Brown filed a motion to compel discovery in April 2007. The record shows that, within a few days of Brown filing his motion to compel, the State tried to mail some discovery materials to his lawyer, but they were sent to the wrong address. Brown finally was arraigned in November 2008, and at that time, the State finally provided discovery to Brown.

In December 2008, Brown moved to dismiss his indictment, contending that he had been deprived of his constitutional right to a speedy trial. The court below heard argument on the motion to dismiss in March 2009, but during the argument, Brown asked that the motion be set over until a later date, so that he could ascertain whether he could secure evidence of an alibi defense. Brown explained that he still was attempting to obtain his work records from the time of the alleged molestation, which, he said, would show that he was working when the molestation allegedly occurred. Brown said that he did not know whether his employer still had records from so long ago and that the availability of the records would bear upon the extent to which he had been prejudiced by the failure of the State to bring him to trial sooner. The court agreed to continue the hearing on the motion to dismiss.

In July 2010, the court below convened another hearing on the motion to dismiss. At this hearing, the lawyers argued about whether Brown had been deprived of his right to a speedy trial, but no one said anything about whether Brown had, in fact, been able to secure evidence of an alibi from his employer. Brown offered no evidence of actual prejudice as a result of the delay in bringing his case to trial, and the State offered no evidence to show that Brown had not, in fact, been prejudiced by the delay. The court below took the motion to dismiss under advisement, and nine months later, it entered an order granting the motion. In its order, which apparently had been prepared by Brown’s lawyer, the court found that the delay in bringing the case to trial was a lengthy one, that the delay was a result of the “official negligence” of the prosecuting attorneys and the case management system of the court, that Brown timely asserted his right to a speedy trial, that Brown was presumptively prejudiced by the delay, and that Brown was actually prejudiced as well because the delay impaired his ability to assert an alibi defense because “records vital to that defense no longer exist.” The State timely filed a notice of appeal from this judgment. See OCGA § 5-7-1 (a). Whether an accused has been deprived of his right to a speedy trial is committed to the discretion of the trial court, and we review its decision to dismiss an indictment on speedy trial grounds only for an abuse of that discretion. State v. Pickett, 288 Ga. 674, 679 (2) (d) (706 SE2d 561) (2011).

1. The principles that guide a court when it considers whether the delay in bringing an accused to trial amounts to a denial of his right to a speedy trial are set out in Barker and Doggett. Some delay is inevitable, of course, so a court first must consider whether the delay is long enough to raise a presumption of prejudice and to warrant a more searching judicial inquiry into the length, causes, and consequences of the delay. See Doggett, 505 U. S. at 651-652 (II); see also Barker, 407 U. S. at 530-531 (IV); Pickett, 288 Ga. at 675 (2) (a). The right to a speedy trial attaches at the time of arrest or formal accusation or indictment, whichever occurs first, and the courts measure the delay from the time the right attaches. Scandrett v. State, 279 Ga. 632, 633 (1) (a) (619 SE2d 603) (2005). Generally speaking, a delay approaching one year is sufficient in most cases to raise a presumption of prejudice and warrant a more searching inquiry. See Doggett, 505 U. S. at 652 (II), n. 1; but see Barker, 407 U. S. at 530-531 (IV) (“[T]he length of delay that will provoke such an inquiry is necessarily dependent upon the peculiar circumstances of the case.”). In this case, nearly nine years elapsed between the arrest of Brown and the entry of the order dismissing his indictment. This delay raises a presumption of prejudice and clearly warrants a more searching inquiry, and the State does not contend otherwise.

2. When a more searching inquiry is warranted, the United States Supreme Court has explained that a court should consider “whether [the] delay before trial was uncommonly long, whether the government or the criminal defendant is more to blame for that delay, whether, in due course, the defendant asserted his right to a speedy trial, and whether he suffered prejudice as the delay’s result.” Doggett, 505 U. S. at 651 (II); see also Barker, 407 U. S. at 530-533 (IV); Pickett, 288 Ga. at 675 (2) (a). Of these factors, no one is dispositive. Instead, a court must weigh all four factors, along with any other relevant circumstances, in “a difficult and sensitive balancing process.” Barker, 407 U. S. at 533 (IV); see also Pickett, 288 Ga. at 675 (2) (a). We now proceed to examine whether the court below abused its discretion in its consideration and balancing of these factors.

(a) We first consider the finding of the court below that the delay in this case is an uncommonly lengthy one, and its conclusion that the length of the delay weighs heavily against the State. On appeal, the State concedes that the delay is uncommonly lengthy, and it is right to do so. After all, it took more than four years to indict Brown and more than two years to arraign him, and even after he asserted his right to a speedy trial, it took another two-and-a-half years to dispose of his motion to dismiss the indictment. The length of the delay in this case is, we think, extraordinary, and given that “the presumption that pretrial delay has prejudiced the accused intensifies over time,” Doggett, 505 U. S. at 651 (II), we cannot say that the court below abused its discretion when it weighed the length of the delay against the State so heavily.

(b) We next consider the findings of the court below about the reasons for the delay. The court found that the delay in this case is a result of the negligent inaction of the prosecuting attorneys and the negligent case management practices of the court, that the blame for the delay, therefore, lies with the State, and that the reasons for the delay weigh against the State heavily. The State admits on appeal that the court was right to find that the preponderance of delay is attributable to it, but the State argues that the court erred when it failed to acknowledge that some portion of the delay is attributable to Brown and when it weighed the responsibility of the State for the delay heavily. We will address these arguments in turn.

Although the court below did not acknowledge explicitly in its order that Brown is to blame for a part of the delay, neither did it find explicitly that Brown bears no responsibility at all. A small portion of the delay is, in fact, attributable to Brown, namely the delay occasioned by his request to continue the first hearing on his motion to dismiss the indictment. But the continuance accounts for little more than a year of the nearly nine years of delay in this case, and in any event, when Brown asked for a continuance, he explained that he needed only “three to four weeks” to ascertain whether his employer had the work records that he sought to obtain. We see nothing in the record to suggest that Brown ought to be faulted for the failure of the court to set another hearing on his motion for more than 15 months, so we do not think the court was required to even attribute the entirety of the delay between the first hearing and the second to Brown. Consequently, although it might have been better for the court below to address explicitly the portion of the delay attributable to Brown, we cannot say that its failure to do so was an abuse of discretion, especially considering that the portion of the delay properly attributable to Brown is so short and that the blame for the nearly nine years of delay lies so overwhelmingly with the State.

We turn now to the contention that the court below gave too much weight to the reasons for the delay. About the weight to be assigned this factor, the.United States Supreme Court has explained that “different weights should be assigned to different reasons.” Barker, 407 U. S. at 531 (IV). “A deliberate attempt to delay the trial in order to hamper the defense should be weighted heavily against the government,” whereas an unintentional delay, such as that occasioned by the mere negligence of the prosecuting attorneys or the overcrowded docket of the trial court, “should be weighted less heavily.” Id. See also Vermont v. Brillon, 556 U. S. 81, 90 (II) (129 SC 1283, 173 LE2d 231) (2009) . Consistent with these principles, our own Supreme Court has said in several cases that a delay attributable to the mere negligence of the State should, generally speaking, be weighed against the State ‘benignly,” “lightly,” or “minimally.” See, e.g., Pickett, 288 Ga. at 676 (2) (c) (2) (trial court “correctly weighed [unintentional delay] against the State only benignly”); Sweatman v. State, 287 Ga. 872, 875 (4) (700 SE2d 579) (2010) (unintentional delay “is weighed lightly against the State”); Jakupovic v. State, 287 Ga. 205, 207 (1) (b) (695 SE2d 247) (2010) (unintentional delay “weighs minimally’). In this case, the court below made no finding of deliberate delay and instead attributed the delay to the negligence of the prosecuting attorneys and the court, but it nevertheless weighed the reasons for the delay “heavily” against the State. According to the State, this clearly shows that the court below abused its discretion.

We do not think, however, that it is quite that simple. When the courts say that deliberate delays should be weighed “heavily,” and that unintentional delays occasioned by mere negligence should be weighed “lightly,” they are speaking in relative, not absolute, terms. How to weigh the reasons for a particular delay is not just a matter of selecting one of two discrete choices, “heavily” or “lightly.” See State v. Carr, 278 Ga. 124, 126 (598 SE2d 468) (2004) (“Delay caused by State negligence, rather than deliberate action to impair a defense, generally is considered ‘relatively benign.’ ”) (citation omitted; emphasis supplied); Johnson v. State, 268 Ga. 416, 418 (2) (490 SE2d 91) (1997) (same). After all, the United States Supreme Court has said that “the weight we assign to official negligence compounds over time as the presumption of evidentiary prejudice grows,” such that “our toleration of such negligence varies inversely with its protractedness,” Doggett, 505 U. S. at 657 (III) (B), signaling quite clearly that not all negligence is to be weighed equally. In this case, because the court below attributed the delay to the mere negligence of the prosecuting attorneys and the court, it was not entitled to weigh the reasons for the delay against the State as heavily as it might in a case of deliberate delay. It does not follow, however, that the court could not still weigh the reasons for the delay “heavily” against the State, relatively speaking.

This is not a case in which the blame for the delay is split pretty evenly between the State and the accused, and it is not even one in which the accused bears the blame for some significant share of the delay. To the contrary, of the nearly nine years of delay, at least seven-and-a-half years — the six years and nine months from the arrest until the first hearing on the motion to dismiss and the nine months from the second hearing until the entry of the order — seem quite clearly attributable to the State. And as we explained earlier, it is not clear to us that Brown ought to bear the full responsibility for the extended delay between the two hearings. That the delay is so overwhelmingly attributable to the State is a proper basis, we think, for weighing the reasons for the delay against the State more heavily than in a case in which the responsibility for the delay is more evenly divided. See Doggett, 505 U. S. at 651 (II) (considering “whether the government or the criminal defendant is more to blame for [the] delay”). Moreover, the delay occasioned by negligence in this case is extraordinary, and as the United States Supreme Court noted in Doggett, “our toleration of such negligence varies inversely with its protractedness.” 505 U. S. at 657 (III) (B).

For these reasons, the court below was authorized to give substantial weight, we think, to the reasons for the delay, even in the absence of deliberate delay. The court said only that it weighed the reasons for the delay against the State “heavily.” Perhaps the court could have explained more clearly what it meant by this, and perhaps it would have been better if the court had done so. But our job is not to grade the work of the trial court. We must keep in mind that the consideration of the relevant factors is committed to the discretion of the trial courts, and their discretion in this regard is, as our Supreme Court has put it, “substantial.” See State v. Porter, 288 Ga. 524, 533 (2) (e) (705 SE2d 636) (2011). Although the court below could not properly weigh the reasons for the delay in this case as heavily as in a case of deliberate delay, there is no indication that it did so, and we cannot say in the circumstances of this case that it was an abuse of the substantial discretion of the trial court to, relatively speaking, nevertheless weigh the reasons for the delay against the State “heavily.”

(c) We turn now to the finding of the court below that Brown timely asserted his right to a speedy trial. Though the burden of ensuring that an accused is brought to trial promptly is ultimately the burden of the State, “the accused bears some responsibility to invoke the speedy trial right and put the government on notice that he or she . . . would prefer to be tried as soon as possible.” Ruffin v. State, 284 Ga. 52, 62 (2) (b) (iii) (663 SE2d 189) (2008). As our Supreme Court has explained, once the right to a speedy trial accrues, the accused must assert it with reasonable promptness, and “delay in doing so normally will be weighed against him.” Pickett, 288 Ga. at 676 (2) (c) (3). That said, “[t]he accused is not required to demand a speedy trial at the first available opportunity,” Ruffin, 284 Ga. at 62 (2) (b) (iii), only to demand it “in due course.” Doggett, 505 U. S. at 651 (II). To assess whether the accused insisted “in due course” upon his right to a speedy trial “requires a close examination of the procedural history of the case with particular attention to the timing, form, and vigor of the accused’s demands to be tried immediately.” Ruffin, 284 Ga. at 63 (2) (b) (iii).

In this case, Brown did not assert his right until six-and-a-half years after his arrest. Although he was unindicted for much of that time, the accused need not await indictment and instead “can begin demanding that the right to a speedy trial be honored as soon as he or she is arrested.” Ruffin, 284 Ga. at 63 (2) (b) (iii). Consequently, when the accused waits until years after his arrest to assert his right to a speedy trial, the failure of the accused to assert his right sooner ordinarily will weigh against him heavily. Pickett, 288 Ga. at 677 (2) (c) (3). Even so, the Supreme Court has acknowledged that circumstances sufficient to justify a lengthy delay in asserting the right to a speedy trial may appear in some cases, and whether the circumstances mitigate any delay in asserting the right is a question committed to the sound discretion of the trial court. See, e.g., State v. Gleaton, 288 Ga. 373, 376 (703 SE2d 642) (2010); State v. White, 282 Ga. 859, 862 (2) (c) (655 SE2d 575) (2008). Considering the mitigating circumstances that appear in this case, the court below did not abuse its discretion when it concluded that Brown asserted his right to a speedy trial promptly enough.

Brown was not indicted until more than four years after his arrest, and he was free on bond for most of that time. There is no indication in the record that Brown was represented by a lawyer until after he was indicted, and the record shows that, after a lawyer finally appeared, Brown promptly demanded discovery of the State. When it appeared that discovery was not forthcoming, Brown filed a motion to compel discovery, and when the State finally provided discovery, Brown promptly asserted his right to a speedy trial. Our Supreme Court has acknowledged that a failure to assert the right until after indictment sometimes may be mitigated by the fact that the accused was “out on bond and without counsel” until after indictment. See Pickett, 288 Ga. at 676 (2) (c) (3). And our Court has said that, even after indictment, a delay in demanding a speedy trial sometimes may be mitigated by the fact that the accused was insisting in the meantime that the State comply with its obligations to furnish discovery. See State v. Shirley, 311 Ga. App. 141, 146 (3) (c) (714 SE2d 636) (2011). In light of the potentially mitigating circumstances that appear in this case, we conclude that the court below did not abuse its discretion when it found that Brown asserted his right to a speedy trial in due course. See Gleaton, 288 Ga. at 376; White, 282 Ga. at 862 (2) (c).

(d) Last, we consider the question of prejudice. As the United States Supreme Court has explained, actual prejudice “should be assessed in the light of the interests of defendants which the speedy trial right was designed to protect,” namely “to prevent oppressive pretrial incarceration,” “to minimize anxiety and concern of the accused,” and “to limit the possibility that the defense will be impaired.” Barker, 407 U. S. at 532 (IV). See also Doggett, 505 U. S. at 654 (III) (A). Of these interests, an injury to the last is the most serious, “because the inability of a defendant adequately to prepare his case skews the fairness of the entire system.” Barker, 407 U. S. at 532 (IV). That is just the sort of injury that the court below found in this case, finding that Brown was impaired in his assertion of an alibi defense because “records vital to that defense no longer exist.”

The record, however, does not sustain this finding. Although the court below ordered the employer to produce the work records that Brown sought, Brown never reported back to the court whether the employer did so, whether it instead reported that the work records were unavailable, or whether it failed altogether to respond. On the existing record, therefore, the finding of actual prejudice was erroneous. That said, prejudice properly can be presumed in this case, given the extraordinary length of the delay, see Doggett, 505 U. S. at 652 (II) (noting that “the presumption that pretrial delay has prejudiced the accused intensifies over time”), and the State offered no evidence to rebut the presumption of prejudice. The court below, therefore, properly considered presumptive prejudice when it weighed the Barker-Doggett factors.

3. The question that remains for our consideration is whether the decision below must be set aside and the case remanded for further proceedings simply because the finding of actual prejudice was erroneous. We do not think a remand is required in this case. When a question is committed to the sound discretion of the trial court, but the trial court clearly errs in its consideration of the question with respect to a finding of material fact, an appeals court ordinarily must vacate the decision of the trial court and remand. See Pickett, 288 Ga. at 678-680 (2) (d). But even when the trial court has clearly erred in a finding of material fact, its decision can be affirmed on appeal if, putting aside that clear error, “the trial court would still be required, as a matter of law, to exercise its discretion” in the same way as it did. Id. at 679-680 (2) (d). This is one of those unusual cases, we think, in which the court below, even if we remanded for reconsideration, would have no discretion under the law to do anything but grant the motion to dismiss the indictment. The delay in bringing Brown to trial was truly extraordinary, the State having waited more than four years to indict him for a noncapital offense, the State having taken more than two years after indictment to arraign him and provide discovery, and the court below having taken more than two years after the filing of the motion to dismiss to decide the motion. That delay, the court below correctly found, was almost entirely the fault of the State and could be weighed heavily against it. The court found that Brown asserted his right to a speedy trial in due course, a finding that was no abuse of discretion. And although no evidence of actual prejudice appears, a presumption of prejudice has arisen, and the State offered nothing to rebut it. Considering these things, we conclude that Brown was deprived of his right to a speedy trial, and no court reasonably could conclude otherwise. See Doggett, 505 U. S. at 658 (III) (B) (“When the Government’s negligence thus causes delay six times as long as that generally sufficient to trigger judicial review, and when the presumption of prejudice, albeit unspecified, is neither extenuated, as by the defendant’s acquiescence, nor persuasively rebutted, the defendant is entitled to relief.”) (citations omitted). We will not remand for unnecessary, additional proceedings when the outcome is already certain, and for these reasons, we affirm the judgment below.

Judgment affirmed.

Barnes, P. J., and Adams, J., concur.

Decided March 20, 2012

Reconsideration denied April 12, 2012

Paul L. Howard, Jr., District Attorney, Lenny I. Krick, Assistant District Attorney, for appellant.

King, King & Jones, David H. Jones, for appellee.

       The United States Constitution guarantees that, “[i]n all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial,” U. S. Const., Amend. VI, and the Georgia Constitution likewise guarantees that, “[i]n criminal cases, the defendant shall have a public and speedy trial.” Ga. Const., Art. I, Sec. I, Par. XI (a).

       The molestation allegedly occurred in May 2002.

       The record does not reveal exactly when Brown made bond, but he and the State appear to agree that it happened soon after he was arrested. In any event, Brown did not argue below, and he does not argue on appeal, that he was held in custody for a long time following his arrest.

       See OCGA § 16-6-4 (c).

       See OCGA § 16-5-41 (a).

       The case apparently was set for arraignment in September 2006, April 2007, and February 2008, but nothing in the record shows what happened at these proceedings or whether Brown even had notice of the scheduled arraignments.

       The case appeared on a trial calendar for December 2008, but at the call of the calendar, Brown understandably announced that he was not ready for trial, having only received discovery a few days earlier.

       The employer apparently maintained these records in another state, and according to Brown, he had been unable to get any response to a subpoena and needed a court order compelling the production of the records. The court subsequently entered an order, directing either the production of the records or that a representative of the employer appear in court in April 2009.

       The principles set out in Barker and Doggett apply equally to a claimed denial of the right to a speedy trial under the United States Constitution and a claimed denial of the same right under the Georgia Constitution. Redd v. State, 261 Ga. 300, 301, n.1 (404 SE2d 264) (1991). Brown asserts his right to a speedy trial under both the United States and Georgia Constitutions.

       In Doggett, the United States Supreme Court characterized an eight-and-a-half year delay as “extraordinary.” 505 U. S. at 651 (II).

       This principle is addressed, of course, to the reality that some accused might wish to delay his prosecution for as long as possible, or at least for some substantial time:
      Pretrial delay often works to the advantage of the accused, because the government is constitutionally required to prove each element of its case beyond a reasonable doubt. Thus, in the main, the dimming of memories and loss of evidence that inevitably accompany the passage of time tend to help rather than hinder the accused, with the result that delay is not an uncommon defense tactic. Many criminal defendants, particularly when they have been released on bond pending trial, would therefore prefer to drag out the process as long as possible.

        Ruffin v. State, 284 Ga. 52, 62 (2) (b) (iii) (663 SE2d 189) (2008) (punctuation and footnotes omitted).

       We do not mean to suggest that the court below was required in this case to find a timely assertion of the right. See Shirley, 311 Ga. App. at 146 (3) (c). That question was committed to the discretion of the trial court. Pickett, 288 Ga. at 677 (2) (c) (3).

       As to the last interest, the United States Supreme Court has observed that, “[i]f witnesses die or disappear during a delay, the prejudice is obvious. There is also prejudice if defense witnesses are unable to recall accurately events of the distant past.” Barker, 407 U. S. at 532 (IV).

       The court below did not find, and Brown does not urge, that he was subjected to oppressive pretrial incarceration in this case. Moreover, although Brown argues that he has suffered anxiety and concern about his prosecution, no evidence appears in the record on this point, and as our Supreme Court has instructed, it is only “unusual anxiety and concern beyond that which necessarily accompanies serious pending charges” that counts as actual prejudice. Sweatman, 287 Ga. at 875 (6).