Key Points

  • MagMutual's policy unambiguously required it to pay post-judgment interest on the part of the judgment within its limits, separate from and in addition to the $3 million limits.
  • A judgment creditor may recover that interest in a direct action against the insurer, because insurance "proceeds" means the total amount due under the policy, not only the limits.
  • The estate's claim for time-value-of-money damages from the delayed payment is in substance a bad-faith claim under OCGA § 33-4-6, which only the insured may bring, and must be dismissed.
  • The estate's claim for attorney fees under OCGA § 13-6-11 may proceed because the complaint alleged more than a mere failure to pay a debt.

The Georgia Court of Appeals ruled Tuesday that Mag Mutual Insurance Company must pay post-judgment interest on top of the $3 million in policy limits it paid toward a $15 million medical malpractice verdict over a patient's death after prostate surgery.

The three-judge panel affirmed in part and reversed in part a trial court ruling for the Estate of James S. Tapley, which won the verdict and then sued MagMutual directly, alleging that the insurer "slow paid" its limits. Judge Davis wrote for the court, and Doyle, P. J., and Whitaker, J., concurred. The panel reversed in one respect, holding that the estate cannot recover separate damages for the "time-value of money" it lost while MagMutual delayed payment.

The decision allows a judgment creditor, an injured party holding an unpaid judgment against an insured defendant, to sue the insurer for interest that the policy promises outside its limits, even after the insurer has paid the full limits. It also holds that a claim under Georgia's insurance bad-faith statute may be made only by the insured, not a judgment creditor.

The case arose from a November 16, 2016, operation that Brian Geary performed on Tapley. Tapley's bladder was perforated during the surgery, Geary tried to drain the fluid instead of repairing the perforation, and Tapley died about 30 hours later. A jury awarded the estate $15 million, and the Court of Appeals affirmed the verdict in 2024 against Geary and his practice, Urology Specialists of Georgia, P.C.

MagMutual's policy covered the doctor for $2 million and the practice for $1 million. A "Strong Defense" provision opened with the statement, "We will pay all expenses and costs we incur defending you in a covered claim. None of these payments will reduce your limits of liability." Among those payments was "[p]ost judgment interest accruing by law on that part of the judgment that does not exceed your limits of liability and before we have deposited our portion of the judgment into the court."

MagMutual paid the estate $3 million on June 6, 2025, three months after the Georgia Supreme Court denied review of the malpractice appeal, but paid nothing for post-judgment interest. The estate sued for the interest, for damages caused by the late payment, and for attorney fees under OCGA § 13-6-11, which lets a jury award litigation expenses when a defendant has acted in bad faith, has been stubbornly litigious, or has caused unnecessary trouble and expense.

MagMutual moved to dismiss, arguing that the estate lacked standing because the limits had been paid, that the policy did not provide for the interest, and that a bona fide controversy barred fees. The trial court denied the motion and granted the estate partial summary judgment on liability for the interest.

The panel agreed with the trial court that "the insurance contract unambiguously provided that MagMutual would pay for post-judgment interest on the amount of the judgment within the normal policy limits and that such payment of post-judgment interest would be separate from the $3,000,000 policy limit." Davis noted that the policy listed the interest among the costs of defending the insured, apart from items that would count toward the limit, such as punitive damages and prejudgment interest.

MagMutual also argued that a defense cost cannot be recovered in a judgment creditor's direct action. Georgia law generally bars an injured party from suing a wrongdoer's insurer, but a party holding an unsatisfied judgment may sue the insurer to satisfy the judgment from the available insurance "proceeds." MagMutual contended that "proceeds" means only the policy limits.

The panel rejected that reading. Relying on a dictionary, Davis wrote that the word as used in Georgia case law "refers to the total amount due to be paid under an insurance policy, which, depending on the situation, is not necessarily equivalent to the amount of the policy limits." Davis added that "while the insurance policy here refers to post-judgment interest as a cost of defending the insured, it is nevertheless a cost that is to be paid to the judgment creditor."

The estate's claim for damages "equal to the time-value of money" failed. The court held that "the Estate is essentially presenting a bad faith claim under OCGA § 33-4-6," which allows penalties when an insurer fails to pay a covered loss within 60 days of a demand and the refusal is found to be in bad faith. Under the court's precedents, those penalties are the exclusive remedy for an insurer's bad-faith refusal to pay.

Davis wrote that "a claim under that statute may only be made by the insured, not a judgment creditor, and, indeed, such a claim cannot be assigned to a judgment creditor even after a judgment has been obtained against the insured." The panel distinguished Merritt v. State Farm, a 2000 decision the estate had cited, which noted that a plaintiff could claim damages for delay caused by an insurer's fraud and misrepresentation in failing to disclose the proper policy limit when negotiating a settlement. Merritt "did not involve a direct action by a judgment creditor against the insurer merely seeking to claim the amount due under a judgment," Davis wrote.

The attorney fee claim survived. The estate alleged that MagMutual refused "multiple opportunities to settle the Underlying Lawsuit within the Policy limits" and offered "no justification" for waiting to pay. MagMutual called that a mere failure to pay a debt. "Because the Estate alleged that MagMutual did more than just fail to pay a debt, MagMutual has not shown that the trial court erred by allowing the attorney fees claim to proceed," Davis wrote.

The court's judgment, affirmed in part and reversed in part, leaves the interest ruling and the fee claim in place and reverses the trial court's refusal to dismiss the time-value damages claim. A footnote reports that, according to the estate's complaint, Geary and Urology Specialists have separately sued MagMutual for bad faith. Under the court's rules, a motion for reconsideration must be received by 4:30 p.m. on the 10th day after the decision.