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Georgia Court Holds Employer Not Entitled to Share of Injured Employee’s Negligence Settlement

If an employee is injured on the job or in the course of employment, he or she may be entitled to workers’ compensation benefits under Georgia law. But what happens when an employee’s accident or injuries can be attributed to the negligence of someone other than the employer? While workers’ compensation does not preclude the employee from suing such persons, any subsequent award may be subject to “subrogation lien” filed by the employer.

Basically, a subrogation lien protects the employer’s ability to recover any money it paid out in workers’ compensation benefits. Georgia law establishes certain conditions for enforcing subrogation liens. The lien cannot “exceed the actual amount of compensation” paid to the employee, and the employer may not recover unless “the injured employee has been fully and completely compensated” for all “economic and non-economic losses.” It should also be noted if the employee fails to sue the negligent third party within one year, the employer (or its workers’ compensation insurer) may bring such a lawsuit itself.

Best Buy Co. v. McKinney

Georgia courts will not enforce subrogation liens that do not strictly comply with the law. For example, in a recent case the Georgia Court of Appeals rejected an employer’s subrogation lien because it failed to prove the employee had been “fully and completely compensated for his losses.”

The employee in this case was injured when he fell from a forklift at work. The fall caused “several facial bone fractures and brain damage.” The employee was “permanently disfigured” and continues to experience serious “cognitive problems.” Accordingly, the employer paid (and continues to pay) workers’ compensation benefits.

Two years after the accident, the employee sued a product liability claim against the manufacturers of the forklift. As permitted by Georgia law, the employer intervened to protect its potential subrogation lien. The victim and the liability defendants eventually settled for an undisclosed amount.

The employer then moved to enforce its subrogation lien. The employer noted it had paid over $173,000 in workers’ compensation benefits, which an expert witness argued “fully and completely compensated” the employee for his “head injuries.” Neither the trial judge nor the Court of Appeals agreed with this assessment.

The key problem, the Court of Appeals explained, was the employer failed to show what portion of the employee’s settlement was for “economic losses” rather than non-economic losses. This is critical because a subrogation lien may only be enforced against compensation for economic losses, and if the employer cannot identify which is which, the lien is unenforceable. (The settlement itself did not apportion damages between economic and non-economic.)

Additionally, the employer’s expert offered only “speculative” testimony which failed to consider the specific details of the employee’s injuries. Indeed, at trial the expert conceded he never interviewed the victim or reviewed his medical records. The expert merely opined the employee received more through settling his product liability case than a jury would likely have awarded at trial. This was not enough, the appeals court said, to prove the employee had been fully compensated.