This is аn appeal from cross-motions for summary judgment in a workers’ compensation subrogation suit brought by Canal Insurance Company c/o O’Steen Adjusting Services, the workers’ compensation insurer, who did not intervene in the employee’s tort suit against Liberty Mutual Insurance Company, the third-party tortfeasor’s insurer, although it was on notice. Liberty Mutual settled the tort suit with the injured employee for a recovery for pain and suffering damages only, and there were substantial economic damages for lost wages and medical expenses remaining uncompensated in excess of the benefits paid by Canal. The trial court denied Canal’s motion and granted Liberty Mutual’s motion, because Canal’s derivative claim was lost when the employee’s suit was dismissed with prejudice. Absent intervention in such tort suit to protect its subrogation right, Canal could never carry its burden to prove that the employee had been fully compensated for his injuries and damages, thus barring any right of subrogation. We affirm.
On July 2,
Although Canal was on notice of the third-party tort action by the employee, Canal chose not to intervene in Wilson’s tort suit. Liberty Mutual was on notice that Canal had a workers’ compensation subrogation lien for the еconomic benefits that Canal had paid. Prior to trial and entry of judgment, Liberty Mutual settled the suit with Wilson for only his noneconomic damages, i.e., his pain and suffering, for $100,000, and Wilson dismissed the suit with prejudice. At the time of settlement, Wilson had special damages of $133,000 of which $40,000 were unreimbursed lost wages. Canal had paid $27,186.16 in medical expenses and $52,650 in disability benefits. Liberty Mutual was of the opinion
Upon learning of Wilson’s settlement, Canal sued Liberty Mutual on the theory that Liberty Mutual failed to honor Canal’s workers’ compensation subrogation lien by settling the case with Wilson, although no one had made any agreement to protect Canal’s subrogation lien.
1. Canal contends that the trial court erred in holding a workers’ compensation insurance carrier must intervene in a claimant’s action to protect and enforce its subrogation lien. We do not agree.
The General Assembly through OCGA § 34-9-11.1 creates a statutory subrogation lien in derogation of common law in the employer or workers’ compensation insurer against any third-party tortfeasor, causing the employee’s injury or recovery. The Act reads in pertinent part:
(b) In the event an employee has a right of action against such other person as contemplated in subsection (a) of this Code section and the employer’s liability under this chapter has been fully or partially paid, then the employer or such employer’s insurer shall have a subrogation lien, not to еxceed the actual amount of compensation paid pursuant to this chapter, against such recovery. The employer or insurer may intervene in any action to protect and enforce such lien. However, the employer’s or insurer’s recovery under this Code section shall be limited to the recovery of the amount of disability benefits, . . . and medical expenses paid under this chapter and shall only be recoverable if the injured employee has been fully and completely compensated, taking into consideration both the benefits received under this chapter and the amount of the recovery in the third-party claim, for all economic and noneconomic losses incurred as a result of the injury.
“[A]ny claim by [the] employer or its insurer asserting subrogation rights against a third-party tortfeasor to the extent of workers’ compensation payments made to [the employee] arises solely by operation of statute.”
Ga. Star Plumbing v. Bowen,
The Act only provides that the employer, insurer, or employee under OCGA §§ 9-11-24 and 34-9-11.1 have the right to intervene in a personal injury action brought by the employee to protect its subrogation rights or by the employer/insurer.
Dept. of Admin. Svcs. v. Brown,
The right of an employer or insurer to seek subrogation under OCGA § 34-9-11.1 is not absolute. Because that right “arises solely by operation of statute,” the insurer must follow the specific procedures set forth in the statute in order to protect its subrogation lien. The statute provides that an insurer “may intervene” in a lawsuit by the injured emplоyee against a third-party tort-feasor to “protect and enforce” its subrogation lien against the tort recovery. If the injured employee does not sue the third-party tort-feasor within one year of the date of injury, then the insurer may “assert the employee’s cause of action in tort, either in its own name or in the name of the employee.” In either case, the insurer’s right of action against a third party is derivative of the injured employee’s claim; the insurer has no right to pursue its own independent action against the third party.
(Punctuation and footnotes omitted.)
Anthem Cas. Ins. Co. v. Murray,
Where the employee settled a lawsuit and released the third-party tortfeasor prior to recеiving any workers’ compensation payments, which gave rise to a subrogation lien, the settlement and release extinguished any and all future subrogation rights later asserted by the employer or its insurer; notice of a pending workers’ compensation claim by the tortfeasor did not give rise to a possible future subrogation lien where no payments had been made at the time of settlement.
Ga. Star Plumbing v. Bowen,
suрra at 381-382. However, where the employee received benefits but settled his personal injury claim against a tortfeasor without filing suit and where the tortfeasor had no knowledge of the workers’ compensation subrogation lien, the employer or insurer had no claim against the tortfeasor by way of a subrogation action, but the subrogation lien would attach to the recovery by settlеment.
Rowland v. Dept. of Admin. Svcs.,
However, in
Rowland v. Dept, of Admin. Svcs.,
supra at 902, language not necessary to the holding in such case said: “[a]s a matter of general law, where the wrongdoer settles with the insured without the consent of the insurer with the knowledge of the insurer’s payment and right of subrogation, such right is not defeated by the settlement.” (Punctuation and emphasis omitted.) See
Anthem Cas. Ins. Co. v. Murray,
supra at 782-783. Such general law came, not from workers’ compensation law, but from insurance policy subrogation applicable to collision coverage and relied upon
Vigilant Ins. Co. v. Bowman,
Further, relied upon by Canal, in
The General Assembly required that the subrogation lien be asserted, perfected, and satisfied in whole or in part in the trial court, because the trial court had to determine if the employee had been made whole. Even when the lien is asserted against the recovery, this must be done in the trial court. The trial court and not a jury must determine if the employee has been fully and completely compensated by workers’ compensation benefits and by a recovery from a third-party tortfeasor.
Liberty Mut. Ins. Co. v. Johnson,
Without such a special verdict form, [trial and] apрellate courts could not determine what portions of the award the jury applied toward economic and noneconomic losses, and, as a result, it would be impossible to determine whether [an employee] had been fully compensated for his losses. The outcome in many such situations would be that a workers’ compensation subrogation lien could not be enforcеd. It is the responsibility of the workers’ compensation provider to protect its interest by intervention and special verdict requests.
(Citation omitted.)
North Bros. Co. v. Thomas,
supra at 841. However, either by the agreement of the parties or by waiver in failing to timely object, the trial court can submit the issue of full and complete compensation to the jury to render an advisory finding of fact. See generally
Hammond v. Lee,
supra;
Homebuilders Assn. of Ga. v. Morris,
2. Canal contends that the trial court erred in interpreting the term “fully and
The General Assembly, in creating for the first time the right of subrogation of workers’ compensation benefits in the employer or its insurer of the employee’s tort action against a third-party tortfeasor, imposed conditions precedent to such subrogation right:
the employer’s or insurer’s recovery under this Code section shall be limited to the recovery of the amount of disability benefits, death benefits, and medical expenses paid under this chapter and shall only be recoverablе if the injured employee has been fully and completely compensated, taking into consideration both the benefits received under this chapter and the amount of the recovery in the third-party claim, for all economic and noneconomic losses incurred as a result of the injury.
(Emphasis supplied.) OCGA § 34-9-11.1 (b). “[A] primary legislative
concern was that the injured employee first be madе whole.”
Bartow County Bd. of Ed. v. Ray,
supra at 335; accord
Powell v. Daniels Constr. & Demolition,
In an analogous area of interpretation of subrogation rights and the meaning of full and complete compensation, the Supreme Court of Georgia has held in regard to the insurer’s subrogation rights under an insurancе policy that such rights as a matter of public policy are subordinate to the insured’s paramount right to complete compensation for his losses prior to any subrogation.
[W]e conclude that Georgia public policy strongly supports the rule that an insurer may not obtain reimbursement unless and until its insured has been completely compensated for his losses. Indeed, Georgia publiс policy encourages insurance coverage which assures no less than full compensation to the insured, while at the same time preventing the insured from recovering more than is necessary to make him whole. Furthermore, Georgia law has long recognized that subrogation, a doctrine originating in equity, is founded upon the dictates of refined justice. Its basis is the doing of complete, essential, and perfect justice between all the parties, without regard to form, and its object is the prevention of injustice. These considerations of public policy and equitable principles of subrogation are so strong that some jurisdictions declare that any insurance policy provision which modifies the complete compensation rule is unenforceable аnd void.
(Citations and punctuation omitted.)
Duncan v. Integon Gen. Ins. Corp.,
The trial court alone must determine if the employee has been fully and completely compensated; neither party has a right to a jury determination of whether the injured employee has been fully and
completely compensated under subsection (b).
Liberty Mut. Ins. Co. v. Johnson,
supra at 340 (2); see also
Anthem Cas. Ins. Co. v. Murray,
supra at 780-781 (1). Thus, unless clearly erronеous, this Court must defer to the trial court’s determination of this factual determination.
Hartford Ins. Co. v. Fed. Express Corp.,
Neither the employer nor the insurer can assert a subrogation lien against noneconomic damages, i.e., pain and suffering, where, under the Act, no noneconomic benefits were paid. Hammond v. Lee, supra at 868; North Bros. Co. v. Thomas, supra at 841. Where prior weekly lost wages exceeded the amount paid weekly for disability, the insurer was not entitled to a subrogation lien, because the employee had not been fully compensated by the recovery. Hammond v. Lee, supra at 867 (1).
Where the special verdict specified a certain amount for medical expenses and another sum certain for pain and suffering and there was no evidencе that the employee’s medical expenses exceeded such sum, the employer could enforce the subrogation lien against the medical award up to the limit of its medical subrogation lien but could not enforce the lien against the noneconomic pain and suffering award. North Bros. Co. v. Thomas, supra at 841-842. Thus, where the recovery for medical expenses was more than sufficient to fully and completely compensate for all medical expenses incurred as a result of the injury, i.e., medical expenses paid by the insurer, by the employee, and for unpaid expenses, the insurer was entitled to a subrogation lien against the medical recovery up to the total of its lien. Hammond v. Lee, supra at 868 (2).
Here, in this case, Canal did not intervene or otherwise seek to protect in court its derivаtive subrogation right, and there is no evidence that Wilson’s recovery by settlement with the tortfeasor consisted of anything other than noneconomic damages, to which Canal could not assert a subrogation lien. Unlike
Anthem Cas. Ins. Co. v.
Murray,
supra at 780-781, where the evidence allowed the trial court to determine full compensation from the employee’s own briefs and suits, Canal’s inaction made it impossible for Canal to carry the burden of proof so that the trial court could determine if Wilson had been fully and completely compensated for all his economic and noneconomic losses. Therefore, Canal, by its inaction, made it impossible to prove that Wilson had been fully and completely compensated.
North Bros. Co. v. Thomas,
supra at 841. Thus, summary judgment against Canal and for Liberty Mutual was appropriate.
Lau’s Corp. v. Haskins,
Judgment affirmed.