In Austell Healthcare, Inc. v. Scott, the Georgia Court of Appeals stood by the employer/insurer’s heavy burden of establishing that an injured employee has been
In Austell Healthcare, Inc. v. Scott, the Georgia Court of Appeals stood by the employer/insurer’s heavy burden of establishing that an injured employee has been fully and completely compensated under O.C.G.A. § 34-9-11.1. 2011 Ga. App. LEXIS 193 (March 11, 2011). Comparing lump sum settlements to general verdict forms, the Court of Appeals held that a lump sum settlement alone is insufficient on the issue of whether an employee has been fully and completely compensated and thus, absent other evidence to the contrary, an employer’s subrogation lien will not be enforced.
Dan Scott was injured in an automobile accident that occurred within the course and scope of his employment. As a result, he received workers’ compensation benefits from his employer, Austell HealthCare. Scott subsequently filed a personal injury suit against several parties he claimed were responsible for his injuries. When Scott filed suit, Austell HealthCare and its insurer, Travelers Indemnity (“Travelers”) had a $59, 030.02 subrogation lien for disability benefits and medical expenses paid to Scott for his work-related injury. Austell HealthCare and Travelers were allowed to intervene in Scott’s tort action as the employer/insurer; however, the trial court prohibited them from participating in discovery. Id. at *1-*2.
Ultimately, Scott settled his claim against the alleged tortfeasors for $76,000.00. Scott then filed a motion to quash the employer/insurer’s subrogation lien. Scott argued that he had not been fully and completely compensated by the settlement and thus, the lien should be extinguished. In support of his motion to quash, Scott showed that he had undergone two shoulder surgeries and that he was permanently partially disabled as a result of the accident. Moreover, Scott argued that the disability benefits he received while he was totally disabled immediately preceding the accident were significantly less than his pre-injury salary. Thus, the $76,000 he received to settle his tort suit did not amount to “past and future indemnity losses coupled with past and future medical expenses.” Id. at *2-*3. Persuaded by Scott’s argument, the trial court ordered that the subrogation lien be extinguished, and the employer/insurer appealed. Id.
Subrogation is the substitution of one person in the place of another with reference to a lawful claim or right. Lindsey v. Samoluk, 135 Ga. App. 852, 219 S.E.2d 464 (1975). In the workers’ compensation realm, subrogation is the substitution of the employer/insurer in the place of an employee with reference to the employee’s tort claim recovery against a third party tortfeasor for injuries suffered by the employee within the course and scope of employment. Subrogation under Georgia’s workers’ compensation law is governed by O.C.G.A. § 34-9-11.1. Pursuant to O.C.G.A. § 34-9-11.1, the employer/insurer have a subrogation lien, up to the amount of benefits paid, against any recovery by the injured employee. The lien only applies to the payment of disability benefits, death benefits, and medical expenses paid under Georgia’s workers’ compensation laws. To protect and enforce a subrogation lien, the employer/insurer have the right to intervene in any lawsuit brought by an injured employee against a third party. Anthem Casualty Ins. Co. v. Murray, 246 Ga. App. 778, 779, 542 S.E.2d 171 (2000). However, a subrogation lien is enforceable only if the injured employee has been “fully and completely compensated,” taking into consideration the workers’ compensation benefits received and the amount of recovery in the employee’s claim against a tortfeasor for all economic and non-economic losses incurred as a result of the injury. Anthem Casualty Ins. Co. v. Murray, 246 Ga. App. at 779 (citing O.C.G.A. § 34-9-11.1).
The employer/insurer bear the burden of proving that an injured employee has been fully and completely compensated either through a jury award or through settlement agreement. City of Warner Robbins v. Baker, 255 Ga. App. 601, 604, 565 S.E.2d 919 (2002). This has proved to be a heavy burden, with little guidance from Georgia statute, because no presumption of full and complete compensation arises when an award or settlement agreement exceeds the amount of workers’ compensation benefits received or the amount of economic damages proven, as was the case in Austell Healthcare. See Bartow Co. Bd. of Educ. v. Ray, 229 Ga. App. 333, 335, 494 S.E.2d 29 (1997). Moreover, there is no presumption that workers’ compensation benefits paid to an injured employee equal the employee’s economic losses. Ga. Electric Membership Corp. v. Garnto, 266 Ga. App. 452, 454-55, 597 S.E.2d 527 (2004). Instead, an employer/insurer must show that an employee has been fully and completely compensated as to each category of damages and that no portion of the subrogation lien is taken against recovery for the employee’s non-economic losses, such as an employee’s recovery for pain and suffering. Id. Whether an employee has been fully and completely compensated is a question of law to be determined by the trial court. Canal Insurance Co. v. Liberty Mutual Ins. Co., 256 Ga. App. 866, 870, 570 S.E.2d 60 (2002).
In cases where an injured employee’s tort claim is submitted to a jury, Georgia courts have repeatedly held that a general verdict which awards more than the amount of economic loss and less than the amount of non-economic loss alleged is inadequate to establish full and complete compensation because of the impossibility of determining what portion of the award the jury meant to apply to the employee’s economic damages. As a solution to the problem thus presented, Georgia courts have made clear that utilization of a special verdict form is required. Canal Insurance Co., 256 Ga. App. at 870; Bartow Co. Bd. of Educ. v. Ray, 229 Ga. App. 333, 335, 494 S.E.2d 29 (1997).
A similar situation arises in the context of a settlement agreement between an injured employee and an alleged tortfeasor. Applying the proposition that a court cannot determine from a general verdict form what portion of an award was meant to compensate for economic loss, the Georgia Court of Appeals affirmed inAustell HealthCare v. Scott the principle that a court cannot determine from lump sum settlement documents what portion of the settlement amount was meant to compensate for economic losses and what portion was to compensate for non-economic losses. 2011 Ga. App. LEXIS 193, *5 (citing City of Warner Robbins, 255 Ga. App. at 604). Because Scott and the alleged tortfeasors in Austell HealthCare reached a lump sum settlement agreement and because the employer/insurer presented no other evidence that Scott had been fully and completely compensated, the Court of Appeals affirmed the trial court’s grant of Scott’s motion to quash the subrogation lien. Noting that the trial court’s language mirrored the holding in City of Warner Robbins, the Court of Appeals found unavailing the employer/insurer’s argument that use of “cannot” in the trial court’s order extinguishing the lien was reversible error.
Beneficial to employers/insurers, the Court of Appeals also affirmed a prior holding that an intervener “may choose discovery tactics different than those of a plaintiff.” 2011 Ga. App. LEXIS 193, *7 (citing Intl. Maintenance Corp. v. Inland Paper Board & Packing, 256 Ga. App. 752, 754, 569 S.E.2d 865 (2002)). The Court of Appeals held that although the employer/insurer should have been afforded the opportunity to participate in discovery, no pertinent evidence regarding Scott’s damages was presented at the hearing on Scott’s motion to quash that had not been produced during discovery. Thus, the trial court’s actions, prohibiting the employer/insurer from participating in discovery, did not constitute reversible error.
In light of Austell HealthCare, it is clear that when an employee agrees to a lump sum settlement and the employer/insurer presents no other evidence demonstrating that the employee has been fully and completed compensated, an employer/insurer’s subrogation lien will not be enforced. Because lump sum settlements alone will not establish that an injured employee has been fully and completely compensated, an employer/insurer should actively engage in discovery and gather evidence of full and complete compensation in cases with a likelihood of settlement. Such evidence may include evidence that the employee did not suffer significant injuries, evidence that the employee has minimal future medical expenses, or evidence that the employee is exaggerating the extent of his pain or his need for medical treatment. Moreover, an employer/insurer should attempt to itemize within the settlement agreement both the economic and noneconomic damages paid by the alleged tortfeasor.