Georgia Courts Clarify Burden of Proof for Subrogation Liens in Workers’ Compensation Claims

Under the Workers' Compensation Act (“WCA”), if an employer pays workers' compensation benefits to an employee who was injured while in the course and scope of their employment, and the employee sues a third party for causing the injuries, the employer can intervene in the suit and seek to enforce a subrogation lien against any recovery obtained by the employee from the third party. OCGA § 34–9–11.1(b). The Georgia Court of Appeals recently denied appellant, Best Buy Co.’s, motion to enforce a subrogation lien ruling as speculative certain expert testimony and finding the employer failed to separate economic versus noneconomic losses relating to the appellee’s third party settlement. Best Buy Co., Inc. v. McKinney, WL 5669902 (Ga. App. 2015).

In January 2011, McKinney suffered a traumatic injury after falling off of a forklift during the course of his employment at Best Buy. The injury left him with a permanent facial disfigurement as well as brain damage that causes ongoing cognitive problems. Since the fall, Best Buy has paid, and continues to pay, workers’ compensation benefits. Two years after the injury, McKinney filed a negligence and strict liability suit against several defendants involved in the manufacture and maintenance of the forklift. Pursuant to OCGA § 34–9–11.1(b), Best Buy moved to intervene in the suit to protect their right to a workers’ compensation subrogation lien against McKinney’s possible recovery. The trial court ultimately granted the motion. McKinney reached a settlement with the tort defendants and dismissed his suit against them. Subsequently, Best Buy filed a motion to enforce its lien arguing that it was entitled to an evidentiary hearing due to McKinney being “fully and completely” compensated for his losses relating to the injury.

The trial court granted the motion for an evidentiary hearing, at which, Best Buy presented the testimony of two witnesses. First, Best Buy called the general manager of the store where the injury occurred. She testified that McKinney had received $173,679.49 in workers’ compensation benefits, of which only $10,926.41 were unrelated to medical expenses. Second, Best Buy called a partner from an Atlanta law firm that specialized in litigation and mediation. The lawyer compared McKinney’s settlement with four other head injury cases and testified that McKinney had been comparatively, fully and completely compensated.

A precondition to the enforcement of a subrogation lien is that the employee has been fully and completely compensated for his losses. This may be determined “by comparing the sum of the workers' compensation benefits paid by the employer and the amount of the employee's recovery in a third-party settlement, to all economic and noneconomic losses caused by the injury.” Georgia Elec. Membership Corp. v. Garnto, 597 S.E.2d 527 (Ga. App. 2004). . At the close of evidence at the hearing, the trial court noted that it “wasn’t really impressed” by the expert testimony. The trial court found that the expert did not gather all the essential factual information necessary to complete a valid comparison. In light of these deficiencies, the court held that Best Buy failed to prove that McKinney was fully and completely compensated. The Georgia Court of Appeals affirmed and essentially approved of the analysis the trial court had used.

This decision is important because it reiterates the high bar for employers to effectively recover on a lien against an employee’s third party settlement. Despite the excitement and assurances that “double dipping” had been eliminated when Georgia enacted workers’ compensation subrogation, time has told another story. Enforcement of workers’ compensation liens continues to be at best a challenge and at worst, if not addressed with razor sharp detail as to economic and non-economic losses, a waste of resources.

The attorneys at Buckley Christopher & Haff are available to assist you and your company in ensuring that your employment practices are within the bounds of the law and to represent you if litigation arises. Please contact one of our attorneys for more information.