Written by Joseph T. Brasher


Official Code of Georgia Annotated §34-9-11.1 provides a statutory right of recovery on behalf of an employer and/or insurer that pays workers’ compensation benefits due to an injury caused by a third-party tort feasor. In the event that the employee is participating in the litigation against the third party defendant, the employer’s ability to recover its subrogation lien interest is conditioned upon the employee being fully and completely compensated for all economic and non-economic loss, taking into account the benefits received under the Workers’ Compensation Act, as well as the amount of recovery from the third party.

What follows is a practical guide to representing subrogation lien holders and tips regarding maximizing subrogation lien recovery as the personal injury case goes to trial.


This text will focus on issues which generally arise after a third party claim has been initiated by the employer or employee/plaintiff against the third party. Please bear in mind that, under the decision of Rowland v. Department of Administrative Services, 219 Ga. App. 899, 466 S.E.2d 923 (1996), it is essential that an employer claiming a subrogation lien interest place the plaintiff, defendant and liability insurer on notice of the subrogation claim as early as possible.

Special consideration should also be given to the procedural vehicle utilized by the employer to participate in any third party claim involving the claimant/plaintiff. Under the recent decision of Georgia Electric Membership Corporation v. Hi-Ranger, 275 Ga. 197, 563 S.E.2d 841 (2002), the Georgia Supreme Court, answering a certified question from the Eleventh Circuit Court of Appeals, found that an employer participating as a plaintiff under subsection (c) of the subrogation statute has independent rights against the third party defendant. An employer’s rights against the defendant as a plaintiff or co-plaintiff should be contrasted with the limited rights that an employer has against the defendant if the employer is participating as an intervenor under subsection (b) of the subrogation statute.


The subrogation statue provides that the ability to bring a claim against the third party defendant rests solely with the employee during the first year following the accident. However, upon the one (1) year anniversary of the date of accident, there is a partial assignment of the cause of action by operation of law to the employer. During the period between the first anniversary of the date of accident and the expiration of the statute of limitations (the second anniversary of the date of accident) both the employer and employee have the right to prosecute an action against a the responsible third-party tort feasor. Note that damages recoverable by the employer are limited to medical, indemnity, and death benefits paid under the Workers’ Compensation Act.

If an employee files suit against the responsible third party during the first year following the accident (before the one (1) year anniversary), then the employer has no other choice but to intervene in the action under O.C.G.A. §34-9-11.1(b).

However, if the employee has taken no action to assert a claim during the first year, the employer may file an action against the responsible third party defendant asserting the cause of action in the employer’s name. This is loosely referred to as a “direct action.”

Under the Hi Ranger decision, it is always preferable for an employer to file a direct action. Claims should be diaried by defense counsel for the one (1) year anniversary date. If no action has been taken to commence an action against the third party defendant, counsel representing the employer’s subrogation lien interest should file suit on the 366th day following the date of accident. This will allow the employer to assert independent rights against the responsible third party.

Two recent Court of Appeals decisions, Canal Insurance Co v. Liberty Mutual Insurance, 2002 W.L. 176522 (Ga. App. 2002) and International Maintenance Corp. V. Inland Paperboard and Packaging, Inc., 2002 W.L. 175397 (Ga. App. 2002), hold that an employer participating in the third party litigation as an intervenor under subsection (b) is completely derivative through the claim asserted by the employee. In the event that the employee decides to settle, these recent cases hold that the plaintiff can settle his or her claim against the defendant at any time, for any amount. If the employer is a mere intervenor, the employer has no claim against the released defendant. The employer is then relegated to attempting to affect a recovery against the settlement proceeds then held by the plaintiff. When a plaintiff reaches a compromised settlement, which, by its very nature will entail less than the total amount of economic and non-economic damages claimed, it is very difficult for an employer to demonstrate full compensation as a pre-requisite for recovery.

The same would not be true if the employer had asserted a direct action under subsection (c). In that case, under the Hi-Ranger decision, if the plaintiff chooses to settle with the defendant, then, irrespective of any release granted by the plaintiff, the employer would have continuing rights against the defendant following the defendant’s settlement with the plaintiff. In fact, if an employer has filed a direct action, and, for what ever reason, the plaintiff is no longer participating in the litigation, the employer is relieved of its obligation to demonstrate full compensation. GEMC v. Hi-Ranger, 563 S.E2d 841 at 843 (Ga. 2002).

Always try and name the employer (rather than the insurer) as the lien holder. In the event a jury hears the subrogation issue, the jury may be more sympathetic to an employer than an insurance company.


Whether an employer is participating as an intervenor or a plaintiff, special consideration should be given to the following issues.


In order to save the cost of participating in a third-party claim (particularly time intensive litigation such as products liability or medical malpractice) it is often advisable, depending on the facts of the case, to enter into a reimbursement agreement with the plaintiff and forego participation in the third-party litigation. This has an obvious savings of attorneys’ fees and expenses. Such an agreement also serves to manage the risk associated with subrogation recovery (such as the full compensation doctrine).

When using a reimbursement agreement of this type, be sure to expressly state that there will be a sharing of litigation expenses, or that the total amount of the subrogation lien will be a net payment without allocation for expenses, loss of consortium, attorneys’ fees, etc.

Some of the most effective leverage used to persuade a plaintiff to enter into a reimbursement agreement can be exerted at the Pre-Trial Order stage by the employer’s demand to submit verdict forms, jury charges, and an allocation of the plaintiff’s jury challenges to the employer. Many of the recommendations regarding pre-trial tactics to maximize subrogation lien recovery have not been tested before the appellate courts. The subrogation statute, as drafted, is replete with opportunities for novel arguments to be made in good faith regarding collateral source implications. In order to avoid protracted appeals (and the inevitable escrowed settlement or judgment proceeds) plaintiff/claimants will often enter into reimbursement agreements that allow an employer to maximize its subrogation lien recovery.


In the event that it is not feasible to manage recovery of the subrogation lien by a reimbursement agreement, I have found it helpful to ask that all parties provide copies of discovery and deposition notices to me as counsel for the employer. I generally advise my clients that it is helpful to attend the plaintiff’s and defendant’s (or Rule 30 (b)(6) representative) deposition. Sometimes a request to be allowed to participate in crucial medical depositions can persuade a plaintiff to consider a reimbursement agreement. Most plaintiff’s attorneys would not relish the idea of an attorney representing the employer participating in a doctor’s evidentiary deposition.


Attached as Appendix D is a outline of an intervenor’s portion of a pre-trial order to be submitted in third-party claims. Please bear in mind that this pre-trial order merely gives some suggestions for an attorney representing an employer regarding a subrogation claim. This pre-trial order is not applicable to all cases, and counsel for an employer should give thoughtful attention to the specifics of the pre-trial order before it is submitted to the trial court. Make certain that you have addressed the special interrogatory verdict form issue. The Court of Appeal has ruled that special interrogatory verdict forms are necessary in order to determine what portion of the jury’s award are being allocated to economic and non-economic damages. See Bartow County Board of Education v. Ray, 229 Ga. App. 333, 497 S.E.2d 29 (1997).


If the trial judge allows the workers’ compensation lien holder to participate at trial (discussed below), please make sure that you bring jury charges from the statute and interpreting case law that will give a jury some guidance on the issue of full compensation, as well as allocation of damages between economic and non-economic losses.


In the decision of North Brothers v. Thomas, 236 Ga. App 839, 513 S.E.2d 251 (1999), the Court of Appeals found that a plaintiff may be made whole, in regard to medical bills, if all of the bills submitted at trial have been paid by the workers’ compensation carrier and there are no outstanding medical bills. In North Brothers, the Court of Appeals upheld the trial court’s entry of a judgment allowing recovery of medical expenses paid, in that the medical expenses paid by the employer were the only expenses incurred in treatment of the underlying injuries. The jury in North Brothers awarded $25,000.00 for medical expenses using a special verdict form. The jury also awarded $25,000.00 for pain and suffering. The Court of Appeals found that the employer did not have a claim against damages awarded for pain and suffering.

However, because the employer had paid $60,000.00 in medical expenses, and there was no evidence of any outstanding, unpaid medical expenses, the trial court’s decision that the employee had been fully compensated for his medical expenses was affirmed on appeal.

Often, a plaintiff’s attorney will attempt to ensure that a plaintiff has as least some medical bills which were not paid (or even submitted) to the employer for payment in the underlying workers’ compensation claim.

As a case is prepared for trial, make sure you have a complete copy of all medical bills and compare that to the pay details generated by the employer or the insurer/third party administrator. If there are no additional medicals beyond those medicals paid as a result of the workers’ compensation claim, be sure to include the appropriate language in the pre-trial order (and submit a special interrogatory jury verdict form) to address those medical expenses and reimbursement of those medical expenses by the judge or jury.


In Liberty Mutual v. Johnson, 244 Ga. App. 338, 535 S.E.2d 511 (2000), the Court of Appeals upheld the trial court’s decision that there is no right to a jury trial on the issue of full compensation. I argue that this case is limited in its scope of application to cases where the plaintiff and defendant have settled and fixed the total amount of the employee’s recovery from the third party. Please note when a case is proceeding to trial on the issues of liability and damages, I contend that the Liberty Mutual v. Johnson case does not apply. Johnson is limited by its facts to cases where the amount of the third-party recovery has been pre-determined. In the event that a case proceeds to jury trial and a jury must award damages that are sufficient to fully compensate the plaintiff, I argue that due process and equal protection require that the employer be allowed to present evidence regarding the subrogation lien in the liability and damage phase of the trial. A jury must fully compensate the plaintiff before the lien interest can be recovered. I argue that traditional notions of fundamental fairness require that a jury, charged with entering an award sufficient to fully compensate the plaintiff, must be aware of the subrogation lien interest before rendering a verdict.

Trial judges across Georgia are divided on the issue of whether a employer should be allowed to present evidence regarding the subrogation lien at trial. In my experience, some judges have invoked the collateral source rule to prevent the employer from presenting evidence of a subrogation lien at the liability/damage phase. Many judges opt to allow a bifurcated proceeding, addressing the subrogation lien issue after the jury has rendered its verdict. I take issue with this approach in that the collateral source rule is designed to prevent a wrong-doer from taking advantage of payments made by a collateral source. In the case of a subrogation lien recovery, the defendant would not be taking an improper credit for the amount of workers’ compensation benefits paid; rather, knowledge of the lien would empower the jury to require the defendant to reimburse the employer the workers’ compensation benefits paid to the employee. This would have the opposite result of allowing a defendant to profit from payment of workers’ compensation benefits by the employer.


What happens in the event that the plaintiff settles with the defendant and the employer is participating as an intervenor? Typically, a plaintiff will file a motion to avoid the subrogation lien citing the failure of the third party recovery to completely compensate the plaintiff. While there is no independent right to a jury trial in this circumstance, it has been my experience that trial judges will, upon request by the subrogated employer, set the matter for a evidentiary hearing. The trial court will then take evidence regarding full compensation. These proceedings invariably will focus on testimony, not only from the plaintiff, but also from both vocational and economic experts as to the amount of the plaintiff’s damages, his ability to earn in the future, and the amount of economic benefit which the plaintiff can expect if workers’ compensation benefits are continuing under the Act. This is particularly true in catastrophic cases.

While the Georgia Star Plumbing v. Bowen, 225 Ga. App. 379, 484 S.E.2d 26 (1997) case provides that an employer cannot increase the amount of its subrogation lien interest by projecting future workers’ compensation payments, I argue that an employer can introduce evidence at the evidentiary hearing regarding a plaintiff’s continued entitlement to workers’ compensation benefits. This is true because the statute provides that the trier of fact must take into account the plaintiff’s economic and non-economic damages balanced against the amount recovered from the third party and benefits paid under the Workers’ Compensation Act. While the subrogation lien amount is limited to the amount of benefits paid on the date of the subrogation lien recovery (if any), I argue that a trial judge must take into account the economic value of future workers’ compensation benefits in order to properly apply the statute.

For an example of what not to do at an evidentiary hearing when relying on expert testimony, please see CGU Insurance Company v. Sable Industries, 225 Ga. App. 236, 564 S.E.2d 836 (2002).


An employer’s advocate attempting to obtain a subrogation recovery must be as aggressive as the facts and procedural posture will allow. However, it is important to recognize that the most valuable subrogation dollar recovered is the one that is never spent in the underlying workers’ compensation claim. Often an employer’s most efficient means of maximizing a subrogation lien interest is by agreeing to waive (or receive a reduced recovery of) the subrogation lien in conjunction with settlement of the underlying workers’ compensation claim. From the vantage of a cost benefit analysis, it is often more lucrative for an employer to agree to waive the subrogation lien in exchange for a reduction of new money which will be paid in lump sum to settle the underlying workers’ compensation claim. This is especially true in light of the inherent risks associated with participating in the litigation as an intervenor, and the difficult task of demonstrating full compensation. Keep in mind that the employer bears the burden of demonstrating full compensation. Bartow County v. Ray, 229 Ga. App. 333, 494 S.E.2d 29 (1997); Liberty Mutual Ins. Co. V. Johnson, 244 Ga. App. 338, 535 S.E.2d 511 (2000).

Be wary, as an advocate representing an employer, of the ethical implications which arise as a result of the interplay between bartering subrogation recovery for settlement of a workers’ compensation claim for a reduced amount. If an advocate accepts a subrogation claim on a contingent fee basis, and it becomes clear that the employer’s best interests would be served by a waiver of the subrogation lien, the subrogation advocate will be required to place his client’s interest before his financial interests (which typically results in free work being performed by the advocate).


I hope you find these practical tips valuable when representing employers in a subrogation context. Remember the importance of initiating a direct action under subsection (c) of the statute, whenever possible. Review the attached statute, checklist, reimbursement agreement, and pre-trial order carefully. When reviewing appellate decisions interpretating the statute, go beyond the head notes and look at the actual language of the opinion. Aggressive and novel interpretations of the case law open obscure avenues available to an employer attempting to affect the maximum recovery of a subrogation lien interest. Remember, most of the successful subrogation recoveries do not result in reimbursement of the subrogation lien from the judgment or settlement proceed obtained by the plaintiff. Often, the most efficient subrogation recoveries are achieved by a waiver of the lien in conjunction with some other consideration given in the underlying workers’ compensation claim.


1. Canal Insurance Company v. Liberty Mutual Insurance Company, 256 Ga. App. 866, 570 S.E.2d 60 (2002)

The employee in this case sued the third party tortfeasor and the workers’ compensation company chose not to intervene.

While the third party was on notice of the workers’ compensation subrogation lien, they chose to settle this case with the employee for the employee’s non-economic damages.

At that point, the employee dismissed the case with prejudice against the third party tortfeasor.

The Court of Appeals addressing the issue, whether the workers’ compensation carrier must intervene to protect and enforce the subrogation lien, held that so long as the employee files first, and the employer is relegated to intervening under subsection (b) of the subrogation statute, the plaintiff can settle with the defendants and dismiss them from the litigation without addressing the lien.

2. International Maintenance Corporation v. Inland Paperboard and Packaging, Inc., 256 Ga. App. 752, 569 S.E.2d 865 (2002)

The employee and his wife sued the third party tortfeasor and the workers’ compensation carrier intervened under O.C.G.A. §34-9-11.1(b) in their personal injury action. Subsequently, the trial court struck the intervenors from the action but gave them the right to proceed in a separate action. The Court of Appeals disagreed with this Order. Also, the employee in this action settled with two of the four defendants and the trial court approved their dismissal. In addressing this question, the Court of Appeals held that it was proper for the trial court to dismiss such defendants. This is so because:

When a settlement is reached or a judgment is entered in a suit governed by O.C.G.A.§34-9-11.1(b), the lien attaches to the recovery, “that is, to the money now in the hands of the injured employee.” Citing Powell v. Daniels Construction and Demolition, Inc., 232 Ga. App. 422, 424 (3) (501 S.E.2d 578) (1998). After the employee settles with a defendant, and the lien has attached to the proceeds, there is no longer any purpose for intervention. An employer/insurer cannot continue to pursue a claim against that defendant when intervention was pursuant to subsection (b).

3. CGU Insurance Company v. Sabel Industries, Inc., 255 Ga. App. 236, 564 S.E.2d 836 (2002).

This case involves a catastrophically injured employee who filed suit against a third party tortfeasor. That suit was settled in April of 2001 for $4.5 million dollars. However, in March of that year, the workers’ compensation insurance carrier had placed all parties on notice of its subrogation rights. Subsequently, the injured employee and his wife filed motions to confirm settlement and dissolve the workers’ compensation insurance carrier’s lien. The Trial Court found in favor of the employee and his wife stating that the insurance carrier had not proven the employee had been fully and completely compensated. Also, there is no way to distinguish which portion of the settlement was for the wife’s consortium claim and what portion was for compensation of the employee’s injuries.

In upholding the Trial Court’s decision, the Court of Appeals noted that regardless of whether the settlement would have been a complete award for the employee, the record supported the conclusion that the insurance carrier failed to meet its burden that the employee had been fully and completely compensated. Also, the Court of Appeals agreed with the Trial Court that “the law does not authorize a lien against the settlement proceeds with respect to future benefits paid to [an employee].” Id.

4. Hartford Insurance Company v. Federal Express Corporation, 253 Ga. App. 520, 559 S.E.2d 530 (2002).

Here, the injured employee received workers’ compensation benefits from the workers’ compensation carrier, as well as a lump sum settlement from the third party tortfeasor. The Trial Court found in favor of the employee and refused to enforce the workers’ compensation carrier’s lien. Basing his decision on the fact that the workers’ compensation carrier failed to prove that the employee had been fully and completely compensated. In upholding this decision, the Court of Appeals reasoned that in the settlement there was no specific payment made for medical expenses.

5. City of Warner Robins v. Baker, 255 Ga. App. 601, 565 S.E.2d 919 (2002).

Here, the employee filed a civil action against the third party tortfeasor and although aware of the action, the workers’ compensation insurance carrier chose not to intervene. However, it did make the employee aware of their subrogation lien. Once the employee settled with the third party tortfeasor, the workers’ compensation carrier tried to enforce its lien and the employee refused. Subsequently, the employee filed a Motion to Extinguish the subrogation lien arguing that he had not been fully and completely compensated. The Trial Court granted the Motion to Extinguish the lien.

The Court of Appeals in upholding the Trial Court stated that;

“an employer/ insurer that has a subrogation lien has an absolute right to intervene in both trials and settlement negotiations, the existence of the lien itself is not dispositive. The employer and insurer must act to protect it.” Id.
Also, the Court of Appeals notes that the burden of proof is on the employer and insurer to prove that the employee has been fully and completely compensated by the proceeds of the settlement. Finally, the Court of Appeals states that:
“[W]hen the employee negotiates a settlement of his claim against the tortfeasor and the settlement is a lump sum. A reviewing court cannot determine from the settlement documents what portion of the settlement was allocated to economic losses and what portion was meant to compensate for non-economic losses. The result is that the lien cannot be enforced, because full and complete compensation cannot be shown.” Id.

6. Georgia Electric Membership Corp. v. Hi-Ranger, Inc., 275 Ga. 197, 563 S.E.2d 841 (2002).

Here, the injured employee and his employer filed a joint action against a third party tortfeasor. Subsequently, the employee settled his claim with the third party tortfeasor and released them with prejudice. This led to the following question being certified to the Supreme Court of Georgia;

“Whether a claim for repayment of workers’ compensation benefits against a third party tortfeasor is extinguished by the employee’s settlement of his claim and execution of a limited release.”

First, the Supreme Court of Georgia stated that the full and complete compensation language within §34-9-11 applies both the section (b) and (c) actions. However, the Court admitted that the full and complete compensation language applies procedurally different when dealing with a §34-9-11.1(b) action versus a §34-9-11.1 (c) action. Under a (b) action, an employer would have to show he has been fully and completely compensated by the third party. On the other hand, under a (c) action the roles are reversed because an employer/insurer only needs to give an employee that which is in excess of its own full and complete recovery. Finally, the Court holds that the release which states, “[employer] is not released herein and the workers’ compensation subrogation claim asserted by [employer] for the benefits paid in behalf of [employee] shall remain pending before the court,” does not extinguish the employer’s subrogation action against a tortfeasor.

7. Georgia Electric Membership Corporation (GEMC) v. Garnto, 266 Ga. App. 452, 597 S.E.2d 527 (2004).

The employee, Curtis Garnto was injured in an on-the-job vehicle accident in Georgia. Pursuant to his injury he was paid workers’ compensation benefits in the amount of $76, 509.75. The Claimant eventually filed suit against the third party tortfeasor at which time, the employer (GEMC) intervened in the action to assert its subrogation lien per O.C.G.A. § 34-9-11.1.

During the litigation process, the employee settled his action against the former employer for $175,000.00; GEMC tried to assert its subrogation lien to the proceeds of the settlement asserting that the employee had been fully and completely compensated. GEMC and the employee did not have a hearing on the issue of full compensation, rather the parties submitted briefs and affidavits to the trial court for consideration. The trial court concluded that GEMC had not put on any evidence to show that it had been fully and completey compensated and therefore was not entitled to the fulfillment of its lien.

On the appellate level the Court of Appeals affirmed the decision of the trial court and concluded that said court did not to give the affidavits of GEMC any weight. The Court stated that the decisions and factual findings of the trial court must be adopted unless clearly erroneous.

8. Johnson v. Comcar, 252 Ga. App. 62, 556 S.E.2d 148 (2001).

A Virginia employee was injured in an automobile accident in Georgia in the course and scope of his employment for a Virginia employer and received workers’ compensation benefits under Virginia law.

The employer/insurer subsequently filed a tort action in Georgia against the third-party driver.

The defendant driver, his employer and insurer filed a motion for partial summary judgment on the ground that plaintiff’s insurer was not entitled to assert a subrogation claim.

Reversing the trial court’s denial of defendant’s motion, the Court of Appeals held that while O.C.G.A § 34-9-11.1 grants to an employer/insurer the right to recover workers’ compensation benefits paid to an employee for damages caused by a third party, the language of the statute is clear in that the employer/insurer can only recover those benefits paid under the Georgia Workers’ Compensation Act.

Thus, as the benefits paid to the employee were under Virginia law, employer/insurer had no Georgia subrogation rights in the case.

9. Tyson Foods, Inc. V. Craig et al., 266 Ga. App. 443, 597 S.E.2d 520 (2004).

The employee, Eddie Craig, was injured in a January ,1999 truck collision in Fulton County, Georgia. He was paid $97,840.43 benefits under the Texas Labor Code § 401.001. As in the Garnto case referenced above, the employee filed a suit against the third party tortfeasor for damages arising from the collision. In response to the employee’s actions, the employer, Tyson Foods, intervened in the action to assert its subrogation lien per O.C.G.A §34-9-11.1.

The employee, eventually settled his claim for $160,000.00. The employee filed a motion with the trial court asking it to find that Tyson Foods was not entitled to any portion of the settlement proceeds, while Tyson moved the Court to enter an order enforcing its lien. The trial Court found in favor of the employee and denied Tyson’s motion.

On appeal Tyson Foods argued that the trial court should have recognized its right to enforce its subrogation lien, stating that the trial court erred in: (1) failing to give full faith and credit to the Texas workers’ compensation statute and (2) finding that the Tyson could not show full compensation under Georgia law.

The Court of Appeals affirmed the decision of the trial Court ruling that (1) when an injury occurs in Georgia, the Georgia workers’ compensation rule of law applies (2) Texas laws of recovery were against Georgia public policy an inapplicable in that in Texas the “first money” of any recovery goes to the payor of workers’ compensation benefits while in Georgia an employer must show full and complete compensation to recover in subrogation and (3) Tyson foods did not have the right to recover in subrogation because O.C.G.A § 34-9-11.1 only allows for recovery of benefits paid under Georgia law. Since the benefits Tyson paid the employee were paid under Texas law subrogation was not available.

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