When an employee is injured on the job, he or she may be entitled to worker’s compensation benefits. Georgia law also allows the injured employee to bring a separate claim against any third party that is responsible for causing the injuries. When this happens, the employer or the employer’s workers compensation carrier may assert a subrogation claim. Subrogation is the right of the employer or insurer to seek indemnification against the at-fault third party for the benefits it paid to an employee because of the third party’s negligence.
For example, imagine an employee of John Doe Construction Company is driving from his office to a job site when a negligent driver rear ends him causing him significant personal injuries. The employee may be entitled to workers compensation benefits because he was injured on the job but he also has a right to sue the negligent driver for causing the wreck.
In situations like this, the employer or its worker’s compensation insurer has a right to seek indemnification against the negligent driver for benefits it pays to the employee due to the negligence of the at-fault driver. The right of the employer or worker’s compensation carrier to seek indemnification is set by statute. O.C.G.A. § 34-9-11.1. However, employers and their insurance carriers are not entitled to recover the benefits paid just because they have a statutory right to assert a subrogation claim.
Employers or the workers compensation insurer must prove three things in order to succeed in their subrogation claim:
1. Worker’s compensation benefits must be paid,
2. The benefits must be paid “under circumstances creating a legal liability against some person other than the employer,” and
3. The employee must be “fully and completely compensated” for all economic and noneconomic losses incurred as a result of the injury.
O.C.G.A. § 34-9-11.1. Requirement 3 is often referred to as the “made whole doctrine” and is the most difficult element for employers or their insurers to prove.
Georgia law is clear that the injured employee’s right to full and complete compensation takes priority over the insurer’s subrogation right.
In general, ‘an insurer may not obtain reimbursement unless and until its insured has been completely compensated for his losses.’ This rule arises upon the rationale that [w]here the insurer or the insured must go unpaid to some extent, the loss should be borne by the insurer since the insurer has already been paid a premium for assuming this risk and would have been obligated to pay medical expenses regardless of its insured’s negligence and regardless of whether a culpable third party could have been found.
Simpson v. Southwire Co., 249 Ga. App. 406, 408-409, (2001), citing Duncan v. Integon Gen. Ins. Corp., 267 Ga. 646, 647 (1997).
The employer or workers compensation carrier bears the burden of proving that injured claimant has been fully and completely compensated. Georgia Electric Membership Corp. v. Garnto, 266 Ga. App. 452, 454 (2004); City of Warner Robins v. Baker, 255 Ga. App. 601 (2002); Ga. Elec. Membership Corp. v. Hi-Ranger, 275 Ga. 197, 198 (2002). At a minimum, the employer bears the burden of demonstrating that the settlement fully and completely compensates the Plaintiff for all past, present and future damages, including economic and non-economic losses.
If you have been injured on the job due to the negligence of a third party and have received workers compensation benefits, you may receive letter from the workers compensation carrier notifying you that they intend to assert a right of subrogation for any amounts you recover from the at-fault party. When this occurs, you need the assistance of an experienced attorney to not only help maximize your recovery against the at-fault party, but also to help you address any subrogation claims made by your employer or the workers compensation carrier.
