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Canal Ins. Co. v. Liberty Mut. Ins. Co.8/1/2002
WHOLE COURT
This is an 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' comp. 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 Mut. 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 Mut.'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, 1997, Robert E. Wilson, an employee of Thomas Trucking Company, sustained personal injuries arising out of the scope of his employment through the negligence of Harry's Farmers Market, Inc. and sued Harry's. Liberty Mutual insured Harry's and entered a defense for its insured to the suit. Canal paid Wilson's medical expenses and comp. benefits for the injuries arising from the occurrence.
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 Mut. was on notice that Canal had a worker 's comp. subrogation lien for the economic benefits that Canal had paid. Prior to trial and entry of judgment, Liberty Mut. settled the suit with Wilson for only his non-economic 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 Mut. was of the opinion that the settlement with Wilson was less than full compensation for his injuries and damages, both economic and non-economic from evidence in the suit.
Upon learning of Wilson's settlement, Canal sued Liberty Mut. on the theory that Liberty Mut. failed to honor Canal's workers' comp. 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 ยง 34-9-11.1 creates a statutory subrogation lien in derogation of common law in the employer or worker 's comp. 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 exceed 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
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