Donegal Mut. Ins. Grp. v. Jarrett

• Decision Date: 27 June 2022
• Docket Number: A22A0390
• Parties: DONEGAL MUTUAL INSURANCE GROUP v. JARRETT
• Court: Georgia Court of Appeals

DONEGAL MUTUAL INSURANCE GROUP v. JARRETT

No. A22A0390

Court of Appeals of Georgia, Fifth Division

June 27, 2022

MCFADDEN, P. J., GOBEIL and PINSON, JJ.

McFadden, Presiding Judge

Donegal Mutual Insurance Group appeals from the trial court's grant of summary judgment to Jeffrey Jarrett in Donegal's action to enforce a workers' compensation subrogation lien on Jarrett's recovery against a third-party tortfeasor in a separate action. Finding no genuine issues of material fact that would bar summary judgment to Jarrett, we affirm.

1. Facts and procedural history.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.

Performance Food Group v. Williams, 300 Ga.App. 831, 831-832 (686 S.E.2d 437) (2009) (citations omitted).

So viewed, the evidence shows that Jarrett was seriously injured at work. His employer's insurer, Donegal, paid Jarrett $130,359.02 in workers' compensation benefits. Jarrett also brought an action for negligence against a third-party tortfeasor, in which he sought economic and noneconomic relief in the form of general, special, and punitive damages. Donegal notified Jarrett's counsel that it had a subrogation lien giving it the right to pursue repayment of the workers' compensation benefits it had paid to Jarrett, should Jarrett recover from the third-party tortfeasor. It appears from the record that Donegal did not seek to intervene in the action brought by Jarrett.

Jarrett and his wife entered into a settlement agreement with the third-party tortfeasor under which they recovered a lump-sum amount of $520,000, some of which went to attorney fees and costs of litigation. They signed a release stating, among other things, that the settlement was a "compromise of potential, doubtful and disputed claims[,]" that "the consideration paid hereunder is paid and received to compromise and settle disputed claims[,]" that "the damages and losses allegedly sustained by [Jarrett] are, or may be, uncertain[,]" and that "the consideration paid hereunder does not fully compensate [Jarrett] and/or make him whole for the injuries and damages that he sustained or incurred as a consequence of the incident[.]"

Donegal then brought the instant action, in which it sought to enforce a subrogation lien against Jarrett's settlement with the third-party tortfeasor. Jarrett stated in his answer that Donegal "has a right to assert a subrogation lien pursuant to OCGA § 34-9-11.1 (b), but cannot recover on its asserted lien pursuant to that statute as [Jarrett] has not been made whole or fully compensated." Jarrett also moved for summary judgment on that ground.

In response, Donegal argued that there was a genuine issue of material fact about whether the settlement had fully and completely compensated Jarrett. In support of its argument, Donegal pointed to evidentiary disputes about Jarrett's current physical condition, the effects of his injury on his day-to-day living and activities, and his future prognosis.

The trial court granted Jarrett's motion for summary judgment, finding that he met his burden of showing that there were no genuine issues of material fact and that Donegal had "not sufficiently rebut[ted]" Jarrett's showing. See generally Cowart v. Widener, 287 Ga. 622, 623 (1) (a) (697 S.E.2d 779) (2010) (once a defendant moving for summary judgment discharges his burden of "either presenting evidence negating an essential element of the plaintiff's claims or establishing from the record an absence of evidence to support such claims[,]" then the nonmoving party "must point to specific evidence giving rise to a triable issue") (citations and punctuation omitted). This appeal followed.

2. Analysis.

Donegal seeks to enforce a subrogation lien under OCGA § 34-9-11.1 (b), which addresses situations in which an injury compensable under the Workers' Compensation Act "is caused under circumstances creating a legal liability against some person other than the employee[.]" OCGA § 34-9-11.1 (a). It provides:

In the event an employee has a right of action against such other person . . . 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 . . . against such recovery. The employer or insurer may intervene in any action to protect and enforce such lien.^[1] However, the employer's or insurer's recovery under this Code section shall be limited to the recovery of the amount of disability benefits, death benefits, and medical expenses paid under this chapter and shall only be recoverable if the injured employee has been fully and completely compensated, taking into account both the benefits received under this chapter and the amount of the recovery in the third-party claim, for all economic and noneconomic losses incurred as a result of the injury.

OCGA § 34-9-11.1 (b) (emphasis supplied). As the statutory language indicates,

[w]hen an employee files suit under subsection (b), the [insurer] may recover on its lien only after the employee has been fully and completely compensated. In practice, this rule requires the [insurer] to assert its lien against the employee after the employee has recovered a judgment or settled his claim. The burden is then on the [insurer] to establish that the employee has been fully and completely compensated.

Ga. Elec. Membership Corp. v. Hi-Ranger, 275 Ga. 197, 198 (2) (563 S.E.2d 841) (2002) (citations omitted). See Austell HealthCare v. Scott, 308 Ga.App. 393, 394 (1) (707 S.E.2d 599) (2011) ("The employer [or insurer] carries the burden of proof of showing that the employee has been fully compensated, whether the employee has received compensation from the tortfeasor through a jury award or by settling his claim against the tortfeasor.").

"[A] workers' compensation subrogation lien is available only against recovery for economic losses[.]" Endsley v. Geotechnical & Environmental Consultants, 339 Ga.App. 663, 672 (1) (794 S.E.2d 174) (2016) (citation and punctuation omitted). The trial court cannot enforce it against noneconomic losses such as pain and suffering. Best Buy Co. v. McKinney, 334 Ga.App. 42, 45 (1) (778 S.E.2d 51) (2015). So for an insurer to meet its burden to enforce the lien, it "must show that the employee has been fully and completely compensated as to each category of noneconomic loss for which the insurer seeks subrogation and that no portion of the lien is taken against recovery for noneconomic losses." Endsley, 339 Ga.App. at 672 (1) (citation, punctuation, and emphasis omitted). Where "there is an economic recovery, the trial court[, acting as the factfinder,] must determine if the benefits paid exceed the recovery or if there exist economic damages unrecovered." Canal Ins. Co. v. Liberty Mut. Ins. Co., 256 Ga.App. 866, 871 (1) (570 S.E.2d 60) (2002). "[I]f the trial court is unable to determine what portion of the employee's recovery against the third party was meant to compensate him for his economic losses versus his noneconomic losses, the court cannot enforce the lien." Best Buy Co., 334 Ga.App. at 45 (1).

Jarrett argues that he is entitled to summary judgment because there is no evidence from which the trial court can make this necessary determination. We agree.

Generally a lump-sum settlement such as the one Jarrett received from the third-party tortfeasor prevents a court from determining "what portion of the settlement was allocated to economic losses and what portion was meant to compensate for noneconomic losses." Paschall Truck Lines v. Kirkland, 287 Ga.App. 497, 499 (651 S.E.2d 804) (2007) (citation and punctuation omitted). Accord City of Warner Robins v. Baker, 255 Ga.App. 601, 604-605 (3) (565 S.E.2d 919) (2002). There are exceptions to this general rule. For example, we held in Anthem Cas. Ins. Co. v. Murray, 246 Ga.App. 778 (542 S.E.2d 171) (2000), that a question of fact existed as to whether a jury award against a third-party tortfeasor fully and completely compensated an employee, even though ...