Lump Sum Settlements and Workers Compensation Subrogation: Georgia COA Reinforces Burden on Employers and Insurers

By Daniel Richardson

Recently, on October 22, 2025, the Georgia Court of Appeals issued a significant decision in McLeod v. BITCO Insurance Companies, A25A1362, reinforcing the strict burden employers and insurers face when seeking workers’ compensation subrogation liens after lump sum settlements. The court made clear that without allocating settlement proceeds between economic and noneconomic damages, subrogation recovery will be denied, even when the overall recovery is large.

Under OCGA § 34-9-11.1(b), an employer or insurer may assert a subrogation lien against an employee’s third-party recovery, but only if the employee has been “fully and completely compensated” for all economic and noneconomic losses. The burden of proof rests entirely on the employer or insurer.

In McLeod, the claimant settled her tort case for $325,000 after BITCO had paid $166,371.59 in benefits. BITCO presented no witnesses or exhibits at the lien hearing, while McLeod submitted the settlement agreement and a life care plan projecting future medical costs of $215,275. The trial court enforced BITCO’s lien, finding the total recovery sufficient to cover McLeod’s losses, but the Court of Appeals reversed.

The appellate court held that a subrogation lien applies only to recovery for economic losses, and because the settlement was a lump sum with no allocation, BITCO failed to show that any portion excluded noneconomic damages such as pain and suffering. Without evidence dividing the recovery between the two categories, the lien could not be enforced.

The case underscores that intervention alone is insufficient. Carriers must participate actively in the litigation and settlement process to ensure damages are properly allocated. When settling, they should insist on agreements that clearly distinguish economic and noneconomic damages. Without such allocation, liens will fail regardless of recovery size or benefits paid.

If a case goes to trial, carriers should request special verdict forms separating each damage category, since general verdicts pose the same proof problems as lump sum settlements. Carriers must also present affirmative evidence (live testimony, exhibits, or expert analysis) during subrogation hearings rather than relying on post-hearing filings.

Finally, McLeod highlights the need for a full evidentiary record on the employee’s total losses and how the recovery compensates them. Life care plans, expert testimony, and detailed medical documentation may be essential. Simply showing that the total recovery exceeds the benefits paid is not enough.

Early identification and protection of subrogation rights remain critical, but we should stay realistic in our expectations. The reality is that Georgia’s “full and complete compensation” rule means successful recovery is challenging, and lump sum settlements without clear damage allocation will defeat liens every time. If you have any questions about the subrogation process in Georgia, please feel free to reach out to me or one of our other attorneys.

Daniel Richardson is a partner in the Atlanta office of Hall Booth Smith, where he specializes in defending employers in all aspects of workers compensation claims throughout Georgia. He can be reached at drichardson@hallboothsmith.com.

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