How Is the Workers’ Comp Lien Calculated Against a Third-Party Settlement in Georgia?
On this page
In two steps. First, the lien’s ceiling: the employer or insurer’s lien may “not … exceed the actual amount of compensation paid”, limited to disability benefits, death benefits, and medical expenses (O.C.G.A. § 34-9-11.1(b)). Second, the condition: the lien is “only … recoverable if the injured employee has been fully and completely compensated” for “all economic and noneconomic losses”. If the worker has not been made whole, the lien collects nothing.
Step one: the ceiling
The lien starts from what was actually paid under Georgia’s workers’ compensation act:
| Counts toward the lien | Does not count |
|---|---|
| Disability (income) benefits paid | Benefits not yet paid |
| Medical expenses paid | Amounts above what the employer or insurer actually paid |
| Death benefits paid | Payments made outside the workers' compensation act |
Step two: the made-whole test
Section 34-9-11.1(b) allows recovery only if the worker “has been fully and completely compensated, taking into consideration 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”.
The test compares the worker’s total losses, including pain and suffering, with the total received from both sources. The worker’s own fault does not enter the calculation. In Homebuilders Association of Georgia v. Morris (1999), a case of first impression, the Court of Appeals held that evidence of the employee’s “comparative/contributory negligence or assumption of the risk” is “irrelevant to an insurer’s subrogation claim”; the trial court properly considered only the benefits received and the settlement amount.
A worked example
For example, imagine a worker whose losses (medical bills, lost wages, and pain and suffering) total $400,000. The insurer has paid $90,000 in benefits. The worker settles with the negligent third party for $250,000.
- Total received: $90,000 + $250,000 = $340,000.
- Total losses: $400,000.
- The worker has not been “fully and completely compensated”, so the lien is not recoverable, even though the insurer paid $90,000.
Change one number: the settlement is $380,000. Total received is $470,000, which exceeds the $400,000 in losses, so the made-whole condition can be met and the lien becomes recoverable, never more than the $90,000 actually paid. Whether the insurer can take its full lien or only the amount by which the worker was over-compensated (here $70,000) is a point the statute’s text does not spell out, so it needs an answer before the settlement is distributed. How a court values the losses in a disputed case is a factual question; an itemized verdict makes it easier to answer than a lump-sum settlement.
Recoveries the lien does not reach
The lien attaches to the third-party tort recovery. In Stewart v. Auto-Owners Insurance Co. (1998), a worker hurt in a crash recovered under her own uninsured motorist policy, and the Court of Appeals held the statute “does not support any right to the subrogation claim” the workers’ compensation insurer asserted against that recovery. How uninsured motorist coverage works is explained in uninsured motorist coverage and stacking in Georgia.
Attorney’s fees out of the recovery
The worker’s attorney is “entitled to a reasonable fee for services”, and if the employer or insurer hired its own attorney to help recover from the third party, a court “shall upon application apportion the reasonable fee between the attorney for the injured employee and the attorney for the employer or insurer in proportion to services rendered” (§ 34-9-11.1(d)). The insurer’s procedural rights, including the one-year rule, are covered in the workers’ comp insurer’s subrogation rights.
Sources
- O.C.G.A. § 34-9-11.1 (text as published in October 2016 on a mirror site; no amendment recorded in the 2022 to 2026 legislative summaries).
- Homebuilders Association of Georgia v. Morris, 238 Ga. App. 194 (1999)
- Stewart v. Auto-Owners Insurance Co., 230 Ga. App. 265 (1998)
General information about Georgia law as of October 2026. It is not legal advice, and reading it does not create an attorney-client relationship.