Subrogated Georgia Insurer Has No Fiduciary Duty to Protect Injured Employee’s Interests
OCGA § 34-9-11.1, Georgia’s statute that gives the insurer (or employer) the right to “assert the employee’s cause of action in tort” against a third party or parties if the employee fails to bring the action within a year after the injury, does not impose a fiduciary duty on the insurer or employer to protect the injured employee’s claim, held a state appellate court in Bush v. Liberty Mut. Ins. Co., 2021 Ga. App. LEXIS 499 (Oct. 15, 2021). Accordingly, where neither the employee, during his life, nor his estate, following his death, successfully intervened in the insurer’s suit or filed a tort action against the third party or parties on behalf of the employee or his estate, the workers’ compensation insurer could settle with the allegedly responsible third party or parties for less than its workers’ compensation outlay and owe nothing to the worker or his estate.
Background
In November 2013, Singleton was involved in an auto accident with Earle. At the time of the accident, both Singleton and Earle were working for their respective employers. At that time, Liberty Mutual was the workers’ compensation insurer for Singleton’s employer. Singleton sought workers’ compensation benefits, eventually paying some $104,000 in medical and indemnity benefits.
Five months after the accident, Singleton hired an attorney to pursue personal injury claims against Earle and Earle’s employer. Soon thereafter, Liberty Mutual notified both potential defendants that it had a potential claim against them based upon its outlay of workers’ compensation benefits to Singleton. Liberty Mutual also notified Singleton’s counsel of its subrogation lien created by operation of OCGA § 34-9-11.1. In June 2014, Liberty Mutual sent an additional notice to Earle and his employer, along with a copy to Singleton’s attorney, indicating its intent to protect its subrogation interests.
Liberty Mutual Filed Suit in its Own Name
In May 2015, Singleton died. Nothing in the record indicated that Singleton’s death was a result of the injuries sustained in the car accident. On November 13, 2015, two days before the statute of limitations for personal-injury actions ran, Liberty Mutual sued Earle and his employer in its own name under OCGA § 34-9-11.1. At that time, neither Singleton nor his estate had filed an action against Earle or Earle’s employer. In their answer, the defendants disputed damages and causation, alleging in part that Singleton had been involved in another car accident on the same day as his accident involving Earle.
Nineteen months into Liberty Mutual’s subrogation action, the estate’s temporary administrator moved to intervene, but the trial court denied the motion on the ground that the temporary administrator lacked standing to intervene. Liberty Mutual eventually settled its claims against Earle and Earle’s employer for $45,000 and dismissed the subrogation action with prejudice. Because the settlement amount was less than Liberty Mutual’s subrogation lien, no money from the settlement was paid to Singleton’s estate.
Permanent Administrator Finally Appointed
On August 10, 2017, eight days after Liberty Mutual’s case was dismissed, Wilson Bush was appointed as permanent administrator of Singleton’s estate. As the trial court later noted, the statute of limitation applicable to the estate was tolled from the time of Singleton’s death on May 20, 2015, through to the appointment of Wilson Bush as administrator of the estate on August 10, 2017. The effect of this tolling was such that the two-year statute of limitations on Singleton’s personal-injury claims against Earle and Earle’s employer did not expire until February 6, 2018 [see OCGA § 9-3-92].
Trial Court Grants Summary Judgment in favor of Liberty Mutual
The estate took no action, however, as to those claims in the six months between appointment of the permanent administrator and the expiration of the limitations period on February 6. Instead, on February 21, 2018, the estate filed the instant lawsuit against Earle, Earle’s employer, and Liberty Mutual, claiming that Liberty Mutual breached its fiduciary duty to protect the estate’s interest in the subrogation action. After the trial court dismissed all defendants except Liberty Mutual, Liberty Mutual moved for summary judgment. After a hearing, the trial court granted the motion. In short, the court concluded that Liberty Mutual did not have a fiduciary relationship with Singleton or his estate based on either OCGA § 34-9-11.1 or the conduct of the parties.
Appellate Court: No Fiduciary Duty Owed by Liberty Mutual
On appeal, the permanent administrator contended that the trial court erred in concluding that Liberty did not owe the estate a fiduciary duty to protect its interests in the subrogation action. The administrator grounded this supposed duty primarily in OCGA § 34-9-11.1, the statute that gives the insurer the right to “assert the employee’s cause of action in tort” if the employee fails to bring the action within a year after the injury. That statutory right, the administrator asserted, comes with a corresponding duty to “protect the injured Plaintiff’s claim” rather than simply pursuing the insurer’s own interests in the litigation. The appellate court said that it was not persuaded.
Noting that OCGA § 34-9-11.1 created no fiduciary duty expressly, the statute did create other duties for the insurer or employer who brought action action under it:
- It must “immediately notify the employee” that it’s bringing the action, and
- If it recovers more than the amount of the subrogation lien, that amount must be “paid over to the employee” [OCGA § 34-9-11.1(c)].
The court stressed that the presence of these express duties owed by the insurer to the employee implied the exclusion of other similar duties, including a duty to litigate an action for the benefit of an absent employee. Nor did the statute create a fiduciary relationship by letting the insurer stand in the shoes of the employee. The statutory text gave the insurer no control or influence over the employee or the employee’s own claims. To the contrary, said the court, the statute preserved the employee’s agency: the employee had an exclusive right to bring the action for a year, and after that, the employee could intervene in the action brought by the insurer or bring his own, separate action at any time before the statute of limitations had run.
In other words, stressed the court, far from requiring any employee to place his or her trust in the insurer bringing the action—which might point toward a fiduciary relationship—the statute contemplated the employee acting to protect his or her own interests in any recovery by suing or intervening. Reading the statute as leaving the onus to protect the employee’s interests on the employee instead of shifting that responsibility to an insurer or employer also made practical sense in the context of this statutory scheme.
Finally, the court said that a fiduciary duty could not be constructed from the facts of the case. Liberty Mutual’s contractual relationship was with Singleton’s employer, not Singleton; it brought an action in its own name to protect and enforce its own subrogation lien; and nothing prevented Singleton and his estate from acting to protect their own interests by intervening in Liberty Mutual’s action or bringing their own. Taking account of these circumstances and the record as a whole, the court agreed with the trial court that the conduct of the parties here did not create a fiduciary relationship.