Cooper v. Logistics Insight Corp.

• Decision Date: 16 January 2013
• Docket Number: No. M2010–01262–SC–R11–CV.,M2010–01262–SC–R11–CV.
• Parties: Joshua COOPER, et al. v. LOGISTICS INSIGHT CORP., et al.
• Court: Tennessee Supreme Court

395 S.W.3d 632

Joshua COOPER, et al.

v.LOGISTICS INSIGHT CORP., et al.

No. M2010–01262–SC–R11–CV.

Supreme Court of Tennessee, at Nashville.

Feb. 16, 2012 Session.

Jan. 16, 2013.

Scott Carey and Mark Baugh, Nashville, Tennessee, for the appellants, ProLogistics, Inc., Logistics Insight Corp., and Joe Murray.

Daniel C. Todd, Nashville, Tennessee, for the appellees, MasterStaff, Inc. and Discover RE.

OPINION

JANICE M. HOLDER, J., delivered the opinion of the Court, in which GARY R. WADE, C.J., and CORNELIA A. CLARK and SHARON G. LEE, JJ., joined.

JANICE M. HOLDER, J.

An employee was injured at work as a result of the actions of a third-party tortfeasor. The employee suffered permanent injuries that required future medical care. The injured employee filed a claim for workers' compensation benefits and filed a lawsuit against the third-party tortfeasor. The employer intervened in the lawsuit pursuant to Tennessee Code Annotated section 50–6–112 (2008) to protect its subrogation lien against any recovery from the third-party tortfeasor. The employee settled the lawsuit with the third-party tortfeasor and voluntarily dismissed the case. The employer requested that the case be set for trial, claiming that it was entitled to a lien against the settlement proceeds for the cost of future medical benefits that may be paid on behalf of the injured employee. We hold that the employer's subrogation lien provided by Tennessee Code Annotated section 50–6–112 does not include the cost of future medical benefits that may be provided to an injured employee.

I. Facts and Procedural History

MasterStaff, Inc. (“MasterStaff”) is an employee-contracting company. MasterStaff employed Joshua Cooper and assigned him to work as a towmotor operator for ProLogistics, Inc. (“ProLogistics”). On January 14, 2008, Mr. Cooper was engaged in moving pallets of goods from trailers parked at a loading dock into the ProLogistics warehouse. As Mr. Cooper backed the towmotor out of a trailer, Joe Murray, an employee of ProLogistics, drove the truck and trailer away from the loading dock. The towmotor fell out of the trailer, and Mr. Cooper sustained “significant, permanent injuries” to his back and spine.

Mr. Cooper asserted a claim for workers' compensation benefits against MasterStaff. As a result, MasterStaff began to pay temporary disability benefits to Mr. Cooper and paid Mr. Cooper's medical expenses.

Mr. Cooper and his wife also filed a claim on January 22, 2008, against Mr. Murray, ProLogistics, and Logistics Insight Corporation ¹ in the Chancery Court for Rutherford County. The complaint alleged negligence on the part of the defendants and sought damages of $1,000,000 for Mr. Cooper's injuries and Mrs. Cooper's loss of consortium.

MasterStaff intervened in the Coopers' negligence action, asserting a statutory subrogation lien for workers' compensation benefits that had been paid and may be paid in the future against any recovery by the Coopers from the defendants in the chancery court action. SeeTenn.Code Ann. § 50–6–112(c)(1) (2008). MasterStaff also asserted a “common law and equitable right of subrogation” in any recovery Mr. Cooper obtained from the third-party defendants.

On July 10, 2009, MasterStaff filed an itemized list of medical expenses in the amount of $44,698.62 that it had incurred on Mr. Cooper's behalf. In January 2010, the Coopers settled their claims against the defendants in the chancery court actionand voluntarily dismissed their claims against those defendants with prejudice.

In February 2010, MasterStaff filed a motion to set the case for trial. MasterStaff asserted that it had no notice of the settlement and that the settlement did not dispose of all of the claims between the parties because the issue regarding the amount of Mr. Cooper's future medical expenses was still outstanding. The trial court set the case for trial on June 7, 2010.

The defendants in the chancery court action filed a motion to dismiss for failure to state a claim. SeeTenn. R. Civ. P. 12.02(6). The defendants asserted that they should be dismissed from the case because the Coopers were required to reimburse MasterStaff from the settlement proceeds.² The trial court concluded that the order of voluntary dismissal “resolved all claims against the defendants” and granted the motion to dismiss.

MasterStaff appealed. The Court of Appeals held that future medical expenses are not too speculative as a matter of law to be included in an employer's lien against the proceeds of a suit against a third-party tortfeasor and remanded the case to the trial court. Cooper v. Logistics Insight Corp., No. M2010–01262–COA–R3–CV, 2011 WL 1874577, at *4, *5 (Tenn.Ct.App. May 16, 2011); seeTenn.Code Ann. § 50–6–112(c)(2). The Court of Appeals also held that the Coopers' dismissal of the suit against the defendants in the chancery court action did not serve as an assignment of their negligence claims to MasterStaff pursuant to Tennessee Code Annotated section 50–6–112(d)(2). Cooper, 2011 WL 1874577, at *5. We granted permission to appeal.

II. Analysis

As an initial question, ProLogistics asks whether an injured employee and a third-party defendant are required to obtain the approval of an employer to settle a case when the employer has a subrogation lien pursuant to Tennessee Code Annotated section 50–6–112. We previously have held that the Workers' Compensation Law does not require an employee to obtain an employer's agreement before settling with the third-party tortfeasor. Hunley v. Silver Furniture Mfg. Co., 38 S.W.3d 555, 558 (Tenn.2001). We reiterate, however, that an injured worker, the injured worker's spouse, or a third-party tortfeasor may seek court approval of any settlement “to ensure that the allocation of settlement proceeds between the worker and the worker's spouse is fair and reasonable.” ³Hunley, 38 S.W.3d at 559. An employer is entitled to reasonable notice of the action in which court approval is sought. Hunley, 38 S.W.3d at 559. Although the better practice would have been for the Coopers to obtain court approval of their settlement with the defendants in the chancery court action, the Workers' Compensation Law did not require them to do so.

The principal issue in this case is whether Tennessee Code Annotated section 50–6–112 grants an employer a subrogation lien for the cost of future medical expenses against the proceeds of an employee's lawsuit against a third-party tortfeasor. The interpretation of the Workers' Compensation Law presents a question of law, which we review de novo. Gerdau Ameristeel, Inc. v. Ratliff, 368 S.W.3d 503, 506 (Tenn.2012).

To construe the current statute relating to an employer's subrogation lien against an employee's recovery from a third party, it is helpful to review the evolution of the Workers' Compensation Law in Tennessee. In 1950, an injured employee was entitled to medical benefits paid by his employer for a period not to exceed six months after the injury. Tenn.Code § 6875 (1950). Liability for medical benefits could not exceed $800, and the total liability for workers' compensation benefits could not exceed $7500. Tenn.Code §§ 6875, 6878(e) (1950).

The Workers' Compensation Law has been amended numerous times to increase the time period for which the employer is responsible for the employee's medical care and to increase the total amount of medical benefits an employee may receive:

• In 1953, to require the employer to provide medical benefits in an amount not to exceed $1500. Act of Apr. 3, 1953, ch. 111, § 1, 1953 Tenn. Pub. Acts 402, 402–03.

• In 1957, to increase the duration of medical benefits from six months to one year. Act of Mar. 13, 1957, ch. 234, § 1, 1957 Tenn. Pub. Acts 733, 734.

• In 1959, to require the employer to provide medical benefits in an amount not to exceed $1800. Act of Mar. 11, 1959, ch. 172, § 1, 1959 Tenn. Pub. Acts 530, 530.

• In 1963, to require the employer to provide medical benefits in an amount not to exceed $1800 plus an additional $700 for “unusual medical expenses.” Act of Mar. 22, 1963, ch. 362, § 3, 1963 Tenn. Pub. Acts 1282, 1283–84.

• In 1967, to require an employer to provide up to two years of medical benefits in an amount not to exceed $3500. Act of May 24, 1967, ch. 313, § 3, 1967 Tenn. Pub. Acts 815, 816–17.

• In 1971, to remove the limitation on an employer's total liability for workers' compensation benefits and to require notice to the Tennessee Department of Labor when such amounts exceed $5000. Act of May 4, 1971, ch. 134, § 3, 1971 Tenn. Pub. Acts 290, 291–92.

• In 1973, to require the employer to pay medical benefits for a maximum of three years. Act of May 3, 1973, ch. 379, § 4, 1973 Tenn. Pub. Acts 1368, 1369.

In 1977, the General Assembly removed the limitation on the duration of medical benefits, thereby opening the door to future medical benefits to the employee that were unlimited in both duration and amount. See Act of May 19, 1977, ch. 417, § 1, 1977 Tenn. Pub. Acts 1039, 1040.

The statute governing suits against third-party tortfeasors also has undergone changes. The Workers' Compensation Law originally provided that an injured employee must elect to pursue a remedy against either the employer or the third party responsible for his injury. Millican v. Home Stores, Inc., 197 Tenn. 93, 270 S.W.2d 372, 373 (1954) (citing Tenn.Code § 6865 (1932)). The General Assembly amended the applicable statute in 1949 to permit an employee to recover benefits from an employer and also to pursue an action against the third party responsible for his injury. Millican, 270 S.W.2d at 373 (citing Act of Apr. 14, 1949, ch. 227 § 1, 1949 Tenn. Pub. Acts 897, 897–98). Notably, the amended statute provided that an employer would be “subrogated to the extent of the amount paid or payable under this chapter.” Millican, 270 S.W.2d at 373 (quoting Tenn.Code § 6865). This Court construed the statute to provide a credit against workers' compensation benefits...