Roberts v. Sanders

• Decision Date: 22 February 2002
• Docket Number: M1998-00957-COA-R3-CV
• Parties: MARY C. ROBERTS, ET AL. v. SEVREN G. SANDERS, ET AL.IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE
• Court: Tennessee Court of Appeals

MARY C. ROBERTS, ET AL. v SEVREN G. SANDERS, ET AL.

No. M1998-00957-COA-R3-CV

IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE

May 6, 1999 Session

Filed February 22, 2002

Appeal from the Circuit Court for Sumner County No. 16404-C Thomas Goodall, Judge

This appeal involves the right of a lawyer to collect a fee from the entire proceeds of a $33,000 settlement between his elderly client and the teenage driver who struck her vehicle from the rear. Upon being notified of the pending settlement, the TennCare managed care organization that had paid $12,687 of the client's medical expenses asserted its subrogation rights to a portion of the settlement and declined to pay any portion of the lawyer's fee from its share of the settlement proceeds. The Circuit Court for Sumner County recognized the managed care organization's subrogation interest in the settlement proceeds but awarded the lawyer a one-third contingent fee from these funds. On this appeal, the managed care organization takes issue with the trial court's decision to award the lawyer any attorney's fees from its subrogation interest. We have determined that the lawyer had a right under Tenn. Code Ann. 71-5-117(c) (Supp. 2001) to collect a fee from the proceeds of the settlement and that the managed care organization failed to prove the existence of circumstances that would disentitle the lawyer to collect a portion of his fee from its subrogation interest. Accordingly, we affirm the trial court.

Rhonda M. Whitted, Nashville, Tennessee, for the intervenor-appellants, Tennessee Managed Care Network / Access . . . MedPLUS.

Mark T. Smith, Gallatin, Tennessee, for the appellees, Mary C. Roberts and Alton R. Roberts.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

WILLIAM C. KOCH, JR., J., delivered the opinion of the court, in which WILLIAM B. CAIN and PATRICIA J. COTTRELL, JJ., joined.

OPINION

I.

Mary C. Roberts was injured on February 13, 1996, when an automobile being driven by 16-year-old Sevren Sanders ran a yield sign and struck the rear of her automobile. At that time, Ms. Roberts had medical insurance coverage by virtue of her membership in Access . . .MedPLUS ("Access MedPLUS"), a private managed care organization that had contracted with the State of Tennessee to provide medical insurance under the TennCare program.¹ Access MedPLUS eventually paid $12,687 of Ms. Roberts's medical expenses stemming from the injuries she sustained when Mr. Sanders struck her automobile.

Shortly before the statute of limitations ran on her claim, Ms. Roberts hired Mark T. Smith to file a personal injury suit against Mr. Sanders and his mother, the owner of the automobile Mr. Sanders was driving when the collision occurred. Mr. Smith filed a $150,000 negligence suit against Mr. Sanders and his mother in the Circuit Court for Sumner County. After the lawsuit was filed, Ms. Roberts told Mr. Smith that TennCare had paid the medical bills for the injuries she sustained when Mr. Sanders struck her. Mr. Sanders did not, at that time, notify either the State or Access MedPLUS that Ms. Roberts had retained him to pursue her damage claim against Mr. Sanders and his mother.

The record contains no evidence that Access MedPLUS undertook to protect its subrogation interest until twenty months after the collision in which Ms. Roberts was injured. In November 1997, a "Subrogation Specialist" employed by Innovative Recovery Services, Inc. wrote a letter to Ms. Roberts on behalf of Access MedPLUS.² The two-fold purpose of this letter was to inform Ms. Roberts of Access MedPLUS's subrogation rights under Tenn. Code Ann. 71-5-117 (Supp. 2001)³ and to obtain information from Ms. Roberts regarding the persons who were responsible for her injuries.⁴ In March 1998, after receiving no response to his November 1997 letter, the subrogation specialist sent Ms. Roberts a second letter informing her that "it is imperative that we receive the requested information" and requesting that she provide the information "no later than two (2) weeks from the date of this letter."⁵ Ms. Roberts did not respond to this letter and did not inform Mr. Smith of either letter.⁶ Innovative Recovery Services apparently let the matter drop after Ms. Roberts did not respond to its March 1998 letter.

Mr. Smith eventually negotiated a $33,000 settlement of Ms. Roberts's claim against Mr. Sanders and his mother. On May 10, 1998, he requested Innovative Recovery Services to provide him with the amount of the medical expenses Access MedPLUS had paid on Ms. Roberts's behalf. By letter dated May 12, 1998, a "Subrogation Representative" employed by Innovative Recovery Services informed Mr. Smith that Access MedPLUS had paid $12,687 to Ms. Roberts's healthcare providers and that Access MedPLUS's "interest is being protected by Innovation [sic] Recovery Services, Inc. (IRSI). IRIS [sic] [b]elieves it is entitled to receive the full amount of the proceeds paid by TMCN on behalf of Ms. Roberts."

Following his receipt of the letter from Innovative Recovery Services, Mr. Smith filed a motion to impress a lien for his fees on the portion of the settlement proceeds set aside for Access MedPLUS's subrogation claim. On June 11, 1998, the trial court entered an order of compromise and settlement reciting that Ms. Roberts and her husband had agreed to settle their claims against Mr. Smith and his mother for $33,000. The order directed that $20,313.10 be paid over to Ms. Roberts and her husband and that $12,687 be held by the trial court clerk pending a determination of Mr. Smith's claim for attorney's fees for his recovery of these payments.

Immediately after the entry of the order of compromise and settlement, Access MedPLUS intervened in the proceeding to oppose Mr. Smith's claim for an attorney's fee from its subrogation interest. On August 28, 1998, the trial court entered an order finding that Mr. Smith was entitled to collect an attorney's fee from Access MedPLUS's subrogation interest under Tenn. Code Ann. 71-5-117(c) even though no "specific" contract for legal representation existed between Access MedPLUS and Mr. Smith. Accordingly, the trial court awarded Mr. Smith one-third of the $12,687 being held by the trial court clerk. Access MedPLUS has appealed from the trial court's decision to award Mr. Smith attorney's fees.

II.

PAYMENT OF ATTORNEY'S FEES UNDER TENN. CODE ANN. 71-5-117(C)

This dispute does not involve the existence or the reasonableness of Mr. Smith's contingent fee agreement with Ms. Roberts or whether Mr. Smith has provided professional services that entitle him to compensation in accordance with his agreement. There is no disagreement that Mr. Smith and Ms. Roberts entered into a standard contingent fee agreement or that Mr. Smith provided professional services pursuant to that agreement or that Mr. Smith is entitled to compensation under the terms of that agreement. This dispute involves whether Ms. Roberts must pay the full amount of Mr. Smith's fee from her share of the settlement or whether Access MedPLUS must also pay a portion of Mr. Smith's fee from its share of the settlement proceeds.

Mr. Smith asserts that Tenn. Code Ann. 71-5-117(c) entitles him to collect a portion of his attorney's fee from Access MedPLUS's share of the settlement proceeds. Specifically, he relies on the language in Tenn. Code Ann. 71-5-117(c) stating that "[t]he right of subrogation by the state to the recipient's right to recovery shall be subject to ordinary and reasonable attorney fees . . .." For its part, Access MedPLUS, reading this provision much more narrowly, argues that it authorizes the payment of attorney's fee only to the lawyers that either it or the State of Tennessee has retained. Accordingly, the threshold issue is the purpose and effect of Tenn. Code Ann. 71-5-117(c).

A.

The responsibility for determining what a statute means rests with the courts. Roseman v. Roseman, 890 S.W.2d 27, 29 (Tenn. 1994); Realty Shop, Inc. v. R.R. Westminster Holding, Inc., 7 S.W.3d 581, 601 (Tenn. Ct. App. 1999). We must ascertain and then give the fullest possible effect to the General Assembly's purpose in enacting the statute as reflected in the statute's language. Stewart v. State, 33 S.W.3d 785, 790-91 (Tenn. 2000); Lavin v. Jordon, 16 S.W.3d 362, 365 (Tenn. 2000). In doing so, we must avoid constructions that unduly expand or restrict the statute's application. Watt v. Lumbermens Mut. Cas. Ins. Co., 62 S.W.3d 213, 218 (Tenn. 2001); Patterson v. Tennessee Dep't of Labor & Workforce Dev., 60 S.W.3d 60, 64 (Tenn. 2001); Limbaugh v. Coffee Med. Ctr., 59 S.W.3d 73, 83 (Tenn. 2001). Our goal is to construe a statute in a way that avoids conflict and facilitates the harmonious operation of the law. Frazier v. East Tenn. Baptist Hosp., 55 S.W.3d 925, 928 (Tenn. 2001); LensCrafters, Inc. v. Sundquist, 33 S.W.3d 772, 777 (Tenn. 2000).

Our construction of a statute is more likely to conform with the General Assembly's purpose if we approach the statute presuming that the General Assembly chose its words purposely and deliberately, Tidwell v. Servomation-Willoughby Co., 483 S.W.2d 98, 100 (Tenn. 1972); Merrimack Mut. Fire Ins. Co. v. Batts, 59 S.W.3d 142, 151 (Tenn. Ct. App. 2001), and that the words chosen by the General Assembly convey the meaning the General Assembly intended them to convey. Limbaugh v. Coffee Med. Ctr., 59 S.W.3d at 83; BellSouth Telecomms., Inc. v. Greer, 972 S.W.2d 663, 673 (Tenn. Ct. App. 1997). Thus, we must construe statutes as we find them, Jackson v. Jackson, 186 Tenn. 337, 342, 210 S.W.2d 332, 334 (1948); Pacific Eastern Corp. v. Gulf Life Holding Co., 902 S.W.2d 946, 954 (Tenn. Ct. App. 1995), and our search for a statute's purpose must begin with the words of the statute itself. Blankenship v. Estate of Bain, 5 S.W.3d 647, 651 (Tenn. 1999); State ex rel. Comm'r of Transp. v. Medicine Bird Black Bear White Eagle, ___ S.W.3d ___, ___, 2001 WL 775607, at...