Tennessee Supreme Court Overturns COA Dedmon case - Key Decision for Personal Injury cases on Medical Bill Evidence

The Tennessee Supreme Court issued a very important decision today on the appeal in the Dedmon case.  Many people have been waiting on this decision from the plaintiff’s side and the defendant’s side.  The Dedmon case was the case where the Tennessee Court of Appeals ruled that defendants, in personal injury cases, could introduce evidence of the discounted amounts accepted by health providers or paid by insurance companies.  I previously blogged on this prior ruling here.  

The Tennessee Supreme Court reversed the key part of the prior Tennessee Court of Appeals decision today.  The key part in the new case (and a good summary of the current status of the law on this issue) is the following:

In sum, we hold that the definition of “reasonable charges” under the Hospital Lien Act set forth in West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014), does not apply directly to determinations of “reasonable medical expenses” in personal injury cases; the West definition of “reasonable charges” is limited in application to interpretation of the Hospital Lien Act. We also decline to alter existing law in Tennessee regarding the collateral source rule. Consequently, the Plaintiffs may submit evidence of Mrs. Dedmon’s full, undiscounted medical bills as proof of her “reasonable medical expenses,” and the Defendants are precluded from submitting evidence of discounted rates for medical services accepted by medical providers as a result of Mrs.  Dedmon’s insurance. The Defendants remain free to submit any other competent evidence to rebut the Plaintiffs’ proof on the reasonableness of Mrs. Dedmon’s medical expenses, so long as the Defendants’ proof does not contravene the collateral source rule.  Thus, we affirm the Court of Appeals’ decision to reverse the trial court’s grant of the Defendants’ motion in limine, but we reverse the Court of Appeals to the extent that it held that the Defendants could introduce evidence of lesser amounts accepted by Mrs. Dedmon’s medical providers in order to rebut the Plaintiffs’ proof on reasonableness.

As a result, this basically returns the status of the law on this issue in Tennessee to the prior status quo.  Usually, the only evidence that a jury will now hear about the medical bills in a case is the amount of the medical bills charged by the medical care provider.  This effectively greatly inflates (in many situations) the amount of “medical bills” for an injury.  However, this is the law in Tennessee.  I expect this will not be the end of this issue and the Tennessee Legislature will take a look at trying to find a solution in the coming years.

2017 Tennessee Legislature Adds Requirement that Terms in Tennessee Statutes are Given Their “Natural and Ordinary” Meaning

The Tennessee Legislature passed a new law in 2017 that governs appropriate statutory construction.  This is an interesting change that has application to all of the words in the Tennessee Code that do not have a definition provided in the code.  This new law was passed as Public Chapter No. 302 and signed into law by Governor Bill Haslam on May 5, 2017, and it took effect immediately.  It is codified now in T.C.A. § 1-3-105.  This statute is not often cited to but is important to know about because it provides definitions for certain words provided for in the Tennessee Code (such as “property”, “highway”, “real property”, “age of majority”, “record” and other terms).

This new law provides as follows:

(b) As used in this code, undefined words shall be given their natural and ordinary meaning, without forced or subtle construction that would limit or extend the meaning of the language, except when a contrary intention is clearly manifest.

It appears to me that this new statute is designed to prevent judicial overreach in redefining terms outside of their normal meaning.   Sometimes in cases, key terms in statutes do not have a definition within the Tennessee Code and the lawyers and the Court must interpret the term.  This new law provides guiding principles for statutory construction that are intended to prevent odd or unique interpretation of key terms in statutes.  The only way to interpret a word beyond the “natural and ordinary meaning” is if the “contrary intention is clearly manifest”.  That is a very high standard and should not be taken lightly.  I interpret that standard to be when the statute actually misuses a word and a contrary interpretation is compelled by the clear intent of the legislation.  This should rarely be applied.

Some specific terms that are defined in this statute (T.C.A. § 1-3-105) that may be helpful to review and remember include the following:

(1) “Age of majority” means eighteen (18) years of age or older; except that when purchasing, consuming or possessing alcoholic beverages, wine or beer as those terms are defined in titl...

New Tennessee Court of Appeals Decision Holds that Registered Agent is Not Required to be Served at Address Listed with Secretary of State

An interesting case dealing with a civil procedure situation was recently decided by Tennessee Court of Appeals.  This case is Ace Design Group Inc. v. Greater Christ Temple Church Inc., No. M2016-00089-COA-R3-CV 2016 WL 7166408, (Tenn. Ct. App. 2016).  In this case, the Defendant had a Registered Agent listed with the Tennessee Secretary of State with a specific address.  Initially the Plaintiff attempted to serve the Defendant’s Registered Agent at the address listed with the Secretary of State, however, it was an incorrect address for the Registered Agent, therefore, the service of process was returned “unserved”.  However, subsequent to that, the Registered Agent was served at his business address after the attorney for the Plaintiff did some research to determine where the Registered Agent was actually located.  As a result, the Registered Agent actually received service of process of the lawsuit.  Despite this fact, the Defendant Church, did not respond to the Complaint or the Motion for Default Judgment.  As a result, Default Judgment was entered against the church with damages totaling approximately $132,000.00. 

This case was appealed to the Tennessee Court of Appeals and the Defendant argued that actual service on the Registered Agent was not effective because it was not served on the Registered Agent at the address listed with the Secretary of State.  However, it was undisputed that the Registered Agent was actually served personally.  This argument was quite confusing because it makes no sense.  The Tennessee Court of Appeals found this argument had no merit.  Specifically, the Court found that “in serving process, it is not the address or location where service is achieved that is paramount; rather, it is whether the proper party is served that establishes compliance with the process requirements.”  Ace Design at p. 5.  The Court further stated that “personal service of written notice within the jurisdiction is the classic form of notice always adequate in any type of proceeding.” citing Mullane v. Central Hanover Bank and Trust Company, 339 U.S. 306, 313 (1950). 

The Defendant also argued that once the service was returned “unserved” at the address listed with the Secretary of State, then service needed to be completed at the church’s physical address.  The Tennessee Court of Appeals also rejected this argument.  Specifically, it found the church’s status as a Tennessee corporation required it to have a Registered Agent in the state pursuant T.C.A. 48-15-101.  This statute provides as follows: 

Does Employer’s Admission of Vicarious Liability for Actions of Employee Insulate the Employer from Other Causes of Action?

The Tennessee Court of Appeals recently dealt with an issue that has not been previously discussed by Tennessee Appellate courts in Melanie Jones, Individually and on behalf of Matthew H. V. Shavonna Rachelle Windham, et al., No. W2015-00973-COA-R10-CV, 2016 WL 943722 (Tenn. Ct. App. 2016).  The question deal with the situation where an employer and employee are both sued due to the actions of the employee in causing an automobile accident (while working for the employer).  The employer, in the Answer to Complaint, admitted they were vicariously liable for the actions of the employee.  The question, therefore, was whether the plaintiff could still proceed with other claims against the employer including negligent hiring, negligent retention and negligence per se for their own independent negligent actions when they had already admitted vicarious liability for the actual accident.    

For some reason, the plaintiff wanted to pursue various individual cause of actions directly against the employer in this case.  Perhaps they thought it would increase the damages because the employer took actions that were inappropriate.  Interestingly, many other state courts have decided this issue and they are basically evenly split on how to handle this situation.  Thus, the Tennessee Court of Appeals went into a detailed assessment of the various positives and negatives of both avenues.  The Court ultimately held that the “an employer’s admission of vicarious liability does not bar a plaintiff from proceeding against the employer on independent claims of negligence.” Jones at 5. 

The Court admitted that this holding does make it necessary for trial courts to potentially guard juries from being prejudice by evidence against the employer after vicarious liability is already admitted.  As a result, the Court discussed in detail the possibility of trying to avoid that prejudice by using jury instructions or ultimately by bifurcating the proceedings under Tennessee Rule of Civil Procedure 42.02.   This rule provides as follows: 

The court for convenience or to avoid prejudice may in jury trials order a separate trial of any one or more claims, cross-claims, counterclaims, or third-party claims, or issues on which a jury trial has been waived by all parties. For the same purposes the court may, in nonjury trials, order a separate trial of any one or more claims, cross-claims, counterclaims, third-party claims, or issues.

“Reasonable” Medical Expenses in Tennessee (Amount Billed or Amount Paid?) – The Law After West and Dedmon for Personal Injury Litigation

A very important Tennessee Court of Appeals opinion was issued on June 2, 2016.  In this case, Jean Dedmon v. Debbie Steelman, No. W2015-01462-COA-R9-CV (Tenn. Ct. App. June 2, 2016), the Court discussed whether the amount an insurance company actually pays for medical services in a personal injury action, is, as a matter of law, the “reasonable” amount of medical expenses.  In order to recover medical expenses under Tennessee law, in a personal injury action, the plaintiff must prove the medical expenses were reasonable and necessary.  The reason the Dedmon decision is so important is because of the West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014) decision.  In the West case, the Tennessee Supreme Court, when interpreting the Tennessee Hospital Lien Act, essentially found that a hospital’s non-discounted charges reflected in their lien, were not reasonable because they do not reflect what is actually being paid in the marketplace.  The Court found that, under the Tennessee Hospital Lien Act, the amount actually paid for the hospital charges were the reasonable charges for the services provided, not the amounts billed which were, as a matter of law, unreasonable.

Since the time of the West decision, several trial courts and some Federal district courts have decided that the West case reasoning also applies to personal injury actions.  They have found that essentially, in a personal injury action in the State of Tennessee, evidence of the actual amount actually paid for medical bills is the only amount that can be introduced into evidence, not the amount billed or charged by the provider.  The reason is, due to insurance industry dynamics, there is almost always a significant difference in the amount billed or charged by the provider and the amount actually paid by insurance, Medicare or otherwise.  For instance, in the Dedmon case, the total amount of “incurred” medical expenses were $52,482.87 (the amount charged by the providers).  However, the plaintiff’s health insurance carrier only paid $18,255.42.  As a result, there is a significant disparity between the amount billed and the amount actually paid.

Lawsuit filed in Tennessee General Sessions Court for Property Damage Cannot be Amended to Add Personal Injury Damages After Statute of Limitations Has Run

A recent case dealt with an attempted amendment to add personal injury damages after the initial suit only requested property damages.  The case was State Farm Mutual Automobile Insurance Company v. Robert Blondin, No. M2014-01756-COA-R3-CV, 2016 WL 1019609 (Tenn. Ct. App. 2016).  This case was about a July 7, 2009 automobile accident that occurred where an individual sustained personal injury and property damages.  State Farm Insurance filed a Civil Warrant on May 17, 2010 to recover amounts paid to their own insured under the uninsured motorist provision of their policy.  State Farm sued the allegedly at fault driver for property damage only as outlined in their initial Civil Warrant.  On July 15, 2010, after the 1 year statute of limitations for personal injury, State Farm filed a motion to amend the Civil Warrant to assert personal injury damages as well.  The General Sessions Court denied the motion due to the fact the statute of limitations had expired.  State Farm then appealed to the Circuit Court where this request was also denied and then the case was set for trial.  State Farm next voluntarily dismissed the case without prejudice prior to trial. 

After the dismissal without prejudice, State Farm refiled the action in General Sessions Court on January 31, 2012.  This time, State Farm’s Civil Warrant was for personal injury and property damages.  Ultimately, the Circuit Court, on appeal from General Sessions Court, went forward with the trial and allowed the case to be tried seeking both personal injury and property damages.  The Court awarded personal injury and property damages at the trial.  This case was then appealed to the Tennessee Court of Appeals over the statute of limitations issue. 

The Tennessee Court of Appeals reversed the decision of the trial Circuit Court.  The Court found that “the statute of limitations operated to deprive the General Sessions Court of subject matter jurisdiction to hear the claim for personal injuries”.  State Farm at p. 3.  Further, the appeals and voluntary dismissal by State Farm did not operate to revive or extend the statute of limitations because the statute of limitations was already extinguished. State Farm at p. 3.  The Court also discussed State Farm’s argument that the saving statute under T.C.A. § 28-1-105 somehow permitted State Farm to re-file the previous action and rely upon the prior filing of the lawsuit to extend statute of limitation.  The Court noted that the saving statute did permit State Farm to re-file the cause of action but it did not resurrect the previously barred cause of...

Tennessee Trial Judges Must Make Findings of Fact and State Legal Basis for Summary Judgment Before Instructing Party to Prepare Order

A recent Tennessee Court of Appeals decision dealt with a case where a Trial Judge granted Summary Judgment on behalf of a defendant and instructed the parties to prepare an Order without first making any findings of fact or providing a legal basis for the Court’s decision.  The case of Bobby McEarl v. City of Brownsville, No. W2015-00077-COA-R3-CV, 2015 WL 6773544 (Tenn. Ct. App. 2015) was a premises liability case where the Court granted summary judgment in favor of the defendant.  However, the Court did not explain its ruling.  Instead, the Court simply stated “I don’t think – I don’t think the city is responsible here. I am granting the defendant’s motion.”  The trial court then instructed the parties to prepare competing orders for the court to review.  The Court ultimately adopted an order granting summary judgment for various reasons.

The question on appeal was whether this method for deciding a motion for summary judgment was appropriate under Tennessee Rules of Civil Procedure 56.04.  This rule provides as follows:

The motion shall be served at least thirty (30) days before the time fixed for the hearing. The adverse party may serve and file opposing affidavits not later than five days before the hearing. Subject to the moving party’s compliance with Rule 56.03, the judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. The trial court shall state the legal grounds upon which the court denies or grants the motion, which shall be included in the order reflecting the court's ruling. A summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages. 

Additionally, the Tennessee Supreme Court rendered a decision in 2014 discussing this rule of civil procedure in the Smith v. UHS of Lakeside, Inc., 439 S.W.3d 303 (Tenn. 2014) decision. The Tennessee Supreme Court provided direction to Tennessee trial courts that they are required to state the legal grounds upon which the Court denies or grants a motion for summary judgment. This is a mandatory requirement. 

As a result, the Tennessee Court of Appeals in the McEarl case found the trial court’s grant of summary judgment must be vacated and the cas...

How Are Damages to Real Property Calculated Under Tennessee Law?

Sometimes I like to write about specific issues that have come up in my own law practice.  When I confront certain issues, I assume there are other attorneys and individuals who deal with the same concerns.  One of those issues I recently addressed is how damages are calculated when there is damage to real property.  Tennessee courts have been fairly consistent on this subject over the years.  The Tennessee Court of Appeals’ decision of Fuller v. Orkin, 545 S.W.2d 103 (Tenn. Ct. App. 1975), discussed the appropriate measure of damages for real property as follows: 

[T]he measure of damages for injury to real estate is the difference between the reasonable market value of the premises immediately prior to and immediately after injury but if the reasonable cost of repairing the injury is less than the depreciation in value, the cost of repair is the lawful measure of damages.  Of course, the trier of fact can also take into consideration the reasonable cost of restoring the property to its former condition in arriving at the difference in value immediately before and after the injury to the premises.

Another resource Tennessee attorneys use on these kinds of issues are the Tennessee Pattern Jury Instructions.  These are the instructions that most Tennessee judges use to advise the jurors of the law in a case.  The current 2014 Tennessee Pattern Jury Instruction on this specific issue provides as follows:

T.P.I.—CIVIL 14.45 Damage to Real Property

The measure of damage to real property is the lesser of the following amounts:

1 The reasonable cost of repairing the damage to the property; or

Tennessee Supreme Court Clarifies How to Determine the Applicable Statute of Limitations for a Case (Old Rule was “Gravaman of the Complaint”)

The Tennessee Supreme Court in Brenda Benz-Elliott v. Barrett Enterprises, LP, No. M2013-00270-SC-R11-CV, 2015 WL 294635 (Tenn. 2015) has provided an opinion that attempts to clarify how statute of limitations should be applied for Tennessee cases.  Over the years numerous Tennessee appellate decisions have cited the “gravaman of the complaint” rule in order to determine which statute of limitations applies to a case.  (Benz-Elliott at 7, 8).  In this case, the Tennessee Supreme Court noted that defining exactly what this actually means has proven difficult over time.  If you desire to read a detailed analysis of the historical citations to this rule and the general “fuzziness” in the actual application of this rule, this case provides a lengthy discussion of these issues.  For the purposes of this blog post, however, I am mainly going to address the ultimate conclusion of the Tennessee Supreme Court that is an attempt to clarify confusing pre-existing precedent. 

Ultimately, the Tennessee Supreme Court found that when choosing the appropriate statute of limitations for a case “courts must ascertain the gravaman of each claim, not the gravaman of the complaint in its entirety.”  Benz-Elliott at 8.  The Court then found the court’s should use a specific “two-step approach” test that has previously been discussed in Tennessee decisions in order to determine the gravaman of a claim.  This holding is stated as follows: 

Today we clarify that the two-step approach articulated in Vance and applied in Alexander and Harvest Corp. is the correct framework for courts to employ when ascertaining the gravamen of a claim for the purpose of choosing the applicable statute of limitations. When utilizing this approach, a court must first consider the legal basis of the claim and then consider the type of injuries for which damages are sought. This analysis is necessarily fact-intensive and requires a careful examination of the allegations of the complaint as to each claim for the types of injuries asserted and damages sought. Contract Law and Practice § 12:78, at 595 (2006).

Tennessee Rule 68 Offer of Judgment Cannot be Revoked Within Ten Day Period

The Tennessee Court of Appeals recently decided an issue of first impression in Tennessee involving an offer of judgment.  The case of Kaitlyn Alexis McGinnis v. Aubie L. Cox, No. M2014-00102-COA-R3-CV, 2014 WL 5512451 (Tenn. Ct. App. 2014), discussed a situation where a plaintiff provided a Rule 68 offer of judgment and then revoked it within the ten day time period found in Tennessee Rule of Civil Procedure 68.  After the attempted revocation of the offer, the defendants went ahead and accepted the offer within the ten day timeframe provided under Rule 68.  The plaintiffs refused to comply with the offer of judgment.  The defendants filed a motion to enforce the offer of judgment in the Trial Court.  The Trial Court had a hearing and granted the motion to enforce the offer of judgment.  This issue was appealed to the Tennessee Court of Appeals.

The Tennessee Court of Appeals noted that there are no Tennessee cases that have addressed this issue in the past.  In this case the Court framed the appeal as being the singular issue of “whether a Rule 68 offer of judgment may be revoked by the offeror within the ten-day time period for acceptance on the basis that the offeror changed his mind?”  McGinnis at 2.  The text of Rule 68 of the Tennessee Rules of Civil Procedure is as follows:

At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property, or to the effect specified in the offer, with costs then accrued. Likewise a party prosecuting a claim may serve upon the adverse party an offer to allow judgment to be taken against that adverse party for the money or property or to the effect specified in the offer with costs then accrued. If within 10 days after service of the offer the adverse party serves writt...