Dan Berexa's Tennessee Law Blog

Tennessee Supreme Court Holds Noneconomic Damages Cap is Constitutional

On February 26, 2020, the Tennessee Supreme Court issued its much-awaited opinion in Jodi McClay v. Airport Management Services, LLC, M2019-00511-SC-R23-CV, a case in which the plaintiff challenged the constitutionality of Tennessee's tort caps. In McClay, the 3-2 Court held that Tennessee’s statutory cap on noneconomic damages does not violate the Tennessee Constitution.

The noneconomic damages cap was enacted as part of the Tennessee Civil Justice Act of 2011, which was one of Governor Bill Haslam’s major legislative initiatives upon taking office. The caps statute, enacted as Tennessee Code Annotated § 29-39-102, generally provides for a $750,000 cap on noneconomic damages. The cap is increased to $1,000,000 for “catastrophic loss or injury,” such as injuries resulting in severe burns, multiple amputations, paraplegia, quadriplegia or the wrongful death of a parent with surviving minor children. The statute exempts certain kinds of cases from the cap, such as those in which the defendant had specific intent to inflict serious physical injury, was intoxicated, under the influence of drugs or committed a felony when causing the injury.

The constitutional challenge to the noneconomic damages cap in McClay came about after a United States District Court jury awarded a plaintiff $930,000.00 in noneconomic damages, including pain and suffering, permanent injury and loss of enjoyment of life. Following the plaintiff’s constitutional challenge to the cap statute, the District Court certified three questions of law to the Tennessee Supreme Court. In the 3-2 decision, the Tennessee Supreme Court held that the statutory cap on noneconomic damages does not violate the plaintiff’s right to a trial by jury under the Tennessee Constitution. The Court also rejected  challenges to the cap under the separation of powers and equal protection provisions of the Tennessee Constitution.

Prior to the release of the McClay opinion, the viability of the noneconomic damages cap was in doubt. In August of 2019, a Williamson County trial court judge found the cap unconstitutional, for violating the right to a trial by jury, as established in the Tennessee Constitution. That decision is overruled by McClay.

Tennessee has a separate cap statute limiting punitive damage awards. The constitutionality of Tennessee’s cap on punitive damages has never been decided by the Tennessee Supreme Court. In Lindenberg v. Jackson National Life Insurance Company, the United States Court of Appeals for the Sixth Circuit held that the statutory cap on punitive damages violated the right to a jury trial under the Tennessee Constitution.  (See 12/26/2018 post regarding Lindenberg) While the McClay court was not called upon to determine the constitutionality of the punitive damages cap, the Court noted: “Decisions by federal circuit courts of appeals are not binding on this Court” and expressed dissatisfaction with the Lindenberg opinion. These comments, and the Court’s analysis of the constitutionality of the noneconomic damages cap, are good indicators that the Tennessee Supreme Court would have upheld the constitutionality of the punitive damages cap if the issue was before the court.

The McClay opinion bodes well for the viability of both caps absent a change in the makeup of the Tennessee Supreme Court. While the Lindenberg decision striking down the punitive damages cap remains on the books, it is unlikely to be followed.

Links:
McClay Opinion, Justice Bivens
Concurring opinion, Justice Kirby
Dissent, Justice Clark
Dissent, Justice Lee

 

July 16, 2019 CLE at the Nashville School of Law - Discover Effective Discovery Strategies

On the evening of July 16, 2019, Dan Berexa will speak at a 3 hour CLE program hosted by the Nashville School of Law “Discover Effective Discovery Strategies.” The program will identify and discuss the rules governing civil discovery in state court and provide strategies to increase the quality of information obtained in discovery. The program includes a 1.5 hour presentation on E-Discovery, taught by John Morris of Nashville Vanguard Law. We hope to see you there. For more information, or to register, go to http://nsl.law/cle-nsl/

Sixth Circuit Holds Tennessee's Statutory Cap on Punitive Damage Awards Violates Tennessee Constitution

On December 21, 2018 the Sixth Circuit issued an opinion in Lindenberg v. Jackson National Life Insurance Company holding that Tennessee's statutory cap on punitive damages violates the right to trial by jury set forth in Article I, § 6 of the Tennessee Constitution. The cap on punitive damages was enacted as Tenn. Code Annotated §29-39-104 and was part of the Tennessee Civil Justice Act of 2011, which was one of Governor Haslam's major legislative initiatives upon taking office. The cap statute provides that punitive damage awards are generally limited to the greater of either double the compensatory damages awarded or $500,000. The statute sets forth various exceptions, for which the cap is inapplicable, and defines the requisite level of conduct and burden of proof necessary to sustain a punitive damages claim.

Linderberg also held that an insurance company can be held liable for punitive damages for the bad faith failure to pay a claim, in addition to the remedy available under Tennessee's bad faith statute, Tenn. Code. Ann. § 56-8-113. Previous decisions held that the bad faith statue was the exclusive remedy permitted for bad faith claim against an insurer.

More commentary on this decision will follow shortly. The opinion can be viewed with the link below.

Download Lindenberg v. Jackson Nat'l Life Ins. Co.

Dan Berexa
Nashville, Tennessee

 

 

Tennessee Supreme Court reverses Dedmon v. Steelman - holds amount of discounted medical expenses are not admissible in personal injury actions

On November 17, 2017, the Tennessee Supreme Court delivered its long awaited opinion in Dedmon v. Steelman, holding that personal injury plaintiffs may submit evidence of the injured party’s full, undiscounted medical bills as proof of reasonable medical expenses and that defendants are precluded from submitting evidence of discounted rates accepted by medical providers from the insurer to rebut the plaintiffs’ proof that the undiscounted charges are reasonable. In addition to rejecting the argument that a plaintiff's recovery should be limited to the discounted amounts accepted by medical providers, the Court rejected the argument that introducing evidence of the actual amount paid does not violate the collateral source rule:

[T]he Defendants argue that the actual amount paid approach is not contrary to the collateral source rule because it does not involve evidence of payments from a collateral source. They note that, under this approach, plaintiffs are still permitted to introduce evidence of all medical expenses actually incurred by them or paid on their behalf, without indicating who made the payments. The negotiated rate differential is not a collateral-source benefit to the plaintiff, they insist, because it benefits only the plaintiff’s insurance company. We disagree.

The Court's summary of its holding follows:

We granted this appeal to address whether our holding in West v. Shelby County Healthcare Corp., 459 S.W.3d 33 (Tenn. 2014), applies in personal injury cases. We hold that it does not. West held that “reasonable charges” for medical services under Tennessee’s Hospital Lien Act, Tennessee Code Annotated sections 29-22-101 to –107 (2012), are the discounted amounts a hospital accepts as full payment from patients’ private insurers, not the full, undiscounted amounts billed to patients. West, 459 S.W.3d at 46. West defined “reasonable charges” in the context of interpreting the Hospital Lien Act, and its holding is limited to that Act. As an alternative argument, we are asked in this appeal to consider applying the principles in West to the determination of reasonable medical expenses in personal injury cases. Doing so involves the collateral source rule, which excludes evidence of benefits to the plaintiff from sources collateral to the tortfeasor and precludes the reduction of the plaintiff’s damage award by such collateral payments. The rule is based on the principles that tortfeasors should be responsible for all of the harm they cause and that payments from collateral sources intended to benefit an injured party should not be used to reduce the liability of the party who inflicted the injury. After a thorough review of court decisions in Tennessee and across the country on the collateral source rule, we decline to alter existing law in Tennessee. We hold that the collateral source rule applies in this personal injury case, in which the collateral benefit at issue is private insurance. Consequently, the plaintiffs may submit evidence of the injured party’s full, undiscounted medical bills as proof of reasonable medical expenses. Furthermore, the defendants are precluded from submitting evidence of discounted rates accepted by medical providers from the insurer to rebut the plaintiffs’ proof that the full, undiscounted charges are reasonable. The defendants remain free to submit any other competent evidence to rebut the plaintiffs’ proof on the reasonableness of the medical expenses, so long as that evidence does not contravene the collateral source rule. The decision of the Court of Appeals is affirmed in part and reversed in part, and the case is remanded to the trial court for further proceedings.

The full opinion is available at this link: Dedmon v. Steelman

Dan Berexa
Nashville, Tennessee

 

CLE/CME Nov. 17, 2016 - Online Dispute Resolution's Influence on the Practice of Law

Dan Berexa and the Honorable Catherine Bussart are co-producing a Continuing Legal Education and Continuing Mediation Education program for the Tennessee Bar Association titled Modern Law Practice Series: Online Dispute Resolution’s Influence on the Practice of Law. The program will take place on November 17, 2016 and focuses on the emerging use of online dispute resolution (ODR), which allows users with civil disputes to forgo court proceedings by using web-based technologies and the Internet to resolve their conflicts. The program will be held at the TBA Center and is also available via webcast. You can register online or at the TBA Center at 12:30 on the day of the program. 

Tennessee's Evolving Approach to Medical Expenses and Insurance Discounts - what is Reasonable?

UPDATE - On October 21, 2016 the Tennessee Supreme Court granted the application for permission to appeal filed on behalf of the defendants in Dedmon v. Steelman.

Below is an excellent article authored by C & C attorney Sean Wlodarczyk discussing the Tennessee Court of Appeal's recent opinion in Dedmon v. Steelman 2016 Tenn. App. LEXIS 386 (Tenn. Ct. App. 2016), which permits defense counsel to introduce evidence of the amount accepted by a health care provider in satisfaction of its charges in connection with the determination of the "reasonable value" of medical services claimed as damages. As Sean points out, the Dedmon decision allows defendants to argue to the finder of fact that the amount actually paid, rather than the amount charged, more accurately represents the reasonable value of the claimed medical expenses. 

Dan Berexa
Nashville, Tennessee

Medical Damages Post-West and Dedmon
by Sean Wlodarczyk

Modern medical billing practices are less than straightforward. Typically, health care providers maintains two sets of prices. The first is a list price the provider ostensibly charges for a service. The second is a discounted price the provider is willing to accept pursuant to an agreement with a patient’s health insurer. Over time, these prices have diverged greatly, with services being listed at prices five to ten times greater than the amount the provider accepts as full compensation. Naturally, in personal injury and wrongful death cases, plaintiffs and their counsel routinely seek to recover the list price—hoping to profit on the difference between what the provider accepted, and what could be wrung from a defendant. In turn, defendants are usually precluded from putting on evidence of the actual amount accepted as payment from an insurer due to the collateral source rule. That, however, appears to be changing in Tennessee. Recent case law allows Tennessee defendants to assert that the amount the provider accepted as payment—the discounted price—is the real measure of medical damages.

The trend towards allowing defendants to argue that the measure of damages is the discounted price began in Tennessee with the Tennessee Supreme Court’s 2014 decision in West v. Shelby Cty. Healthcare Corp., which can be located at 459 S.W.3d 33. In West, two individuals were injured in separate accidents. In turn, they came to a hospital for treatment, and the bill was paid by their insurers at the contractually agreed upon discounted rate. Despite this, the hospital asserted a lien against the patients under Tennessee’s Hospital Lien Act for the higher list price, claiming that—because the accidents were caused by third parties who could be sued—the hospital was entitled to recover the list price just as a normal personal injury plaintiff would be entitled to. Essentially, the hospital wanted a cut of the patient’s potential recovery from the third-party tortfeasors.

In addressing the situation laid out in West, the Tennessee Supreme Court determined that the Hospital Lien Act only allowed for the recovery by the hospital of amounts charged for reasonable medical expenses, and that—at least for lien purposes—the list price is unreasonable if the hospital has accepted a discounted amount as payment in full. While the holding in West referred only to the Hospital Lien Act, its implications were obvious. Since West, four Tennessee Circuit Courts and five Federal District Courts have held that West’s logic applies to personal injury cases—and therefore that plaintiffs may no longer seek the higher list price as damages.

Since West, only one appellate decision has come down addressing this issue, and it was decided only in early June 2016. That decision is Dedmon v. Steelman, 2016 Tenn. App. LEXIS 386 (Tenn. Ct. App., 2016). In it, the Court of Appeals recited the age-old maxim that a plaintiff in a personal injury action is entitled to recover the reasonable value of the medical care necessitated by the tortfeasor. From there, the Court held that the list and discounted prices were not necessarily reasonable or unreasonable, but rather, that the amount to be awarded is a question that needs to be answered by a jury. Thus, the Dedmon Court held that both the discounted and list prices can be admitted at trial as proof of what is a reasonable charge, with the caveat that attorneys must avoid mentioning the existence of insurance, so as to maintain the integrity of the collateral source rule’s ban on defendants profiting from a plaintiff’s decision to be insured.

The Dedmon decision is a common sense way of dealing with the divergence between list prices and the actual amounts paid for services. While it remains to be seen if Dedmon will be appealed to the Tennessee Supreme Court, should it remain in place, Dedmon is a boon to defendants. They can now explicitly argue to the jury that the discounted amounts actually accepted by a health care provider as payment in full equals the reasonable value of the services provided. To put this in perspective, this means that when a plaintiff has a hospital bill of $100,000 which is then satisfied for $10,000 (this is common), defendants can assert that the lower number is the real value of the care—and can even point out that anything in excess of the lower number is pure profit to the plaintiff.

It will be interesting to see whether the Tennessee Supreme Court takes Dedmon up on appeal. Given the Court’s current composition, there is a good chance that if Dedmon is taken up, it will be either to affirm it, or to hold that list prices are per se unreasonable as West previously indicated. This would be in keeping with developments of other states. Indeed, even the plaintiff friendly bastion of California has recognized that there is nothing reasonable about a plaintiff recovering medical expenses that were billed but then satisfied at a reduced amount. It should be no surprise if Tennessee’s Supreme Court ultimately declares the same—but, in the interim, defendants must make that argument themselves to juries per Dedmon.

 

Online Dispute Resolution's Influence on the Practice of Law

Dan Berexa and the Honorable Catherine Bussart are co-producing a Continuing Legal Education and Continuing Mediation Education program for the Tennessee Bar Association titled Modern Law Practice Series: Online Dispute Resolution’s Influence on the Practice of Law. The program will take place on November 17, 2016 and focuses on the emerging use of online dispute resolution (ODR), which allows users with civil disputes to forgo court proceedings by using web-based technologies and the Internet to resolve their conflicts. Speakers include UT Law Professor Ben Barton, Vanderbilt Law Professor Larry Bridgesmith and Colin Rule, the Founder and Chief Operating Officer of the Silicon Valley based online dispute resolution service provider Modria. Dan and Judge Bussart are members of the Tennessee Bar Association’s Special Committee on the Evolving Legal Market (ELM), which is exploring the evolution of the practice of law. The Modern Law Practice Series programs are part of the TBA’s initiative to education its member lawyers.  

Click here for more information on the program or to register.

Dan Berexa is a Rule 31 General Civil Mediator. For more information see his mediation page. 

How to Use Depositions at Trial

What follows is my article just published in the March 2016 edition of the Tennessee Bar Journal discussing the many ways to use depositions at trial.

Best Practices for Using Depositions at Trial

The law favors the presentation of live witness testimony at trial. Just because a party takes a deposition does not mean it can be used at trial, and even if it can be used it may be only for limited purposes, or under certain circumstances. The purpose of this article is to discuss the many ways that depositions can be used in the trial of a civil case, including uses for proof, impeachment, to refresh recollection, with unavailable witnesses, experts, adverse parties, for completeness and offers of proof. The Tennessee Rules of Civil Procedure (TRCP) and Tennessee Rules of Evidence (TRE) govern the circumstances and purposes for which depositions can be used. Although our focus is on the use of depositions in civil trials, many of the same general principles can apply to criminal cases, to the limited extent depositions are used at trial, and to administrative proceedings, arbitrations and other forms of ADR if the use of depositions is governed or guided by the rules of evidence and procedure.

Click to HERE continue article

TBA Talk Presentation - Depositions: The Very Basics for New Tennessee Lawyers

YouTube Video Click Here Depositions: The Very Basics for New Tennessee Lawyers 

                                                                         Here is a 17 minute Video of a recent "TBA Talk" for newly admitted lawyers on the basics of depositions including a discussion of logistics, objections and information that isn't necessarily in the rules. The presentation was part of the Tennessee Bar Association's November 10, 2015 Law Practice Conference for New Lawyers: I Passed The Bar – Now What?

I hope the information is helpful to any lawyer preparing to take or defend their first several depositions. The accompanying PowerPoint Download TBA Talk Depositions includes citations to the applicable Tennessee and Federal Rules of Civil Procedure.

Dan Berexa
Cornelius & Collins, LLP
Nashville, Tennessee

615-244-1440
www.cclawtn.com

Tennessee Supreme Court holds that Intentional Conduct is not a Prerequisite for Imposing Sanctions for Spoliation of Evidence

Spoliation of evidence is the destruction or alteration of evidence. In Tatham v. Bridgestone Americas Holding, Inc.,(click cite for opinion) the Tennessee Supreme Court addressed the question of whether a party can be sanctioned for the spoliation of evidence, absent intentional conduct, and set out factors that should be considered by a trial court when determining whether sanctions should be imposed.    

In Tatham, the defendants moved to dismiss a product liability suit as a remedy for the plaintiff's failure to preserve the tire that was the subject of her claim. Shortly after her accident the plaintiff transferred the title to her vehicle to a third party which disposed of the car. The plaintiff claimed she did not realize the importance of keeping the tire and was acting on the advice of her insurance company when she disposed of the vehicle. The trial court denied the defendants' motion, finding that the plaintiff did not intentionally participate in the destruction of the evidence. 

Tatham contains a thorough review of prior appellate decisions regarding the imposition of sanctions for the destruction of evidence, whether under the common law "doctrine of spoliation," the court's inherent authority, or Rule 34A.02 Tenn. R. Civ. P., which provides: “Rule 37 sanctions may be imposed upon a party or an agent of a party who discards, destroys, mutilates, alters, or conceals evidence.” Potential sanctions for spoliation include: drawing a negative inference against the party who destroyed evidence; excluding certain proof related to that evidence; the entry of an order designating that certain facts be taken as established; a finding of contempt; the dismissal of part or all of a the party's claims; or, the entry of a default judgment against the party guilty of spoliation. Justice Bivins, writing for the court, noted while many prior decisions focus on whether the conduct was intentional, the analysis varied. Tatham recognized the need for a uniform standard in connection with the analysis for the possible imposition of sanctions for spoliation based on the totality of the circumstances and utilizing the discretion of the trial court. The court went on to hold that intentional conduct is not a prerequisite for imposing sanctions against a party for spoliation of evidence and that a determination of whether any sanction is appropriate should be based on a case-by-case analysis: 

Factors which are relevant to a trial court's consideration of what, if any, sanction should be imposed for the spoliation of evidence include:

(1) the culpability of the spoliating party in causing the destruction of the evidence, including evidence of intentional misconduct or fraudulent intent;

(2) the degree of prejudice suffered by the non-spoliating party as a result of the absence of the evidence;

(3) whether, at the time the evidence was destroyed, the spoliating party knew or should have known that the evidence was relevant to pending or reasonably foreseeable litigation; and

       (4) the least severe sanction available to remedy any prejudice caused to the non-spoliating part.

While the Tathum court affirmed the trial court's refusal to sanction the plaintiff, the decision makes it clear that a party can be sanctioned for spoliation in the absence of intentional conduct and underscores the importance of taking immediate steps to preserve crucial evidence relevant to pending or reasonably foreseeable litigation.

Dan Berexa
Cornelius & Collins, LLP
Nashville, Tennessee

615-244-1440
www.cclawtn.com