The last three sessions of the Tennessee General Assembly have brought about extensive tort reform, beginning with the "Tennessee Civil Justice Act of 2011" which was a legislative priority during Governor Bill Haslam’s first year in office. This post provides an overview of the most significant reforms enacted over the last three sessions, including the bills that passed in the 2013 session, which ended on April 19, 2013.
Non-Economic Damages in Most Civil
Actions Capped at $750,000 Per Injured Plaintiff
Pursuant to Tenn. Code Ann. § 29-39-102, non-economic damages are broadly defined to include pain and suffering, physical impairment, mental anguish, emotional distress, loss of enjoyment of life and loss of consortium. The $750,000 cap provision applies per claimant, and is not increased if a claim is brought against multiple defendants. Nor is the cap increased for derivative claims brought by a spouse, or child, for loss of consortium or other noneconomic damages. There are exceptions, which increase the cap to $1,000,000 per plaintiff, in cases where the injured party sustains a catastrophic injury such as paraplegia, multiple amputations, severe burns, or the claim involves the wrongful death of a parent of one or more minor children.
The cap does not apply to economic damages such as medical expenses, lost earning
capacity, property damage, loss of business or employment opportunities or other objectively verifiable monetary losses. The cap is also removed when the injury is intentional; where the defendant intentionally conceals or destroys evidence; for injuries resulting from the defendant’s intoxication or if the defendant is convicted of a felony for the actions which caused the injury.
Punitive Damages Cap
Tenn. Code Ann. § 29-39-104 codifies many aspects of Tennessee Supreme Court’s 1992 decision in Hodges v. S.C. Toof & Co., which limited the availability of punitive damages to instances where the defendant is found, by clear and convincing evidence, to have engaged in intentional, reckless, malicious or fraudulent conduct which caused injury to the plaintiff. The statute also generally limits punitive damages awards to two times the compensatory damages awarded to the plaintiff, or $500,000, whichever is greater. The statute contains provisions limiting the availability of punitive damages against product manufacturers and requires that the culpability of a defendant, whose liability for punitive damages is alleged to be vicarious, be determined separately from that of any agent or employee. Like the cap on non-economic damages, there are exceptions were the cap does not apply, such as where the defendant intended serious physical injury; the defendant’s conduct resulted in a felony conviction; the defendant intentionally concealed or destroyed evidence; or the defendant was under the influence of alcohol, drugs or other intoxicant or stimulate.
Joint Liability
The recent session saw the enactment of SB56/HB1099, which amends Tenn. Code Ann. § 29-11-107 to state that the doctrine of joint liability is not applicable in cases involving comparative fault unless the party sought to be held jointly liable is engaged in a civil conspiracy with the other liable defendant(s). The act does not eliminate traditional claims for vicarious liability or under the doctrine of respondeat superior.
Product Liability Claims Reform Legislation
Tenn. Code Ann. § 29-28-106 alters product liability law to limit the claims that can be brought against any seller of a product, which is not also the manufacturer, and provides additional protection for product manufacturers.
Procedure to Permit Defense Counsel to Engage in Ex Parte Communications with Plaintiff’s Healthcare Providers
Tenn. Code Ann. § 29-26-121, which was amended to apply to all healthcare liability actions commenced on or after July 1, 2012, provides for a procedure by which the defendant and defense counsel may petition the court for permission to interview the plaintiff’s treating healthcare providers outside the presence of the plaintiff or the plaintiff’s counsel.
Limitation of Property Owners and Occupiers Liability to Trespassers
Tenn. Code Ann. § 29-34-208 provides that a possessor of real property, such as an owner, lessee or renter, owes no duty of care to a trespasser except to refrain from willful or intentional conduct causing injury. This is a departure from prior law, which obligated an owner or occupant of real property to warn known trespassers of latent dangers on the property. The new statute does retain the common law concept of “attractive nuisance” and the “playground doctrine,” which can be a basis for liability if the injured trespasser is a child.
Limitations on Tennessee Consumer Protection Act Claims
The Tennessee Consumer Protection Act (“TCPA”) was enacted in 1977. One of the most significant aspects of the TCPA is the potential to recover attorneys’ fees and up to treble damages in the event a party is found guilty of an "unfair or deceptive act or practice." While the 2011 amendments to the TCPA generated little media attention, they are significant and any party evaluating a TCPA claim should take a close look at the amended act and keep in mind that pre-amendment case law interpreting the amended provisions may no longer control.
The 2011 amendments included the elimination of a private right of action for deceptive acts and unfair practices involving the marketing or sale of securities. The TCPA was also amended to specifically prohibit class action lawsuits for alleged TCPA violations and to exempt the insurance industry from TCPA coverage. The Tennessee Supreme Court previously interpreted the act to apply to the insurance industry.
The most significant change in 2011 was the elimination of the right to bring a private action for a violation of the "catch-all" provision found at Tenn. Code Ann. § 47-18-109(b)(27). This "catch-all" was often used as the basis to allege a TCPA violation where the actions of the defendant did not violate one of the specifically described unfair or deceptive acts listed in the TCPA.
Post-Judgment Interest
Prior to July 1, 2012, the “default” interest rate on judgments was 10% per annum, pursuant to Tenn. Code Ann. § 47-14-121. The interest rate applicable to judgments entered after the effective date of the amendment of this statute is based on the prime rate, minus 2%, unless there is a statute, note or contract that fixes the rate of interest at a specific rate. The rate set by a note or contract cannot exceed the maximum interest rates permitted under Tenn. Code Ann. § 47-14-103 and the maximum “default” interest rate is 10%. The Tennessee Administrative Office of the Courts posts rates on its website and the applicable rate is determined by the date of the judgment.
Recovery of Attorney’s Fees and Costs for A Successful Motion to Dismiss
Tenn. Code Ann. § 20-12-119 was amended to provide for the recovery of up to $10,000 in attorney’s fees and costs to a defendant where the court grants that defendant’s motion to dismiss for failure to state a claim and the decision is final and no longer subject to appeal. There are several exceptions where recovery of fees and costs is not permitted, such as claims brought by or against the state, or other governmental entities, and actions brought by pro se litigants. This provision only applies to claims filed on or after July 1, 2012.
Venue Limitations
The Tennessee Civil Justice Act imposes limitations on the venue in which a defendant can be sued in transitory actions, which include tort cases. Unless venue is otherwise provided for, an individual can only be sued in the county where the defendant resides or where “all or a substantial part of the events giving rise to the cause of action accrued.” A business organized in Tennessee can only be sued in the county where “all or a substantial part of the events giving rise to the cause of action accrued” or “in the county where the principal office is located.” If an entity is organized under the laws of a state other than Tennessee, it can only be sued in the county where the cause of action accrued or where the defendant’s registered agent is located, even if the business maintains offices within the state. If the entity does not have a registered agent, it can be sued in the county in which the cause of action accrued or the county of any statutorily designated agent for process.
Looking Ahead
Various issues relating to the interpretations and validity of the 2011 and 2012 enactments described above are currently under consideration by the courts, including the constitutionality of the non-economic and punitive damages caps. It is also reasonable to expect further reform efforts in the upcoming sessions. For example the “Phantom Damages Elimination Act” (SB 1184/HB 0978) never made it beyond committee but will be considered in the 2014 session. The bill sought to limit the recovery of medical expenses to what is actually paid or actually owed to a provider, as opposed to what the provider may have initially billed the patient or their health insurer. Under current case law, except for in health care liability claims, a claim can be made for total amount of a medical bill, even if the provider accepts, or is willing to accept, less than what is initially charged for the medical service.
Dan Berexa
Nashville, Tennessee
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