### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON JA N U A RY 17, 200 6 S es sio n HEAL TH COS T CONTRO LS, I NC. v. RONALD GI FFORD
Direc t Appeal from the Chancer y Court for Weakley County No. 15726 William M . Maloan, Chancellor

No. W2005-01381-C OA-R3-C V - F iled March 20, 2006

Th is i s n ot the fi rs t ti me thi s c a se ha s b e e n o n a pp e a l. In this app e a l, we are a sk e d to de te rm ineif the chancery

court e rre d when it found that a n insured individual wa s made whole by a settlement ag reem ent with a third party tortfea sor so as to re quire the insure d to reimburse his insurer

. Specifica lly , Appellant conte nds that the chancery court e rre d in finding that th e i n s u red was not made whole beca

use it failed to use the formula method use d by fede ral c ourts for de termining whether an insured is made whole and failed to e ng ag e in an analy sis of the dollar amounts of the insured’s r ecove ry

and losses. We reve rse and find that the insurer is e ntitled to reimburse ment from the insured.

Tenn. R. App . P . 3; Appeal as of Right; Judgme nt of th e Chancer y Court Re verse d
A L AN E. H I G H ERS , J. , d e li v e r e d th e o p in io n o f th e c o u rt, inw h ic h W. F RAN K C RAW FORD , P.J ., W.S ., and H OL L Y M. K I RBY , J ., joined.
J ohn M. Russell, Thomas H. L awr ence , and Jul ie Y. McL aug hlin, Memphis, TN, for Appe llant
H. Max S peig ht, Dresde n, TN, for AppelleeR ule 1 0 o f t he R ules o f

the C o urt o f

A p p ea l s o f

T en ne ssee go ve rns the iss ua nc e o f M em o ran d um O p i nio ns, 1

w hich st ates:

T h i s Cou r t , w i t h t h e c on c u r r e n c e of a l l j u dg e s pa r t i c i pa t i n g i n t h e c a s e , ma y a f f i r m, revers e o r m o d ify t he act i o ns o f t he t ri al co urt by me m o randum op i ni o n when a for mal opi n i on w ou l d h av e n o pr ec ede n t i al v al u e. W h en a c as e i s d eci ded by
m e m o ra n d u m o p inio n it sh a ll b e d e sig n a te d “M E M O R A N D U M O P IN IO N ” , sha ll not be publ i s hed, an d s hal l not b e ci t ed or re l i ed on f or any reas on i n a ny un r el at ed
cas e. -2-

M EM OR AN DU M OP IN ION 1
I. F A C TS & P R OC EDU R A L H I S T ORY
This is not t he first time this case has bee n on appea l. I n a pre vious opinion rende red by the Tenne s s e e Su p r e me Co u rt c o n c e r n in g th is c a s e , it n o te d th e f o ll o w in g p e rti n e n t f

a c tu al and p r o c e d u r a l h i s t o r y:
Ron a ld G if fo rd[(“ Gi ff

or d” or “Ap pe lle e ” )], theCou nty Ex ecutive of

Weakley County , Tenne ssee, was seriously injured in an automo bil e a c c ide nt w hil e a pa sse ng e r i n a

ve hic le drive n b y

his brother and owned by his mother

. Giffor d’s mother, who was a lso a pa sse ng e r, late r d ie d a s a

re su lt o f i nju ri e s f

ro m th e a c c ide nt.
Giffor d was in s u re d at t he time of the a ccide nt throug h a Prudential I nsuranc e Company g roup policy

insuring Wea

kley County em ploy ees f

or medica l benef

its. On Gifford’ s behalf, Prud e n ti a l p a idu n d e r

th e p o li c y

$ 3 7 , 7 9 5

. 0 8 f

o r me d ic a l e xp e nses inc ur re d b e c aus e of

inj urie s inthea c c ide nt.
Giffor d ’s separ ate tort c laim for his persona l injuries was based on the neg lige nce of his br other, the driver of the car , imputed to h is m oth e r, the ow ne r of the c ar. Th e tort cla im w a s se ttl e d b y State Fa rm I nsuranc e Company , Giffor d’s mother’s liability insurance c arr i e r , b y t h e p a ym e n to f $ 1 0 0 , 0 0 0 - t h e l i m i tu n d e r h e r p o l i c y. After State Fa rm I nsuran ce Company

made the $100,000 payment to Gifford, H ealth Cost Con t ro l s , I nc., (“ HCC” [or “Appe llant”]), Prudential’s assignee , demande d reimburse ment from Giffor d of the $37,795.08 paid by Pru d en tial for his medica l e xpe ns e s. HC C’ s c la im f or re imb ur semen t r e lie d u po n te rm s in Gi ff or d’ s po li c y

e nti tle d “ B e ne fi t Mo dif ic a tio n f or Th ir d Pa

rty Li ab i l i t y , ” w h i ch i n cl u d ed t h e f o l l o wi n g:-3- A. This Modification applies whe n a pers o n , other than the per son for whom a claim is made, is c on sid e re d re sp on sib le for

a S ic k ness or In jur y . To the ex tent payme nt for the Sickne ss or I njury is made,
o r m ay b e m a de in th e fu tu re, b y or for that re sp on sib le pe rs on (a s a

se ttl e me nt, jud g me nt o r i n any other way ): (1) c ha rg e s a ris ing f

ro m t ha t Si c k ne ss o r I nju ry are not cove red;

. . . . B . B u t w h e n a c l a i mi s r e c e i v e d b y

P ru d e n t ia l, benef its which would be pay able e x cept f or A a bove will be paid if: (1) pay ment by

or for the re sponsible person has not y et bee n made; and (2) the Covere d Person( s) involved ( or if incapable, that person’s legal represe ntative) ag rees in writing to p ay b a c k p ro m

p tl y th e b e n e fi ts p a id a s a r e s u lt of the Sic k ne ss o r I nju ry to the ex te nt o

f an y fut ure payme nts made by or for the responsible pe rson for the Sickne ss or Injury. . . . (E mph a sis a dd e d) . G if

fo rdre fu se d to re imb ur se thee xpe ns e s. HCC filed this action for reimburse ment seeking return of the payment for medic al expenses on t h e t heory that the payment had been ma de by

mistake and moved f

or sum m ary

judgme nt based on the“ thi rdpa

rty lia bil ity ” te rm s o f G if

fo rd ’s po lic y

wi th P ru de nti a l. Th e tria l c o u rt c o n c lu d e d th a t th e p r o v is io n s in th e p o li c yset out abo ve de nie d co ve ra g e fo r an inj ury c aus e d b y a thi rdpa rty on wh os e behalf payment is made by

“settl ement, judg ment, or in any other way .” The trial court did not consider the made wh o l e d o ctrine, althoug h HCC had filed an a ffidavit stating that $44,000 of the payment was for Giffor d’s m edica l expenses and that the re maining $ 5 6 , 0 0 0 o f t h e p ay m en twa s fo r G i ff o rd ’ s p a i n an d s u ff

er i n g. Acc ordingl y , t h e trial c ourt g rante d summary judgme nt in favor of HCC and order ed Giff

ord to reimburse HCC for the medical expense s that ha d b e e n p a id b y

Prud e nti a l.-4- The Court of Appe als held that the medica l expenses pay ment was not c overe d under the policy , that Prudential’s payment was bas e d o n a mi s ta

k e o f f a c t, a n d th a t th e tria l c o u rt p r o p e r ly g rante d summary j u d g ment. Be fore oral a rg ument, howeve r, this Court rele ased Y

or k v . S e v ie r Co un ty Am bu lan c e Au tho rit y , 8 S.W .3d 616 (T e nn
. 19 99 ), in wh ic h we he ld that a n in su re d mu st b e ma de wh ole ba s e d o n e q u i t ab l e p r i n c i p l e s b e f o r e a n i n s u r e r

i s e n t i t l e d to reimburse ment, reg ardle ss of policy lang uag e. Giffor d, wh o had pleade d the made w hole d o ct ri n e in the trial c ourt as a de fense , d i s cu s sed Y

ork ino r a l a

r g u me n t i n th e Co u rt o f A p p e a ls as controlling authorit y i n this case. On a pplication for a

ppeal, we rema nded the c ase to the Court o f Appeals to consider Y or k . On rema nd, the Court of Appe als once ag ain af firmed the trial court’s su mma ry jud g me nt a ft e r d e te rm ini ng that Y ork was inapplica

ble and that “Giff ord di d not car

ry his burden of

establishing that he was not made whole .”
He alt h Cos t Co ntro ls, Inc . v . G if fo rd , 108 S.W .3d 227, 228-29 (T en n
. 2 0 03). The T ennesse e Supreme Court re verse d the dec ision of this C ourt, finding that its de cision in Y or k v . S e v ie r Co un ty Am bu lan c e Au tho rit

y , 8 S.W .3d 616 (Tenn. 1999) was applicable a nd that the made w hole doctrine applied in this case
. Id. at 231. The Te nnessee Supreme Court re manded the c ase to the tria l court to make a f

actua l determination of whe ther Giff ord wa s “made whole” by his settlement. Id. Onre ma nd , th e c ha nc e ry

c ou rt fo un d th a t [i ]n l ight of

the seve rity

of the phy s i ca l and emotional inj uries, and the medica l bills incurre d, the Court f inds Gifford ha s not been made wh oleby these ttl e me nt p ro c e e ds in this c a se a nd , th e re fo re , H CC is not enti tl e d to r e imb u r s e me n t o f th e $ 3 7 , 7 9 5

. 0 8 it

p a idinme d ic al bills on behalf of Giff

ord.
II. I SS U E P R ESENTED Appellant has timely

filed its notice of a

ppeal and prese nts the following issue f or re view: 1. Whe the r the c ha nc e ry c ou rt e rr e d whe n it fo un d that App e lle e wa s not “m a de wh ole ” by his se ttl e me nt.
F or thefo llo wi ng re a so ns , w e re ve rs e thede c isi on of thec hanc e ry

c ou rt

.

III . S TA N D A R D O F R EVIEWT hi s Co ur t i s cogn i zan t of t he f act t hat wh en t he cha nce r y cour t at t emp t ed t o determi ne whe t her Ap pel l ee 2

was ma d e who l e, i t us ed t he am o unt recove red b y A p p el l ee f rom t he set t l em ent agreem ent as t he t o t al am o unt of reco very as a basi s t o de t erm i ne whet her Ap p el l ee was m ad e who l e. W hen d et erm i ni ng whether an i nsur ed i s m ad e who l e, a co urt m ust m a k e its d e te rm ina tion i n l i ght of t he t o t al recove ry , whi ch i n t hi s case not o nl y i ncl ud ed t he am o unt of t he
s et t l ement ag r eement but al s o i ncl uded t he amo un t pai d by A pp el l ant an d anot her i ns ur er of Ap pel l ee for h i s medi cal
e x p e n se s. Se e W i m ber l y v. Am
. Cas
. Co. , 5 84 S

. W

. 2d 2 00 , 2 03

- 04 (T enn
. 1 97 9) (det er mi ni ng t ot al recove r y b y i ns ur ed b y ad d i ng am o unt s reco vered by i nsur ed f rom t wo dif

ferent i nsur ers ).
-5- This Court reviews f

indings of f

act by a trial co u rt s i tting without a jury under a de novo standard w ith a presumption of cor rec tness for t h e t ri al court’s finding s. Tenn. R. App. P. 13(d). This Court reviews a

trial court’ s conclusions of law de novo with no presumption of cor rec tness for the trial court’s conclusions. Union C arbide Corp. v. Huddleston , 854 S.W .2d 87, 91 (Tenn. 1993) (c i t i n g Estate of Adkins v. W hite Consol. Indus., Inc. , 788 S.W .2d 815, 817 (Tenn. Ct. App. 1989))

.

IV. D I S CUS S I ON On appe al, Appellant c ontends that the chancery court e rre d when it found that Appe llee wa s not m ad e whole by

his settlement ag ree ment so as to requireAppellee to reimburse A ppellant for the medica l expenses Appellant paid for on behalf of Appe llee. We ag ree
. Rece ntly , this Court found in Abb ott v . Bl ount Coun ty , No. E2004-00637- COA-R 3 -C V, 2005 Tenn. App. L

EXI S 469, at *23 (T enn. C t. App. Aug . 9, 2005) (pe rm. app. filed) , that wher e a trial court “made no finding s of any damag e amount other than medica l expenses of $223,000, .

. . [and] simplystated that in light of the severity of [the insured’s] injuries, neither the $1,275,000 out- o f

- court settlement nor

any amount of money

could possibly

make he r whole” was “ neither pr oof nor finding of da mag es.” Id. at *22-23. I n doing so, this Court stated that “[c]ompensable damag es must be proved in c ompensable terms; in othe r words, they must be valuated mone tarily .” Id. at *23. Further, this Court concluded t h at “t he burde n of proof is on the insured to demonstratethat the settlement did not make her whole in light of all the fa cts . . . .” Id. at* 2 3 -2 4 (c i t i n g Te nn . F ar me rs Mu t. I ns . Co . v . F

ar me rs , No. 03A01-9610- CH-00327, 1998 Tenn. A pp. LEXI S 581, at *3 (Te nn. Ct. Ap p. Au g . 2 0, 19 98 ) ( no pe rm . a pp . f ile d) ). We f

indthi s r a tio na le to a

pp ly in this c a se a s w e ll. At trial, while the c hance ry court found that Appellee was not made whole by the settlement ag r e e me n t a n d d e te r mi n e d th e a mo u n t o f me d ic a l d a ma g e s A p p e ll e e in c u rr e d , it d id n o t a ssign a monetary amount to the i njuries Appellant suffe red from the accident. Rather , the chancery court made spe cific f

indings a s to what injur i es Ap p el l an t suffe red. In this case, the only monetary damag es that the c hance ry court found that Appellee inc urre d was the amount of Appelle’s me dical expenses, which the chanc ery court stated was in e x cess of $45,000. From the limited recor d befor e us on app e a l, w e c a n f

ind no evi den ce that A pp e lle e pr e se nte d a s to themon e tary va lueof his inj urie s. Ap pe lle e ha s r e c ov e red $1 00 ,0 00 fo r h is i nju ri e s f ro m th e se ttl e me nt a g re e me nt, $37,795.08 from Appe llant for medica l expenses incurre d from his injuries, and $7,358.95 from another insurer of

Appellee , bring ing A ppell ee ’s t otal rec overy to $145,154.03. As his total 2
rec overy is in excess of the a mount of damag es prove d at trial, we conclude that Appellee was made-6-

whole by the settlement. Acc ording ly , we reve rse the decision of the chanc ery court and find that Appellant is entitled to reimburseme nt from Appellee

. V. C ONCL US I ON
For the af oreme ntioned rea sons, we re verse the decision of the c hance ry court a nd find that Ap pe llant is e nti tle d to re imb ur se me nt fr om A pp e lle e be c aus e Ap pe lle e wa s ma de wh olefr om h is settl em en t ag ree ment. Costs of this appeal are taxed to Appellee, Ronald Giff ord, for which e x e c u t i o n m a y i s s u e i f

n e c e s s ar y.

___________________________________ ALAN E. HI GHERS, J UDGE