Opinion ID: 1058552
Heading Depth: 1
Heading Rank: 7

Heading: Future Liability

Text: The trial court further concluded that Tennessee Code Annotated section 50-6-112(c)(2) [4] applied to the circumstances of the present case and therefore held that Continental was entitled to a credit of $7,041.45 against its future liability. [5] The court, however, held that Continental was not entitled to a credit for future medical expenses. The trial court erred in limiting Continental's credit to $7,041.45, but it correctly concluded that Continental's credit does not apply to future medical expenses. Under Tennessee Code Annotated section 50-6-112(c)(2), an employer is entitled to a credit against future liability to the extent the employee's net recovery exceeds the amount that the employer has previously paid in workers' compensation benefits. In the present case, Hickman's net recovery totaled $368,000, and Continental had previously paid $84,216.74 in workers' compensation benefits. As such, Continental is entitled to a credit against future liability in the amount of $283,783.26 ($368,000 less $84,216.74). Consequently, the trial court erred in limiting Continental's credit against future liability to $7,041.45. Continental will be entitled to a credit from the remaining sum of $283,783.26 for the award of periodic payments of permanent partial disability benefits, totaling $90,338.44. On the other hand, the trial court correctly held that Continental's credit against future liability does not apply to future medical expenses. In reaching this conclusion, the trial court relied on Graves v. Cocke County, 24 S.W.3d 285 (Tenn.2000). In Graves , a worker settled a third-party tort claim and then settled his workers' compensation claim for a lump sum. The parties agreed that the employer was entitled to reimbursement for medical expenses it had already paid on behalf of the employee. The parties could not agree as to whether the employer was entitled to a credit for future medical expenses that were unknown and incalculable at the time of the hearing. We held that the credit on the employer's future liability as used in Tennessee Code Annotated sections 50-6-112(c)(2) and (3) does not encompass payments that are unknown at the time of the trial court's hearing. Graves, 24 S.W.3d at 288. We concluded that employees should not be placed in the difficult position of not being able to spend the money they receive in a third-party suit for fear that some or all of those funds may have to be paid to the employer if needed medical treatment is sought. Id. We also determined that the goals of judicial economy and finality of workers' compensation settlements supported our holding. Id. The present workers' compensation case was not settled for a lump sum as was the case in Graves . However, our construction of Tennessee Code Annotated sections 50-6-112(c)(2) and (3) in Graves is not affected by the manner in which the benefits are paid. Employees will be placed in the difficult position of not being able to spend their third-party recoveries even if periodic payments are credited against the third-party recovery. Holding these funds hostage for an indefinite period of time is just as unacceptable under these circumstances as it was in Graves . As such, the logic underlying Graves compels us to reach a similar result in this case. We therefore apply the holding of Graves to the present case and conclude that Continental is not entitled to a credit against future liability for medical expenses that are unknown or incalculable at the time of the trial of the workers' compensation case.