Court Opinion

ID: 4352429
Source: CourtListenerOpinion
Date Created: 2018-12-19 21:40:35.668953+00
Date Added: 2024-06-11T14:38:10.954401
License: Public Domain

12/19/2018
                  IN THE COURT OF APPEALS OF TENNESSEE
                             AT KNOXVILLE
                                  October 16, 2018 Session

                   SHAWN T. SLAUGHTER V. GROVER T. MILLS ET AL.
                    Appeal from the Circuit Court for Hamilton County
                      No. 11-C-434       Jeff Hollingsworth, Judge
                              ___________________________________

                                No. E2017-02288-COA-R3-CV
                              ___________________________________

This matter involves Hamilton County’s attempt to recover funds it paid, through its on-
the-job injury program, on behalf of one of its employees, Shawn T. Slaughter. Mr.
Slaughter was injured while riding in a County vehicle when that vehicle collided with
another vehicle; he filed suit against the drivers and the County. Prior to trial, Mr.
Slaughter settled with one of the defendant drivers. After trial, having been found not at-
fault by the jury, the County attempted to assert a lien against settlement. The trial court
held that the County does not have a contractual or statutory basis for a lien against Mr.
Slaughter’s settlement. It further held that, because Mr. Slaughter was not made whole by
his settlement, the County is not entitled to subrogation. The County filed a motion for
reconsideration and requested a ruling on its asserted constitutional basis for recovery.
The court denied the County’s motion. The County appeals. We affirm.

           Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                                Affirmed; Case Remanded

CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which D. MICHAEL
SWINEY, C.J. and THOMAS R. FRIERSON, II, J., joined.

J. Micah Guster, Chattanooga, Tennessee, for the appellant, Hamilton County.

Marvin Berke, Chattanooga, Tennessee, for the appellee, Shawn T. Slaughter.

                                          OPINION

                                              I.

      Mr. Slaughter worked for Hamilton County as an EMT.1 On April 5, 2010,
another County employee was driving an ambulance while Mr. Slaughter tended to a

       1
           Emergency Medical Technician

                                              -1-
patient in the back. A motor-vehicle collision occurred; Mr. Slaughter was injured. He
sued the drivers of the two vehicles and Hamilton County.

       Hamilton County does not participate in Tennessee’s workers compensation
program. Instead, it operates a self-funded on-the-job injury compensation program. The
program provides coverage to relevant employees for losses caused by injuries the
employee experiences while working for the County. The program is budgeted from tax
dollars and the County’s general fund. The County engages a third-party administrator to
handle claims.

        In accordance with its on-the-job injury program obligations, the County paid
approximately $7,512.29 in assorted benefits for Mr. Slaughter attributable to the
collision. The County filed a lien against any recovery obtained by Mr. Slaughter aiming
to recover the funds it spent on his medical care and time off of work. Prior to trial, Mr.
Slaughter settled his claims against Grover Mills, a defendant driver, for $24,600 and
released him from further liability. After trial, the jury found Mr. Mills one-hundred
percent (100%) at fault, and awarded Mr. Slaughter $58,000 in damages.

        The County subsequently sought to assert a lien against Mr. Slaughter’s pre-trial
settlement. The court conducted a hearing regarding the lien; neither a transcript of the
lien hearing nor a statement of evidence was provided on this appeal. However, the
resulting July 13, 2017 order suggests that Mr. Slaughter “object[ed] to payment of any
money to the County. He argue[d] that he was not ‘made whole’ by the settlement and
therefore, the County cannot recover.” In response, the court stated that the County
“claim[ed] it has a lien and the ‘made whole’ doctrine does not apply.”

      In its order entered July 13, 2017, the court denied the County’s lien interest,
holding that

              [I]n Blankenship v. Estate of Bain, 5 S.W.3d 647 (Tenn. 1999),
              the Supreme Court dealt with the “made whole” doctrine,
              which applies to subrogation claims. The court also discussed
              the difference between subrogation claims and liens. As to
              liens, the court said they can be established by statute or
              contract. There is no evidence in this case of a contractual
              lien between Mr. Slaughter and the County. The County
              apparently relies on the statutory lien created for employers in
              the Worker’s Compensation (sic) statutes. See T.C.A. § 50-6-
              112(c)(1). However, the County is not part of the Worker’s
              (sic) Compensation system. It is exempt from Workers
              Compensation, unless it chooses to “opt in.” It has not done
              so. Therefore, the subrogation lien created by T.C.A. § 50-6-
              112 does not apply.

                                            -2-
The court then held that “[u]nder the evidence in this case, the County does not have a
lien against Mr. Slaughter’s settlement.” Mr. Slaughter’s jury verdict was for $58,000 and
he was only able to recover $24,600 in the settlement; the court therefore held that
because Mr. Slaughter was not made whole by his settlement, “the County is not entitled
to subrogation.”

       On August 10, 2017, the County filed a motion for reconsideration. Therein, the
County asked the court to reconsider its previous ruling, and it requested a ruling on its
“constitutional claim.” Hamilton County’s motion argued that it had asserted a claim
under Article 2, Section 29 of the Tennessee Constitution, which states that

              the credit of no County, City or Town shall be given or
              loaned to or in aid of any person…except upon an election to
              be first held by the qualified voters of such county, city, or
              town, and the assent of three-fourths of the votes cast at said
              election.

Tenn. Const. art. II, § 29. The County argued that this “could be a basis for Hamilton
County’s lien not included in the statutory or contractual nature of Plaintiff’s claim.” It
suggested that “even if the Court finds that there is no contract or statute applying to his
situation, the Court can rule Hamilton County’s lien has a constitutional basis as no
county can give or loan credit to any person without an election.” On September 18,
2017, a hearing was conducted on the motion, of which a transcript was made.

      On October 23, 2017, the court entered its order denying the County’s motion. At
the conclusion of the motion hearing, the court held that the constitutional provision
advanced by the County does not apply. The court held that

              [i]n regard to the constitutional argument, I’ve already
              expressed that I do not think Article II, Section 29 of the
              Tennessee Constitution applies to this situation. I don’t think
              this is -- what’s the term used? A credit being extended by the
              County to, to someone outside the County. As I said, this is a
              part of the County’s contract with its employee. We will pay
              you this for your efforts and your skills and your time. Part of
              “this” is this on-the-job injury fund and what comes with that.
              Now, there’s no doubt that had Mr. Slaughter been made
              whole, then the City might -- I mean the County may be
              entitled to a -- to a lien to recover that. But it was clear to me
              that under these circumstances, he was not made whole.

On November 21, 2017, the present appeal was filed.

                                             -3-
                                             II.

        Hamilton County argues on appeal that the made whole doctrine cannot apply to
Hamilton County and that the Tennessee Constitution allows Hamilton County to pursue
its lien, which are issues of law. Mr. Slaughter argues that the County’s notice of appeal
was untimely.

                                            III.

        As a preliminary matter, Mr. Slaughter argues that Hamilton County’s notice of
appeal is untimely. As noted above, on July 13, 2017, the trial court entered its order on
the County’s alleged lien. Less than a month later, on August 10, 2017, the County filed
its motion to reconsider the court’s previous opinion. It was not until nearly a month after
the court entered its October 23, 2017 order on the motion to reconsider that the County
filed its notice of appeal. Mr. Slaughter argues that, because motions to reconsider are not
listed in the applicable rules of civil and appellate procedure as one that tolls
commencement of the thirty-day period for filing a notice of appeal, the November 21,
2017 filed notice of appeal is untimely. The County counters that the motion to
reconsider was, in substance, a Rule 59.04 motion to alter or amend the judgment that
allowed the court to retain jurisdiction and tolled commencement of the time for filing a
notice of appeal.

        The Supreme Court has instructed that courts are to consider “the substance of a
post-trial motion, rather than its form.” Tenn. Farmers Mut. Ins. Co. v. Farmer, 970
S.W.2d 453 (Tenn. 1998). The motion to reconsider filed by the County was, in
substance, a Rule 59.04 motion to alter or amend the initial judgment of the trial court.
The motion to reconsider was filed within thirty days of the July 13, 2017 order of the
court, and therefore the court retained jurisdiction to rule on the motion. The thirty-day
time period for filing the notice of appeal did not commence until the court entered its
October 23, 2017 order, and therefore the November 21, 2017 notice of appeal was
timely.

                                            IV.

      Hamilton County argues, without citation to proper supporting authority, that Mr.
Slaughter “waived his standing to object to the lien.” The trial court stated in its July 13,
2017 order following the lien hearing that “Mr. Slaughter object[ed] to payment of any
money to the County.” The record available before us does not indicate that Mr.
Slaughter did anything other than consistently deny any alleged debt to Hamilton County.
The “existence of a lien presupposes the existence of a debt.” West v. Shelby Cty.
Healthcare Corp., 459 S.W.3d 33, 42 (Tenn. 2014). Given that Mr. Slaughter denied the

                                             -4-
existence of a debt obligation throughout the present matter, it follows that he opposed
the purported lien, and therefore he did not waive his right to object.

                                            V.

       As noted above, the trial court held that there was no contractual or statutory basis
presented for the County to assert its lien. It also denied the County’s claim of a
constitutional basis for recovery, a decision which the County appeals. The County had
argued that Article II Section 29 of the Tennessee Constitution mandates its right to
recover; however, as noted above, the trial court held that the provision is inapplicable.
The court held that the County’s “[on-the-job injury program] is a part of the County’s
contract with its employee. We will pay you this for your efforts and your skills and your
time.” We agree with the trial court’s assessment and affirm its holding that the asserted
constitutional provision is not implicated in the present matter, and it therefore cannot
serve as a basis for recovery.

        Next, the court held that the County is not entitled to subrogation, because Mr.
Slaughter was not made whole by his settlement. In so holding, the court looked briefly
to the Supreme Court’s opinion, in Blankenship v. Estate of Bain, where the Supreme
Court held that the state was not entitled to subrogation or reimbursement for funds paid
through its medical assistance program until the recipient was made whole. Blankenship
v. Estate of Bain, 5 S.W.3d 647 (Tenn. 1999). In Blankenship, the Supreme Court dealt
with an insurance company seeking to recover under a statutory right to subrogation –
distinguishable from the present matter; however, the Supreme Court began its analysis
by reviewing the established principles of subrogation, and we find their review and
discussion illustrative. In Blankenship, the Supreme Court found no exemption from the
made whole doctrine in the statute at issue that granted subrogation rights to the state.
The Court stated that it proceeds with the presumption that the legislature is aware of the
existing state of the law and had the legislature intended an exemption to the principle, it
could simply have stated in precise language that the subrogation right in the context of
the medical assistance program is not subject to the requirement that an injured party first
be made whole for his or her loss. See Blankenship v. Estate of Bain, 5 S.W.3d 647,
651-52 (Tenn. 1999). Absent such expression, the principle that subrogation is subject to
the made whole doctrine remains. Similarly here, the County has not indicated a
sufficient legal basis for its contention that it is exempt or excepted from the principle
that subrogation is subject to the made whole doctrine. The County instead argues
broadly that

              [u]pholding [] the trial court’s ruling presents potential
              unfunded liabilities that could accrue into the thousands of
              dollars towards multiple tortfeasors for cities and
              counties…The very nature of the made whole doctrine
              ensures that the County is never able to recoup funds paid on

                                            -5-
             behalf of its employees because the employee is never made
             whole.

                                     *     *      *

             [r]efusing to remove the barrier of the made whole doctrine
             will likely result in municipalities terminating such benefits
             in the future because maintaining such benefits will become
             too uncertain, making planning, budgeting, and meeting the
             municipality’s fiduciary duty to taxpayers nearly impossible.

                                     *     *      *

We decline the County’s request to “remove the barrier of the made whole doctrine.” It is
the purview of the legislature to carve such an exception for counties and/or local
governments, if it so chooses. See e.g. Tenn. Code Ann. § 71-5-117 (following
Blankenship, supra, the statute was amended to create a statutory right for the state to
subrogation under the medical assistance program: “[i]t is the intention of the general
assembly that subsections (f) through (i) be used in lieu of application of the ‘made
whole’ doctrine for any recovery authorized under this section.”) There being no such
basis for an exception or exemption before us, we affirm.

                                          VI.

       The judgment of the trial court is affirmed. Costs on appeal are taxed to the
appellant, Hamilton County. Case remanded for collection of costs on appeal.

                                                  _______________________________
                                                  CHARLES D. SUSANO, JR., JUDGE

                                           -6-