§71.5 Recoverability of Monies From Loss of Consortium Plaintiff

The Case: Hunley v. Silver Furniture Mfg. Co., 38 S.W.3d 555 (Tenn. 2001).

The Basic Facts: Man injured at work filed products liability claim and his wife asserted a loss of consortium claim. Each of them recovered money from the product manufacturer. The two of them then filed a declaratory judgment action asking the court to declare that the wife's settlement was not subject to the workers compensation lien.

The Bottom Line:

• "A worker who has been injured by a third-party tortfeasor may receive workers' compensation benefits from the employer and also may maintain an action against the third-party tortfeasor. See Tenn. Code Ann. § 50‑6‑112. In the event of the worker's recovery from the third party, Tenn. Code Ann. § 50‑6‑112(c) provides a subrogation lien in favor of an employer against any amounts recovered by the worker from the third party 'by judgment, settlement or otherwise.' Tenn. Code Ann. § 50‑6‑112(c); see also Castleman v. Ross Eng'g, Inc., 958 S.W.2d 720 (Tenn. 1997)." 38 S.W.3d at 557.
• "The employer's subrogation lien extends only to amounts recovered by 'the worker, or by those to whom such worker's right of action survives.' Tenn. Code Ann. § 50‑6‑112(c). Because this is not an action brought by a party surviving the worker, the statutory language, 'by those to whom such worker's right of action survives' is not implicated.^FN3 The question remaining for our determination is whether the settlement amount allocated to Mrs. Hunley was an amount recovered by 'the worker.'

  FN3 This claim is not one for wrongful death. We, therefore, express no opinion as to the extent to which damages awarded pursuant to a claim for wrongful death are subject to subrogation under Tenn. Code Ann. § 50‑6‑112(c). See Jordan v. Baptist Three Rivers Hosp., 984 S.W.2d 593 (Tenn. 1999) (holding loss of consortium damages constitute a portion of the pecuniary value of the decedent's life)."

  Id .
• "It is derivative in the sense that Mrs. Hunley's loss of consortium claim originates from Mr. Hunley's claim for his personal injuries." Id.
• "We have held, however, that loss of consortium is ''a separate claim from that of an injured spouse.'' Tuggle, 922 S.W.2d at 108 (Tenn. 1996) (quoting Jackson v. Miller, 776 S.W.2d 115, 117 (Tenn. Ct. App. 1989)). The Court of Appeals has also held that '[t]he right to recover for loss of consortium is a right independent of the spouse's right to recover for the injuries themselves.'Swafford v. City of Chattanooga, 743 S.W.2d 174, 178 (Tenn. Ct. App. 1987); see also Tuggle, 922 S.W.2d at 108 (citing Swafford with approval). These cases recognize that a spouse's loss of consortium claim is a distinct cause of action vested solely in the spouse." Id.
• "The status of the worker's spouse's cause of action for loss of consortium as a distinct claim is further supported by the lack of a remedy for the worker's spouse under our workers' compensation law. The workers' compensation statutes make no provision for compensating a worker's spouse for loss of consortium damages. Indeed, we have held that a worker's spouse has no right to bring suit against the employer for loss of consortium. Napier v. Martin, 250 S.W.2d 35, 36 (Tenn. 1952). The spouse's remedy for loss of consortium exists only against a third-party tortfeasor. Equating the worker's spouse with the worker for purposes of Tenn. Code Ann. § 50‑6‑112(c) would require us to ignore the substance of a statutory scheme that regards a spouse's claim for loss of consortium as separate from the worker's claim. Accordingly, we join the majority of jurisdictions that hold an employer's right to subrogation does not extend to amounts recovered by the worker's spouse for loss of consortium against a third-party tortfeasor and that amounts collected by a spouse for a cause of action vested solely in that spouse are beyond the reach of the statutory subrogation lien." Id. at 558 (footnote omitted).
• "One consideration remains. Clearly, workers in Tennessee are authorized to settle claims against third-party tortfeasors. See Millican v. Home Stores, Inc., 270 S.W.2d 372, 374 (Tenn. 1954). Further, '[t]he Tennessee statute does not require the employee to obtain the ratification of the employer before making a settlement.' Aetna Cas. & Sur. Co. v. Gilbreath, 625 S.W.2d 269, 273 (Tenn. 1981). Nevertheless, we recognize, as have other jurisdictions, the risk that workers, their spouses, and third-party tortfeasors may structure a settlement in such a way that the employer's subrogation right is effectively circumvented." Id. (footnote omitted).
• "We find it appropriate, however, to clarify that trial courts have the power to ensure the continued honesty of workers' settlements with third-party tortfeasors when loss of consortium damages are apportioned to a spouse as an adjunct to the worker's personal damages." Id. at 559.
• "We hold that an injured worker, the injured worker's spouse, or a third-party tortfeasor may seek court approval of a settlement. Reasonable notice of the action in which approval is sought shall be provided to the employer or its carrier. The trial court having jurisdiction over the third-party claim shall then review the allocation of damages to the injured worker and to the injured worker's spouse. We believe that the trial court is in the best position to review the allocation of damages between the plaintiffs. In the trial of personal injury cases, juries determine the amount of damages awarded to the parties for their claims. In the absence of a jury demand, the trial court makes those determinations as the trier of fact. Moreover, trial courts have the authority to accept settlements and to give effect to them." Id.
• "When presented with a motion to approve a settlement between a third-party tortfeasor and the worker and the worker's spouse, the trial court having jurisdiction over the third-party claim shall review the settlement to ensure that the allocation of settlement proceeds between the worker and the worker's spouse is fair and reasonable. See, e.g., Blagg v. Ill. F.W.D. Truck & Equip. Co., 572 N.E.2d 920, 924 (Ill. 1991). The court should consider both the need to protect the statutory subrogation rights of the employer and the need to encourage good faith settlement of third-party claims. In determining the reasonableness of the allocation of the total damages, the trial court should consider 'the nature and extent of the claimed loss of consortium, the potential value of the dismissed claim, and the expectations and motivations of the settling parties.' Rains v. Kolberg Mfg. Corp., 897 P.2d 845, 848 (Colo. Ct. App. 1994). If any portion of the settlement allocated for loss of consortium damages is determined not to be fair and reasonable, that portion shall be made subject to subrogation in favor of the employer. See id. The trial court's ruling shall be upheld unless an abuse of discretion is shown." Id. (footnote omitted).

Other Sources of Note: Correll v. E.I. DuPont de Nemours & Co ., 207 S.W.3d 751 (Tenn. 2006). (workers' compensation statutes do allow for death benefits to be paid, and thus any recovery from a third-party tortfeasor for wrongful death is subject to subrogation liens by the employer but not to that portion reasonably attributable to the loss of consortium claim).

Recent Cases: Correll v. E.I. Dupont Nemours & Co ., 207 S.W.3d 751 (Tenn. 2006) (upholding the trial court's decision that an employer's subrogation right does not extend to the surviving spouse's loss of consortium claim, but does extend to the recovery the employee's surviving spouse received in wrongful death claim).