Injury Damages Under Tennessee Law

Lessons from a Recent Federal Trial

A products liability case against Hankook Tire concluded recently with a defense verdict for Hankook.[1] The plaintiff was paralyzed from the neck down. Workers’ compensation had paid more than $1.75 million in past medical expenses, and the plaintiff also sought millions in future life care expenses. Had the case not concluded with a defense verdict, the plaintiff’s non-economic damages would have tested the Civil Justice Act (CJA) damage caps. And the plaintiff also sought punitive damages. The parties and the court devoted significant attention to damages, and the case provides insight in several areas of note.

Punitive Damages and Compliance with Government Standards: Two new statutory provisions bar punitive damages when the defendant has complied with applicable government regulations. The first applies to civil matters generally and applies whenever a defendant demonstrates “substantial compliance” with applicable federal or state “regulations setting forth specific standards applicable to the activity in question and intended to protect a class of persons or entities that includes the plaintiff.”[2] The second provision applies to products liability cases.[3] It bars punitive damages when the product was “designed, manufactured, packaged, labeled, sold, or represented” in accordance with an “approval, license or similar determination of a government agency” or, more commonly, when the product complied with a statutory provision or with a “standard, rule, regulation, order, or other action of a government agency.”[4] The Tennessee Products Liability Act has long afforded products a rebuttable no-defect presumption when they are shown to have complied with applicable government standards,[5] and this latter provision closely tracks the language of the rebuttable presumption. These statutory punitive damages provisions were enacted after Tennessee Supreme Court’s decision in Flax v. DaimlerChrysler Corp.,[6] to reverse the result in that case, which allowed punitive damages even though the defendant manufacturer had established compliance with the Federal Motor Vehicle Safety Standards (FMVSS). As the Western District properly recognized, the new provisions impose an absolute bar to punitive damages when the statutory requirements are met, providing specifically that a manufacturer or seller “shall not be liable” for punitive damages. Hankook’s product complied with all FMVSS requirements, which was established beyond dispute during discovery. The Western District agreed these statutes impose an absolute bar to punitive damages and granted partial summary judgment to Hankook.[7]

Billed Versus Paid Medical Expenses: Amounts billed by the plaintiff’s medical providers exceeded amounts paid to them by about 40 percent. It has long been the law that plaintiffs in personal injury actions may only recover the reasonable cost of medical care received. Following the Tennessee Supreme Court’s decision in West v. Shelby County Healthcare Corp.,[8] several Western District of Tennessee rulings have held that undiscounted amounts billed by medical providers do not represent the reasonable cost of medical care received — that a plaintiff may recover only the usually much lower amounts actually paid to his medical providers.[9] Thereafter, the Tennessee Court of Appeals decided Dedmon v. Steelman,[10] casting doubt on this position. However, the Tennessee Supreme Court has Dedmon under review and the Western District has continued to make an Erie guess that West will be applied outside the hospital lien context, and to hold that plaintiffs may not prove or recover the undiscounted amount of their medical bills. Hankook moved for partial summary judgment on this issue, and also to exclude any evidence of the undiscounted amounts billed for past medical care. The Western District granted both motions.[11] At trial, the plaintiff was permitted to prove only the amounts actually paid for his medical care.

Proof of Medical Expenses and the Statutory Presumption: A Tennessee Code provision can help a plaintiff prove his medical expenses. For medical expenses exceeding $4,000, this statute, Tenn. Code Ann. § 24-5-113(b), raises a rebuttable presumption that medical expense amounts itemized and served at least 90 days before trial are reasonable in amount. Separate proof is still required that all treatment was medically necessary and caused by the accident at issue; the statutory presumption does not help with that.[12] In drafting the statutory notice document, consider two lessons from this case. First, if the plaintiff seeks to utilize the statutory presumption, then his itemized listing of medical expenses should include both the amount billed and the amount paid for each item. Hankook filed a response objecting to the plaintiff’s statutory notice because he had listed only amounts billed, which could not be recovered under the Western District authorities discussed above. After the court granted summary judgment on this issue and ruled that amounts billed could not be proven at trial, the plaintiff faced considerable difficulty proving his medical expenses at trial. Second, when a plaintiff continues to receive treatment, this must be addressed in drafting and supplementing the statutory notice filing. Failing to do so makes the statutory notice filing ineffective as proof of amounts incurred subsequent to the notice filing. Alternatively, for large dollar cases consideration should be given to using an expert witness who can testify to the reasonable amount of the plaintiff’s medical expenses. Relying solely on the statutory presumption to prove medical expenses carries significant risk, as this case demonstrated. A proper expert witness also can prove medical necessity and causation, for which the statutory presumption provides no help.

Lost Household Services: In a wrongful death case, the decedent’s family not only loses the monetary income the decedent would have earned, they also lose the non-monetary value of household services he would have provided to the family (cooking, cleaning, lawn mowing, etc.). In a death case, economists often include lost household services as an element of damages because these are losses suffered by the family members bringing the wrongful death action. In this case, however, the plaintiff did not die, and was suing on his own behalf. The plaintiff nonetheless sought to recover the loss of his own household services to himself, as a separate element of damages. But because the plaintiff was totally incapacitated by his injuries, his life care plan damages already included the cost to have someone else provide all household services (all cooking, cleaning, lawncare, etc.). The plaintiff’s lost household services claim was double-counting. The Western District ultimately agreed that plaintiff was seeking to recover twice for the same loss, and eliminated this claim on summary judgment.[13]

Pre-Accident Versus Post-Accident Life Expectancy: Statistics show that people with spinal cord injuries simply do not live as long as the general population. The plaintiff’s post-accident life expectancy may be half what it would have been before the accident. In a case involving serious injury, future life care expenses can be the largest element of economic damages, and these damages depend heavily on the life expectancy figure used to estimate them. In this case, the plaintiff’s experts argued stridently for application of a pre-accident life expectancy to the life care plan, roughly doubling the bottom-line figure. But life care plan damages are meant to estimate the total cost of caring for the plaintiff for the remainder of his life, and a post-accident life expectancy represents the best estimate of how long those life care expenses will continue. The plaintiff’s shortened life expectancy does not go uncompensated. That loss is compensated as lost enjoyment of life (which is subject to the CJA cap on non-economic damages).[14] Using a pre-accident life expectancy to estimate life care plan damages would double count those other damage elements. Although no case had decided this pre-accident versus post-accident life expectancy question, a CJA statutory provision directs that post-accident life expectancy be used in estimating future care expenses.[15] The Western District granted partial summary judgment on this issue, requiring the plaintiff to use only the post-accident life expectancy figure in presenting life care damages at trial.[16]

Even with this ruling, another life expectancy issue arose at the close of trial. Tennessee Civil Pattern Jury Instruction 14.53 instructs jurors that life expectancy figures are not conclusive and that they may apply a higher or lower figure.[17] This makes some sense when the jury is provided with figures from a general population life expectancy table, like the one now found as an appendix to the Tennessee Civil Pattern Jury Instructions.[18] In this case, however, the experts agreed on the plaintiff’s particular post-accident life expectancy in view of his specific health conditions. The proof on this point was uncontradicted, as was the plaintiff’s life care damage estimate based upon this life expectancy. Hankook moved for judgment as matter of law under Fed. R. Civ. P. 50 on this issue, asking the court to direct the jury that it could not award more than the amount calculated using the plaintiff’s undisputed post-accident life expectancy. Hankook also objected to the TPI instruction. The court included the instruction and denied the pre-verdict Rule 50 motion. Hankook would have renewed its Rule 50 motion following the verdict had the jury found for the plaintiff. With undisputed proof of life expectancy, the jury did not have a “legally sufficient evidentiary basis” to increase plaintiff’s life care damages beyond what he had proven, thus meeting the standard for judgment as a matter of law on this issue.[19]

CJA Damages Caps in Federal Court: The Civil Justice Act caps non-economic damages at $750,000, or $1 million for catastrophic injuries, defined to include spinal cord injury resulting in quadriplegia.[20] The statute directs that the damage cap “shall not be disclosed to the jury, but shall be applied by the court to any award of noneconomic damages.”[21] As a matter of substantive law, the damages cap must be applied in a federal diversity case under Erie R. Co. v. Tompkins.[22] The question arises, however, what procedural vehicle a federal court should use to reduce a jury verdict to the amount allowed by the cap. One choice would be to use a special verdict and to reduce the jury’s verdict to the maximum allowed when entering judgment, pursuant to Rules 49 and 58.[23] Another option would handle the issue through post-trial motion practice, which is the approach adopted in a recent Eastern District of Tennessee case.[24] It is not clear from the motion or the court’s ruling in that case, however, whether the motion was a Rule 50 motion for judgment as a matter of law,[25] a motion to alter or amend the judgment under Rule 59,[26] or something else.[27] In another recent federal case, the post-trial application of Tennessee’s cap on punitive damages was presented as part of a broader Rule 50 motion for judgment as a matter of law.[28] In light of the possibility a court may view Rule 50 as the proper vehicle for post-verdict application of Tennessee’s damage caps, counsel should preserve the issue by moving for judgment as a matter of law on these grounds before the case is submitted to the jury.[29] A post-trial motion under Rule 50 “will not lie unless it was preceded by a motion for a directed verdict made at the close of all the evidence,”[30] and “[b]ecause the Rule 50(b) motion is only a renewal of the preverdict motion, it can be granted only on grounds advanced in the preverdict motion.”[31]

A Concluding Thought About Settlement of Cases Subject to the CJA Damage Caps: From a defendant’s perspective, the CJA caps can significantly reduce the risks of taking a case to trial. Because non-economic damages generally are capped at $750,000 or $1 million,[32] and punitive damages either capped[33] or eliminated altogether, a defendant can calculate with near certainty its worst possible outcome. Assuming there is some probability of a defense verdict, and ignoring defense costs, a rational defendant should be willing to settle for no more than some fraction of the plaintiff’s calculable maximum recovery. But this amount may net the individual plaintiff little or no recovery once he pays the fees and expenses of his attorneys, and resolves subrogation claims arising from his past and future medical expenses.[34] In serious cases with large medical expenses, and where prospective defense costs do not overwhelm the amounts at stake, the damage caps actually may make a trial more likely by constraining a defendant’s downside trial risk.

Notes

  1. Cone v. Hankook Tire Company Ltd., No. 1:14-cv-01122-STA-egb (W.D. Tenn.).
  2. Tenn. Code Ann. § 29-39-104(e).
  3. Tenn. Code Ann. § 29-28-104(b).
  4. Id.
  5. Tenn. Code Ann. § 29-28-104(a).
  6. 272 S.W.3d 521, 536 (Tenn. 2008).
  7. Order, D.E. 275, Cone v. Hankook Tire Company Ltd., No. 1:14-cv-01122-STA-egb (W.D. Tenn., Jan. 23, 2017).
  8. 459 S.W.3d 33 (Tenn. 2014).
  9. Hall v. USF Holland Inc., 152 F. Supp. 3d 1037, 1040 (W.D. Tenn. 2016); Smith v. Lopez-Miranda, 165 F. Supp. 3d 689, 691 (W.D. Tenn. 2016); Keltner v. United States, No. 2:13-cv-2840-STA-dkv, 2015 WL 3688461, at *4 (W.D. Tenn. June 12, 2015). See also Johnson v. Trans-Carriers Inc., No. 2:15-CV-2533-STA-DKV, 2017 WL 28004, at *3 (W.D. Tenn. Jan. 3, 2017).
  10. No. W201501462COAR9CV, 2016 WL 3219070 (Tenn. Ct. App. June 2, 2016), appeal granted (Oct. 21, 2016), oral argument (April 5, 2017).
  11. Order, D.E. 279, Cone v. Hankook Tire Company Ltd., No. 1:14-cv-01122-STA-egb (W.D. Tenn., Jan. 25, 2017). See also Pacheco v. Johnson, 2017 WL 3188429 (M.D. Tenn. July 26, 2017) (granting defendant’s motion to limit medical expense evidence to the amount the plaintiff’s providers accepted as payment in full); but cf. Barnes v. Malinak, 2017 WL 3687320 (E.D. Tenn. Aug. 25, 2017) (holding that tables showing the amounts accepted as full payment were inadmissible under the collateral source rule because they evidenced a discount).
  12. See, e.g., Wilson v. Monroe Cty., 411 S.W.3d 431, 442 (Tenn. Ct. App. 2013).
  13. Order, D.E. 279, Cone v. Hankook Tire Company Ltd., No. 1:14-cv-01122-STA-egb (W.D. Tenn., Jan. 25, 2017).
  14. See Tenn. Code Ann. § 29-39-101(2) (non-economic damages include “noneconomic effects of disability, including loss of enjoyment of normal activities, benefits and pleasures of life and loss of mental or physical health, well-being or bodily functions”); Tenn. Code Ann. § 29-39-102 (capping non-economic damages).
  15. Tenn. Code Ann. § 29-39-103(c) (“The calculation of all future medical care and other costs of health care and future noneconomic losses must reflect the costs and losses during the period of time the claimant will sustain those costs and losses.”). Sensibly, this provision also directs that pre-accident life expectancy be used in estimating lost future income, as this is the period over which the plaintiff would have had earnings but for his injuries. Id. (“The calculation for other economic loss must be based on the losses during the period of time the claimant would have lived but for the injury upon which the claim is based. All such calculations of future losses shall be adjusted to reflect net present value.”).
  16. Order, D.E. 279, Cone v. Hankook Tire Company Ltd., No. 1:14-cv-01122-STA-egb (W.D. Tenn., Jan. 25, 2017).
  17. T.P.I. — CIVIL14.53 Life Expectancy, 8 Tenn. Prac. Pattern Jury Instr. T.P.I.-Civil 14.53 (2016 ed.).
  18. APPENDIX E. LIFE EXPECTANCY TABLE, 8 Tenn. Prac. Pattern Jury Instr. T.P.I.-Civil Appendix E (2016 ed.).
  19. Fed. R. Civ. P. 50(a); cf. Kelley v. Apria Healthcare LLC, No. 3:13-CV-96, 2017 WL 2703520, at *7 (E.D. Tenn. June 22, 2017) (holding that life expectancy was factually disputed).
  20. Tenn. Code Ann. § 29-39-102.
  21. Tenn. Code Ann. § 29-39-102(g).
  22. 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938).
  23. Fed. R. Civ. P. 49, 58(b).
  24. See Kelley v. Apria Healthcare LLC, No. 3:13-CV-96, 2017 WL 2703520, at *1 (E.D. Tenn. June 22, 2017).
  25. Fed. R. Civ. P. 50.
  26. Fed. R. Civ. P. 59(e).
  27. See also Learmonth v. Sears, Roebuck & Co., 710 F.3d 249, 255 (5th Cir. 2013) (“Although the district court denied Sears’ request for a new trial or remittitur, it reduced noneconomic damages to $1 million” under a Mississippi damage cap).
  28. Lindenberg v. Jackson Nat’l Life Ins. Co., 147 F. Supp. 3d 694, 708 (W.D. Tenn. 2015). However, the court ultimately deferred application of the punitive damages cap pending certification of its constitutionality to the Tennessee Supreme Court. The Tennessee Supreme Court declined to accept the certified question. See Order on Defendant’s Motion for Judgment as a Matter of Law as to Punitive Damages, No. 2:13-cv-02657-JPM-cgc (W.D. Tenn. Sept. 28, 2016).
  29. Fed. R. Civ. P. 50(a)(2) states: “A motion for judgment as a matter of law may be made at any time before the case is submitted to the jury.”
  30. Fed. R. Civ. P. 50(b), Advisory Committee Notes, 1963 amendment.
  31. Fed. R. Civ. P. 50(b), Advisory Committee Notes, 2006 amendment.
  32. Tenn. Code Ann. § 29-39-102.
  33. With certain exceptions, Tenn. Code Ann. § 29-39-104(a)(5) caps punitive damages at the greater of two times compensatory damages or $500,000.
  34. See, e.g., Tenn. Code Ann. § 50-6-112(c) (creating subrogation right for employer who has paid workers’ compensation benefits).

Scott Ross SCOTT ROSS is a member of Neal & Harwell PLC in Nashville. He was counsel for Hankook Tire in the matter discussed in this article. Scott handles trial, appellate, administrative and arbitration matters. Twenty-five years of experience includes products liability, utility regulation, trademark, employee and officer fiduciary duty and noncompete, class actions, multi-district litigation, healthcare, mass torts, corporate, computer intrusion and misappropriation, and tax litigation. Ross is a graduate of Vanderbilt University Law School and can be reached at sross@nealharwell.com, (615) 244-1713 or via www.nealharwell.com.

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