Robert Harold BOMELY, Jr., Plaintiff/Appellee, v. MID-AMERICA CORPORATION, d/b/a Burger King, Defendant/Appellee, and Larry Brinton, Jr., Director of the Division of Workers’ Compensation, Tennessee Department of Labor, Second Injury Fund, Defendant/Appellant.
No. unknown
Supreme Court of Tennessee, at Knoxville.
June 1, 1998.
968 S.W.2d 929
DROWOTA, Justice.
Additional facts indicate that the trial court‘s award of prejudgment interest was an equitable decision. First, a jury determined that the Myints did not commit arson and were legally entitled to the insurance proceeds. Yet, they were without the use of those proceeds from the date of the loss, October 1990, to the trial court‘s judgment in May 1995—a period of approximately four and a half years. During that time, Allstate had full use of the funds, while the Myints possessed only unproductive property. Unquestionably, then, the Myints cannot be fully compensated without the award of interest. Further, the trial court did not allow the interest to begin accruing until the date Allstate denied the claim, June 1991, rather than the date of the loss, as the trial court did in Wilder v. Tennessee Farmers Mutual Ins. Co., 912 S.W.2d 722, 727 (Tenn. App. 1995) (award of interest beginning at date of loss was abuse of discretion; two year period was more appropriate under the circumstances).
In conclusion, we find that there is evidence here to support the award of prejudgment interest. Consequently, the trial court‘s decision was not a “manifest and palpable abuse of discretion,” and, as a matter of law, we are constrained to sustain the trial court‘s judgment, even if we were to disagree with it.8
IV
In sum, we hold that the Consumer Protection Act, although applicable to the insurance industry as a whole, does not provide a right to recovery to the Myints for the denial of their insurance claim. Further, under the circumstances of this case, we find no error in the award of prejudgment interest. Accordingly, we affirm the Court of Appeals’ dismissal of the claim made under the Consumer Protection Act. We reverse the Court of Appeals’ decisions that the Consumer Protection Act does not apply to insurance companies and that the prejudgment interest award was an abuse of discretion.
ANDERSON, C.J., DROWOTA and HOLDER, JJ., and REID, Senior Justice, concur.
David H. Dunaway, Dunaway & Associates, LaFollette, for Appellee Bomely.
Steven Johnson Butler, Vines, Babb, Knoxville, for Appellee Mid-America Corporation, d/b/a Burger King.
John Knox Walkup, Attorney General and Reporter, Dianne Stamey Dycus, Senior Counsel, Nashville, for Appellant.
OPINION
DROWOTA, Justice.
In this workers’ compensation action the Second Injury Fund, defendant-appellant,
BACKGROUND
In 1993 and again in 1994, the employee, Robert Bomely, was working as an assistant manager for Burger King when he injured his neck and back in the course and scope of his employment. He had an extensive history of prior back and neck injuries, both work-related and nonwork-related. These include a noncompensable back injury in 1982; a work-related back injury in 1983 that resulted in a court approved settlement for 25 percent permanent disability to the body as a whole; a work-related back injury in 1988 for which a settlement was reached and approved by the court for 10 percent permanent disability to the body as a whole; and a noncompensable neck injury resulting from a car accident in 1989. Accordingly, the employee has received workers’ compensation awards totaling 35 percent permanent disability to the whole body prior to the 1993 and 1994 work-related back and neck injuries which precipitated this suit. The employee was able to return to work after each injury, but has not been able to return to work since his last injury in 1994.
Dr. William Kennedy, an orthopedic surgeon, testified that the employee sustained a 29 percent permanent anatomical impairment to his neck and a 26 percent permanent anatomical impairment to his back for a total of 47 percent impairment to the body as a whole. Dr. Kennedy attributed 33 percent of the total anatomical impairment of 47 percent to the 1993 and 1994 injuries, which equates to 15.6 percent. A psychiatrist testified the employee has permanent and severe depression related to his injuries which prevent him from being gainfully employed. A vocational disability expert concluded that the employee is totally and permanently vocationally disabled.
The trial court found the employee to be permanently and totally disabled, a finding that the parties do not contest on appeal. The court also found that only 20 percent of the employee‘s permanent and total disability was attributable to the last injury. The court further determined that the employee was entitled to workers’ compensation benefits until he reached the age of 65 (he was 42 years old at the time of trial). See
The primary question on appeal is whether it was proper to have assessed the employer‘s liability based on a percentage of 400 weeks.2 A secondary but related issue is whether an award of permanent total disability is subject to the monetary cap imposed by the 400 week maximum total benefit provision of
I.
The Second Injury Fund argues that the trial court erred by limiting the employer‘s liability to 65 percent of 400 weeks. Citing Reagan v. American Policyholders’ Ins., 842 S.W.2d 249 (Tenn.1992), the Fund contends that the employer‘s liability should be calculated based upon the total amount of benefits awarded to age 65. According to
In response, the employer argues that to hold it liable for more than 400 weeks of benefits would undermine the purpose of the Second Injury Fund to encourage employers to hire injured workers because employers will not risk having to pay benefits to age 65.
In Reagan v. American Policyholders’ Ins., 842 S.W.2d 249 (Tenn.1992), the employee fell through a floor in the course and scope of his employment which left him totally and permanently disabled. He had previously settled a workers’ compensation claim for 15 percent permanent impairment to the body as a whole. Due to his low average weekly wage, the employee was entitled to an award of 550 weeks rather than the typical 400 weeks of benefits provided at that time for permanent total disability. The employer in Reagan argued that its liability was limited to 85 percent of 400 weeks and that the Second Injury Fund should be liable for the rest of the award. This Court rejected the employer‘s argument and held that the apportionment should be based on the total amount of money awarded to the employee. Reagan, 842 S.W.2d at 251. We reasoned that apportioning the award in this manner was the only equitable thing to do. Id.
The employer in the case at bar argues that Reagan is “wholly unrelated to the issues in the present case” because it was decided before the 1992 change to the workers’ compensation law providing that a permanently and totally disabled worker is entitled to receive benefits until age 65. It is true that when Reagan was decided an award for permanent total disability was based on 400 weeks of benefits rather than the current payment of benefits until age 65. See
Nonetheless, we are persuaded that the principle of equitable apportionment adopted in Reagan applies with equal force to the case at bar. It is not equitable to cap the employer‘s liability at 400 weeks and require the Fund to pay the bulk of the award in light of the fact that
Furthermore, we note here as we did in Reagan that the “objective of the legislation creating the Second Injury Fund is to limit the liability exposure of the employer by holding it responsible only for the employee‘s first 100 percent of workers’ compensation disability, thereby encouraging the employment of injured workers.” Reagan, 842 S.W.2d at 250. “In other words, the employer is responsible for the employee‘s first 100 percent of benefits and the Second Injury Fund is responsible for the rest.” Id. at 250-251. Under our holding today the employer‘s exposure to liability is still limited to the first 100 percent of Bomely‘s permanent total disability. If Bomely is able to rehabilitate himself and return to work and then gets injured again, the employer would pay nothing in benefits.
In sum, we are persuaded that the equitable division rationale that we adopted in Reagan should apply in this case. We find no statutory or equitable basis for using 400 weeks as the basis of apportionment under
II.
An issue necessarily related to the apportionment question is what effect, if any, the maximum total benefit provision of
Because the statutory definition of maximum total benefit exempts permanent total disability awards from the 400 week limitation, we conclude that such benefits are to be paid until age 65 under
In sum, we hold that awards of permanent total disability are payable to age 65 under
III.
Finally, we must address the employer‘s argument that the trial court should have apportioned the award between it and the Second Injury Fund under
After this case was tried and the employer filed its brief in this Court in which it contended that subsection (a) and subsection (b) of
We further indicated in Perry (and again reiterate here) that an employee will also have met the requirements for recovery under subsection (b) if the employee has re-
As indicated above, the trial court in this case apportioned the award 65 percent to the employer and 35 percent to the Second Injury Fund pursuant to
The facts in this case, as we found in Perry, satisfy only the requirements of section (a). The employee has not met the requirements of section (b) of having received awards for permanent disability which equal or exceed 100 percent. The employee had received prior workers’ compensation awards totaling 35 percent permanent disability to the whole body prior to the last work-related injury in 1994. He was found to have sustained a 20 percent permanent disability as a result of the 1994 injury. As in Perry, the combined awards (55 percent) do not equal or exceed 100 percent.
The trial court did, however, correctly recognize that the facts of this case satisfy the requirements of subsection (a). The employee had sustained prior injuries which caused permanent disability and he subsequently became permanently and totally disabled as a result of the 1994 compensable injury. As explained above, the employer would pay only for the disability that resulted from the last injury which rendered the employee totally and permanently disabled without consideration of any prior injuries, which the trial court correctly found to be 20 percent. The evidence does not preponderate against this finding.
For the foregoing reasons, the judgment of the trial court is affirmed in part and re-
ANDERSON, C.J., and REID and BIRCH, JJ., concur.
HOLDER, J., with separate concurring and dissenting opinion.
HOLDER, Justice, concurring and dissenting.
I agree with the majority‘s holding that an employee who is permanently and totally disabled is entitled to receive benefits until age 65. I dissent, however because: (1) I believe the majority‘s analysis of the proper division between the employer and the Second Injury Fund substitutes a judicially-created policy of “equitable division” for the clear and established legislative policy that dictated the Second Injury Fund legislation; and (2) I disagree with the majority‘s approach in finding both subsection (a) and (b) applicable in cases of permanent total disability.
DIVISION BETWEEN EMPLOYER AND SECOND INJURY FUND
I disagree with the majority‘s decision to “equitably divide” the total award between the employer and the Second Injury Fund and not to limit the employer‘s liability to the first 400 weeks of the award. Applying the majority‘s analysis, employers will be deterred from the hiring of the handicapped. For example:
X is 20 years old and has a prior noncompensable disability of 75 percent. X sustains a compensable disability of 25 percent and is rendered permanently and to-tally disabled.
Y is 20 years old with no previous disability. Y sustains the precise injury that X sustained. Y receives a 25 percent disability rating and is able to continue working. According to the majority, an employer will pay 585 weeks (25% of 2340 weeks) of X‘s total compensation. Y, however, will receive only 100 weeks (25% of 400 weeks) compensation for the same injury. Under the majority‘s analysis, X‘s employer has incurred an additional 485 weeks or nearly six times the liability of Y‘s employer by having hired an employee with a prior disability instead of an employee with no prior disability. This result is contrary to the clear purpose of the Second Injury Fund and will have a devastating impact on the ability of the handicapped to obtain employment.
The majority asserts that “[t]here is no indication in the workers’ compensation law that the legislature intended to limit an employer‘s liability under
If a worker has sustained prior permanent partial compensable injuries to the body as a whole of 30 percent and 70 percent, the employer‘s liability is limited to the first 100 percent or 400 weeks compensation. If a worker has a prior compensable disability of 30 percent and subsequently sustains a compensable disability of 70 percent but is able to earn a wage, the employer‘s liability is still limited to 100 percent or 400 weeks total compensation. Accordingly, I would find that the first 100 percent to the body as a whole as contemplated under subsection (b) equates to 400 weeks of total compensation.
APPLICATION OF SUBSECTION (a) or (b)
I disagree with the majority‘s approach of finding both subsection (a) and subsection (b) applicable in cases of permanent total disability and then applying the subsection favoring the employer. The Second Injury Fund was created merely to assure that, in cases of permanent total disability, an employer incurs the same liability by hiring a disabled worker as it incurs by hiring a healthy worker. Accordingly, the Second Injury Fund should be absolved from liability when a
Assume a worker with a preexisting compensable disability of 35 percent is hired by an employer. The worker then sustains a catastrophic injury which would cause permanent total disability or 100 percent vocational disability absent any preexisting conditions. The majority‘s approach is as follows: (1) under subsection (a), the employer would be responsible for 100 percent; (2) under subsection (b), add 100 percent to the preexisting 35 percent, apportioning 65 percent to the employer and 35 percent to the Second Injury Fund; and (3) choose the result favoring the employer. Accordingly, the majority would apply subsection (b) (65 percent instead of 100 percent), and the Second Injury Fund would incur liability for an injury that would have caused permanent total disability regardless of any preexisting condition.
HISTORICAL ANALYSIS
A prevailing view during the development of workers’ compensation law was that an employer took an employee as he found him. E.I. du Pont de Nemours & Co. v. Friar, 218 Tenn. 554, 404 S.W.2d 518, 521 (1966). The employer, therefore, was liable for all disabilities that resulted from an accident that aggravated a preexisting physical impairment. Id. Accordingly, employers assumed additional liability by hiring individuals suffering physical impairments. Id. This additional liability led to considerable resistance in the hiring of the handicapped. Id.
The legislature recognized that employment of the handicapped was in the interest of society and responded by enacting the Second Injury Fund legislation. Id. The Second Injury Fund was designed “to overcome some of the resistance to employment of disabled persons.” Id. To overcome this resistance, the Second Injury Fund limited an employer‘s liability when the employer hired a disabled worker and the worker subsequently became permanently and totally disabled by a compensable injury. Id. Accordingly, the purpose of the Second Injury Fund legislation was “to encourage employ-ers to hire workers with an existing handicap which would impair their competitive position as a job seeker.” Id.; See also Brown v. John Martin Const. Co., 642 S.W.2d 145, 147 (Tenn.1982) (noting statute “seeks to reward the employer‘s humane gesture” by limiting its liability). The history of legislative encouragement in the hiring of the handicapped along with the related concept of limiting employer liability must be considered when analyzing subsection (a) and the later addition of subsection (b).
Subsection (a)
The Second Injury Fund operates to relieve an employer of liability while assuring that injured employees receive full compensation. The statutory provisions establishing the Second Injury Fund are codified at
If an employee has previously sustained a permanent physical disability from any cause or origin and becomes permanently and totally disabled through a subsequent injury, such employee shall be entitled to compensation from such employee‘s employer or the employer‘s insurance company only for the disability that would have resulted from the subsequent injury, and such previous injury shall not be considered in estimating the compensation to which such employee may be entitled under this Chapter ...
Nothing in this section shall be construed to limit the employer‘s liability as provided by law for aggravation of preexisting conditions or disabilities in cases where recovery against the second injury fund is not applicable.
Reading subsections (a)(1) and (a)(4) in pari materia, Lyons v. Rasar, 872 S.W.2d 895, 897 (Tenn.1994), I find that under
This interpretation furthers the legislative purpose of enacting the Second Injury Fund. To interpret otherwise would run counter to the policy of encouraging employers to hire the handicapped. I shall use the following hypothetical for illustrative purposes:
Employer hires two employees, X and Y. X has a congenital condition that causes a 5 percent anatomical disability. Y has no disabilities.
Both X and Y suffer precisely the same compensable injury. Y sustains a 70 percent vocational impairment. X, however, is rendered permanently and totally disabled when the compensable injury is superimposed over X‘s prior disability.
X is entitled to benefits until age 65. Y, however, is entitled to 70 percent of 400 weeks, or 280 weeks of compensation. The Second Injury Fund does not incur a portion of Y‘s award.
This example assumes that X would have sustained only a 70 percent vocational disability absent the preexisting condition. If the employer pays benefits above and beyond 280 weeks, the employer has assumed additional liability by hiring an individual with a preexisting disability. Moreover, X‘s disability exceeding 70 percent is either attributable to a preexisting condition or to an aggravation of a preexisting disability.
The above result holds true whether the employee‘s preexisting condition is compensable or noncompensable under the Act. The inverse, as the Second Injury Fund argues, should also be true. The Second Injury Fund should not be implicated if the subsequent injury would have in and of itself caused permanent and total disability. See Church v. N.B.C Co. Inc., 224 Tenn. 658, 461 S.W.2d 387, 388 (1970) (holding Second Injury Fund not implicated when “employee sustained total permanent disability (100 percent) from the current disability (silicosis) without considering the previous permanent disability [of 35 percent]“).
Subsection (b)
I read subsection (b) as relying on a mathematical computation to assess awards rather than on the relative contribution of the subsequent injury.
In cases where the injured employee has received or will receive a workers’ compensation award or awards for permanent disability to the body as a whole, and the combination of such awards equals or exceeds one hundred percent (100%) permanent disability to the body as a whole, the employee shall not be entitled to receive from the employer or its insurance carrier any compensation for permanent disability to the body as a whole that would be in excess of one hundred percent (100%) per-manent disability to the body as a whole, after combining awards.
The Second Injury Fund shall pay any benefits in excess of 100 percent permanent disability to the body as a whole after all compensable awards are combined.
Subsection (b) clearly limits an employer‘s exposure for all compensable awards to the first 100 percent of combined permanent vocational disability. Assessment under subsection (b) is as follows: Employee has sustained two prior compensable awards with vocational disabilities totaling 75 percent and a non-compensable injury of 5 percent. Employee then sustains a third compensable injury which causes an additional 30 percent vocational disability. The employee, however, can still perform light duty and earn a wage. Under this scenario, the non-compensable injury should be ignored and the employer should be responsible for 25 percent of 400 weeks with the Second Injury Fund incurring the remaining 5 percent of the 400 weeks.
Application of subsections (a) and (b)
Having determined that assessment of liability is different under subsections (a) and (b), I shall now address under what circum-
The Second Injury Fund legislation was formerly codified at
If an employee has previously sustained a permanent disability by reason of the loss of, or loss of use of, a hand, an arm, a foot, a leg, or an eye and becomes permanently and totally incapacitated through the loss, or loss of use of another member, he shall be entitled to compensation from his employer or the employer‘s insurance carrier; ... provided, however, that in addition to such compensation for said subsequent injury, and after completion of the payments therefor, then such employee shall be paid the remainder of the compensation that would be due for the permanent total disability out of a special fund to be known as the “second injury fund” herein created.
Accordingly, the 1945 amendment addressed only that situation in which an employee was rendered permanently and totally disabled as the result of a subsequent injury. The 1945 amendment did not contain a provision comparable to
The 1945 amendment is similar to
Our present statute, as amended, extends subsection (a)‘s coverage to encompass all forms of preexisting conditions. See
Both the inclusion of the “catch all” phrase in subsection (a) and the addition of subsection (b) appeared in the 1985 amendment. I, therefore, find it improbable that the legislature intended subsection (b) to apply to subsequent injuries causing permanent and total disabilities when it simultaneously broadened subsection (a) to encompass all permanent total disabilities regardless of the origin of the preexisting conditions.
I believe it an untenable proposition that the legislature intended both subsections to apply to the same case and render a different result. The majority‘s solution is to apply whichever subsection is “favorable to the employer.” The statute, however, neither mandates nor requires this construction.
The application of both subsections may occur under the majority‘s analysis whenever an employee becomes rehabilitated after receiving permanent partial disability awards under the workers’ compensation statute. For example, an employee who has prior permanent partial compensable disabilities totaling 80 percent returns to work and is able to perform as well as prior to the injuries. The employee then sustains a work-related injury that causes the employee to become permanently and totally disabled. The trial court finds under subsection (a) that the last injury caused a 40 percent vocational disability absent consideration of the prior injuries. Under my analysis the em-
The majority would agree that the employer is responsible for 40 percent under subsection (a). Applying subsection (b), however, the majority would find the employer responsible for 20 percent (the difference between the prior awards and 100 percent) and Second Injury Fund responsible for 20 percent (80 percent + 40 percent, with that portion exceeding 100 percent apportioned to the Second Injury Fund). Since the 20 percent finding is more favorable to the employer than the 40 percent finding, the majority would apply subsection (b). What the majority fails to address is that the employee will receive only 40 percent of the total disability award under the majority‘s analysis.
We should presume that the legislature did not intend an absurdity and adopt a reasonable construction which avoids statutory conflict. Cronin v. Howe, 906 S.W.2d 910, 912 (Tenn.1995); Epstein, v. State, 211 Tenn. 633, 366 S.W.2d 914, 914 (1963). Interpreting the subsections to be mutually exclusive avoids arbitrarily deciding which subsection shall apply. I would therefore overrule this Court‘s holding in Perry that the subsections are not mutually exclusive. Perry v. Sentry Ins. Co., 938 S.W.2d 404 (Tenn.1996).
Upon reading the statutes in pari materia and examining the plain language of the
In this case, Bomely was rendered permanently and totally disabled as a result of the 1994 compensable injury. He previously had sustained both compensable and noncompensable injuries. Because Bomely is no longer able to earn a wage, I would hold that subsection (b) does not apply. His employer had notice of his preexisting conditions. Accordingly, subsection (a) applies. I would affirm the trial court‘s finding that, under subsection (a), Bomely sustained a 20 percent disability as a result of the 1994 injury and that the liability of the employer is limited to the first 400 weeks of disability.
Under subsection (a) I believe we should determine what vocational disability the 1994 injury would have caused if Bomely had no preexisting condition. Although the trial judge erroneously decided the case under subsection (b), he alternatively found that under subsection (a) Bomely would have sustained a 20 percent vocational disability absent consideration of his preexisting conditions. I would find that the trial judge‘s finding of 20 percent is supported by the record. I would, therefore, apportion under subsection (a) as follows: (1) the employer is responsible for 20 percent of 400 weeks; and (2) the Second Injury Fund is responsible for the remaining benefits until age 65.
I am mindful that this holding would have a harsh impact on the Second Injury Fund in light of the legislative amendment which permits benefits until age 65. The legislature, however, did not amend the language providing for assessment of liability under subsections (a) and (b) when it amended
The majority bases its analysis on a theory of equity. Equity, however, is not a policy that dictated the Second Injury Fund legislation. The Second Injury Fund was created to encourage the hiring of the handicapped. The majority in striving for equity, however, has essentially altered or re-legislated the policy that dictated the creation of the Second Injury Fund.