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Hunley v. Silver Furniture MFG. Co.2/23/2001
We granted this appeal to determine whether a workers' compensation insurance carrier's subrogation right under Tenn. Code Ann. § 50-6-112(c) extends to amounts representing compensation to a worker's spouse for loss of consortium. We hold that such amounts are not subject to subrogation under Tenn. Code Ann. § 50-6-112(c). When the allocation of damages between the worker and the worker's spouse is determined by settlement, however, we hold that the parties may request approval of the settlement from the court having jurisdiction over the third-party claim. Reasonable notice of the action seeking court approval of the settlement shall be provided to the employer or its carrier. The trial court having jurisdiction over the third-party claim shall then review the settlement to determine whether the allocation of settlement proceeds between the worker and the worker's spouse is fair and reasonable. Any portion of the settlement allocated to the worker's spouse for loss of consortium that is determined not to be fair and reasonable shall be subject the employer's statutory lien.
Tenn. R. App. P. 11 Appeal by Permission; Judgment of the Court of Appeals Reversed, Case Remanded to Trial Court
Janice M. Holder, J., delivered the opinion of the court, in which E. Riley Anderson, C.J., and Adolpho A. Birch, Jr. and William M. Barker, JJ., joined. Frank F. Drowota, III, J., not participating.
OPINION
BACKGROUND
William D. Hunley was an employee of Silver Furniture Manufacturing Co. ("SFMC"). He suffered serious employment-related injuries while operating equipment manufactured by Velvac, Inc. ("Velvac"). Mr. Hunley brought suit against Velvac, seeking recovery for necessary medical expenses and personal injury . Mrs. Hunley also brought suit against Velvac for loss of consortium.
The parties entered into an agreement to settle both claims. Velvac agreed to pay $200,000 to Mr. Hunley for his personal injuries and agreed to pay $200,000 to Mrs. Hunley for her loss of consortium claim. The Hunleys then filed a complaint seeking declaratory judgment. They asked the court to declare that Mrs. Hunley's $200,000 settlement was not subject to the workers' compensation subrogation lien provided by Tenn. Code Ann. § 50-6-112(c). SFMC and its workers' compensation insurance carrier filed a counterclaim, seeking a determination that Mrs. Hunley's settlement award was subject to the employer's subrogation lien.
The trial court held in SFMC's favor. The Court of Appeals affirmed. It based its decision upon an unreported case holding that a spouse's recovery for loss of consortium is subject to the employer's subrogation right. We granted review.
ANALYSIS
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).
The parties do not dispute that the amount of the settlement apportioned to Mr. Hunley is subject to the statutory subrogation lien. The issue to be determined is whether the $200,000 apportioned to Mrs. Hunley as compensation for her loss of consortium claim is similarly subject to the lien. As this issue presents questions of law only, our review is de novo. See, e.g., Spencer v. Towson Moving
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