Nance Ex Rel. Nance v. Westside Hospital

OPINION ON PETITION TO REHEAR

FONES, Justice.

The health care defendants have filed a petition to rehear.

Their first complaint is that the Court decided the case on “the basis of a novel ground that had not been briefed, argued or even mentioned by any of the litigants.”

We readily acknowledge that the words of the statute that we interpreted as excluding worker’s compensation as a collateral source, to-wit: “and such losses are not replaced or indemnified in whole or in part,” had not been mentioned, or construed by the litigants or the courts below.

In construing a statute, it is the duty of the courts to give every word and phrase some meaning. E.g., United Canners, Inc. v. King, 696 S.W.2d 525 (Tenn.1985).

Legislative intent is derived from construing a statute in its entirety, and it should be assumed the Legislature used every word purposely and that those words convey some intent and have a meaning and a purpose. E.g., Tennessee Growers, Inc. v. King, 682 S.W.2d 203 (Tenn.1984).

It is incumbent upon the courts to apply the controlling law, whether or not cited or relied upon by either party. City of Memphis v. International Brotherhood of Electrical Workers, 545 S.W.2d 98 (Tenn.1976); Simmons v. State ex rel. Smith, 503 S.W.2d 103 (Tenn.1973). Cf. Smith v. Norris, 218 Tenn. 329 , 403 S.W.2d 307 (Tenn.1966). Obviously that principle applies to the interpretation of legislative acts as well as the common law.

In addition, T.R.A.P. 13(b) provides that while review in the appellate courts will generally extend only to those issues presented for review, other issues may be considered in the court’s discretion. The Court did not decide this case on an issue not mentioned or briefed, but by taking cognizance of words appearing on the face of the statute that the parties and the courts below had ignored, in spite of the affirmative rule of statutory construction that every word and phrase of a statute must be given some meaning.

The foregoing fundamental precepts provide the authority and indeed the duty of this Court to consider the words of the statute that have caused the defendants consternation. The notion that the courts are restricted to deciding issues as framed by the lawyers is untenable.

Next, defendants say there is a fallacy in our interpretation of the statute because it assumes that an employer paying worker’s compensation retains his right of subrogation, even i/T.C.A. § 29-26-119 barred the employee from recovering economic losses funded thereby. They further complain that the issue of whether or not the employer’s subrogation lien would be enforceable if worker’s compensation was included as a collateral source in the Medical Malpractice Act was not addressed by the Court, an issue that was briefed by the parties.

The fallacy of that contention is found in the words “even if’. The statute construed in its entirety excludes collateral sources such as worker’s compensation if the losses paid to medical malpractice victims by those sources must be replaced or indemnified. There simply is no basis for consideration of the issue of whether the employer’s statutory subrogation right under T.C.A. § 50-6-112 would be barred if worker’s compensation was expressly or impliedly included as a collateral source under T.C.A. § 29-26-119.

*745 However, notwithstanding the fact that there is no merit to defendant’s “even if” proposition, we considered and decided that issue prior to the release of our opinion herein, adverse to the contention of defendants.

The employer’s statutory lien pursuant to T.C.A. § 50-6-112 is expressly granted to the extent of the employee’s “net recovery” by “judgment, settlement or otherwise.” This Court has defined net recovery to be the total amount collected by the employee in the tort action, less reasonable expenses, including attorney’s fees. See Cross v. Pan Am World Services, Inc., 749 S.W.2d 29 (Tenn.1987); and Royal Indemnity Co. v. Schmid, 225 Tenn. 610 , 474 S.W.2d 647 (Tenn.1971). The provisions of T.C.A. § 29-26-119 do not repeal or directly deal with the terms of T.C.A. § 50-6-112 that grant employers a subro-gation lien for benefits paid or payable under the worker’s compensation act and we know of no reason why that section could be rendered ineffective by the collateral source section of the Medical Malpractice Act, absent specific language negating enforcement of that lien.

In United States v. Lorenzetti, 467 U.S. 167 , 104 S.Ct. 2284 , 81 L.Ed.2d 134 (1984), the United States Supreme Court enforced a federal statutory right of reimbursement granted the government for sums paid its employees under the Federal Employee’s Compensation Act, where the employee’s third party recovery was precluded by Pennsylvania law from including the economic losses paid under the federal act. Lorenzetti was a federal employee who was injured in an automobile accident in Pennsylvania while in the scope of his employment. He sued the other driver in a Pennsylvania state court. The Pennsylvania No-fault Act prevented him from recovering the medical expenses and lost wages that his government employer paid under the federal act. The federal act provides for reimbursement of the government where an employer receives “money or other property” for damages in pursuit of a third-party claim. Lorenzetti defended the government’s suit for reimbursement on the ground that the federal statute should be construed as limited “to damage awards or settlements for economic losses of the sort covered by FECA.” The Supreme Court held that the language of the statute gave the government a right of reimbursement to all damages received as a result of third-party liability to an employee and that nothing in the statute confined the reimbursement to the class of expenses covered by FECA.

We think Lorenzetti was correctly decided on sound rationale under statutes and facts similar to this case and we would hold that an employer could enforce his statutory lien pursuant to T.C.A. § 50-6-112, even if worker’s compensation was included as a collateral source under T.C.A. § 29-26-119, absent specific language to the contrary.

Defendants also complain that the Court’s interpretation of the statute emasculates its effect and what it conceives to be the legislative intent of reducing the impact of medical malpractice recoveries. Tennessee does not stand alone in excluding collateral sources that have the right of subrogation. The legislatures of California, Massachusetts and Rhode Island have provided that where deductions are allowed for collateral source payments, the collateral source loses the right to subrogation. The legislatures of Connecticut, Florida, Illinois, Michigan, Minnesota, Montana, Nebraska, New York, South Dakota and Utah have provided that no reduction of damage awards to medical malpractice victims will be allowed where the collateral source has a right of subrogation. That complaint, and the remainder of defendants’ complaints, address themselves to the Legislature.

The petition to rehear is denied. Costs are adjudged against defendants.

HARBISON, C.J., O’BRIEN, J., and CORNELIUS and SCOTT, Special Justices, concur.