State - Tennessee Appellate Opinions

Tennessee Supreme Court Rejects Efforts to Alter Existing Law on the Collateral Source Rule in Personal Injury CasesLast month the Tennessee Supreme Court, in Dedmon v. Steelman, affirmed the long-standing collateral source rule in personal injury cases. As long as an injured plaintiff can establish that the medical expenses they incurred were reasonable and necessary for their treatment, the full amount of the charges from the medical providers can be accepted into evidence. Defendants cannot challenge the reasonableness of these medical expenses with evidence of the actual (discounted) amounts paid to medical providers by the plaintiff’s insurance provider.

Defendants sought to extend the Court’s decision in West v. Shelby County Healthcare Corp. to personal injury cases. West interpreted Tennessee’s Hospital Lien Act (HLA) to preclude a hospital from seeking the balance of medical expenses charged to a patient after the hospital had accepted discounted payment from the insurance company in satisfaction of the debt.  Since a lien only exists for the amount a patient owes, “reasonable charges” could not exceed what the patient was required to actually pay the hospital.

The Court in Dedmon rejected the defendants efforts to limit recovery of injured plaintiffs to the discounted amounts that medical providers accepted from insurance companies in payment of medical expenses. The Court considered and rejected the “actual amount paid,” “benefit of the bargain,” and “reasonable value/actual amount paid” approach adopted in other jurisdictions. Finding that these alternatives created as many problems as they solved, the Court retained Tennessee’s “reasonable value/full bill” approach.

To rebut an injured plaintiff’s claim that the charges are reasonable and necessary, defendants are limited to competent evidence that does not run afoul of the collateral source rule.

Practical effect: No change in Tennessee to proving or disputing an injured plaintiff’s medical expenses.

Is It Worth Fighting For (Recusal)?: The Tennessee Supreme Court Clarifies Judicial Canons on Personal Knowledge and Independent InvestigationsIn 2012, Jeanie Holsclaw filed an action against Ivy Hall Nursing Home, Inc. for retaliatory discharge.  Following several years of extensive discovery and the recusal of two trial judges, Ivy Hall sought to have a certified rehabilitation counselor examine Holsclaw.  At the hearing on Ivy Hall’s motion to examine Holsclaw, the judge informed the parties for the first time that she had called the director of the rehabilitation counselor program at the University of Tennessee to “understand what [a rehabilitation counselor] might or might not be able to testify to [based on] their background [and] education.”  Neither of the parties raised an objection at the hearing, but Ivy Hall filed a motion for the trial court judge to recuse herself after obtaining a copy of the transcript.  The trial court judge denied Ivy Hall’s motion to recuse, explaining that she had “done no investigation of [Ivy Hall’s] expert witness whatsoever” and that her “action would not lead a reasonable person to question [her] ability to be impartial.”

In a divided decision, the Tennessee Court of Appeals concluded that, based on Canons 2.11 and 2.9 of the Tennessee Code of Judicial Conduct, the trial court judge should have recused herself.  Specifically, the majority’s decision concluded that “even though [the court] f[ound] no malice in the trial judge’s well-meaning, but misguided action,” the personal knowledge gained from the extrajudicial conversation created an “appearance of impropriety,” thereby necessitating recusal.

In a per curiam opinion, the Tennessee Supreme Court reversed the Court of Appeals and addressed two important questions:  (1) What constitutes “personal knowledge” of a case under Canon 2.11?; and (2) At what point does a judge’s independent investigation create an “appearance of impropriety” whereby the “judge’s impartiality might reasonably be questioned”?

Relying primarily on a Minnesota Supreme Court decision, the Tennessee Supreme Court explained that “personal knowledge” is knowledge derived from “a close relationship between the judge and some substantive fact of a case,” such as where the judge knows of incriminating evidence against a particular defendant as a result of the judge’s role as a former prosecutor.  Conversely, “personal knowledge” does not include information a judge learns “in the course of her general judicial capacity.”  The Court indicated that the trial court judge here did not come close to having “personal knowledge” of the case because she “did not seek this information for the purpose of discrediting a party or a witness, or even for the purpose of ruling on whether to allow a particular certified rehabilitation counselor to testify as an expert.”  Instead, she contacted the director at the University of Tennessee to know “whether such an expert potentially would be able to provide information helpful to resolving the issues in the case and also because the trial judge was considering naming a court-appointed expert.”

The Court, however, found that the trial judge violated Canon 2.9 – which prohibits a judge from engaging in ex parte communications and independent investigations – by contacting a non-party, concerning a pending matter, and outside the presence of the parties.  But this does not end the inquiry for recusal.  Recusal is only required when “the trial judge’s impartiality might reasonably be questioned” – a question, according the Court, that the Court of Appeals failed to consider separately.  On this point, the Court found, “nothing in the record leads us to the conclusion that a person of ordinary prudence . . . would question whether [the trial judge] can be impartial in the proceedings.”  The Court also noted that, “importantly, the trial judge ultimately allowed [Ivy Hall’s] proposed expert to examine [Holsclaw] again.”

Writing the sole dissent, Justice Page departed with the decision only on the question of “appearance of impropriety.”  In particular, Justice Page concluded that because the trial judge’s ex parte communication “could have potential impact on the trial court’s decision-making process,” it “create[d] an appearance of impropriety.”  Justice Page further noted that the trial court judge’s decision to allow the expert’s examination of Holsclaw did not “alleviate the perception of impropriety created by her contacting an outside source ex parte and off the record.”

Takeaways

For judges, this decision is good news in the sense that it provides guidance on when recusal may or may not be appropriate.  It also suggests that trial court judges could avoid this whole problem by relying on the exception in Canon 2.9(A)(2) to ex parte communications with outside experts by providing the parties prior notice and a chance to respond to the advice received.  For litigants, this decision most likely forecloses potential avenues for filing a motion to recuse by setting a high bar for what constitutes “impartiality [that] might reasonably be questioned.”  Indeed, the Court found nothing to question the impartiality of the trial judge in this case.  Then again, if the ultimate goal is to have a case handled by an impartial judge, then this decision will most likely result in more transparency with judges disclosing to the parties any contemplated contact with experts in order to avoid any appearance of impartiality.

Tennessee Supreme Court Lowers the Bar on Collateral EstoppelIn Bowen ex rel. John Doe v. Arnold, the Tennessee Supreme Court abandoned the traditional mutuality requirement for both offensive and defensive collateral estoppel, removing one traditional hurdle for parties seeking to assert the doctrine.

The plaintiff brought the lawsuit on behalf of her young son after he was molested while participating in a mentorship program sponsored by the Boys and Girls Club of Middle Tennessee in partnership with Big Brothers Big Sisters of Tennessee. A jury convicted the child’s mentor, William Arnold, of three counts of rape of a child. The plaintiff brought a civil suit against Mr. Arnold and the sponsoring organizations.

Following Mr. Arnold’s criminal conviction, the plaintiff filed a motion for partial summary judgment against Mr. Arnold asserting that he was collaterally estopped from relitigating in the civil suit “whether he raped and sexually battered” the child. Mr. Arnold argued, among other things, that he should not be estopped from relitigating that issue because plaintiff had not satisfied the strict mutuality requirement of collateral estoppel. Under this requirement, a party can only assert collateral estoppel if they were a party to the first action or in privity with the party in the first action. Mr. Arnold argued that because the plaintiff was not a party to the criminal suit and was not in privity with the state of Tennessee, the strict mutuality requirement prevented the application of collateral estoppel in this case.

The trial court disagreed with Mr. Arnold. The trial court granted the plaintiff’s motion for partial summary judgment and concluded that the plaintiff was in privity with the state of Tennessee. The trial court also granted Mr. Arnold permission to seek an interlocutory appeal. The Court of Appeals, however, declined his application. Mr. Arnold subsequently filed an application to appeal to the Tennessee Supreme Court. The court granted the application in order to “determine whether the mutuality requirement should be abolished or modified in Tennessee.”

After examining the history of the doctrine as well as decisions from other jurisdictions, including two United States Supreme Court cases rejecting the mutuality requirement for both offensive and defensive collateral estoppel, the court joined the majority of jurisdictions in rejecting the strict mutuality requirement because “the traditional mutuality requirement has outlived its usefulness and should be abandoned.”

Going forward, the court concluded that when considering whether to apply offensive or defense collateral estoppel in a particular case, Tennessee judges should follow the general approach adopted by section 29 of the Restatement (Second) of Judgments. Section 29 generally precludes parties from relitigating previously decided issues as long as the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the first action or some other circumstance justifies providing the party with a second opportunity to relitigate the issue. Applying these factors to the case at bar, the court held that Mr. Arnold should be collaterally estopped from relitigating the underlying criminal conduct.

By abolishing the mutuality requirement, the court made it significantly easier for parties seeking to assert collateral estoppel against other parties. Under the flexible restatement approach that is now the law in Tennessee, courts will have considerable discretion in determining whether non-mutual collateral estoppel should apply in a particular case. Parties seeking to assert collateral estoppel against another will now only have to show that the party had a full and fair opportunity to litigate the issue in a prior proceeding.