Can Employer Seek Reimbursement for Workers’ Compensation Benefits Paid to Employee Pursuant to Wrongful Court Order?

The Tennessee Court of Appeals recently decided a case that dealt with a situation where the plaintiff employer was ordered to pay for the workers’ compensation benefits (including medical treatment) of an employee.  See Roadway Express, Inc. v. Sammy T. Robertson, No. E2013-02797-COA-R3CV, 2014 WL 4793022 (Tenn. Ct. App. 2014).  The employer made those payments but appealed the Trial Court’s decision.  Ultimately, the Tennessee Supreme Court Special Workers’ Compensation Appeals Panel vacated the Trial Court’s Order and found there was no subject matter jurisdiction by the Trial Court and, therefore, dismissed the employee’s Petition.  The problem was, the employer had already paid $152,511.59 towards the employee’s medical treatment.

As a result, Roadway Express Inc. filed suit against its employee to recover the payments made pursuant to the Trial Court’s Order in the workers’ compensation case.  The Trial Court dismissed the employer’s claim and found that the action was a workers’ compensation law cause of action and therefore the appropriate Tennessee workers compensation procedures had to be complied with in order to proceed with the cause of action.  Due to the fact there was no benefit review conference conducted, the Complaint was dismissed due to a lack of subject matter jurisdiction.  This issue was appealed. 

The Tennessee Court of Appeals found the trial court wrongly decided this issue.  Specifically, in a prior Tennessee Supreme Court decision, McCall v. National Health Corp., 100 SW.3d 209, 213 (Tenn. 2003), the Court specifically stated that “as we previously stated, a trial court can order the employee to reimburse any funds that were improperly paid to the employee.”  As a result, the Robertson Tennessee Court of Appeals’ decision found the Tennessee Supreme Court had previously held and acknowledged that a Trial Court may order an employee to reimburse his or her employer when the employee was wrongfully paid funds by the employer in a workers compensation case, as ordered by a court. Robertson at 4.  As a result, this suit by Roadway Express is an appropriate way to seek reimbursement from an employee by an employer when workers compensation benefits are wrongly paid. 

This is an interesting case because the employer filed suit against the employee outside the scope of a workers’ compensation case.  Under the

Is President or Managing Officer of Corporation Entitled to Lien Under T.C.A. § 66-13-101 as an “Employee” for Money Earned for Work Performed?

The “employee lien” statute is found in T.C.A. § 66-13-101 and it provides for a statutory lien against the corporation’s property for sums due to employees for their labor and services performed for the corporation.  The question therefore is whether this statute also applies to benefit a corporation’s president and managing officers.  The Tennessee Court of Appeals discussed this issue in Paul J. Frankenberg, III v. River City Resort, Inc., No. E2012-01106-COA-R3-CV, 2013 WL 3877617 (Tenn. Ct. App. 2013). 

This statue basically provides employees with a super lien against a corporation and the corporation’s property for labor and services performed on behalf of the corporation.  The only other liens that have priority above this lien are vendor’s liens and a lien of a mortgage or deed of trust to secure purchase money.  Specifically, T.C.A. § 66-13-101 provides as follows:

All employees and laborers of any corporation, or firm, carrying on any corporate or partnership business shall have a lien upon the corporate or firm property of every character and description, for any sums due them for labor and service performed for the corporation or firm, and such lien shall prevail over all other liens, except the vendor's lien or the lien of a mortgage, or deed of trust to secure purchase money.

This Frankenberg case involved a situation where the president/chief operating officer of a corporation was owed a significant sum of money by the corporation.  As a result, he filed a “notice of lien” with the Register of Deeds office asserting a statutory lien against the corporation’s property under T.C.A. § 66-13-101.  The question before the Tennessee Court of Appeals was whether this lien was appropriate in this circumstance because Mr. Frankenberg was the president and chief operating officer of the corporation. 

In Tennessee, Trial Court Determination of Credibility of Telephonic Testimony Should be Provided Same Deference on Appeal as In-Person Testimony.

The Tennessee Supreme Court in Terri Ann Kelly v. Willard Reed Kelly, No. E2012-02219-SC-R11-CV, 2014 WL 4437671 (Tenn. 2014) discussed the appropriate level of deference an appellate court should provide to a trial court’s consideration of a witness who provided testimony by telephone.  This case involved a child custody issue.  One of the mother’s witnesses testified by telephone at trial.  The husband did not object to this testimony by telephone.  On appeal, the Tennessee Court of Appeals found the determination of credibility by the trial court for telephonic testimony should not be given any deference by the appellate court because the trial court lacked the ability to view the actual witness.  This was then appealed to the Tennessee Supreme Court.

The Tennessee Supreme Court first noted that in this case the parties cited no rule or Tennessee law that would actually permit testimony by telephone.  However, due to the fact that nobody objected, the Court did not take issue with this fact (although if you are on the other side of this issue in the future you should certainly object and cite this opinion).  The Court then turned to the issue of the appropriate level of deference that should be afforded to the trial court’s determination of witness credibility when it took testimony by telephone.  The general rule is that for “live, in-court witnesses, appellate courts should afford trial courts considerable deference when reviewing issues that hinge on the witnesses' credibility because trial courts are uniquely positioned to observe the demeanor and conduct of witnesses.”  Kelly at 6. (citing State v. Binette, 33 SW.3d 215, 217 (Tenn. 2000)). 

In deciding this issue, the Tennessee Supreme Court ultimately disagreed with the Court of Appeals decision and instead found that telephonic testimony should be given the same level of deference as live testimony.  The Court found that even by telephone the trial court is better situated to gauge the credibility of the witness when compared to an appellate court’s ability to evaluate the witness.  The trial court actually heard the witness’ voice in testify...