Nurse Case Management Fees Not Part of Employer’s Subrogation Lien

Tennessee Employer Does Enjoy Lien for Disability Indemnity & Medical Expenses

In a case of first impression, a Tennessee appellate court recently held that an employer does not enjoy a workers’ compensation subrogation lien for nurse case management expenses under Tenn. Code Ann. § 50-6-112(c)(1) [Memphis Light Gas & Water Div. v. Watson, 2019 Tenn. App. LEXIS 82 (Feb. 13, 2019)]. Brushing aside the employer’s argument that case management of an injured employee’s claim is mandatory under Tennessee law, the court looked to the language of Tenn. Code Ann. § 50-5-123, which states that employers “may, at their own expense, utilize case management, and if utilized, the employee shall cooperate with case management.” That the Commissioner of Labor, by rule, retained a requirement for case management after a case reached an appropriate threshold did not alter the situation, said the Court. Moreover, the Court stressed that case management was not primarily for the benefit of the injured employee.

Illinois Decision Found Instructive

The Court noted that in a somewhat similar factual situation, the Supreme Court of Illinois addressed whether the cost of services provided by a “medical rehabilitation coordinator” was reimburseable [see Cole v. Byrd, 167 Ill. 2d 128, 656 N.E.2d 1068, 1069-70, 212 Ill. Dec. 234 (Ill. 1995)]. There, the Illinois Supreme Court ultimately agreed with the trial court that the services in question were not primarily on behalf of the employee. Among other things, the Illinois Supreme observed that the rehabilitation coordinator:

  1. Did not provide any medical treatment to the employee;
  2. Had considered cost effectiveness while managing her file, and
  3. Had acted on behalf of the employer’s workers’ compensation insurer.

Earlier Tennessee Case

The appellate court also considered an earlier decision by the state’s Supreme Court—Hickman v. Continental Baking Co., 143 S.W.3d 72 (Tenn. 2004). According to the court, at the time of the employee’s injury in Hickman, case management services were apparently required by law given the amount of medical costs involved, and yet, the high court’s opinion made no mention of the employer’s subrogation interest extending to any such services. The appellate court acknowledged that Hickman did not squarely address the issue before the current court and thus did not stand for the proposition that case management expenses are not recoverable in subrogation. Nevertheless, the opinion in Hickman did comment that the amounts recoverable represented “amounts previously paid to the employee or on his behalf” [143 S.W.3d at 77].

Here, the Court concluded by stating that the services at issue in the instant case were for the benefit of the employer, not the employee. Accordingly, the Court affirmed the trial court’s decision not to include case management expenses in the amount of the employer’s subrogation lien.

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