Smith v. U.S. Pipe & Foundry Co.

IN THE SUPREME COURT OF TENNESSEE
AT KNOXVILLE
FILED
FOR PUBLICATION22, 2000
February
PAUL D. SMITH, )
) Cecil Crowson, Jr.
HAM ILTON CIRCU IT
Plaintiff/Appellee, ) Appellate Court Clerk
) HON. L. MARIE WILLIAMS,
Vs. ) JUDGE
)
U.S. P IPE & FOU NDR Y CO ., ) NO. E1998-00306-SC-R3-CV
)
Defe ndant/A ppellan t. )
)
and )
)
LARRY B RINTON, Director of the )
Division of Workman’s Compensation )
TENNESSEE DEPART MENT OF )
LABOR, SECOND INJURY FUND, )
)
Defendant/Appellee. )

For the Plaintiff/Appellee: For the Defendant/Appellant
Paul D. Smith U.S. Pipe & Foundry Company
ROBINSON & ASSOCIATES THE FLEISSNER FIRM
Samuel F. Robinson, Jr. Phillip A. Fleissner
Keith A. Black David C. Nagle
Chattanooga, Tennessee Chattanooga, Tennessee

For the Defendant/Appellee
Second Injury Fund
Paul G. Summers
Attorney General & Reporter

E. Blaine Sprouse
Assistant Attorney General
Nashville, Tennessee

Kathleen W. Stratton
Assistant Attorney General
Nashville, Tennessee

OPINION
JUDGMENT OF TRIAL COURT
AFFIRMED. DROW OTA, J.
We granted the motion for review in this work er’s comp ensation ac tion to

consider the following two issues: (1) whether the employer is entitled to an offset

against the workers’ compensation award o f schedu led mem ber benef its in an amount

equal to fifty percent o f the Socia l Security old age insurance benefits received by the
employee; and (2) whether permanent total disability benefits begin accruing on the

date of injury or on the date of maximum medical improvem ent. After c arefully

examining the record and the relevant authorities, we conclude that the employer is not

entitled to an offset for Social Security old age insurance benefits when an employee

over sixty suffers a work-re lated injury that resu lts in scheduled member benefits. We

also conclude that permanent total disability benefits begin accruing on the date the

employee attains maximum medical improvement rather than on the date the injury

occurs. Consequently, we reject the findings of fact and conclusions of law of the

Special Workers Compensation Appeals Panel and affirm the judgment of the trial

court.

BACKGROUND

The facts pertine nt to the legal iss ues in this ap peal are not disputed. The

plaintiff, Paul D. Smith (“S mith”) worked f or the defendant, U .S. Pipe & Foun dry

Company (“U.S. Pipe”) from November 12, 1956 through August 26, 1994. During

this time, Smith sustained three work-related injuries, and as a result of these injuries,

is now permanently and totally disabled.

The first injury occurred on February 28, 1991. The treating physician assessed

a 15 percent permanent impairment to Smith’s left leg, and pursua nt to a non-court

approved settlement, Sm ith was compensated for a 15 perce nt perman ent disability to

the leg. The second injury occurred on July 21, 1992. His treating physician assessed

a 4.2 percent perman ent impairment to Sm ith’s right arm for this injury, and through

another non-court approved settlement, U.S. Pipe paid Smith benefits in an amount

equal to 4.2 percent to the right arm.

The subject of this appeal is the third injury which occurred on September 25,

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1992. At the time this injury occurred, Sm ith was sixty-one years of age . The treating

physician opined that Smith suffered a 25 percent permanent impairment to his right

lower extremity as a res ult of this inju ry. With resp ect to this third in jury, Smith

attained maximum medical improvement on February 22 , 1994, and Smith rece ived his

first payment of Social Sec urity old age insu rance ben efits one week later, during the

first week of March, 1994.

The trial court found that Smith suffered a 70 percent permanent disability to his

right leg as a result of the September 25 injury. In accordance with the sta tutory

directives relating to scheduled members, the trial court ordered U.S. Pipe to pay S mith

140 weeks of permanent disability benefits.1 In addition, the trial court found U.S. Pipe

liable to Smith for temporary total disability benefits from the date of the injury,

September 25, 1992, until the date that he attained m aximum medical im provem ent,

February 22, 1994. Furthermore, the trial court found that the Septem ber 25 injur y, in

combination with the previous two injuries, had rend ered Sm ith perman ently and totally

disabled. Because Smith was sixty-one years of age at the time the injury occurred, the

trial court found that his ben efits w ere cap ped at 2 60 we eks. See Tenn. Code Ann. §

50-60-207(4)(A )(i)(1999). Pursuant to Tenn. Code Ann. § 50-6-20 8(a), the trial court

found the defen dant, Seco nd Injury Fun d, liable for 120 weeks, the difference between

260 weeks, the amount of permanent total disability benefits to which a person over age

sixty is entitled, and 140 weeks, the am ount of the awa rd against the employer.

The trial court nex t addressed the applicab ility of the statutory offset for Social

Security old age insurance benefits. See Tenn. Code Ann. § 50-6-20 7(4)(A)(i) (1999).

First, the trial court held that U.S. Pipe was not entitled to the offset. In so holding, the

1
See Tenn. Code Ann. § 50-6-207(3)(A)(ii)(o)(1999)(“For the loss of a leg, sixty-six and two-thirds
percent (66 b%) of the average weekly wages during two hundred (200) weeks.”)

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trial court obse rved that U .S. Pipe w as liable only for the impairment resulting from the

September 25 injury and th at U.S. Pipe ’s liability for the injur y to Smith ’s leg, a

sche dule d me mbe r, wa s gov erne d by a specific statu te. How ever, the trial co urt held

that the Second Injury Fund was entitled to the offset because the Second Injury Fund

was liable for permanent total disability benefits. The trial court allowed the Second

Injury Fund an offset of fifty percent of the Social Security old age insurance b enefits

received by the employee.2

U.S. Pipe filed an appeal, and the case was referred to the Special Workers’

Compensation Appeals Panel for findings of fact and conclusions of law . The only

issue raised by U.S. Pipe in its appeal was the trial court’s decision denying U.S. Pipe

the statutory offset for Social Security old age insurance b enefits. The Appea ls Panel

reversed the trial court and found that U.S. Pipe is entitled to the statutory offset of fifty

percent of the Social Security old age insurance benefits received by Smith for the 140

weeks of benefits and that the Second Injury Fund is entitled to the fifty percent offset

for the remaining 120 weeks. In its opinion, the Appeals Panel also stated that

“benefits for permanent total disability begin to accrue as of the date of injury, not the

date the injured work er reach es max imum medic al impro veme nt.”

Thereafter, both Smith and U.S. Pipe filed motions as king this Court to review

the Panel’s decision. We granted the motions for review to consider whether the

Appea ls Panel erred both in concluding that U.S. Pipe is entitled to the statutory offset

and in stating that permanent total disability benefits begin accruing from the date of

injury rather than from the date on which the employee attains maximum medical

2
The parties stipulated at trial that fifty percent was the appropriate offset “attributable to employer
contributions” because employers contribute fifty percent to the FICA accounts of employees. We note that
the parties’ stipulation is consistent with our recent decision in McCoy v. T.T.C. Illinois, Inc., __ S.W.3d __
(Tenn. 2000).

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improvem ent. For the following reasons, we reject the findings of fact and conclusions

of law of the Special Workers’ Compensation Appeals Panel and affirm the judgment

of the trial cou rt.

STANDARD OF REVIEW

Appellate review of factual findings in a worker’s compensation case is de novo

upon the record of the trial court with a presumption that the findings of the trial court

are correct . See Tenn. Code Ann. § 50-6-225(e)(2) (1999). Where, as in this case,

questions of law are presented, appellate review is de novo without a presumption of

correctness. Parks v . Tennessee Mun. League Risk Management Pool, 974 S.W.2d

677, 678 (Ten n. 1998); Nutt v. Champion Int’l Corp., 980 S.W.2d 365, 367 (Tenn.

1998); Presley v. Ben nett, 860 S.W.2d 85 7, 858 (Tenn. 199 3).

SOCIAL SECURITY OFFSET

We begin our analysis with the relevant statute, Tenn. Code Ann. § 50-6-

207(4)(A)(i) (1999), which provides, in pertinent part, as follows:

[C]ompensation shall be paid during the period of the permanent total
disability until the employee reaches sixty-five (65) years of age;
provided, that with respect to disabilities resulting from injuries which
occur after 60 years of age, regardless of the age of the employee,
permanent total disability benefits are payable for a period of two
hundred sixty (260) weeks. Such compensation payments shall be
reduced by the amount of any old a ge insuran ce benef it payments
attributable to employer contributions which the employee may receive
under the Social Security Act, U.S.C., title 42, chapter 7, subchapter II,
as amended.

This statute contains two directives which relate to workers over age sixty – the 260

week cap and the Social Security offset. The proper application and interpretation of

this statute was first considered by this Court in Vogel v. Wells Fargo Guard Serv., 937

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S.W.2d 856 (Tenn. 1996). In that case, we dealt specifically with the 260 week cap

provision of the statute and held that “the 260 week cap set forth in Tennessee Code

Annotated Section 50-6-207 (4)(A)(i) applies to all injured worke rs over sixty who are

awarded benefits under the Workers’ Compensation statute for permanent partial or

permanent total disability.” Id. at 862. In so holding, we noted that our conclusion was

“required to avoid an otherwise irrational result.” Id.

In McIlvain v. Russell Stover Candies, Inc., 996 S.W.2d 179, 184-85 (Tenn.

1999), we app lied this statute in th e context of a worker over age sixty who had

sustained a work-related injury resulting in a disability to a scheduled member. The

employer in McIlvain claimed that under the statute, it was entitled to offset the

employee’s Social Security old age insurance benefits against her workers’

compensation award. Furthermore, the employer argued that the employee should have

been awarded benefits equivalent to forty percent of 260 weeks, the cap set in the

statute for workers w ho are injured after age sixty, rather than b enefits equ ivalent to

forty perc ent of 4 00 we eks. In rejecting the employer’s arguments, we observed that

“[i]t is well-settled that ‘[w]hen the injury is to a sch eduled m ember, the disability

award is exclusively controlled by the impairment rating established by the General

Assemb ly for that member.’” Id. at 185 (emphasis in original)(citations omitted).

Acc ordingly, in McIlvain , we held that “Tenn. Code Ann. § 50-6-207(4)(A)(i) applies

to workers over age 60 who suffer injuries to the body as a whole, whether permanent

partial or perm anent to tal, but not to such workers who suffer scheduled member

injuries.” Id. at 185 (emphasis ad ded).

Therefore, in McIlvain , we specif ically refused to apply Tenn. Code Ann. § 50-

6-207(4)(A )(i) to workers, such as Smith, who sustain scheduled member injuries.

While we perhaps dealt more specifically with the 260 week cap in McIlvain , the

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Social Security offset at issue in this appeal is an integral pa rt of Ten n. Cod e Ann . § 50-

6-207(4)(A)(i). As previously stated, the offset is one of two directives tha t relate to

workers over the age of sixty who are awarded compensation benefits. We have

previously de clined to apply one of the directives, the 260 week cap, to workers over

the age of sixty who sustain scheduled member injuries, and we perceive no valid

reason that would justify application of the other directive, the Social Security offse t,

to workers over the age of sixty who sustain scheduled member injuries. As we pointed

out in McIlvain , “[w]hen the injury is to a scheduled member, the disability award is

exclusively controlled by the impairment rating established by the Gene ral Assem bly

for that member.” 996 S.W.2d at 179 (citations and quo tatio ns om itted ). Ac cord ingly,

we hold that an employer of a worker over age sixty who sustains a scheduled member

injury is no t enti tled t o the statu tory S ocia l Sec urity offset contained in Tenn. Code

Ann. § 50-6-2 07(4)(A )(i).

Applying our holdin g to the fac ts in this case, w e must rejec t the Appe als

Panel’s conclusion that U.S. Pip e is entitled to the statutory offset for Social S ecurity

old age insurance benef its. While U.S. Pipe is correct in pointing out that, unlike

McIlvain , this case involves not only a scheduled member injury, but also a resulting

finding of perma nent total disa bility, U.S. Pipe fa ils to recogniz e that its own liability

is limited to the award of 70 percent disability to the scheduled member which resulted

from the September 25 injury. The Second Injury Fund is liable for the remainder of

the compensation that is due for the permanent total disability under Tenn. Code Ann.

§ 50-6-20 8(a), which provides, in p ertinent part:

(1)(a) If an employee has previously sustained a permanent physical
disability from any cause or origin and become s perman ently and totally
disabled through a subsequent injury, such employee shall be entitled to
compensation from such employee's employer or the employer's
insurance com pany only for the disability that would have resulted from
the subsequent injury, and such previous injury shall not be considered
in estimating the compensation to which such employee may be entitled
under this chapter from the employer or the employer's insurance
com pany; provided , that in addition to such com pensation for a

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 subsequent injury, and after completion of the payments therefor, then
such employee shall be paid the remainder of the compensation that
would be due for the permane nt total disability out o f a special fu nd to
be known as the "second injury fund" therein created.

(Empha sis added.) In Minton v. State Indus. Inc., 825 S.W.2d 73 (Tenn. 1992), we

explained that when a sched uled membe r injury combines with prior injuries to render

the employee totally and permanently disabled, “[u]nder subsection (a) the employer

is liable only for the disability that would have resulted from the subseq uent injury

without consideration of the first [injury].” Id. at 76. Accordingly, we held in Minton

that the e mployer ’s liability w as limited to the sc hedule d mem ber inju ry.

Consequently, even though Smith is now totally and permanently disabled,

under Section 20 8(a) and this Court’s de cision in Minton, U.S. Pipe is liable “only for

the disability that would have resulted from the subseque nt injury” whic h, in this case,

is 70 percent disability to the right leg, a scheduled member, which is, as the trial court

found, 140 w eeks of benef its. See Tenn. Code Ann. § 50-6-20 7(3)(ii)(o) (1999).

Accordingly, we conclude that the trial court correctly found that U.S. Pipe is not

entitled to the statutory offset for Social Security old age insurance benefits.3

ACCRUAL OF PERMANENT TOTAL DISABILITY BENEFITS

We next consider Smith’s argument that the Appeals Panel erred in stating that

permanent total disability benefits begin accruing on the date of the injury, September

25, 1992, rather than on the date Smith attained maximum medical improvemen t,

3
We emphasize that Smith has not challenged in this appeal the trial court’s decision to allow the Second
Injury Fund the benefit of the statutory offset for Social Security old age insurance benefits, and our holding
in no way affects th at decision.

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February 22, 1994.4 As we recently recognized,

[o]ur Worke rs’ Comp ensation A ct classifies co mpensa ble occupational
disabilities into four distinct classifications. These classifications are: (1)
temporary total disability; (2) temporary partial disability; (3) permanent
partial disability; and (4) permanent total disability. This Court has
previously recognized that eac h separate d isability classification is
independ ent and serv es a specific compen sation goal.

Davis v. Reagan, 951 S.W.2d 76 6, 767 (Tenn. 199 7) (internal citations omitted).

Temporary total disability “refers to the injured employee’s condition while disabled

to work by his injury and until he recovers as far as the nature of his injury permits .

. . .” Redmo nd v. M cMinn County, 209 Tenn. 463 , 468, 354 S.W.2d 435, 437 (1962 );

see also Roberson v. Loretto Casket Co., 722 S.W.2d 380, 382 (Tenn. 1986). These

benefits are paid for “the healing period during which the employee is totally prevented

from working.” Gluck Bros., Inc. v. Coffey, 222 Tenn. 6, 13-14, 431 S.W.2d 756, 759

(1968); see also Roberson v. Loretto Casket Co., 722 S.W.2d 380, 383 (Tenn. 1986).

Temporary total disability benefits are terminated e ither by the emp loyee’s ability to

return to work or the em ployee’s attainment of ma ximum medic al impro veme nt. See

Prince v. Sentry Ins. Co., 908 S.W.2d 937, 939 (Tenn. 19 95); Lock v. Nat. U nion Fire

Ins. Co. of Pa., 809 S.W.2d 483, 488 (Tenn. 1991); Fagg v. Hutch Mfg. Co., 755

S.W.2d 446, 452 (Tenn. 1988); Jones v. Crenshaw, 645 S.W.2d 23 8 (Tenn. 1983);

Simpson v. Satterfield, 564 S.W.2d 953, 955 (Tenn. 1978). When the period of

temporary total disability ends, a determination can be made as to whether the work-

related injury has resulted in a perm anent d isability. Id. If the employee remains

4
We no te that U.S. P ipe conten ds for the first time in th is proceed ing that the Ap peals Pan el’s statement is
correct and that permanent total disability benefits begin to accrue on the date of the injury. As explained
above, we disagree with U .S. Pipe’s arg ument and hold that the A ppeals P anel’s statemen t was errone ous.
However, we also note that U.S. Pipe submitted proposed findings of fact and conclusions of law to the trial
court which specifically stated that permanent total disability benefits “began to accrue on 2/22/94." In light
of this assertion in the trial court, we note that as a matter of procedure, U.S. Pipe was barred from presenting
a contrary ar gument on appeal. See Price v. Tennessee Prod. & Chem. Corp., 385 S.W.2d 301, 307-08
(Tenn. Ct. App. 1964) (stating that “[w]hen a cause is brought up for appellate review, a party cannot assume
an attitude inconsistent with, or different from, that taken by him at the trial, and is restricted to the theory on
which the cause was prosecuted or defended in the court below. Accordingly, where both parties act on a
particular theo ry of the cause o f action, they will not b e permitted to depart the refrom whe n the case is
brought up for appellate review. The same rule governs where the parties act on a particular theory of
defense in opposition thereto. 4 C.J.S. Appeal and Error, § 241, page 719.”)

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disabled, permanent disability benefits begin accruing.

Applying these we ll-settled principle s, we hold that the Ap peals Pan el erred in

stating that permanent total disability benefits accrue from the date of injury. Indeed,

the interpretation adopted by the Appeals Pane l would effectively eliminate tem porary

total disa bility bene fits from the statu tory schem e. Clearly, tempo rary benefits begin

accruing on the date of the injury, and permanent disability benefits, whether total or

partial, begin accruing on the date that the employee attains maximum medical

improvem ent. In this case, the trial court corre ctly held that the permanent total

disability benefits began accruing on February 22 , 1994, the d ate on wh ich Smith

attained ma ximum m edical impro vement.

CONCLUSION

After carefully considering the relevant authorities, we conclude that the trial

court correctly found that U.S. Pipe is not entitled to the statutory offset for Social

Security old age insuran ce ben efits. We also conclu de that the trial c ourt correctly

found that permanent total disability benefits began accruing in this case from the date

on which Smith attained maximum medical improvement rather than the date of the

injury. Accordingly, we reject the findings of fact and conclusions of law of the

Special Workers’ Compensation Appeals Panel and affirm the judgment of the trial

court.

_____________________________________
FRA NK F . DRO WO TA, III ,
JUSTICE

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Concur:
Anderson, C.J.
Barker, J. and Byers, Sp. J.

Birch and Holder, JJ. - Not Participating.

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