IN THE SUPREME COURT OF TENNESSEE
AT NASHVILLE
FILED
FOR PUBLICATION
December 7, 1998
Filed: December 7, 1998
Cecil W. Crowson
Appellate Court Clerk
FAY THOMAS NUTT, )
)
PLAINTIFF/APPELLEE, ) WAYNE CHANCERY NO. 8926
)
v. ) Hon. Jim T. Hamilton, Chancellor
)
CHAMPION INTERNATIONAL ) No. 01S01-9705-CH-00114
CORPORATION, )
)
DEFENDANT/APPELLANT. )
FOR APPELLANT: FOR APPELLEE:
P. ALLEN PHILLIPS WM. LANDIS TURNER
JACKSON HOHENWALD
OPINION
TRIAL COURT AFFIRMED AS MODIFIED HOLDER, J.
OPINION
We granted this appeal to determine whether an employer is entitled to an
offset of long-term disability payments against a workers’ compensation award
for permanent total disability. A 1996 amendment to Tenn. Code Ann.
§ 50-6-114 permits offsets against workers’ compensation benefits for payments
made to an employee under an employer-funded disability plan. The plaintiff’s
injury pre-dated the effective date of the statute. We hold that the amendment is
not retroactive and the employer is not entitled to an offset in this case.
BACKGROUND
The facts are not in dispute. Fay Thomas Nutt was employed by
Champion International Corporation when he fell on November 15, 1990, injuring
himself. The parties agree Mr. Nutt sustained a work-related injury leaving him
permanently disabled. The parties also agree that he is entitled to the maximum
benefit of $109,200 pursuant to Tenn. Code Ann. § 50-6-102(a)(6)(A).
From the date of injury to February 3, 1993, Mr. Nutt received $31,550.61
in temporary total disability benefits pursuant to the Workers’ Compensation Act.
From February 1993, through the November 26, 1996 trial, he received long-
term disability benefits totaling $31,285 under a long-term disability plan offered
by Champion.
The parties have agreed that the $109,200 in workers’ compensation
benefits should be reduced by $31,550.61, the amount of the temporary total
disability benefits Champion has already paid. Champion contends that the
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benefit amount should be further reduced by $31,285, the amount of benefits
paid under the employer-provided, long-term disability plan.
At the time of Mr. Nutt’s injury, he participated in a union-negotiated, long-
term disability plan offered by Champion. The long-term disability plan was the
result of an agreement reached between the Local 193 U.P.I.U. and Champion
on February 7, 1990. The plan was optional for employees; participating
employees paid one-half of one percent of their hourly base pay into the plan.
Mr. Nutt chose to participate in the program and had regular salary deductions.
Champion described the employee contribution as an administrative fee paid in
order to operate the program.
On March 9, 1993, Mr. Nutt filed an action in Wayne County Chancery
Court seeking disability benefits. Champion argued that a 1996 amendment to
Tenn. Code Ann. § 50-6-114(b) should apply, allowing a set-off against the
workers’ compensation benefits for the amount Champion has already paid.
A hearing was held on November 26, 1996. The chancellor applied Tenn.
Code Ann. § 50-6-114(b) and found that the plan was not entirely employer
funded because the participating employees paid one-half of one percent of the
costs of the disability plan. Accordingly, the chancellor found that the contract
provision allowing the offset violated public policy and held that Champion was
not entitled to an offset of $31,285.00.1
The Special Workers’ Compensation Appeals Panel of the Tennessee
Supreme Court reversed. The panel determined that the amended statute was
1
After the chancellor’s judgment, the parties entered a partial satisfaction of judgment
showing that Champion had paid $37,091.51 of permanent total disability, $9,272.88 in attorneys'
fees o n the u ncon tested portion of the ju dgm ent, an d $1,1 87 in dis cretion ary cos ts to M r. Nutt's
cou nse l.
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applicable and held that the collective bargaining agreement controlled. The
panel held that the employer is entitled to an offset for payment of long-term
disability payments against the court award of workers’ compensation benefits.
Upon review, we reverse.
RETROACTIVITY OF STATUTE
We must first determine whether the amended statute, Tenn. Code Ann.
§ 50-6-114(b), is applicable to Mr. Nutt’s case. Since we are dealing exclusively
with conclusions of law, our standard of review on appeal is de novo without a
presumption of correctness. Presley v. Bennett, 860 S.W.2d 857, 859 (Tenn.
1993).
The amended statute in question took effect July 1, 1996, after the injury
occurred in this case. The provision states:
(b) However, any employer may set off from temporary total,
temporary partial, and permanent partial and permanent total
disability benefits any payment made to an employee under an
employer funded disability plan for the same injury, provided that
the disability plan permits such an offset. Such an offset from a
disability plan may not result in an employee receiving less than the
employee would otherwise receive under the Workers’
Compensation Law. In the event that a collective bargaining
agreement is in effect, this provision shall be subject to the
agreement of both parties.
Tenn. Code Ann. § 50-6-114(b).
This statute was codified in response to this Court’s opinion in McCaleb v.
Saturn Corp., 910 S.W.2d 412 (Tenn. 1995). In McCaleb, we held that an
employer was not entitled to an offset based upon Tenn. Code Ann.
§ 50-6-114(a) which states:
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Supremacy of chapter -- No contract or agreement, written or
implied, or rule, regulation or other device, shall in any manner
operate to relieve any employer in whole or in part of any obligation
created by this chapter except as herein provided.
This Court reasoned that public policy would not support “any agreement which
would reduce an employer’s liability for permanent disability benefits under the
Act.” McCaleb, 910 S.W.2d at 416.
The Tennessee Constitution states, “That no retrospective law, or law
impairing the obligations of contracts, shall be made.” Tenn. Const. art. 1, § 20.
Statutes are presumed to operate prospectively unless the legislature clearly
indicates otherwise. Shell v. State, 893 S.W.2d 416, 419 (Tenn. 1995); Kee v.
Shelter Ins., 852 S.W.2d 226, 228 (Tenn. 1993); State v. Defriece, 937 S.W.2d
954, 957 (Tenn. Ct. App. 1996), per. app. denied (Tenn. 1997). The 1996
amendment to Tenn. Code Ann. § 50-6-114 does not include a provision making
subsection (b) retroactive.
Generally, the statute in effect at the date of the worker’s injury governs
the rights of the parties under workers' compensation law absent an indication of
the legislature’s contrary intent. Presley, 860 S.W.2d at 860, n.2; Oliver v. State,
762 S.W.2d 562, 566 (Tenn. 1988). An exception to the prospective-only
application exists for statutes which are remedial or procedural in nature. Shell,
893 S.W.2d at 419; Kee, 852 S.W.2d at 228; Defriece, 937 S.W.2d at 957-58.
Statutes deemed remedial or procedural apply retrospectively to causes of action
arising before such acts became law and to suits pending when the legislation
took effect.
A procedural or remedial statute is one that does not affect the vested
rights or liabilities of the parties. Shell, 893 S.W.2d at 416. A procedural statute
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is one that addresses the mode or proceeding by which a legal right is enforced.
Saylors v. Riggsbee, 544 S.W.2d 609, 610 (Tenn. 1976) (citing Jones v. Garrett,
192 Kan. 109, 386 P.2d 194, 198-199 (1963)). Remedial statutes are defined
as “[l]egislation providing means or method whereby causes of action may be
effectuated, wrongs redressed and relief obtained . . . .” Defriece, 937 S.W.2d at
958 (citations omitted). “Statutes that create a new right of recovery or change
the amount of damages recoverable are, however, deemed to have altered the
parties vested right and thus are not considered remedial.” Shell, 893 S.W.2d at
420 (citing Anderson v. Memphis Hous. Auth., 534 S.W.2d 125, 127-28 (Tenn.
Ct. App. 1975)).
We find that the amendment to Tenn. Code Ann. § 50-6-114 is neither
remedial nor procedural. The amendment affects the substantive rights of the
employee by allowing offsets to the workers’ compensation award. While the
employee may receive payments from both disability plans and workers'
compensation, the amendment guarantees that the employee will not receive
less than what is due him under the workers’ compensation law. The
amendment also indicates that a collective bargaining agreement, if present, will
control the manner of payment.
Since the amended statute is not retroactive, the only provision in effect at
the time of Mr. Nutt’s injury was subsection (a). That section does not provide
for offsets. Therefore, Champion is not entitled to an offset of $31,285 against
Mr. Nutt’s workers’ compensation award.
The ruling of the chancellor is affirmed for the reasons stated.
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JANICE M. HOLDER, JUSTICE
Panel:
Anderson, C.J.
Drowota and Barker, J.J.
Birch, J., Not Participating
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