insurancedefense

Tennessee Supreme Court Assesses when Tennessee can Apply Retaliatory Taxes on Insurance Companies from Other States

The Tennessee Supreme Court recently interpreted the laws of a foreign state in order to determine whether or not the State of Tennessee could impose a “retaliatory tax” on insurance companies based in the foreign state who operated in Tennessee as authorized workers’ compensation coverage providers. See Chartis Casualty Company et al. v. State of Tennessee, No. M2013-00885-SC-R11-CV, 2015 WL 5766279 (Tenn. October 2, 2015).

The State of Tennessee had audited a number of insurance companies based in Pennsylvania and required them to pay “retaliatory taxes” under Tenn. Code Ann. § 56-4-218. This statute allows the State of Tennessee to impose additional taxes on insurance companies from other jurisdictions when insurance companies based in Tennessee are taxed to a greater degree in those jurisdictions than the insurance companies from other jurisdictions are taxed in Tennessee. The calculation takes into account “taxes, fees, fines, penalties, licenses, deposit requirements or other obligations…” § 56-4-218(a).

In the case of the Pennsylvania companies, the State of Tennessee determined that the State of Pennsylvania’s taxes and fees on Tennessee insurance companies were higher than the State of Tennessee’s taxes and fees on Pennsylvania insurance companies. Therefore, the State of Tennessee applied “retaliatory” taxes on these Pennsylvania companies. Five of these Pennsylvania insurance companies paid the taxes under dispute to the State before filing a complaint with the Tennessee Claims Commission. The Tennessee Claims Commission granted the summary judgment motions of the State of Tennessee as to all five cases involving the five Pennsylvania insurance companies, and the Court of Appeals affirmed the rulings. The Tennessee Supreme Court granted permission to appeal.

In its opinion, the Supreme Court did not question the constitutionality of Tennessee’s retaliatory laws. Rather, the Supreme Court analyzed Pennsylvania statutes to determine whether or not Pennsylvania actually did impose a financial burden on Tennessee insurance companies doing business in Pennsylvania greater than the financial burden applied by the State of Tennessee. If they did, the Court held that Tennessee’s retaliatory taxes should have applied.

The lower courts had based their opinions on three Pennsylvania statutes which applied higher financial burdens on Tennessee insurance companies than Tennessee applied on Pennsylvania insurance companies. However, a more recent statute had been passed by the Pennsylvania legislature which stated that taxes imposed under the previous statutes were no longer to be directly imposed on insurance companies but instead were to be “imposed, collected and remitted through insurers in accordance with regulations promulgated by the Department of Labor and Industry.” 71 Pa. Cons. Stat. Ann. § 578. This statute was interpreted by the Supreme Court as not requiring the workers’ compensation assessments to be paid by insurance companies but instead to be merely collected by insurance companies from their policyholders and then paid to the State of Pennsylvania. The Court found that the newer statute repealed the three older Pennsylvania statutes imposing fees directly on insurance companies, since, because “the statutory schemes are inconsistent,” the older statutes would be repealed by implication. Chartis Casualty Company, 2015 WL 5766279 at *8.

The next question the Court analyzed was whether or not the newer Pennsylvania statute continued to place a direct financial burden upon Tennessee insurance companies doing business in Pennsylvania which exceeded the reciprocal financial burden upon Pennsylvania insurance companies doing business in Tennessee. The Court found that the fact that the policyholders of the insurance, instead of the insurance companies themselves, paid directly for these fees and taxes meant that the financial burden from the three older statutes could not be factored into a determination by Tennessee of retaliatory taxes for insurance companies. The State argued that the insurance companies’ administrative role of collecting and sending payments made by its policyholders to the State of Pennsylvania was an indirect financial burden which would be considered a fee, fine, penalty, license, deposit requirement or other obligation under the TN retaliatory tax statute. The Court, however, declined to consider this argument.

While the Court noted that the newer statute was an attempt by Pennsylvania to actively avoid retaliatory taxes for insurance companies domiciled in the state which operated in other jurisdictions, this active avoidance was successful since the financial burden of the policyholders would not factor into a determination of the financial burden for insurance companies. The Court thus found that there was no financial burden on Tennessee insurance companies operating in Pennsylvania greater than the financial burden of Pennsylvania insurance companies operating in Tennessee. Therefore, the State of Tennessee had no authority to impose retaliatory taxes upon the Pennsylvania insurance companies.

businesslitigation

Tennessee Whistleblower Claim Requires Reporting Illegal Conduct to Other Than Wrongdoer

Recently in Haynes v. Formac Stables, Inc., Judge Wade authored a Tennessee Supreme Court opinion which dismissed a retaliatory discharge case brought pursuant to both common law and the Tennessee Public Protection Act. The Complaint alleged the owner of the business had engaged in illegal conduct and had terminated the employee when he acted as a whistleblower by complaining of conduct to the owner. The Trial Court dismissed the plaintiff’s claim, because according to the employee’s own allegations, he had not reported the illegal activity to anyone other than the person responsible for the activity.

 It was determined on appeal that an employee must report an employer’s wrongdoing to someone other than the wrongdoer to qualify as a whistleblower claim. There is a requirement of reporting to an outside entity or individual when the wrongdoer is the manager, owner or highest ranking officer within the company. The decision of the Appellate Court was affirmed.

insurancedefense

Tennessee’s One Year Personal Injury Statute of Limitations Extended to Two Years when Criminal Charges are Brought

The 2015 Tennessee legislature passed Public Chapter No. 388 that extends the typical one year statute of limitation for personal injury causes of action (as well as other cause of actions) in certain situations.  This new law went into effect for all causes of action that accrue on or after July 1, 2015.   This statute basically extends the typical one year statute of limitations for cases involving personal injury, libel, false imprisonment, malicious prosecution and compensatory or punitive damage claims under Federal Civil Rights statutes.  In order to take advantage of the two year statute of limitations extension, a criminal charge must be brought pertaining to the incident in question within one year of the incident by (1) a law enforcement officer; (2) a District Attorney General; or (3) a grand jury.

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READ THE REST OF THIS POST AT TENNESSEE DEFENSE LITIGATION HERE

employmentlaw

The Tennessee Supreme Court Determines There is No Cause of Action for Purported Retaliatory Failure to Hire Due to Prior Workers Compensation Claim.

In Kighwaunda V. Yardley v. Hospital Housekeeping Systems, LCC, the Tennessee Supreme Court determined there was not a viable cause of action in Tennessee for retaliatory failure to hire due to a prior workers compensation claim.  There has, however, long been a cause of action for retaliatory discharge for asserting a work injury.  To be successful with a cause of action of this type the employee must establish numerous elements including:

1. The plaintiff was an employee of the defendant at the time of the injury;
2. The plaintiff made a claim against the defendant for workers’ compensation benefits;
3. The defendant terminated plaintiff’s employment; and
4. The claim for workers’ compensation benefits was a substantial factor in defendant’s motivation to terminate the plaintiff.

The Supreme Court, however, held there is a fundamental difference between discharging an employee as a result of a work-related injury and refusing to hire a job applicant because they previously filed for workers’ compensation benefits.  In this case, the claimant had a work-related injury but was ultimately released to perform full duty work and applied for a job with Hospital Housekeeping Systems but was not hired, at least in part, due to the fact she previously filed a workers’ compensation claim.  The claimant sued Hospital Housekeeping Systems in Federal District Court raising a number of claims one of which was the company failed to hire her because she had a previous workers’ compensation claim which gave rise to a cause of action for a “retaliatory failure to hire.”  The claimant recognized this cause of action had not previously been recognized in Tennessee.  The Federal District Court requested the Tennessee Supreme Court to consider whether or not there should be a cause of action for this.  Federal Courts certify questions of this type to State Supreme Courts when a Federal Court is ruling on a cause which involves an issue that has not been previously addressed by the State or its Legislature.

Our Supreme Court determined Tennessee is an employment-at-will state and there has been no such cause of action created by the Legislature.  As a result, the Supreme Court was unwilling to recognize this as a cause of action.  As a side note, this does not mean she had no claim for disability discrimination under the American’s with Disabilities Act (ADA) and the Tennessee Human Rights Act (THRA).

businesslitigation

Tennessee Legislature Clarifies that Franchisee Employees Are Not To Be Deemed Employees of the Franchisor

The Tennessee legislature in Public Chapter No. 114 clarified Tennessee law on who is considered the employer of franchisee employees. This was signed into law by Governor Bill Haslam on April 10, 2015 and took effect immediately. Specifically, employees of franchisees as well as franchisees themselves will not be “deemed to be an employee of the franchisor for any purpose.” This obviously is important in several different areas of the law. It can certainly be important for numerous employment law issues including Tennessee employee discrimination or fair labor standard cases. Additionally, if employees are deemed to be employed by a franchisor, this could lead to an increased level of litigation against franchisors for claims based in premises liability or automobile liability (when a franchisee is involved in an incident or claim).

The Tennessee legislature felt it was important to clarify this issue mainly because of concerns for litigation as well as recent changes in the law on this issue at the national level.

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READ THE REST OF THIS POST AT TENNESSEE DEFENSE LITIGATION HERE

productsliability

Does Four Year Statute of Repose in T.C.A. § 28-3-202 Bar Tennessee Construction Defect Claims When Project is Not Complete?

The recent Tennessee Court of Appeals decision of Keith Gillis v. Covenant Health, 2015 WL 3563034 (Tenn. Ct. App. 2015) discussed the four year statute of repose found in T.C.A. § 28-3-202 for construction defect claims.  This statute of repose is a very good way to defeat many construction defect claims in Tennessee.  This particular case dealt with a situation where a radiology facility at Methodist Hospital was allegedly defectively constructed.  Specifically, the walls around the radiology facilities required a certain amount of lead shielding but there was a portion of the walls that did not contain the necessary lead shield to protect individuals from exposure to excessive radiation.  As a result, plaintiffs claimed they were exposed to excessive radiation and therefore they sued the construction company that failed to put in the necessary lead shielding.

Tennessee law is clear that we have a four year statute of repose that bars claims for construction defect cases filed greater than four years from the date of substantial completion (with certain exceptions).  The entire statute found in T.C.A. § 28-3-202 is as follows:

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READ THE REST OF THIS POST AT TENNESSEE DEFENSE LITIGATION HERE

employmentlaw

Tennessee Passes “Employee Online Privacy Act of 2014” Preventing Employers from Obtaining Access to Personal Internet Accounts Like Facebook

The Tennessee Legislature recently passed the Employee Online Privacy Act of 2014.  This is found in 2014 Public Chapter 826.  This new statute will be found at T.C.A. § 50-1-1001 et seq. and takes effect on January 1, 2015.  This new statute basically prevents an employer from taking any adverse employment action against an employee for failure to provide access to a “personal internet account” (which basically includes any type of internet account).  “Personal internet account” is defined as follows:

(5) “Personal Internet account”:
(A) Means an online account that is used by an employee or applicant exclusively for personal communications unrelated to any business purpose of the employer; and includes any electronic medium or service where users may create, share or view content, including, emails, messages, instant messages, text messages, blogs, podcasts, photographs, videos or user-created profiles; and
(B) Does not include an account created, maintained, used, or accessed by an employee or applicant for business-related communications or for a business purpose of the employer.

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READ THE REST OF THIS POST AT TENNESSEE DEFENSE LITIGATION HERE

 

productsliability

Tennessee Supreme Court Clarifies Way to Determine Applicable Statute of Limitations for a Case

The Tennessee Supreme Court in Brenda Benz-Elliott v. Barrett Enterprises, LP, No. M2013-00270-SC-R11-CV, 2015 WL 294635 (Tenn. 2015) has provided an opinion that attempts to clarify how statute of limitations should be applied for Tennessee cases.  Over the years numerous Tennessee appellate decisions have cited the “gravaman of the complaint” rule in order to determine which statute of limitations applies to a case.  (Benz-Elliott at 7, 8).  In this case, the Tennessee Supreme Court noted that defining exactly what this actually means has proven difficult over time.  If you desire to read a detailed analysis of the historical citations to this rule and the general “fuzziness” in the actual application of this rule, this case provides a lengthy discussion of these issues.  For the purposes of this blog post, however, I am mainly going to address the ultimate conclusion of the Tennessee Supreme Court that is an attempt to clarify confusing pre-existing precedent.

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READ THE REST OF THIS POST AT TENNESSEE DEFENSE LITIGATION HERE

insurancedefense

Tennessee Premises Owners Not Responsible to Protect Patrons from Violence that Occurs Off of Their Property

The Tennessee Court of Appeals decided a recent interesting case involving a shooting that occurred just outside of the property of a youth outreach ministry. The Jerterrius Marshawn Akridge v. Fathom, Inc., No. 2014-00711-COA-R9-CV, 2015 WL 97946 (Tenn. 2015) decision dealt with a shooting that occurred close to, but clearly outside of the property of the defendant. The plaintiffs alleged they were attending a public music event at Club Fathom. Club Fathom provides outreach to at-risk youth, including gang members. At the event the plaintiffs assert certain individuals wore gang colors and an altercation erupted inside the building. The defendant’s security personnel forced all patrons to leave the building and the premises. The plaintiffs were subsequently caught in a shooting which occurred off the premises.

The plaintiffs claimed the defendant had a history of violence and numerous incidents of crime and public disorder on their property….

READ THE REST OF THIS POST AT TENNESSEE DEFENSE LITIGATION HERE