                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                JANUARY 17, 2006 Session

           HEALTH COST CONTROLS, INC. v. RONALD GIFFORD

                Direct Appeal from the Chancery Court for Weakley County
                        No. 15726   William M. Maloan, Chancellor



                    No. W2005-01381-COA-R3-CV - Filed March 20, 2006


This is not the first time this case has been on appeal. In this appeal, we are asked to determine if
the chancery court erred when it found that an insured individual was made whole by a settlement
agreement with a third party tortfeasor so as to require the insured to reimburse his insurer.
Specifically, Appellant contends that the chancery court erred in finding that the insured was not
made whole because it failed to use the formula method used by federal courts for determining
whether an insured is made whole and failed to engage in an analysis of the dollar amounts of the
insured’s recovery and losses. We reverse and find that the insurer is entitled to reimbursement from
the insured.


    Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Reversed

ALAN E. HIGHERS, J., delivered the opinion of the court, in which W. FRANK CRAWFORD , P.J., W.S.,
and HOLLY M. KIRBY , J., joined.

John M. Russell, Thomas H. Lawrence, and Julie Y. McLaughlin, Memphis, TN, for Appellant

H. Max Speight, Dresden, TN, for Appellee
                                       MEMORANDUM OPINION1

                                   I. FACTS & PROCEDURAL HISTORY

       This is not the first time this case has been on appeal. In a previous opinion rendered by the
Tennessee Supreme Court concerning this case, it noted the following pertinent factual and
procedural history:

                        Ronald Gifford [(“Gifford” or “Appellee”)], the County
                 Executive of Weakley County, Tennessee, was seriously injured in an
                 automobile accident while a passenger in a vehicle driven by his
                 brother and owned by his mother. Gifford’s mother, who was also a
                 passenger, later died as a result of injuries from the accident.

                        Gifford was insured at the time of the accident through a
                 Prudential Insurance Company group policy insuring Weakley
                 County employees for medical benefits. On Gifford’s behalf,
                 Prudential paid under the policy $37,795.08 for medical expenses
                 incurred because of injuries in the accident.

                          Gifford’s separate tort claim for his personal injuries was
                 based on the negligence of his brother, the driver of the car, imputed
                 to his mother, the owner of the car. The tort claim was settled by State
                 Farm Insurance Company, Gifford’s mother’s liability insurance
                 carrier, by the payment of $100,000 - the limit under her policy.

                         After State Farm Insurance Company made the $100,000
                 payment to Gifford, Health Cost Controls, Inc., (“HCC” [or
                 “Appellant”]), Prudential’s assignee, demanded reimbursement from
                 Gifford of the $37,795.08 paid by Prudential for his medical
                 expenses. HCC’s claim for reimbursement relied upon terms in
                 Gifford’s policy entitled “Benefit Modification for Third Party
                 Liability,” which included the following:



        1
           Rule 10 of the Rules of the Court of Appeals of Tennessee governs the issuance of Memorandum Opinions,
which states:

                 This Court, with the concurrence of all judges participating in the case, may affirm,
                 reverse or modify the actions of the trial court by memorandum opinion when a
                 formal opinion would have no precedential value. W hen a case is decided by
                 memorandum opinion it shall be designated “M EMORANDUM OPINION”, shall
                 not be published, and shall not be cited or relied on for any reason in any unrelated
                 case.


                                                         -2-
       A. This Modification applies when a person, other
       than the person for whom a claim is made, is
       considered responsible for a Sickness or Injury. To
       the extent payment for the Sickness or Injury is made,
       or may be made in the future, by or for that
       responsible person (as a settlement, judgment or in
       any other way):

       (1) charges arising from that Sickness or Injury are
       not covered; . . . .

       B. But when a claim is received by Prudential,
       benefits which would be payable except for A above
       will be paid if:

       (1) payment by or for the responsible person has not
       yet been made; and

       (2) the Covered Person(s) involved (or if incapable,
       that person’s legal representative) agrees in writing
       to pay back promptly the benefits paid as a result of
       the Sickness or Injury to the extent of any future
       payments made by or for the responsible person for
       the Sickness or Injury. . . .

(Emphasis added). Gifford refused to reimburse the expenses.

        HCC filed this action for reimbursement seeking return of the
payment for medical expenses on the theory that the payment had
been made by mistake and moved for summary judgment based on
the “third party liability” terms of Gifford’s policy with Prudential.
The trial court concluded that the provisions in the policy set out
above denied coverage for an injury caused by a third party on whose
behalf payment is made by “settlement, judgment, or in any other
way.” The trial court did not consider the made whole doctrine,
although HCC had filed an affidavit stating that $44,000 of the
payment was for Gifford’s medical expenses and that the remaining
$ 56,000 of the payment was for Gifford’s pain and suffering.
Accordingly, the trial court granted summary judgment in favor of
HCC and ordered Gifford to reimburse HCC for the medical expenses
that had been paid by Prudential.




                                 -3-
                       The Court of Appeals held that the medical expenses payment
               was not covered under the policy, that Prudential’s payment was
               based on a mistake of fact, and that the trial court properly granted
               summary judgment. Before oral argument, however, this Court
               released York v. Sevier County Ambulance Authority, 8 S.W.3d 616
               (Tenn. 1999), in which we held that an insured must be made whole
               based on equitable principles before an insurer is entitled to
               reimbursement, regardless of policy language. Gifford, who had
               pleaded the made whole doctrine in the trial court as a defense,
               discussed York in oral argument in the Court of Appeals as
               controlling authority in this case. On application for appeal, we
               remanded the case to the Court of Appeals to consider York. On
               remand, the Court of Appeals once again affirmed the trial court’s
               summary judgment after determining that York was inapplicable and
               that “Gifford did not carry his burden of establishing that he was not
               made whole.”

Health Cost Controls, Inc. v. Gifford, 108 S.W.3d 227, 228-29 (Tenn. 2003). The Tennessee
Supreme Court reversed the decision of this Court, finding that its decision in York v. Sevier County
Ambulance Authority, 8 S.W.3d 616 (Tenn. 1999) was applicable and that the made whole doctrine
applied in this case. Id. at 231. The Tennessee Supreme Court remanded the case to the trial court
to make a factual determination of whether Gifford was “made whole” by his settlement. Id.
       On remand, the chancery court found that

               [i]n light of the severity of the physical and emotional injuries, and
               the medical bills incurred, the Court finds Gifford has not been made
               whole by the settlement proceeds in this case and, therefore, HCC is
               not entitled to reimbursement of the $37,795.08 it paid in medical
               bills on behalf of Gifford.

                                      II. ISSUE PRESENTED

Appellant has timely filed its notice of appeal and presents the following issue for review:
1.     Whether the chancery court erred when it found that Appellee was not “made whole” by his
       settlement.

For the following reasons, we reverse the decision of the chancery court.




                                   III.   STANDARD OF REVIEW



                                                -4-
         This Court reviews findings of fact by a trial court sitting without a jury under a de novo
standard with a presumption of correctness for the trial court’s findings. Tenn. R. App. P. 13(d).
This Court reviews a trial court’s conclusions of law de novo with no presumption of correctness for
the trial court’s conclusions. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993)
(citing Estate of Adkins v. White Consol. Indus., Inc., 788 S.W.2d 815, 817 (Tenn. Ct. App. 1989)).

                                               IV. DISCUSSION

       On appeal, Appellant contends that the chancery court erred when it found that Appellee was
not made whole by his settlement agreement so as to require Appellee to reimburse Appellant for
the medical expenses Appellant paid for on behalf of Appellee. We agree.

         Recently, this Court found in Abbott v. Blount County, No. E2004-00637-COA-R3-CV,
2005 Tenn. App. LEXIS 469, at *23 (Tenn. Ct. App. Aug. 9, 2005) (perm. app. filed), that where
a trial court “made no findings of any damage amount other than medical expenses of $223,000, .
. . [and] simply stated that in light of the severity of [the insured’s] injuries, neither the $1,275,000
out-of-court settlement nor any amount of money could possibly make her whole” was “neither proof
nor finding of damages.” Id. at *22-23. In doing so, this Court stated that “[c]ompensable damages
must be proved in compensable terms; in other words, they must be valuated monetarily.” Id. at *23.
 Further, this Court concluded that “the burden of proof is on the insured to demonstrate that the
settlement did not make her whole in light of all the facts . . . .” Id. at *23-24 (citing Tenn. Farmers
Mut. Ins. Co. v. Farmers, No. 03A01-9610-CH-00327, 1998 Tenn. App. LEXIS 581, at *3 (Tenn.
Ct. App. Aug. 20, 1998) (no perm. app. filed)). We find this rationale to apply in this case as well.

        At trial, while the chancery court found that Appellee was not made whole by the settlement
agreement and determined the amount of medical damages Appellee incurred, it did not assign a
monetary amount to the injuries Appellant suffered from the accident. Rather, the chancery court
made specific findings as to what injuries Appellant suffered. In this case, the only monetary
damages that the chancery court found that Appellee incurred was the amount of Appelle’s medical
expenses, which the chancery court stated was in excess of $45,000. From the limited record before
us on appeal, we can find no evidence that Appellee presented as to the monetary value of his
injuries. Appellee has recovered $100,000 for his injuries from the settlement agreement,
$37,795.08 from Appellant for medical expenses incurred from his injuries, and $7,358.95 from
another insurer of Appellee, bringing Appellee’s total recovery to $145,154.03.2 As his total
recovery is in excess of the amount of damages proved at trial, we conclude that Appellee was made

         2
             This Court is cognizant of the fact that when the chancery court attempted to determine whether Appellee
was made whole, it used the amount recovered by Appellee from the settlement agreement as the total amount of recovery
as a basis to determine whether Appellee was made whole. W hen determining whether an insured is made whole, a court
must make its determination in light of the total recovery, which in this case not only included the amount of the
settlement agreement but also included the amount paid by Appellant and another insurer of Appellee for his medical
expenses. See Wim berly v. Am . Cas. Co., 584 S.W .2d 200, 203-04 (Tenn. 1979) (determining total recovery by insured
by adding amounts recovered by insured from two different insurers).


                                                         -5-
whole by the settlement. Accordingly, we reverse the decision of the chancery court and find that
Appellant is entitled to reimbursement from Appellee.

                                       V. CONCLUSION

       For the aforementioned reasons, we reverse the decision of the chancery court and find that
Appellant is entitled to reimbursement from Appellee because Appellee was made whole from his
settlement agreement. Costs of this appeal are taxed to Appellee, Ronald Gifford, for which
execution may issue if necessary.



                                                     ___________________________________
                                                     ALAN E. HIGHERS, JUDGE




                                               -6-
