## Facts

- Billy Castleman, an employee of subcontractor J.E.C. Electric, suffered a compensable workplace injury on November 3, 1989.
- Hartford Accident and Indemnity Company, the general contractor’s workers’ compensation carrier, paid approximately $100,000 in workers’ compensation benefits.
- Castleman sued Ross Engineering, Inc., a third-party tortfeasor, for personal injuries; Hartford intervened asserting a statutory subrogation lien under Tenn. Code Ann. § 50-6-112(c)(1).
- After Tennessee adopted comparative fault, the case was tried to a jury with fault submitted as to Castleman, Ross Engineering, and J.E.C. Electric (the employer).
- The jury found total damages of $1.5 million and allocated fault: 68% Ross Engineering, 16% Castleman, and 16% J.E.C. Electric.
- The trial court entered judgment against Ross Engineering for $1,020,000 (68% of $1.5 million); Castleman did not appeal and later acknowledged full satisfaction of the judgment.
- Ross Engineering paid the judgment amount minus $100,000, which was withheld by agreement pending resolution of Hartford’s lien.
- The trial court enforced Hartford’s lien, awarding reimbursement of the benefits paid less a share of attorney’s fees and expenses (net $68,489).
- Castleman appealed, arguing Hartford should not recover because he was not “made whole” given that 16% fault was assigned to the employer, from whom he could not recover in tort.

## Issues

1. Whether Tenn. Code Ann. § 50-6-112 permits enforcement of a workers’ compensation carrier’s subrogation lien against an employee’s third-party recovery when comparative fault assigns a portion of fault to the employer and the employee.
2. Whether equitable “made whole” principles limit or defeat the statutory subrogation lien in this workers’ compensation context.

## Decision

- The Supreme Court of Tennessee affirmed enforcement of Hartford’s statutory subrogation lien.
- The carrier’s right to reimbursement under Tenn. Code Ann. § 50-6-112 was not conditioned on the employee being fully compensated for all damages, including damages attributable to the employer’s percentage of fault.
- Allocation of fault to the employer under comparative fault did not reduce or bar the carrier’s lien against the employee’s recovery from the third-party tortfeasor.
- Hartford was entitled to recover the workers’ compensation benefits it paid (subject to reduction for attorney’s fees and expenses attributable to obtaining the third-party recovery).

## Legal Principles

- Tenn. Code Ann. § 50-6-112(c)(1) grants an employer or carrier a statutory subrogation lien on an employee’s recovery against a third party to the extent workers’ compensation benefits have been paid.
- The statutory lien attaches to the employee’s actual third-party recovery “by judgment, settlement or otherwise” and is enforceable through intervention.
- Equitable “made whole” limitations applicable to non-statutory subrogation do not override a clear, comprehensive workers’ compensation subrogation statute.
- Comparative fault may allocate fault to an immune employer for purposes of apportioning damages among parties, but that allocation does not negate the statutory reimbursement right for benefits paid.

## Conclusion

The court held that a workers’ compensation carrier may enforce its statutory subrogation lien against an employee’s third-party recovery even when the jury allocates fault to the employer and the employee and the employee claims he was not fully compensated; the statute controls distribution of the third-party recovery and permits reimbursement of benefits paid, reduced by appropriate fees and costs.


Castleman v. Ross Eng’g, Inc., 958 S.W.2d 720 (Tenn. 1997)