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IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE
December 5, 2011 Session EARL McLEMORE, BY AND THROUGH JEAN McLEMORE, AS ADMINISTRATRIX OF THE ESTATE OF EARL McLEMORE, DECEASED FOR THE USE AND BENEFIT OF THE WRONGFUL DEATH BENEFICIARIES OF EARL McLEMORE v. ELIZABETHTON MEDICAL INVESTORS, LIMITED PARTNERSHIP d/b/a LIFE CARE CENTER OF ELIZABETHTON, et al.
Appeal from the Circuit Court for Carter County No. C10129 Hon. Thomas J. Seeley, Jr., Judge

No. E2010-01939-COA-R3-CV Filed June 22, 2012

This is a survivor and wrongful death suit arising out of the alleged neglect and abuse of Earl McLemore while he was a resident in a nursing home, Life Care Center of Elizabethton, which is located in Elizabethton, and is owned and operated by defendants. The suit was filed in the Circuit Court for Carter County, and following a ten day trial in May of 2010, the jury returned verdicts in favor of plaintiff and against all defendants. The jury awarded compensatory damages of $500,000.00 and punitive damages of $4,250,000.00. The Trial Court suggested a remittitur of compensatory damages to $225,000.00, but sustained the punitive damages award. Defendants/appellants appealed the verdict on numerous grounds. We affirm the Judgment of the Trial Court.

Tenn. R. App. P.3 Appeal as of Right; Judgment of the Circuit Court Affirmed.

H ERSCHEL P ICKENS F RANKS, P.J., delivered the opinion of the Court, in which C HARLES D. S USANO, J R., J., and D. M ICHAEL S WINEY, J., joined.

Roger W. Dickson, Travis R. McDonough, Robert F. Parsley, Kevin D. Hudson, and Jade D. Dodds, Chattanooga, Tennessee, for the appellants, Elizabethton Medical Investors, Limited Partnership d/b/a Life Care Center of Elizabethton; Elizabethton Medical Investors, LLC; and Life Care Centers of America, Inc. 1

1

Appellants' counsel did not represent appellants in the Trial Court.

M. Chad Trammell, Texarkana, Arkansas, S. Drake Martin, Grayton Beach, Florida, Tony Seaton, Johnson City, Tennessee, and Brian G. Brooks, Greenbrier, Arkansas, for the appellee, Jean McLemore.

OPINION Background Plaintiff's complaint was filed on March 13, 2006 by Deceased's surviving spouse, Jean McLemore, for "the use and benefit of the wrongful death benefits of the wrongful death beneficiaries" of McLemore. At least fifteen entities were named as defendants, including Life Care C enters of America, Inc., (LCCA). All but three defendants were dismissed prior to trial. The complaint alleges claims for negligence, negligence per se, gross negligence, medical malpractice, violation of the Tennessee Adult Protection Act and violation of the Tennessee Consumer Protection Act. The complaint alleges that while in the care of the defendants, Mr. McLemore suffered injuries, including decubitus ulcers, contusions and bruises, pain and suffering, mental anguish, infection, poor hygiene and death. Plaintiff sought compensatory and punitive damages. The complaint was amended twice and a claim for misrepresentation was added. Plaintiff narrowed her claims, focusing on " understaffing" and "undersupplying" in her Second Amended Complaint. The answer specifically stated that defendant LCCA managed the operations of LCCE at all material times. On July 20, 2009, defendants filed a motion for partial summary judgment on the pleadings asking the Trial Court to dismiss the claims based on ordinary negligence, gross negligence, negligence per se, the Tennessee Adult Protection Act, the Tennessee Consumer Protection Act and misrepresentation. They contended that under the Court's holding in Estate of French v. Stratford House, E2008-00539-COA-R3-CV. 2009 WL 211898 (Tenn. Ct. App. Jan. 29, 2009), only plaintiff's claim under the Tennessee Medical Malpractice Act (TMMA) should be sustained as French held that claims of "understaffing" and "undersupplying" sounded in medical malpractice. On July 27, 2009, plaintiff voluntarily dismissed all claims other than ordinary negligence, medical malpractice, wrongful death and violation of the Tennessee Adult Protection Act. Plaintiff also pared down the number of defendants, dismissing all but Elizabethton Medical Investors Limited Partnership, d/b/a Life Care Center of Elizabethton; Elizabethton Medical Investors, LLC; and Life Care Centers of America, Inc. These three defendants will be referred to as "Life Care" or "defendants" when referred to as a group. On the same day the Trial Court denied defendants' motion for summary judgment with regard to the negligence claim but dismissed the TAPA claim.2

2

The order is not in the record, however the parties agree that these rulings were made by the Trial

Court.

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Also on July 27, 2009, defendants filed a "Pretrial Request for Special Jury Instructions" and a "Proposed Jury Verdict Form." Both documents addressed medical malpractice claims only and defendants specifically stated that the proposed jury instructions were "in accordance with the requirements of the Tennessee Medical Malpractice Act as applicable to the alleged actions and omissions of licensed administrators and/or operators of nursing home facilities . . . .". During a pre-trial hearing on plaintiff's motions to compel discovery depositions of LCCA corporate employees, counsel for Life Care made the following statement which is important to an issue raised on appeal: But as to Kathy Murray, Your Honor, she is the COO, Chief Operating Officer, for Life Care Centers of America. And I want to say this up front, part of the argument that we just heard about, about control and who is running things at Life Care Center of Elizabethton, there is no dispute. He [counsel for plaintiff] said he thought we would, he would find Life Care logo stamps on policies and procedures. He will, because there is no dispute in this case that Life Care Centers of America runs and manages the Life Care Center of Elizabethton. There's no dispute about that. That was admitted in the original answer. And unlike the Smart[t] Corporation case, or the Smart[t] case again [sic] NHC that he referenced where the, the president and the COO testified, there were many issues in that case. . . . Issues in that case about which Defendants controlled the facility. Well, we don't have that issue in this case. Life Care Centers of America did control the operation of Life Care Center of Elizabethton. That's agreed and stipulated. At the same hearing, counsel for Life Care sought an order that LCCA financial documents would not have to be produced to plaintiff unless the trial reached the punitive damage stage. The Trial Court expressed concern that the production would consist of a lot of documents and that it would not be possible for plaintiff's counsel and their experts to properly review them and prepare for the punitive damage stage of the trial without causing a significant delay or even to cause a bifurcation of the trial. Defendants' counsel assured the Court that just one document, a federal tax return from the previous year, would suffice to provide all of the financial information plaintiff would need for the punitive damage stage as follows: What we're talking about are tax returns that show net worth. That's what Court's have orders [sic] to be produced in these cases . . . that I've tried. Tax returns for the last year. So it's not going to be a whole bunch of documents, but a tax return is more, more than a few pages, 15 or 20 pages. But it's only one document. At least

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that's the way we've handled it in the other cases.3 The Trial The trial of this case commenced on April 5, 2010 and ended on April 15, 2010. At the close of plaintiff's case defendants did not move for a directed verdict. The defense presented its case, and plaintiff did not put on any evidence of rebuttal. Again, the defendants did not make a motion for a directed verdict. At the close of the evidence, plaintiff withdrew her claim for ordinary negligence. The stated reason being was "to move the case forward." The Trial Court ruled that plaintiff was allowed to suggest a dollar amount for damages in the closing argument. The Trial Court instructed the jury on the law, including medical malpractice, and the Court told the jury that when it used the term "Life Care" in the instructions, the term included Life Care Centers of America, Life Care Center of Elizabethton, Elizabethton Medical Investors, L. P., their officers, agents and employees.4 The Trial Court told the jury that plaintiff had asked for punitive damages and informed the jury that the purpose of punitive damages was not compensatory but was to punish and deter others from committing similar wrongs. The Court explained that in order for them to award plaintiff punitive damages they would have to find that plaintiff had shown by clear and convincing evidence that Life Care had acted recklessly. The Court also instructed the jury that if they decided to award punitive damages, they were not to decide the amount until after notifying the Court of the finding of recklessness. Following closing arguments by the parties, the jury was retired to deliberate, and during the time the jury was deliberating, counsel for defendants asked the Trial Court to make a change to the original verdict form that had been given to the jury. The Court acquiesced and the change was made and provided to the jury. Although it was the defendants who requested the change to the verdict form, the defendants made a motion for a mistrial "on the basis of the original verdict form being with the jury for an hour and a half yesterday." The motion was denied. The jury returned their verdict finding that defendants' malpractice was a substantial
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This statement is contrary to defendants' position on appeal regarding the proof of LCCA's finances that were submitted to the jury. This instruction is consistent with the defendants' statement in their answer to the second amended complaint that LCCA managed the operations of LCCE at all material times and defendants' stipulation at a pre-trial hearing that Life Care Centers of America "runs and manages Life Care Center of Elizabethton", and "Life Care Centers of America did control the operation of Life Care Center of Elizabethton. That's agreed and stipulated." Further, defendants did not object to this instruction during the charge conference with the Court.
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factor in producing damages to Mr. McLemore but was not the cause of his death. They awarded $250,000 for his pain and suffering, $150,000 for his loss of ability to enjoy life and $100,000 for Mrs. McLemore's loss of consortium. The jury also found by clear and convincing evidence that the conduct of Life Care, upon which they based their finding of medical malpractice, was reckless. The Trial Court instructed the jurors on the Hodges factors that they should consider when determining the amount of punitive damages. Those factors are: Life Cares's net worth and financial condition, the objectionable nature of Life Care's conduct to plaintiff; Life Care's awareness of the amount of harm being caused and its motivation in causing the harm; the duration of Life Care's misconduct and whether they attempted to conceal the conduct; the amount of money plaintiff has spent in the attempt to recover the losses; whether Life Care had profited from the activity and, if so, whether the punitive award should be in excess of the profit in order to deter similar future behavior; the number and amount of previous punitive damages awarded against Life Care based on the same wrongful act; whether once the misconduct became known to LCCA, it tried to remedy the situation or offered a prompt and fair settlement for the actual harm caused; and any other circumstances shown by the evidence that bears on determining the proper amount of punitive award. Plaintiff then presented its proof in connection with the amount of the punitive damages award, and when plaintiff rested on the punitive damage phase of the trial, the defendants again did not make a motion a directed verdict at the close of proof on punitive damages. According to the final judgment entered on the trial date on May 11, 2010, a jury of twelve returned an unanimous verdict as follows: 1. That from the preponderance of the evidence there WAS medical malpractice on the part of Life Care which caused, or directly contributed, that was a substantial factor in producing, injuries to Earl McLemore; That from the preponderance of the evidence there WAS NOT medical malpractice on the part of Life Care which caused, or directly contributed, that was a substantial factor in producing, the death of Earl McLemore.

2.

The jury decided the total amount of compensatory damages to be awarded against Life Care was as follows: 1. Pain and suffering (both physical, mental, and disfigurement): $250,000.00 (Two Hundred Fifty Thousand Dollars and No Cents) Loss of ability to enjoy life: $150,000.00 (One Hundred Fifty Thousand Dollars and No Cents) -5-

2.

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Loss of consortium: $100,000.00 (One Hundred Thousand Dollars and No Cents)

The jury, having awarded damages to the Plaintiff, next found by clear and convincing evidence that the conduct of Life Care, upon which the jury based its finding of medical malpractice, was reckless. Following a bifurcated hearing on the issue of punitive damages, the jury returned the following verdict: Punitive Damages: $4,250,000.00 (Four Million Two Hundred Fifty Thousand Dollars and No Cents.) It is therefore ORDERED AND ADJUDGED AND DECREED that the plaintiff recover from the defendants compensatory damages in the amount of $500,000 (Five Hundred Thousand Dollars); and that with respect to punitive damages, the court's Findings of Fact and Conclusions of Law with respect to the punitive damage verdict, appended hereto, are hereby incorporated herein and made a part of the Judgment of the court. Also on May 11, 2010, the Trial Court entered a "Punitive Damage Findings of Fact and Conclusions of Law" as required in Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 900 (Tenn. 1992). The Trial Court stated that the law required it to "determine whether there was material evidence of a clear and convincing nature to support an award for punitive damages" while still taking the strongest legitimate view of Plaintiffs' evidence. Wasielewski v. K Mart Corp., 891 S.W.2d 916, 919(Tenn. Ct. App. 1994). The Trial Court made extensive findings of fact and after a thorough review concluded that, "in the view most favorable to Plaintiff, material evidence exists from which a jury could conclude by clear and convincing evidence that Life Care acted with reckless disregard for the safety and well-being of Earl McLemore" and approved the jury's punitive damage award. On June 3, 2010, defendants filed a Motion to Amend Findings of Fact and Judgment; for a New Trial; and/or for a Remittitur. Defendants contended the jury verdict was error because the Trial Court permitted plaintiff's counsel to "suggest a dollar value and argue the worth or monetary value of the plaintiff decedent's `pain and suffering'". They further contended that the finding by the jury and confirmation by the Trial Court that defendants' conduct was reckless was not supported by the evidence. They also argued that the compensatory damage award was not supported by the evidence and that the punitive damage verdict was excessive under a due process analysis. Plaintiff responded that any argument by defendants regarding the sufficiency of the evidence was waived by defendants when they failed to make a motion for a directed verdict at the close of plaintiff's proof and/or at the close of all of evidence. Defendants' motion was heard, and the Trial Court suggested that plaintiff grant the -6-

defendants a remittitur of the judgment for compensatory damages in the amount of $275,000, thus reducing the award to $225,000. The remaining requests raised in defendants' motion were denied. The transcript of the August 12, 2010 hearing reflects that the Trial Court stated that "there was substantial evidence in this case from which the jury could find and which this Court finds that there was clear and convincing evidence that the defendant Life Care Center of Elizabethton and hence its corporate parents did act recklessly." The Court continued its statement on liability, finding that "there was substantial evidence of short staffing . . . whereby LPNs and CNAs did not have sufficient time to turn appropriately the residents, to clean their residents, to perform other necessary functions to care for their residents". The Court also noted that the short staffing and the problems ensuing were communicated to the "superiors" at Life Care Center of Elizabethton and, in all likelihood, to corporate headquarters." The Court stated that it agreed with the amount of the jury's punitive damage award but was "bothered" by the amount of the compensatory damage award. The Court was of the opinion that Mr. McLemore was "probably terminal" when he was admitted to Life Care, thus his life expectancy was certainly limited. Based on this finding, the Trial Court, in its capacity as 13th juror, stated that it was "mere conjecture" to say that he sustained $250,000 in pain and suffering and loss of enjoyment of life. The Court also concluded that given Mr. McLemore's condition when he entered Life Care, it could not see how Mrs. McLemore could have lost "a whole lot of either services or companionship." Thus, there was a suggestion that the award for pain and suffering and loss of enjoyment of life be reduced to $175,000 and the loss of consortium award be reduced to $50,000. An order reflecting the suggested remittitur and the denial of a new trial was entered on August 20, 2010. On August 19, 2010, plaintiff filed, under protest, a remittitur as suggested by the Trial Court, remitting the compensatory damage award to $225,000. All defendants filed a joint notice of appeal on September 16, 2010.

The Appeal This case was heard before a jury. Tenn. R. App. P. 13(d) provides that "[f]indings of fact by a jury in civil actions shall be set aside only if there is no material evidence to support the verdict." The Tennessee Supreme Court in Barnes v. Goodyear Tire & Ruber Co., 48 S.W.3d 698 (Tenn. 2000) set out the standard for reviewing material evidence in support of a jury's verdict: When addressing whether there is material evidence to support a verdict, an appellate court shall: (1) take the strongest legitimate view of all the evidence in favor of the verdict; (2) assume the truth of all evidence that supports the verdict; (3) allow all reasonable inferences to sustain the verdict; and (4) discard all [countervailing] evidence. Crabtree Masonry Co. v. C & R Constr., Inc., 575 S.W.2d 4, 5 (Tenn.1978); -7-

Black v. Quinn, 646 S.W.2d 437, 439-40 (Tenn. App.1982). Appellate courts shall neither reweigh the evidence nor decide where the preponderance of the evidence lies. If the record contains "any material evidence to support the verdict, [the jury's findings] must be affirmed; if it were otherwise, the parties would be deprived of their constitutional right to trial by jury." Crabtree Masonry Co., 575 S.W.2d at 5. Barnes, 48 S.W.3d at 704-05 (Tenn.2000). This Court's review of whether sufficient evidence exists to support the verdict requires that we assume the truth of all evidence that supports the verdict and discard all countervailing evidence. Barnes, 48 S.W.3d at 704 (citing Crabtree at 5). Then, if the record contains any material evidence to support the verdict the jury's findings must be affirmed. Id. Our review of questions of law is de novo without a presumption of correctness afforded to the lower court's conclusions of law. Blair v. Brownson, 197 S.W.3d 681, 683 (Tenn. 2006)(citing State ex rel. Pope v. U.S. Fire Ins. Co., 145 S.W.3d 529, 533 (Tenn.2004). Appellants also raise the issue of whether the punitive damages award was excessive to the point that the award violated its constitutional due process rights and whether the Trial Court erred when it affirmed the punitive damage award after a Hodges review. When reviewing the amount of the punitive damage award under a due process analysis our review is de novo to ensure the award is based on an application of the law rather than the jury's caprice. LaMore v. Check Advance of Tennessee, LLC, E2009-00442-COA-R3-CV, 2010 WL 323077 at * 8 (Tenn. Ct. App. Jan. 28, 2010)(citing Goff v. Elmo Greer & Sons Const. Co., Inc., 297 S.W.3d 175, 187, 190 (Tenn. 2009). "Our review for material evidence must take the strongest legitimate view of all the evidence in favor of the verdict, ... assume the truth of all that tends to support it, allowing all reasonable inferences to sustain the verdict, and ... discard all to the contrary." LaMore at *8 (citing Flax v. DaimlerChrysler Corp., 272 S.W.3d 521, 532 (Tenn.2008). We do not re-weigh the evidence. Id. As appellants have challenged the Trial Court's Hodges review, we must engage in an intermediate step of reviewing that review to determine whether the Trial Court conducted the review as required by Hodges and of reviewing its findings using the standard of review applicable to decisions of trial courts sitting without a jury. LaMore at *8 (citing Coffey v. Fayette Tubular Products, 929 S.W.2d 326, 331 (Tenn.1996). In that step we presume the factual findings are correct, unless the evidence preponderates against the trial court's findings. Id. All of the defendants jointly filed this appeal. Five of the seven issues appellants raise are in connection with the punitive damage award. Appellants also appeal the Trial Court's denial of their motion for a new trial and the Trial Court's jury instruction on the burden of proof for a medical malpractice claim. Plaintiff/appellee's only issue on appeal is whether the Trial Court's suggestion of remittitur of the compensatory damage award was error. -8-

We will consider the appellants' issues in the order raised in their brief. A. May a punitive damage award be awarded against a corporation for recklessness without proof of conscious disregard of an unreasonable risk of harm.

On this issue, appellants argue there was no proof of a conscious disregard of an unreasonable harm by Life Care, and the award was in error. The Tennessee Supreme Court, in Goff , summarized the different purposes served by compensatory and punitive damages. Compensatory damages are intended to compensate an injured plaintiff for personal injury or property damage and thereby make the plaintiff whole again. Goff at 187. Punitive damages, in contrast, are intended to "punish a defendant, to deter him from committing acts of a similar nature, and to make a public example of him." Goff at 187. Punitive damages are appropriate only in the most egregious cases and a verdict imposing such damages must be supported by clear and convincing evidence that the defendant acted intentionally, fraudulently, maliciously, or recklessly. Goff at 187. The Court defined clear and convincing evidence as evidence that leaves "no serious or substantial doubt about the correctness of the conclusions drawn." Id. The Court further explained that clear and convincing evidence must be such that the truth of the facts asserted be "highly probable." Goff at 187. Here, the Trial Court instructed the jury that it could consider an award of punitive damages if plaintiff had shown by clear and convincing evidence that Life Care had acted recklessly. The Trial Court further instructed the jury that "a person acts recklessly when the person is aware of, but consciously disregards a substantial or unjustifiable risk or damage to another. Disregarding the risk must be a gross deviation from the standard of care that an ordinary person would use under all the circumstances." Both parties agreed to this jury charge and the charge is in concurrence with the case law of Tennessee. See Hodges at 901; Flax v. DaimlerChrysler Corp, 272 S.W.3d 521, 531 (Tenn. 2008). Defendants asked this Court to review whether there was any material evidence presented to the jury to support the verdict that appellants were reckless when they understaffed the LCCE facility. Our review of this issue is limited to determining whether any material evidence supports the jury's conclusion that there is no serious or substantial doubt that appellants consciously disregarded a known, substantial, and unjustifiable risk, here the understaffing of the LCCE facility, to the plaintiff's detriment. Flax at 532. Appellants maintain that plaintiff/appellee "did not prove that Life Care manifested conscious disregard of the risk of understaffing in Elizabethton". Appellants state in their brief that although staff levels at Elizabethton were approved by "high-level management in Life Care's corporate headquarters . . . . [t]here is no evidence that these managers thought -9-

Elizabethton was understaffed, and there is no evidence these managers chose to keep staff levels there lower than required despite a risk of harm to patients." It is interesting that appellants have made this argument to the Court, in view of the jury charge, which they agreed to, that the term "Life Care" includes all of the defendant entities and their officers, agents and employees. In agreement with that jury charge, appellants stipulated that "Life Care Centers of America runs and manages Life Care Center of Elizabethton, Life Care Centers of America did control the operation of Life Care Center of Elizabethton". Moreover, their argument flies in the face of the agreed on jury charge and the stipulation. The argument seems to be made on behalf of LCCA alone even though all of the defendant entities have jointly appealed the Trial Court's final judgment and are represented by the same counsel on appeal. However, we need not consider the merits of this argument as appellants have procedurally waived the right to appeal whether the jury was presented with material evidence that could support the finding of recklessness as they failed to make a motion for directed verdict at the close of plaintiff's proof and at the close of all of the proof pursuant to Tenn. R. Civ. P. 50. A Rule 50 motion for directed verdict provides a vehicle for deciding questions of law. The question presented by a Rule 50 motion is whether the plaintiff has presented sufficient evidence to create an issue of fact for the jury to decide. Spann v. Abraham, 36 S.W.3d 452, 462 (Tenn. Ct. App.1999); Ingram v. Earthman, 993 S.W.2d 611, 626 (Tenn. Ct. App.1998). For this Court to review the sufficiency of the evidence on appeal, a motion for a directed verdict must have been made at the conclusion of all of the proof and renewed in a post judgment motion following the jury's verdict. Steele v. Columbia/HCA Health Care Corp., W2001-01692-COA-R3-CV, 2002 WL 1000181 at * 3 (Tenn. Ct. App. May 13, 2002)(citing Cortez v. Alutech, Inc., 941 S.W.2d 891, 894 (Tenn. Ct. App. 1996); Robert Banks, Jr. & June F. Entman, Tennessee Civil Procedure

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