Applied Underwriters Captive Risk Assurance Company, Inc. v. Tennessee Department of Commerce and Insurance

08/04/2025

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

March 18, 2025 Session

APPLIED UNDERWRITERS CAPTIVE RISK ASSURANCE COMPANY,

INC., ET AL. v. TENNESSEE DEPARTMENT OF COMMERCE AND

INSURANCE

Appeal from the Chancery Court for Davidson County

No. 24-487-IV Russell T. Perkins, Chancellor

___________________________________

No. M2024-01239-COA-R3-CV

___________________________________

This appeal arises from a chancery court petition for interlocutory judicial review of an

intermediate agency decision in a contested case proceeding before the Tennessee

Department of Commerce and Insurance. The petition sought judicial review of the

administrative law judge’s denial of a motion to dismiss. The department moved to dismiss

the petition for lack of subject matter jurisdiction. The chancery court construed the

challenge as a factual challenge to subject matter jurisdiction and determined that an

adequate remedy would be available to the petitioners in the form of subsequent judicial

review of a final administrative decision. Accordingly, the chancery court granted the

motion to dismiss. Petitioners appeal. We affirm.

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

CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which J. STEVEN

STAFFORD, P.J., W.S., and KENNY W. ARMSTRONG, J., joined.

Daniel Olivas, Nashville, Tennessee and Janet Strevel Hayes, Knoxville, Tennessee, for

the appellants, Applied Underwriters Captive Risk Assurance Company, Inc.; California

Insurance Company; and Continental Indemnity Company.

Jonathan Skrmetti, Attorney General and Reporter, J. Matthew Rice, Solicitor General,

Pablo Varela, Assistant Attorney General, and Lauren W. Travis, Senior Assistant Attorney

General, Nashville, Tennessee, for the appellee, Tennessee Department of Commerce &

Insurance.

Scott D. Carey, Claire Fox Hedge, and Meg Hancock, Nashville, Tennessee, for the

appellee Milan Express Co., Inc.

OPINION

I. FACTS & PROCEDURAL HISTORY

This case contains an incredibly protracted and complicated procedural history. The

present appeal stems from the chancery court’s dismissal of a petition for interlocutory

review. Said petition was filed after an administrative law judge denied the petitioners’

motion to dismiss a contested case filed pursuant to the Uniform Administrative Procedures

Act. Accordingly, our recitation of the facts comes largely from the pleadings and the

record of other proceedings litigated between the parties. We will set forth only those facts

which are necessary to the resolution of the present matter.

In September 2008, Milan Express Co., Inc. (“Milan”), one of the appellees in this

matter, purchased worker’s compensation insurance policies from Applied Underwriters

Inc. (“Applied”), a nonparty in this case. The policies were offered as part of a product

called “the Applied Underwriters Workers’ Compensation Profit Sharing Plan.”1 This plan

consisted of “guaranteed cost workers’ compensation insurance policies and a ‘protected

cell,’” which was to be maintained by Applied Underwriters Captive Risk Assurance

Company, Inc. (“AUCRA”), one of the appellants in this matter. The policies themselves

were “procured” through Continental Indemnity Company and California Insurance

Company, the other appellants in this matter. We will refer to the three appellants

collectively as “the Petitioners” throughout this opinion. Additionally, participation in this

program also required Milan to enter into a “Reinsurance Participation Agreement”

(“RPA”), which was issued by AUCRA on October 1, 2008. The validity and legality of

this RPA and its various clauses is the source of much of the conflict and litigation that has

taken place between these parties.

Approximately three years after entering the agreement, it appears that Milan’s

premium amounts increased significantly. Milan refused to pay the increased premiums,

and the insurance policy was cancelled on June 18, 2011, for non-payment. The parties

engaged in litigation and arbitration in multiple forums for several years regarding amounts

allegedly owed by Milan under the terms of the policy.

On March 7, 2016, AUCRA filed a new lawsuit in the District Court for Douglas

County, Nebraska, in which it sought approximately $2,953,722.20 in damages.2 Milan

filed its answer on April 11, 2016, and levied various counterclaims against AUCRA. It is

1

Milan states that it was required to purchase this insurance in order to “satisfy its obligations

under worker’s compensation laws.”

2

Appellants AUCRA and Continental Indemnity Company are both corporations with their

principal places of business in Omaha, Nebraska. The RPA in this case contained a clause that AUCRA

asserted requires the issues be litigated in Nebraska state court.

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unclear what took place in the interim, but it appears that the parties continued litigating

various issues pertaining to the arbitration agreement in Nebraska state court.

Nevertheless, on July 7, 2020, Milan filed an amended counterclaim seeking declaratory

relief, compensatory damages, and punitive damages. The declaratory relief sought was

predicated on the assertion that AUCRA had “transacted insurance business in the State of

Tennessee and other Insured States without a certificate of authority from the

Commissioner” in violation of the statute, and thus the RPA was void. AUCRA filed a

partial motion to dismiss in which it asserted that the Nebraska court was unable to rule on

the declaratory judgment portion of Milan’s counterclaim by operation of the “primary-

jurisdiction doctrine.” The Nebraska court agreed, and on December 18, 2020, entered an

order requiring that the litigation be “stayed so as to give the parties reasonable opportunity

to seek an administrative ruling in each applicable state as to the validity of RPA” as well

as other issues. In order to obtain such a ruling in Tennessee, Milan would be required to

seek a ruling from the Commissioner of the Tennessee Department of Commerce and

Insurance (“the Commissioner”).

However, on April 15, 2021, prior to Milan seeking such a ruling, the Tennessee

Insurance Division of the Tennessee Department of Commerce and Insurance, (“the

Department”) the second appellee in this matter, filed an administrative “Notice of Hearing

and Charges.” In said pleading, it asked the Commissioner “to issue an order revoking or

suspending the Certificate of Authority or insurance producer license of, and to impose

civil penalties against” Applied, AUCRA, and Continental Indemnity Insurance Company

for various violations of Tennessee insurance law. The charges contained allegations that

these parties had “issued an unapproved insurance program to a Tennessee employer” in

violation of Tennessee Code Annotated sections 56-2-1023 and 56-2-105.4 It is unclear

from the record what occurred in these proceedings, but the Department filed a notice of

voluntary dismissal of the action on February 4, 2022. An order of dismissal was entered

by an administrative law judge on February 8, 2022.

On February 28, 2023, Milan filed a “Petition for Declaratory Order” before the

Commissioner in which it identified each of the present Petitioners and sought a ruling that

AUCRA had “issued an unapproved insurance program to a Tennessee employer” in

violation of Tennessee Code Annotated sections 56-2-102 and 56-2-105, and thus the RPA

was illegal and void.

3

Tennessee Code Annotated section 56-2-102 states in relevant part: “No domestic insurance

company or foreign insurance company shall commence business in this state until it has complied with §

56-2-101, . . . and has received from the commissioner a certificate of authority to do business.” Tenn.

Code Ann. § 56-2-102(a)

4

Tennessee Code Annotated section 56-2-105 requires insurance companies, subject to certain

exceptions, to obtain a “certificate of authority from the commissioner” prior to “enter[ing] into a contract

of insurance as an insurer or [ ] transact[ing] insurance business in this state…” Tenn. Code Ann. § 56-2-

105

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On April 28, 2023, the Department issued a notice of the Commissioner’s decision

to grant the hearing request but stated that the hearing would take place at a date, time, and

location to be scheduled in the future. A supplemental notice of hearing was provided on

July 10, 2023, and scheduled the matter for hearing on October 25, 2023. These

proceedings were to take place in the form of a contested case before an Administrative

Law Judge. On January 2, 2024, the Petitioners filed a motion to dismiss the declaratory

judgment action for the following reasons that are pertinent to this appeal: (1) the initial

notice did not specify a date and time for the contested case hearing and thus the matter

was not set within 60 days as required by statute, and (2) the proceedings had violated their

due process rights.5 By order entered on March 28, 2024, Administrative Law Judge

Richard M. Murrell denied the motion to dismiss on all grounds.

On April 18, 2024, the Petitioners filed a “Petition for Judicial Review” of the denial

of the motion to dismiss pursuant to the Tennessee Uniform Administrative Procedures

Act (“UAPA”) in the Davidson County Chancery Court. The Petitioners acknowledged

that they were seeking review of an interlocutory order and asserted that their issues would

not be adequately remedied by subsequent judicial review of a final agency decision. Thus,

they averred that the denial of the motion was subject to immediate judicial review.

In response, the Department filed a motion to dismiss the petition pursuant to

Tennessee Rule of Civil Procedure 12.02(1) and based on the terms of Tennessee Code

Annotated section 4-5-223. Specifically, the Department averred that the Petitioners had

not shown that they would be deprived of an adequate remedy if the contested case were

to proceed through the administrative process, and thus the chancery court lacked subject

matter jurisdiction to take up the appeal. See Tenn. Code Ann. § 4-5-322(a)(1). After a

hearing, the chancery court subsequently entered an order on July 29, 2024, granting the

motion to dismiss. The chancery court determined that the Department had lodged a factual

challenge to its subject matter jurisdiction and found that the Petitioners would have an

adequate remedy available in the form of judicial review of the final administrative

decision. Accordingly, the chancery court determined that it did not have subject matter

jurisdiction to adjudicate the claim and dismissed the petition. The Petitioners filed this

appeal on August 15, 2025.

II. ISSUES PRESENTED

The Petitioners have presented one issue on appeal, which contains two interrelated

claims of error. For ease of review, we have reframed this issue into the following two

issues:

5

The Department explained in its brief that, prior to the October 25, 2023 hearing, the Petitioners

moved for a continuance and to convert the initial hearing to a pre-hearing conference. This motion was

granted. At some point, the hearing was rescheduled for November 7, 2024, and a hearing on the pending

motion to dismiss took place on March 14, 2024.

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1. Whether the trial court erred by treating the challenge to its subject matter

jurisdiction as a factual challenge rather than a facial challenge.

2. Whether the trial court erred when it determined that an adequate remedy existed

in the form of judicial review of a final agency decision.

For the following reasons, the judgment of the chancery court is affirmed.

III. DISCUSSION

A. Standard of Review

This is an appeal of the chancery court’s dismissal of a petition seeking interlocutory

judicial review. The petition was filed after a motion to dismiss filed in a declaratory

judgment proceeding was denied. The chancery court granted the motion to dismiss the

petition based on a lack of subject matter jurisdiction pursuant to Tennessee Rule of Civil

Procedure 12.02(1). “Subject matter jurisdiction involves a court’s lawful authority to

adjudicate a particular controversy.” Osborn v. Marr, 127 S.W.3d 737, 739 (Tenn. 2004).

A “chancery court’s subject matter jurisdiction to review an administrative interlocutory

order is conferred by the Tennessee Uniform Administrative Procedures Act, specifically

Tennessee Code Annotated § 4-5-322(a)(1).” Xcaliber Int’l Ltd., LLC v. Tennessee Dep’t

of Revenue, No. M2017-01918-COA-R3-CV, 2018 WL 4293364, at *6 (Tenn. Ct. App.

Sept. 10, 2018). This statute provides that “[a] preliminary, procedural or intermediate

agency action or ruling is immediately reviewable if review of the final agency decision

would not provide an adequate remedy.” Tenn. Code Ann. § 4-5-322(a)(1). Here, the

chancery court determined that judicial review of a final agency decision would serve as

an adequate remedy, and thus it did not have jurisdiction.

We conduct our review of this decision de novo “to determine whether the evidence

supports a determination that review of the final agency decision will [ ] provide an

adequate remedy.” Hyundai Motor Am. v. Tennessee Motor Vehicle Comm’n, No. M2015-

01411-COA-R3-CV, 2016 WL 7486362, at *3 (Tenn. Ct. App. Dec. 30, 2016). However,

“[t]o the extent that we need to review the trial court’s findings of fact, we do so with a

presumption of correctness unless the preponderance of the evidence is otherwise.”

Xcaliber, 2018 WL 4293364, at *6 (citing Tenn. R. App. P. 13(d)). “We review questions

of law, including those of subject matter jurisdiction, de novo with no presumption of

correctness.” Id. (citing Redwing v. Catholic Bishop for the Diocese of Memphis, 363

S.W.3d 436, 446 (Tenn. 2012)).

B. Facial Challenge or Factual Challenge

The Petitioners’ first issue pertains to the type of challenge the Department made to

the chancery court’s subject matter jurisdiction. A motion to dismiss for want of subject

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matter jurisdiction made pursuant to Tennessee Rule of Civil Procedure 12.02(1) may be

made as a facial challenge or factual challenge. Church of God in Christ, Inc. v. L.M. Haley

Ministries, Inc., 531 S.W.3d 146, 159-60 (Tenn. 2017) (citing Redwing v. Catholic Bishop

for Diocese of Memphis, 363 S.W.3d 436, 445 (Tenn. 2012)). In Church of God, our

Supreme Court discussed the distinctions between facial and factual challenges to subject

matter jurisdiction. The Court explained:

A facial challenge attacks the complaint itself and asserts that the complaint,

considered as a whole, fails to allege facts showing that the court has subject

matter jurisdiction to hear the case. [Redwing, 363 S.W.3d] at 445-46. When

evaluating a facial challenge to subject matter jurisdiction, a court limits its

consideration to the factual allegations of the complaint and considers

nothing else. Id. The court presumes the factual allegations of the complaint

are true. If these factual allegations establish a basis for the court’s exercise

of subject matter jurisdiction, then the court must uncritically accept those

facts, end its inquiry, and deny the motion to dismiss. Id.; see also Staats v.

McKinnon, 206 S.W.3d 532, 542-43 (Tenn. Ct. App. 2006); Osborn v. United

States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). Thus, when evaluating facial

challenges to subject matter jurisdiction, courts are to utilize the familiar

analytical framework that applies to motions to dismiss for failure to state a

claim. McKinnon, 206 S.W.3d at 543.

In contrast, factual challenges to subject matter jurisdiction do not attack the

allegations of the complaint as insufficient. Id. at 543. Rather, a factual

challenge admits that the alleged facts, if true, would establish subject matter

jurisdiction, but it attacks the sufficiency of the evidence to prove the alleged

jurisdictional facts. Redwing, 363 S.W.3d at 446; McKinnon, 206 S.W.3d at

543. When resolving a factual attack on subject matter jurisdiction, a court

may consider matters outside the pleadings, such as affidavits or other

documents. [Anderson v. Watchtower Bible & Tract Soc. of New York, Inc.,

No. M2004-01066-COA-R9-CV, 2007 WL 161035, at *32 n.23 (Tenn. Ct.

App. Jan. 19, 2007)]; see also Holt v. United States, 46 F.3d 1000, 1003 (10th

Cir. 1995); Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990);

Hutterville Hutterian Brethren, Inc. v. Waldner, 791 N.W.2d 169, 174 (S.D.

2010); South v. Lujan, 336 P.3d 1000, 1003-1004 (N.M. Ct. App. 2014).

Furthermore, motions challenging subject matter jurisdiction are not

converted to summary judgment motions when matters outside the pleadings

are considered or when disputes of material fact exist. Anderson, 2007 WL

161035, at *32 n.23; see also McKinnon, 206 S.W.3d at 543 (citing Chenault

v. Walker, 36 S.W.3d 45, 55-56 (Tenn. 2001)). Rather, courts presented with

such motions must weigh the evidence, resolve any factual disputes, and

determine whether subject matter jurisdiction exists. Anderson, 2007 WL

161035, at *32 n.23; Hutterville Hutterian Brethren, Inc., 791 N.W.2d at 175

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(stating that, when a factual attack is mounted on subject matter jurisdiction,

“the court must also weigh the evidence and resolve disputed issues of fact

affecting the merits of the jurisdictional dispute”); Osborn, 918 F.2d at 729-

30 (agreeing with the rule adopted by a majority of the federal circuit courts

of appeal that, when a factual challenge to subject matter jurisdiction is

mounted, the court may resolve disputed issues of material fact and decide

the merits of the jurisdictional issue); 5B Charles A. Wright et al., Federal

Practice and Procedure § 1350 & n.47 (3d ed. Supp. 2017) [hereinafter

Federal Practice and Procedure]. The trial court may hold an evidentiary

hearing limited to the question of subject matter jurisdiction if necessary to

resolve jurisdictional factual disputes. Arbaugh v. Y&H Corp., 546 U.S. 500,

514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) (“[I]f subject-matter

jurisdiction turns on contested facts, the trial judge may be authorized to

review the evidence and resolve the dispute on her own.”); see also Osborn,

918 F.2d at 730; Hutterville Hutterian Brethren, Inc., 791 N.W.2d at 175.

Regardless of the manner used, the plaintiff bears the burden of establishing

that the court has subject matter jurisdiction over the case. McKinnon, 206

S.W.3d at 543 (citing Chenault, 36 S.W.3d at 56).

Church of God in Chris, Inc., 531 S.W.3d at 160-61. On appeal, the Petitioners contend

that the chancery court improperly construed the motion to dismiss as a factual challenge

to its subject matter jurisdiction when it should have been construed as a facial challenge.

The Department avers that the chancery court properly construed its challenge as a factual

challenge.6

To determine whether this challenge was a factual challenge, we must determine

whether the Department challenged the sufficiency of the jurisdictional facts set out in the

petition. Id. Jurisdictional facts have been defined as, “[a] fact that must exist for a court

to properly exercise its jurisdiction over a case, party, or thing.” Black’s Law Dictionary

(12th ed. 2024). Whether an adequate remedy is available, in this instance, is a

jurisdictional fact as the statute grants jurisdiction to the chancery court only where an

adequate remedy is not available.

The Department’s motion to dismiss was predicated on its assertion that the

Petitioners “failed to show that they will be deprived of an adequate remedy by allowing

the [c]ontested [c]ase to proceed to a final decision.” We have previously reviewed cases

in which a chancery court’s decision regarding subject matter jurisdiction was appealed for

us to consider whether the chancery court had properly assessed the jurisdictional challenge

6

The Petitioners also assert that the Department attempted to make both a facial and factual

challenge, but they were not permitted to make both types of attacks. In its brief, the Department does not

argue that it intended to make both a facial and factual challenge, and so we will not address this particular

supporting argument.

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as a facial or factual one. In at least two instances, we have held that such challenges,

which were based on whether the petitioner demonstrated that the remedy of judicial

review of a final agency decision was inadequate, were factual challenges. Xcaliber, 2018

WL 4293364, at *8-9 (finding a challenge to a court’s subject matter jurisdiction was a

factual challenge where the party asserted that the petition for judicial review failed “to

allege facts proving that ‘review of the final agency decision would not provide an adequate

remedy’ ”); Hyundai, 2016 WL 7486362, at *3 (stating “it was incumbent upon the trial

court, and this court in our review, to determine whether the evidence support[ed] a

determination that review of the final agency decision will not provide an adequate

remedy” and thus, the motion to dismiss constituted a factual challenge to the court’s

subject matter jurisdiction). The same is true here. The Department’s motion to dismiss

the petition averred that the “Petitioners have failed to show that they will be deprived of

an adequate remedy by allowing the Contested Case to proceed to a final decision.”

Clearly, the Department asserted that the Petitioners failed to allege facts proving the

remedy of judicial review of a final agency decision was inadequate. Accordingly, the

chancery court properly assessed the motion to dismiss as a factual challenge to its subject

matter jurisdiction.

C. Adequate Remedy

Having determined that the chancery court correctly assessed the Department’s

argument as a factual attack to its subject matter jurisdiction, we now turn to the Petitioners’

contention that they “should have prevailed under the factual attack standard because the

Department failed to create any factual issues by failing to proffer any countervailing

evidence.” The chancery court determined that an adequate remedy was available, stating,

“[j]udicial review of the final decision in this case will provide Petitioners with an adequate

remedy.” Additionally, the chancery court stated that the Petitioners “failed to show

irreparable harm” and had not demonstrated the administrative review posed a significant

risk of bias.

As explained above, interlocutory judicial review of an intermediate decision in a

contested case filed pursuant to the UAPA is permitted only in limited circumstances.

Tennessee Code Annotated section 4-5-322(a)(1) provides that “[a] preliminary,

procedural or intermediate agency action or ruling is immediately reviewable if review of

the final agency decision would not provide an adequate remedy.” We have previously

considered claims akin to the one made here. See Hyundai, 2016 WL 7486362. In

Hyundai, we considered the factual allegations in the petition for judicial review to

determine “whether a final agency decision would provide [the petitioner] with an adequate

remedy.” Id. at *4. To make that determination, we assessed the allegations set out in the

petition. Id. We ultimately found that the determination of the substantive issue contained

in the petition “required a factual determination which was to be resolved by the

Commission,” and thus, “[the petitioner] ha[d] failed to demonstrate that ‘review of the

final agency decision would not provide an adequate remedy,’ Tenn. Code Ann. § 4-5-

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322(a)(1)” Id. at *6. We will undertake the same analysis here. Accordingly, we must

determine whether the Petitioners have demonstrated that later judicial review of a final

agency decision would not provide an adequate remedy.

The Petitioners submit three reasons why judicial review of a final agency decision

would not constitute an adequate remedy in this case. First, they aver that “future review

of a final agency decision [would] not restore the Constitutional due process rights [they

have] lost and will continue to lose in the administrative proceeding.” Second, the

Petitioners contend that “the likelihood of the risk of retrial” renders review of a final

administrative decision an inadequate remedy. Third, the Petitioners assert that the

chancery court applied an improper standard when assessing whether an adequate remedy

existed by examining whether an “irreparable injury” would occur as the basis for doing

so. They assert that the risks present in this case also render judicial review of a final

administrative order an inadequate remedy. We address each argument in turn.

1. Procedural Due Process

First, we consider the procedural due process argument that the Petitioners have

raised to the extent it allegedly shows that judicial review of a final agency decision would

not constitute an adequate remedy in this case. They assert that because the Department

previously filed a “Notice of Hearing and Charges,” it has already “prejudged Milan’s

Petition for Declaratory Order and cannot be a fair decision maker in the contested case,”

as many of the issues raised in the present matter are similar to those raised in the

Department’s charges. The Petitioners also assert that review of a final decision would not

be adequate as it would be “on the record only, and the record [would] not include any

direct evidence of the actual deliberations.” Accordingly, the Petitioners posit that review

of a final order would “not be able to inquire into, or to determine, whether, and to what

extent, the risk of intolerable bias manifested itself and influenced the Department’s

decision.” We disagree.7

The Petitioners rely on Martin v. Sizemore, in which we recognized that “[a]

combination of prosecutorial and adjudicative functions is the most problematic

7

It appears that, in conjunction with the argument that the chancery court erred by undertaking

review as a factual challenge rather than a facial challenge, the Petitioners also claim the chancery court

employed an incorrect standard of review. They assert that the chancery court was required to accept the

allegations and assess only whether the allegations were sufficient to show there was not an adequate

remedy available. Thus, the Petitioners take issue with the chancery court’s statements that they had “failed

to convince” it that later judicial review would not provide an adequate remedy and that they held a

“difficult burden of persuasion” in establishing a threat of bias in the proceedings. However, as explained

above, the chancery court properly assessed this as a factual challenge to subject matter jurisdiction and

thus, were required to “weigh the evidence, resolve any factual disputes, and determine whether subject

matter jurisdiction exists.” Church of God in Christ, Inc., 531 S.W.3d at 160. Accordingly, the chancery

court properly charged Applied with the burden of demonstrating that an adequate remedy was not

available. See Hyundai, 2016 WL 7486362, at *6.

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combination for procedural due process purposes.” 78 S.W.3d 249, 265 (Tenn. Ct. App.

2001). However, we went on to state that “the risk of bias becomes intolerably high only

when the prosecutor serves as the decision-maker’s advisor in the same or a related

proceeding.” Id. Additionally, we noted “that some combination or overlapping of

functions in an administrative proceeding is not inconsistent with fundamental fairness.”

Martin, 78 S.W.3d at 264. Our Supreme Court has likewise noted that “[u]nlike a judicial

system, in which investigative, prosecutorial, and adjudicative functions are separate, some

overlapping of these functions is inherent in administrative agencies, like the Board [of

Professional Responsibility].” Moncier v. Bd. of Prof’l Resp., 406 S.W.3d 139, 159 (Tenn.

2013). We are unconvinced that charges having been previously brought and dismissed by

the Department alone creates an undue risk of bias in the present proceedings that would

make final review inadequate. As the chancery court noted, the Petitioners have “not

demonstrated overlapping roles of the Department’s staff nor bias on the part of the

Commissioner.” The Petitioners have not pointed to any evidence in the record which

preponderates against these findings. Similarly, the Petitioners’ claim that judicial review

of the final administrative decision would not serve as an adequate remedy because it

would “not be able to inquire into, or to determine, whether, and to what extent, the risk of

intolerable bias manifested itself and influenced the Department’s decision” is

unconvincing based on the availability of de novo review. See Cooper v. Williamson Cnty.

Bd. of Educ., 746 S.W.2d 176, 183-84 (Tenn. 1987) (explaining the curative effects of a

chancery court’s de novo review which “readjudicates the matter in a neutral forum,

completely eliminating any arbitrariness or capriciousness in the board’s decision, which

is not afforded a presumption of correctness”).

Importantly, the substantive issue raised in the motion to dismiss pertains to the

interpretation of Tennessee Code Annotated section 4-5-223(c). The issue is whether the

Department granted the petition for hearing within the sixty-day timeframe espoused in the

statute. As we have previously explained, “‘statutory construction remains a question of

law. Accordingly, the courts review an agency’s interpretation of statutes without a

presumption of correctness.’” H & R Block E. Tax Servs., Inc. v. State, Dep’t of Commerce

& Ins., Div. of Ins., 267 S.W.3d 848, 855 (Tenn. Ct. App. 2008) (quoting Kidd v. Jarvis

Drilling, Inc., No. M2004-00973-COA-R3-CV, 2006 WL 344755, at *4 (Tenn. Ct. App.

Feb. 14, 2006)). We further explained that a “Commissioner’s ruling is ‘entitled to

consideration and respect,’ but not necessarily to ‘deference.’ The ruling is neither

controlling nor presumed correct” and further, “[i]f [a reviewing court] find[s] error in

either the Commissioner’s interpretation of the statute or her application of the statute to

the case’s undisputed facts, [it] will be ‘impelled to depart from it.’” Id. (quoting Kidd,

2006 WL 344755, at *4). Therefore, in the present case, a reviewing court would be tasked

with determining whether the Department’s interpretation and application of the statute at

issue was correct as a matter of law. Thus, any potential bias would not have any effect on

the court’s review as the Department’s decision would be afforded respect but not a

presumption of correctness. Accordingly, we are unconvinced that judicial review of a

final administrative decision would be an inadequate remedy based on the threat of bias

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influencing the Department’s interpretation of the statute, as no intolerable risk of bias has

been shown.

2. Risk of Retrial

We now turn to the Petitioners’ second contention that “[b]ecause of the likelihood

of the risk of retrial, future review of a final order would not be an adequate remedy.” The

Petitioners assert that if the Department’s decision is reversed after the completion of the

administrative process, it would require the contested case to be dismissed as the challenge

pertains to subject matter jurisdiction. The Petitioners claim at that point, “there is little

doubt that Milan would, indeed, refile the case and force the parties to do everything twice.”

The Petitioners rely heavily on our opinion in Xcalibur to support this argument.

2018 WL 4293364. Xcalibur dealt with a Rule 12.02(1) motion to dismiss a petition for

interlocutory judicial review in a contested case filed pursuant to Tennessee Code

Annotated sections 67-1-105(a)(1) (2013) and 67-4-2606(a). Id. at *3-5. The underlying

substantive issue concerned a motion to compel certain discovery, which the

Administrative Law Judge had denied. Id. at *4-5. The Department of Revenue filed a

motion to dismiss the petition for want of subject matter jurisdiction. Id. at *5. Xcalibur

appealed. Id.

After determining that the challenge to subject matter jurisdiction had been a factual

challenge, the trial court turned to the question of whether Xcalibur had met its burden of

showing the remedy available was not adequate. Id. at *10. The Court outlined the

approach taken in Hyundai and noted that the same method of analysis would be applicable.

Id. at *10. However, unlike the Hyundai Court, the Xcalibur Court determined that final

judicial review would not constitute an adequate remedy under the specific circumstances

of the case based on a combination of several factors. Id. at *11-12. First, the court noted

that:

“[j]udicial review of this interlocutory discovery issue in a final

administrative decision would require the trial court to search for the absence

of substantial and material evidence to support a decision in favor of the

Department and trace that absence to the earlier discretionary administrative

denial of Xcalibur’s motion to compel, all while taking care not to substitute

its judgment for the agency’s judgment concerning the weight to be given

the evidence already established in the record.”

Id. at *11. Additionally, the court noted that this remedy “would entail a substantial risk

of retrying the entire case before the ALJ because any newly discovered evidence would

not only have to be presented to the ALJ but could also affect the need for additional

testimony from witnesses and presentation of arguments on previously admitted evidence.”

Id. at *12. The court agreed with Xcalibur that these possibilities presented a substantial

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risk the parties would be required to expend additional money and resources retrying the

case on this issue and implicated the interest of judicial economy. Id. The court determined

“that the risk of retrying the case means that consideration of judicial economy weighs

against a finding that judicial review of the final administrative order would be an adequate

remedy.” Id. The court further stated “that, under the specific facts of this case, judicial

review of a final administrative decision would not provide an adequate remedy” and thus,

the trial court had subject matter jurisdiction to conduct an interlocutory review of the order

to deny petitioner’s motion to compel discovery. Id. at *17.

The Petitioners contend that a similar risk of retrying the case exists here and cite

the same “practical concerns” of judicial economy and the expending of monetary and

other resources in retrying the case. Xcalibur, 2018 WL 4293364, at *12. The Petitioners

aver that retrying the case would require new or additional discovery be conducted,

“motion work” to “repeat” based on the new discovery, additional hearings, and witnesses

either reappear or new witnesses appear for the first time. The Petitioners also note that

they have challenged the timeliness of the setting of the cause for hearing, which invokes

the subject matter jurisdiction of the Department to hear the case. They cite this as the

largest risk of retrial, stating that if it were later determined that the notice for hearing had

been untimely returned, it would result in Milan refiling its claim which would “force the

parties to do everything twice.”

In addition to Xcalibur, we considered a similar issue in Mosely v. City of Memphis,

No. W2019-00199-COA-R3-CV, 2019 WL 6216288, at *3 (Tenn. Ct. App. Nov. 21,

2019). That case involved a motion to disqualify an attorney from the Memphis City

Attorney’s Office and/or the entire Memphis City Attorney’s Office from appearing in

certain administrative proceedings pending before the city’s Civil Service Commission.

Id. at *1. Six different persons who had matters pending before the Commission filed a

collective motion to exclude the attorney and the City Attorney’s Office from appearing

before the Commission. Id. The Commission conducted a hearing on the motion and

denied the motion for disqualification; the petitioners then filed a petition for judicial

review in the Shelby County Chancery Court which determined no error had occurred. Id.

at *2. The petitioners appealed to this court, and we were faced with determining whether

subject matter jurisdiction was appropriate in the chancery court and on appeal. Id. at *3-

4. We determined “that immediate review was appropriate” as the same risk of retrial that

influenced our decision in Xcalibur existed to an even higher degree. Id. at *5. We gave

great weight to the fact that the issue concerned six different petitioners and thus, six

different cases in which disqualification was sought. Id. Accordingly, if immediate review

were not permitted, “and final judgment [was] rendered, each and every unsuccessful

petitioner [would have been] required to separately appeal the final judgment in his or her

respective case to obtain review of the denial of disqualification.” Id. This would have

resulted in multiple cases having been retried before the agency and would have heavily

burdened judicial efficiency. Id. Accordingly, we held that later judicial review of the

final agency decision would not have constituted an adequate remedy, and therefore

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immediate judicial review was authorized by Tennessee Code Annotated section 4-5-

322(a). Id.

While these cases bear some similarity to the present case, they are distinguishable.

There certainly exists some risk of retrying the present case, but the extreme risks to judicial

economy which were present in Xcalibur and Mosely do not exist here. First, we

acknowledge that the risk that a case will need to be retried after judicial review of a final

agency decision exists in all contested cases. While we determined the circumstances

present in both Xcalibur and Mosely rendered this risk so paramount that it left judicial

review of a final agency decision inadequate, those rulings were both predicated on

extreme circumstances. Xcalibur would have required the implementation of a

complicated and largely untenable review of the evidence in which the reviewing court

would be required to assess different pieces of evidence under a different standard of

review, as well as searching for the absence of evidence rather than its existence. 2018

WL 4293364, at *11. Mosely would have required six individual cases to be retried with

different counsel representing the city. 2019 WL 6216288, at *5.

Here, the issue raised in the petition pertains only to the interpretation of Tennessee

Code Annotated section 4-5-223(c). Thus, review of this decision would involve de novo

review of an issue of law and would not require any additional discovery or the application

of different standards of review to different pieces of evidence. Additionally, it would not

require the reviewing court to search for the absence of evidence supporting the

Department’s decision. See Xcalibur, 2018 WL 4293364, at *11. These factors are what

led to the determination that judicial review of the final decision “would entail a substantial

risk of retrying the entire case.” Id. at *12. Here, while there is the possibility that the

reviewing court could determine the Department’s interpretation of the statute is incorrect,

there are not complicating factors that would render a greater risk of retrial in this matter

than in a normal contested case proceeding. Additionally, if review of the final

administrative decision did result in the case being retried, it would be limited to a single

case, rather than six separate cases as was the case in Mosely.

It does not appear that the interest of judicial economy would be served by

permitting immediate review in this situation. While Xcalibur and Mosely do provide that

circumstances may exist which render the normal remedy of judicial review of a final

agency decision inadequate, those cases do not authorize interlocutory review of an

intermediate agency decision each time a question of law is raised. If we permitted any

question of law which arose during a contested case proceeding to be eligible for immediate

review, we would open the door to frequent interlocutory appeals. While we do not

disagree with the well-reasoned opinions in Xcalibur and Mosely, those opinions were

predicated on the existence of very specific circumstances, the likes of which do not exist

here. We note that it is incumbent on the Petitioners to demonstrate that the normal remedy

offered in a contested case hearing would not be adequate in this case. Xcalibur, 2018 WL

4293364, at *7; Hyundai, 2016 WL 7486362, at *6. They have not done so, as they have

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not provided facts indicating that an extreme risk of retrial or other major impediment to

judicial efficiency would be created here. Therefore, the chancery court did not err when

it determined that an adequate remedy existed in the form of judicial review based on any

risks of retrial that may have been present.

3. Proper Standard

Finally, we consider whether the chancery court erred by applying an improper

standard. The Petitioners claim that the chancery court used an “irreparable harm” standard

to determine whether it had subject matter jurisdiction over the claim. They argue that the

chancery court assessed only whether the Petitioners would be irreparably harmed if

judicial review were not undertaken instead of whether judicial review of a final agency

decision was an adequate remedy.

In its final order, the chancery court acknowledged that Tennessee Code Annotated

section 4-5-322(a)(1) grants jurisdiction to conduct interlocutory judicial review of an

intermediate agency decision where judicial “review of the final agency decision would

not provide an adequate remedy.” The chancery court stated that it was “incumbent upon

[it] to determine whether the evidence support[ed] a determination that review of the final

agency decision [would] not provide an adequate remedy.” The chancery court then cited

irreparable injury as “an example” of a factual circumstance which would result in judicial

review being an inadequate remedy. See Xcaliber, 2018 WL 4293364, at *16. However,

it also noted that an irreparable injury was not the sole basis for determining judicial review

to be an inadequate remedy. Id. The chancery court went on to address the Petitioners’

concerns with the timely setting of the contested case hearing and the risk of bias based on

the overlapping roles of the Department in its filing of charges in 2021 and its role of

reviewing the issues in this litigation. The court determined that there had not been a

showing of a high risk of irreparable harm. Based on each of these, the chancery court

stated the petitioners failed to convince it “that review of the final agency decision would

not provide an adequate remedy.”

The Petitioners have not demonstrated that the chancery court applied an improper

standard when disposing of this issue. The chancery court cited the appropriate legal

standard set out in Tennessee Code Annotated section 4-5-322(a)(1) and clearly addressed

the Petitioners’ concerns. It cited the possibility of an irreparable injury as a factual

circumstance which would render judicial review of a final agency decision an inadequate

remedy. However, the chancery court also went on to explain that the Petitioners had not

convinced it “that review of the final agency decision would not provide an adequate

remedy.” Specifically, the chancery court noted that “[a]lthough the potential exists for a

determination unfavorable to Petitioners, the Department could equally choose to rule in

favor of Petitioners, rendering any subsequent appeal by Petitioners unnecessary.” The

chancery court acknowledged the Petitioners’ concerns pertaining to the risk of retrial but

determined this risk did not render judicial review of a final agency decision an inadequate

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remedy. The chancery court also noted that the Petitioners had “not demonstrated

overlapping roles of the Department’s staff nor bias on the part of the Commissioner”

indicating it gave consideration to those claims as well. Accordingly, the chancery court

did not employ an improper standard. Each of the Petitioners’ concerns with the adequacy

of the remedy were addressed.

Having reviewed each of the arguments posited by the Petitioners, we find the

chancery court did not err when it determined it lacked subject matter jurisdiction to

conduct an immediate review of the intermediate agency decision. The Petitioners have

failed to demonstrate that judicial review of the final administrative decision would not

serve as an adequate remedy for its concern with the application of Tennessee Code

Annotated section 4-5-223(c). Accordingly, we affirm.

IV. Conclusion

For the foregoing reasons, the judgment of the chancery court is affirmed. Costs of

this appeal are taxed to the appellants, Applied Underwriters Captive Risk Assurance

Company, Inc.; California Insurance Company; and Continental Indemnity Company, for

which execution may issue if necessary.

_________________________________

CARMA DENNIS MCGEE, JUDGE

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