Opinion

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

November 22, 2013 Session

THE CHATTANOOGA-HAMILTON COUNTY HOSPITAL AUTHORITY

D/B/A ERLANGER HEALTH SYSTEM V. UNITED HEALTHCARE PLAN

OF THE RIVER VALLEY, INC. D/B/A AMERICHOICE AND

TENNESSEE ATTORNEY GENERAL

Appeal from the Chancery Court for Davidson County

No. 091253II Carol L. McCoy, Chancellor

No. M2013-00942-COA-R9-CV -Filed June 6, 2014

Hospital filed an action against TennCare managed care organization (“MCO”) for breach

of contract and unjust enrichment when MCO refused to pay Hospital’s standard charges for

emergency services and follow-up care. Hospital was not part of MCO’s “provider network”

under the TennCare regulations and therefore was “non-contract” provider. MCO alleged

Hospital was required to accept as payment the rate TennCare specified in its regulations.

MCO filed motion for summary judgment, and the trial court dismissed the portion of the

complaint to which the TennCare regulations may apply due to lack of subject matter

jurisdiction. The trial court determined the Uniform Administrative Procedures Act

(“UAPA”) divested it of jurisdiction because Hospital did not first seek a declaratory order

from the Bureau of TennCare regarding the applicability of its regulations to Hospital’s

dispute with MCO. Hospital appealed the dismissal of its claims, and we reverse. Because

Hospital is not challenging applicability or validity of TennCare regulations, UAPA does not

divest trial court of jurisdiction.

Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Chancery Court

Reversed

P ATRICIA J. C OTTRELL, P.J., M.S., delivered the opinion of the Court, in which F RANK G.

C LEMENT, J R. and R ICHARD H. D INKINS, JJ., joined.

James Nathaniel Bowen, II, Steven Allen Riley, Nashville, Tennessee, for the appellant, The

Chattanooga-Hamilton County Hospital Authority d/b/a Erlanger Health System.

Erin Palmer Polly, J. Mark Tipps, John C. Hayworth, Nashville, Tennessee, for the appellee,

UnitedHealthcare Plan of the River Valley, Inc. d/b/a AmeriChoice.

Robert E. Cooper, Linda A. Ross, Sue Ann Sheldon, Nashville, Tennessee, for the

appellee/intervenor, Tennessee Attorney General.

OPINION

I. B ACKGROUND

The Chattanooga-Hamilton County Hospital Authority d/b/a Erlanger Health System

(“Erlanger”) is a not-for-profit tertiary care medical center based in Chattanooga, Tennessee.

UnitedHealthcare Plan of the River Valley, Inc. d/b/a AmeriChoice (“AmeriChoice”) is a for-

profit managed care organization (“MCO”) based in Illinois that has contracted with the State

of Tennessee to participate in the TennCare program. TennCare is Tennessee’s managed care

system for Medicaid-eligible individuals residing in Tennessee.

To provide healthcare services to the individuals enrolled in TennCare, MCOs enter

into private contracts with healthcare providers and reimburse the providers at mutually

agreed upon rates for the medical services they provide. The providers that enter into these

contracts with MCOs are referred to as “participating” providers, and this group of providers

constitutes an MCO’s “provider network.” Providers of medical services that do not have

a contract with an MCO, but that provide services to an MCO’s enrollees nonetheless, are

referred to as “non-participating” or “non-contract” providers.

Pursuant to the Emergency Medical Treatment and Active Labor Act1 (“EMTALA”),

all providers of medical services are required to administer emergency services to anyone

who presents himself or herself to the provider, regardless of whether the patient can pay for

the services, is insured, or is insured by an MCO that has contracted with the provider for the

provision of these services. Erlanger and AmeriChoice have a limited service contract with

respect to certain obstetric and pediatric services. However, they do not have a full-service

contract that covers other types of healthcare services that Erlanger may provide to

AmeriChoice’s enrollees. Thus, if an individual covered by TennCare and enrolled with

AmeriChoice as his or her MCO presents himself or herself at Erlanger’s emergency room,

Erlanger is required by federal law to treat that individual and continue to provide necessary

services until the individual is transferred to another provider or is released.

1

42 U.S.C. § 1395d, et seq.

2

This case involves the rate at which AmeriChoice is required to reimburse Erlanger

for two categories of medical care Erlanger has provided to AmeriChoice’s TennCare

enrollees since January 1, 2009, which is when the contract between Erlanger and

AmeriChoice for these services expired. The two categories include services Erlanger was

required to render under EMTALA: (1) outpatient emergency services and (2) medically

necessary inpatient services required as a result of the outpatient emergency services.

Once the contract between Erlanger and AmeriChoice lapsed for these EMTALA

services on January 1, 2009, Erlanger became a “non-participating” or “non-contract”

provider with regard to its provision of these services. As part of the Deficit Reduction Act

of 2005 (“DRA”), the federal government addressed the rate at which these non-contract

providers of emergency services are to be compensated:

Any provider of emergency services that does not have in effect a contract

with a Medicaid managed care entity that establishes payment amounts for

services furnished to a beneficiary enrolled in the entity’s Medicaid managed

care plan must accept as payment in full no more than the amounts (less any

payments for indirect costs of medical education and direct costs of graduate

medical education) that it could collect if the beneficiary received medical

assistance under this subchapter other than through enrollment in such an

entity. In a State where rates paid to hospitals under the State plan are

negotiated by contract and not publicly released, the payment amount

applicable under this subparagraph shall be the average contract rate that

would apply under the State plan for general acute care hospitals or the

average contract rate that would apply under such plan for tertiary hospitals.

42 U.S.C. § 1396u-2(b)(2)(D) (emphasis added).

In response to this legislation, the Tennessee General Assembly passed Tennessee

Code Annotated § 71-5-108. This statute directed TennCare to set out a payment

methodology consistent with the DRA regarding emergency services furnished by non-

contract providers to individuals covered by TennCare:

The TennCare bureau is directed to submit a state plan amendment to the

centers for medicare and medicaid services that sets out a payment

methodology for medicaid enrollees who are not also enrolled in medicare,

consistent with provisions in § 6085 of the federal Deficit Reduction Act of

2005, regarding emergency services furnished by non-contract providers for

managed care enrollees. The payment amount shall be the average contract

rate that would apply under the state plan for general acute care hospitals. A

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tiered grouping of hospitals by size or services may be utilized to administer

these payments. The payment methodology developed pursuant to this section

shall be budget neutral for the state fiscal year 2007-2008 when compared to

the actual experience for emergency services furnished by non-contract

providers for medicaid managed care enrollees prior to January 1, 2007. It is

the intent that this section only applies to the emergency services furnished by

non-contract providers for medicaid managed care enrollees.

Tenn. Code Ann. § 71-5-108 (emphasis added).

As a result of this statute, the TennCare Bureau promulgated the following regulation

to address the compensation to be paid to non-participating providers for outpatient

emergency services:

1200-13-13-.08 PROVIDERS

(2) Non-Participating Providers.

...

(b) Covered medically necessary outpatient emergency services,

when provided to Medicaid managed care enrollees by

non-contract hospitals in accordance with Section 1932(b)(2)(D)

of the Social Security Act (42 U.S.C.A. § 1396u-2(b)(2)(D)),

shall be reimbursed at seventy-four percent (74%) of the

2006 Medicare rates for these services. Emergency care to

enrollees shall not require preauthorization.

T ENN. C OMP. R. & R EGS. 1200-13-13-.08(2)(b) (emphasis added) (the “74% Rule”).

TennCare also promulgated a regulation addressing the compensation to be paid to

non-participating providers for inpatient services provided to TennCare enrollees admitted

to the facility as a result of the requisite emergency outpatient care:

(c) Covered medically necessary inpatient hospital admissions required as

the result of emergency outpatient services, when provided to Medicaid

managed care enrollees by non-contract hospitals in accordance with

Section 1932(b)(2)(B) of the Social Security Act (42 U.S.C.A. §

1396u-2(b)(2)(B)), shall be reimbursed at 57 percent of the 2008

Medicare Diagnostic Related Groups (DRG) rates (excluding Medical

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Education and Disproportionate Share components) determined in

accordance with 42 CFR § 412 for those services. For DRG codes that

are adopted after 2008, 57 percent of the rate from the year of adoption

will apply. Such an inpatient stay will continue until no longer

medically necessary or until the patient can be safely transported to a

contract hospital or to another contract service, whichever comes first.

T ENN. C OMP. R. & R EGS. 1200-13-13-.08(2)(c) (emphasis added) (the “57% Rule”).

When Erlanger’s contract with AmeriChoice expired at the end of 2008, Erlanger

began billing AmeriChoice its standard rates for providing AmeriChoice’s enrollees the

inpatient and outpatient services it was required to provide pursuant to EMTALA.

AmeriChoice has refused to pay the rates Erlanger has charged on the basis that the

regulations promulgated by TennCare (the 74% Rule and the 57% Rule) do not require it to

pay Erlanger’s standard rates. This lawsuit followed.

II. T RIAL C OURT P ROCEEDINGS

Erlanger filed a complaint against AmeriChoice in June 2009 alleging breach of

implied contract and unjust enrichment essentially stating that AmeriChoice had not paid

Erlanger the amount it was due for emergency related services. Erlanger contended that

AmeriChoice was required to pay Erlanger (1) at a rate equal to the prevailing average

contract rate payable by TennCare MCOs to participating tertiary care providers for the

emergency non-contract services Erlanger provides to AmeriChoice’s enrollees as required

under EMTALA; and (2) at a reasonable rate of reimbursement for the non-contract services

Erlanger is required by EMTALA to provide AmeriChoice’s enrollees after stabilization of

the emergency medical condition(s). Erlanger sought declaratory relief and damages.

AmeriChoice filed an Answer and asserted that it has paid Erlanger all that the hospital

was due under applicable law, specifically the 74% Rule and the 57% Rule. According to

AmeriChoice, TennCare’s regulations determine the rate it was required to reimburse Erlanger

for the EMTALA services Erlanger provided AmeriChoice’s enrollees. AmeriChoice asserted

a counterclaim seeking to recoup any amounts it overpaid Erlanger for its EMTALA services.

AmeriChoice also asserted that, because it was reimbursing Erlanger at the rate

provided in TennCare’s rules, Erlanger was, in essence, questioning the applicability of the

regulations to it as a non-contract provider of services to AmeriChoice’s enrollees and/or the

validity of those rules if they were applied to Erlanger. Therefore, Erlanger was required to

seek a declaratory order from TennCare regarding the interpretation of its rules before seeking

relief against AmeriChoice.

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A. Partial Summary Judgment Motion

AmeriChoice filed a motion for partial summary judgment in which it argued that

Erlanger’s claims should be dismissed because the TennCare regulations determine the rates

at which it is required to reimburse Erlanger for the outpatient and inpatient emergency

services Erlanger provides to AmeriChoice’s enrollees pursuant to EMTALA. It also repeated

its argument that Erlanger was required to seek delaratory relief from the TennCare Bureau

before seeking relief in the courts, pursuant to Tenn. Code Ann. § 4-5-225(b).

Erlanger responded by challenging the applicability of the rules to the services it had

provided. Erlanger also argued that if the rules are applied to establish the maximum payment

Erlanger can receive for those services, then the rules “are in direct conflict with and

preempted by the DRA, as well as in conflict with Tenn. Code Ann. § 71-5-108.”

After unsuccessful attempts at mediation, the parties filed Joint Stipulations regarding

AmeriChoice’s motion for partial summary judgment. Among those stipulations was the

following: “. . . AmeriChoice and Erlanger also agree that the Court can decide the narrow

issue of what reimbursement rate(s) apply” without resolving the issue of whether

AmeriChoice had in fact paid the amounts due under the regulations. (There was a dispute

as to whether the payments actually complied with the calculation method AmeriChoice said

it used, but that issue was not decided by the trial court and is not part of this appeal.)

The first motion for partial summary judgment was denied by the trial court because

of an issue concerning the scope of the motion. AmeriChoice filed a new motion and

specifically asked the court to decide that the 74% Rule and the 57% Rule established the

rates for reimbursement of outpatient and inpatient emergency services, respectively, that

AmeriChoice must pay to a provider with whom it does not have a contract.

The motion was heard in November 2012, and the trial court announced from the

bench that it intended to rule in favor of AmeriChoice, because it believed the 74% Rule and

the 57% Rule were enacted in response to the DRA and Tenn. Code Ann. § 71-5-108.

Therefore, according to the trial court, the regulations governed and limited Erlanger’s rights

to obtain payment from AmeriChoice for the emergency medical services at issue.

No order reflecting the trial court’s oral ruling was entered, apparently because of

disagreement between the parties. Erlanger then filed a motion for additional argument in

which it urged the trial court to reconsider its intention to rule in favor of AmeriChoice.

Erlanger asserted, inter alia, that application of the Rules to Erlanger’s claims was contrary

to statute and was unconstitutional.

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Erlanger also notified the Attorney General, pursuant to Rule 24.04 of the Tennessee

Rules of Civil Procedure, that the constitutional validity of the 74% Rule and the 57% Rule

had been “drawn into question before the Chancery Court.” The notice included a copy of

Erlanger’s motion for additional argument. Rule 24.04 requires notice to the Attorney

General when the validity of a statute or administrative rule or regulation of the state “is

drawn into question” in an action in which the State or an officer or agency is not a party.

On the other hand, Tennessee Code Annotated § 29-14-107 requires notice to the

Attorney General when a statute of statewide effect is “alleged to be unconstitutional.” After

such notice, the attorney general is “entitled to be heard.”

The Attorney General gave notice of intervention for the purpose of addressing the

challenges to the Rules. The Attorney General participated in the action pursuant to the above

statute and rule. He did not intervene on behalf of a State entity or official, and no party has

sought to bring a State agency into the litigation as a party. In other words, no state agency

or official is a party to this litigation.

B. Trial Court Ruling

The trial court held a hearing on Erlanger’s motion for additional argument. The court

heard argument from Erlanger, AmeriChoice, and the Attorney General. The trial court

stated,

On behalf of the State, the Attorney General has taken the position that

the validity of TennCare rules and regulations referred to as 74 percent and 57

percent rules are being challenged, and that the requirements triggered the

intervention of the State because the validity of an administrative rule has been

drawn into question to which the State or State agency is not a party.

The court agreed with that position and explained it was without jurisdiction to decide

the issues in the case, in part, because Erlanger was seeking declaratory relief regarding the

applicability of statutes or TennCare’s regulations, without first seeking a ruling from

TennCare. The trial court explained:

In looking at the Complaint that has been filed, Count I asks the Court,

pursuant to Tennessee Code Annotated 29-14-101 et seq. and Rule 57 of the

Tennessee Rules of Civil Procedure, to issue a declaratory judgment that it is

entitled to be paid (1) at a rate equal to the prevailing average contract rate

payable by TennCare MCOs to participating tertiary care providers for the

emergency non-contract services Erlanger must provide to AmeriChoice’s

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enrollees in accordance with its obligations under EMTALA and a declaratory

judgment, and (2) at a reasonable rate of reimbursement for the non-contract

services Erlanger must provide to AmeriChoice’s enrollees after stabilization

of the emergency medical condition.

In January 2013 the trial court issued a written order stating:

[P]ursuant to Tenn. Code Ann. § 4-5-225(b), because Erlanger has not

previously sought a declaratory order from the Bureau of TennCare regarding

the applicability or validity of the Regulations at issue, the Court is without

jurisdiction to adjudicate Erlanger’s claims for payment from AmeriChoice for

pre-stabilization outpatient and inpatient emergency medical services. Those

claims are hereby dismissed without prejudice.2

Erlanger sought interlocutory review of the trial court’s order ruling it lacked

jurisdiction to resolve Erlanger’s claims. Both the trial court and this Court granted the

appeal.

III. I SSUES AND S TANDARD OF R EVIEW

The only issue before us in this interlocutory appeal is whether the trial court had

jurisdiction to resolve Erlanger’s and AmeriChoice’s payment dispute.3 The trial court’s

decision and our resolution of this issue, therefore, turns on the meaning of Tenn. Code Ann.

§ 4-5-225, a provision of the Tennessee Uniform Administrative Procedures Act. No facts

are in dispute that are material to resolution of this limited issue. Statutory construction is a

question of law that is reviewed de novo without any presumption of correctness. Estate of

French v. Stratford House, 333 S.W.3d 546, 554 (Tenn. 2011); Eastman Chemical Co. v.

Johnson, 151 S.W.3d 503, 506 (Tenn. 2004); Bryant v. Genco Stamping & Mfg. Co., 33

S.W.3d 761, 765 (Tenn. 2000).

2

The trial court also dismissed without prejudice, due to the court’s lack of jurisdiction, AmeriChoice’s

counterclaim seeking to recoup any money it overpaid Erlanger because this claim was also based on the

TennCare regulations at issue. The court held that it had jurisdiction over the parties’ claims for payment

relating to post-stabilization services that Erlanger provided to AmeriChoice’s enrollees and that the parties

were free to pursue those claims.

3

Both AmeriChoice and the Tennessee Attorney General filed appellate briefs. The Attorney General

takes the same position as AmeriChoice, so we do not address the Attorney General’s arguments separately

from those made by AmeriChoice.

8

The Tennessee Supreme Court has explained the principles for statutory interpretation:

When dealing with statutory interpretation, well-defined precepts apply.

Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 836 (Tenn. 2008). Our

primary objective is to carry out legislative intent without broadening or

restricting the statute beyond its intended scope. Houghton v. Aramark Educ.

Res., Inc., 90 S.W.3d 676, 678 (Tenn. 2002). In construing legislative

enactments, we presume that every word in a statute has meaning and purpose

and should be given full effect if the obvious intention of the General Assembly

is not violated by so doing. In re C.K.G., 173 S.W.3d 714, 722 (Tenn. 2005).

When a statute is clear, we apply the plain meaning without complicating the

task. Eastman Chem. Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn. 2004). Our

obligation is simply to enforce the written language. Abels ex rel. Hunt v.

Genie Indus., Inc., 202 S.W.3d 99, 102 (Tenn. 2006). When a statute is

ambiguous, however, we may refer to the broader statutory scheme, the history

of the legislation, or other sources to discern its meaning. Colonial Pipeline,

263 S.W.3d at 836. Courts must presume that a legislative body was aware of

its prior enactments and knew the state of the law at the time it passed the

legislation. Owens v. State, 908 S.W.2d 923, 926 (Tenn. 1995).

Estate of French v. Stratford House, 333 S.W.3d at 554.

The trial court’s ruling is based upon Tennessee Code Annotated § 4-5-225(b). The

full statute provides:

(a) The legal validity or applicability of a statute, rule or order of an agency to

specified circumstances may be determined in a suit for a declaratory judgment

in the chancery court of Davidson County, unless otherwise specifically

provided by statute, if the court finds that the statute, rule or order, or its

threatened application, interferes with or impairs, or threatens to interfere with

or impair, the legal rights or privileges of the complainant. The agency shall

be made a party to the suit.

(b) A declaratory judgment shall not be rendered concerning the validity or

applicability of a statute, rule or order unless the complainant has petitioned the

agency for a declaratory order and the agency has refused to issue a declaratory

order.

(c) In passing on the legal validity of a rule or order, the court shall declare the

rule or order invalid only if it finds that it violates constitutional provisions,

9

exceeds the statutory authority of the agency, was adopted without compliance

with the rulemaking procedures provided for in this chapter or otherwise

violates state or federal law.

In determining whether this statute requires dismissal of a particular action, the

determinative factor is, of course, the nature of the dispute and the specific claims and relief

involved. The case before us is a dispute over money between private parties. The parties

disagree over the amount of payment due for the provision of specific services. Because the

parties do not have a contract with each other, they have no agreement on the amount of

payment due. Consequently, they have each relied upon statutory and regulatory provisions

as the method for calculating the amount due.

The hospital is required by law to provide emergency services, including services to

individuals without any health insurance and those who are enrolled in TennCare through

different MCOs. The hospital participates in TennCare, but does not have a contract with

AmeriChoice, the MCO involved in this lawsuit.

AmeriChoice has contracted with the TennCare Bureau to provide health care to those

who have chosen AmeriChoice as its TennCare insurance provider. AmeriChoice is paid by

TennCare a specific amount for each of its enrollees. It then contracts with medical service

providers to pay a specific fee for each service it may provide to AmeriChoice enrollees.

On appeal, the parties have somewhat refined their positions on the merits of their

financial dispute. AmeriChoice continues to assert that the regulations establishing the 74%

Rule and the 57% Rule were adopted in response to legislative action and that those Rules

establish the amount to be paid for the emergency services at issue. It is perhaps more

accurate to say that the rules establish the method for calculating an exact amount.

AmeriChoice takes the position that the Rules establish a “ceiling” for the amount to be paid

per service.

On the other hand, Erlanger asserts that the 74% Rule and the 57% Rule only establish

a “floor” for the payment due. It asserts that it does not seek to invalidate the Rules and is not

challenging their applicability. Erlanger’s position is that the DRA and Tennessee Code

Annotated § 71-5-108 establish the “average contract price” as the amount due. Accordingly,

it argues, the Rules must be interpreted in a way that allows for larger amounts if the average

contract price is actually established to be more.

Although Erlanger and AmeriChoice argue their positions on the merits of the payment

dispute, that is not before us on this appeal. Additionally, the trial court has not ruled on the

correct standard to use in calculating the payment. While the court stated its intention from

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the bench, no written order was entered finalizing that decision. The court determined it had

no jurisdiction to decide the issues. Thus, there is no trial court ruling on the issues raised in

the summary judgment motion on the merits.

IV. A NALYSIS

The requirement of Tennessee Code Annotated § 4-5-225(b) for an administrative

declaratory order prior to court action applies to a request for declaratory judgment

“concerning the validity or applicability of a statute, rule or order.”

The Tennessee Supreme Court has addressed the constitutionality of Tennessee Code

Annotated § 4-5-225(b) and has found that it cannot be applied to certain issues or situations.

Colonial Pipeline Company v. Morgan, 263 S.W.3d 827 (Tenn. 2008). Because the

Tennessee Constitution prohibits one branch of the government from encroaching on the

powers or functions of the other two branches, a statute cannot give judicial functions to

another branch of government. Colonial Pipeline, 263 S.W.3d at 843 (citing Richardson v.

Bd. of Dentistry, 913 S.W.2d 446, 453 (Tenn. 1995). It is “the sole obligation of the judiciary

to interpret the law and determine the constitutionality of actions taken by the other two

branches of government.” Colonial Pipeline, 263 S.W.3d at 843 (quoting Richardson, 913

S.W.2d at 453).

Colonial Pipeline involved a direct challenge to the validity of a tax statute, filed by

a taxpayer, with a State defendant. The Supreme Court was called upon to determine whether

the taxpayer was required, pursuant to Tenn. Code Ann. § 4-5-225, to seek declaratory relief

from the Board of Equalization, a state agency, before seeking declaratory relief from the

Chancery Court when challenging the constitutionality of specific portions of the state tax

code. 263 S.W.3d at 832, 842-46.

Reaffirming earlier holdings and principles viewing earlier decisions, the Court

recognized that a variety of constitutional issues may arise in the administrative context, and

that administrative tribunals are authorized to resolve two types of complaints involving

constitutional issues: (1) those challenging an agency’s application of a statute or rule as

unconstitutional and (2) those challenging the constitutionality of a procedure used by an

agency. 263 S.W.3d at 843. However, the Court was unequivocal that administrative

tribunals are not authorized to resolve a litigant’s claim challenging the substantive

constitutionality of a duly enacted law. Id. at 843-44.

In reviewing another related UAPA section, Tenn. Code Ann. § 4-5-223(a), the

Colonial Pipeline Court held that this provision violates the separation of powers clause in

11

the Tennessee Constitution to the extent the statute allows an agency to determine the

constitutional validity of a statute. The Court wrote:

The provision in the UAPA that an agency may issue a declaratory order

regarding the “validity or applicability of a statute” is, therefore, in partial

conflict with our ruling in Richardson. Tenn. Code Ann. § 4–5–223(a)

(emphasis added). While an agency ruling on the “applicability” is permissible,

the separation of powers clause in our constitution trumps any provision in the

UAPA permitting a determination as to the “validity” of a statute. Richardson,

913 S.W.2d at 455 (“To vest an agency with the authority to determine the

constitutionality of the legislation empowering the agency to act would violate

the doctrine of the separation of powers.”). In consequence, any provision

requiring administrative review prior to a direct challenge to the facial validity

of a statute violates our state constitution.

Colonial Pipeline, 263 S.W.3d at 844.

Thus, even if Erlanger were seeking to challenge the constitutionality of the regulations

on payment for emergency services, which Erlanger denies, that issue is not appropriate for

decision by an administrative agency and must be decided by a court. Comparing this case

to the Colonial Pipeline description of two situations where an agency may consider

constitutional issues, it is clear that the case before us does not meet either situation. This

case does not involve the TennCare Bureau’s applying a statute or regulation to Erlanger;

neither does it involve the use of any procedure by the Bureau. The agency has taken no

action to enforce the regulations, to require Erlanger to accept any particular amount as

payment, or to force or prevent AmeriChoice from paying any particular amount.

Consequently, Erlanger was not required to first seek a declaratory order on the

constitutionality of the Rules, were it raising that challenge. However, Erlanger explains that

it is not seeking to invalidate the 57% and 74% Rules. Moreover, Erlanger contends, it is not

challenging the validity or applicability of the Rules. Indeed, Erlanger does not mention the

Rules in its complaint and does not rely on them for the relief it seeks.

The 57% Rule and the 74% Rule have come into play only because AmeriChoice is

relying on these Rules to defend Erlanger’s breach of contract and unjust enrichment claims.

AmeriChoice takes the position that it is not liable to Erlanger because it has paid Erlanger

for its EMTALA services as the Bureau of TennCare has directed through its 57% Rule and

74% Rule.

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Erlanger and AmeriChoice disagree about the interpretation of the 57% Rule and the

74% Rule. AmeriChoice contends that for outpatient emergency services, it is only required

to pay Erlanger 74% of the 2006 Medicare rates for those services. For inpatient hospital

admissions required as a result of emergency outpatient services, AmeriChoice contends it is

only required to pay Erlanger 57% of the 2008 Medicare Diagnostic Related Groups rates.

Erlanger disagrees with AmeriChoice’s interpretation and argues that the DRA and

Tenn. Code Ann. § 71-5-108 require AmeriChoice to compensate Erlanger in an amount equal

to the “average contract rate” that would apply under the state plan for general acute care

hospitals. See 42 U.S.C.S. § 1396u-2(b)(2)(D); Tenn. Code Ann. § 71-5-108. The parties

agree that the state statute was passed in response to the DRA, and that the 57% Rule and the

74% Rule were both enacted in response to the state statute. Both parties appear to agree that

the Rules apply to the issue of correct payments.

Because the enabling legislation for the Rules specify that non-contract providers are

supposed to be paid the “average contract rate,” Erlanger argues that, unless the 57% Rule and

the 74% Rule are equal to this rate, they must be interpreted to mean the minimum amount,

or floor, that MCOs like AmeriChoice are required to pay non-contract providers like Erlanger

for EMTALA services. AmeriChoice, in essence, interprets the regulations as establishing

a ceiling.

It is apparent to us from a careful review of the appellate briefs of the parties that the

dispute that is at the heart of this case is a difference over the interpretation of the relevant

statutes and regulations. Interpretation of the law is, in the first instance, the province of the

courts.

In fact, this court has considered and decided strikingly similar claims in another case

involving a hospital’s suing a TennCare MCO over the correct payment for emergency

medical services provided to that MCO’s enrollees when the hospital no longer was an in-

network provider of the MCO. River Park Hosp. v. BlueCross BlueShield of Tennessee, Inc.,

173 S.W.3d 43 (Tenn. Ct. App. 2002). In that case, the hospital billed the MCO at its

standard rate and, when the MCO refused to pay that amount, sued claiming, inter alia, breach

of implied contract and unjust enrichment. The MCO defended on the basis that its rates of

reimbursement were governed by its risk agreement with the State and applicable TennCare

regulations. 173 S.W.3d at 50.

The regulations at issue governed out-of-network payments and appeared to include

the predecessor to the regulations at issue in this case. The parties in River Park Hospital

took different positions on the interpretation of the statutes and regulations. While they

agreed that the regulations established a “floor” for the payments, the MCO took the position

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that the regulations also established a “ceiling,” or, more precisely, set the amount that must

be accepted by the provider. The hospital took the position that the regulations did not place

an upper limit, or that they did not set the only payment measure. River Park Hosp., 173

S.W.3d at 55.

This court decided the payment dispute between the hospital and the MCO by

construing the relevant statutes and regulations. 173 S.W.3d at 55-56. We see no difference

in the types of issues and analytical approach in River Park Hospital and the case before us.

The UAPA provision requiring administrative action before access to the courts does not

apply in this case to divest the Chancery Court of its jurisdiction over the parties’ dispute.

AmeriChoice cites numerous cases to support its argument that the trial court was

correct in ruling the UAPA divested it of jurisdiction. See, e.g., Stewart v. Schofield, 368

S.W.3d 457 (Tenn. 2012); Baptist Hospital v. Tennessee Dep’t of Health, 982 S.W.2d 339

(Tenn. 1998); Hall v. McLesky, 83 S.W.3d 752 (Tenn. Ct. App. 2002); and Watson v. Tenn.

Dep’t of Correction, 970 S.W.2d 494 (Tenn. Ct. App. 1998). In each of those cases, however,

a private party had a dispute with a state entity, and the issue in the case centered around the

application of an agency regulation or adverse action by the state agency against the private

party.4

Erlanger, in contrast, has no complaint with the Bureau of TennCare and is not in an

adversarial position with respect to any action the Bureau has taken against it or any other

entity. Erlanger’s complaint is with AmeriChoice, a private entity. The fact that regulations

enacted by the Bureau of TennCare may come into play to resolve the parties’ dispute does

not transform Erlanger’s complaint into a dispute with the Bureau of TennCare. Unlike Image

Outdoor Advertising and the other cases upon which AmeriChoice relies, Erlanger is not

complaining about an action a state agency took that had an adverse effect on Erlanger. Trial

courts are often called upon to interpret statutes and regulations to resolve private parties’

disputes, and this case is no different. See, e.g., Houghton v. Aramark Educ. Resources, Inc.,

90 S.W.3d 676 (Tenn. 2002); Barnett v. Barnett, 27 S.W.3d 904 (Tenn. 2000); Hughes v.

Lumbermens Mut. Cas. Co., Inc., 2 S.W.3d 218 (Tenn. Ct. App. 1999).

4

AmeriChoice also cites Image Outdoor Advertising, Inc. v. CSX Transp., Inc., 2003 WL 21338700

(Tenn. Ct. App., June 10, 2003), to support its argument that the trial court is without jurisdiction. Although

the plaintiff in Image Outdoor Advertising named only private parties as defendants, the plaintiff’s complaint

was really that Tennessee Department of Transportation had wrongfully issued billboard permits to the

named defendants. Id. at *6.

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The only issue before us is in this interlocutory appeal is the trial court’s dismissal of

Erlanger’s claims and AmeriChoice’s counterclaim due to lack of subject matter jurisdiction.

We hold that Tennessee Code Annotated § 4-5-225(b) did not deprive the trial court of

jurisdiction. Accordingly, we reverse the trial court’s judgment and remand this case to the

trial court for further proceedings.5

V. C ONCLUSION

The trial court’s judgment that the UAPA divests it of subject matter jurisdiction to

resolve the parties’ dispute is reversed, and the case is remanded to the trial court for further

proceedings. Costs shall be taxed to the appellees, UnitedHealthcare Plan of the River Valley,

Inc. d/b/a AmeriChoice and the Tennessee Attorney General.

_________________________________

PATRICIA J. COTTRELL, JUDGE

5

Erlanger has requested that we remand the case to the trial court with directions about how to interpret

the 74% Rule and the 57% Rule. We refrain from giving any instruction to the trial court because that issue

is not before us in this interlocutory appeal.

15