Pamela Cotham v. Nicholas Jay Yeager

01/24/2020

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

Assigned on Briefs November 1, 2019

PAMELA COTHAM v. NICHOLAS JAY YEAGER ET AL.

Appeal from the Chancery Court for Anderson County

No. 18CH72 Robert E. Lee Davies, Senior Judge

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No. E2019-00423-COA-R3-CV

___________________________________

The plaintiff filed this action seeking to recover damages on behalf of Anderson County

based upon the plaintiff’s allegations that the defendants had submitted false claims for

payment by the county. The trial court dismissed the action, determining that the

plaintiff’s amended complaint had failed to state a claim upon which relief could be

granted. The plaintiff has appealed. Discerning no reversible error, we affirm the trial

court’s judgment of dismissal.

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

Affirmed; Case Remanded

THOMAS R. FRIERSON, II, J., delivered the opinion of the court, in which J. STEVEN

STAFFORD, P.J., W.S., and W. NEAL MCBRAYER, J., joined.

Gregory Brown, Knoxville, Tennessee, for the appellant, Pamela Cotham.

Jonathan Swann Taylor and Caitlin C. Burchette, Knoxville, Tennessee, for the appellee,

Nicholas Jay Yeager.

Steven H. Trent and Chelsea N. Hayes, Johnson City, Tennessee, for the appellee,

Securus Technologies, Inc.

OPINION

I. Factual and Procedural Background

On October 25, 2016, the plaintiff, Pamela Cotham, filed a complaint in the Knox

County Chancery Court (“Knox County court”), naming Nicholas Jay Yeager; Securus

Technologies, Inc. (“Securus”); and Avery Johnson as defendants. Ms. Cotham stated

that she was a resident of Oliver Springs, Tennessee, and was employed as a Purchasing

Agent for Anderson County (“the County”). Ms. Cotham sought to bring her action as a

qui tam plaintiff on behalf of the County.1 Ms. Cotham explained that Mr. Yeager was

the Law Director for the County and that Mr. Johnson was, at the time of the alleged

incident, the Chief Jailer for the Anderson County Sheriff’s Department.

According to Ms. Cotham, Securus provided telephone services for inmates in the

Anderson County Jail pursuant to a contract that began on July 1, 2008, and ended on

June 30, 2013. Ms. Cotham stated that Securus was the winning bidder when bids for

such telephone services were solicited by the County and that the resulting contract was

properly approved and filed pursuant to the provisions of the County Purchasing Law of

1957, codified at Tennessee Code Annotated § 5-14-101, et seq. (“the Purchasing Act”),

and duly adopted by the County.2 Ms. Cotham further stated that she spoke to Mr.

Johnson before the contract’s expiration date to inquire about soliciting bids for a new

contract when he told her that he wanted to wait until construction at the Anderson

County Jail was completed. Mr. Johnson subsequently retired in November 2013.

Ms. Cotham alleged that when she prepared a draft request in January 2014 for

contract proposals to replace the expired Securus contract, she became aware of a

contract extension between the County and Securus, dated August 21, 2012, which

purported to extend the term of the contract for telephone services until June 30, 2015

(“Contract Extension”). Ms. Cotham further alleged that the Contract Extension was

signed as to form by Mr. Yeager and that Mr. Yeager had also “forged” Mr. Johnson’s

signature on the contract. According to Ms. Cotham, the Contract Extension did not

comply with the provisions of the Purchasing Act for several reasons, including that it

was not competitively bid and was not signed by the Purchasing Agent. Ms. Cotham

averred that Mr. Yeager and Securus were aware that the Contract Extension did not

comply with applicable law. She further alleged that Mr. Johnson either misled her

concerning his awareness of the Contract Extension during her discussions with him in

2012 and 2013 or testified falsely during a subsequent 2015 deposition in an unrelated

case when he stated that he was aware of the Contract Extension when it was signed by

Mr. Yeager.

In addition to her allegations concerning the defendants’ awareness of the issues

with the allegedly unlawful Contract Extension, Ms. Cotham claimed that Mr. Yeager

“threatened” her in order to induce her to “cover up” any problem with the Contract

Extension. Ms. Cotham also asserted that the County had failed to take any action to deal

1

A qui tam action has been defined as one “‘brought under a statute that allows a private person to sue for

a penalty, part of which the government or some specified public institution will receive.’” State ex rel.

Landenberger v. Project Return, Inc., No. M2007-02859-COA-R3-CV, 2009 WL 637122, at *1 n.1

(Tenn. Ct. App. Mar. 11, 2009) (quoting BLACK’S LAW DICTIONARY 1282 (8th ed. 2004)).

2

The parties do not dispute that the Purchasing Act has been adopted by Anderson County.

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with the unlawful Contract Extension. According to Ms. Cotham, the contractor who

eventually replaced Securus in providing telephone services to inmates was paid much

less than Securus, such that the County was damaged by having to expend exorbitant

funds during the term of the Contract Extension. Ms. Cotham alleged that Securus had

violated Tennessee Code Annotated § 4-18-103 of the Tennessee False Claims Act

(“TFCA”) by presenting false claims for payment to the County pursuant to the Contract

Extension and that Mr. Yeager and Mr. Johnson had also violated the TFCA by making

or using a false record in order to have such claims paid by the County. Ms. Cotham

further alleged that all three defendants were jointly and severally liable to the County for

three times the amount of the funds paid to Securus under the unlawful Contract

Extension, costs of the civil action, and a penalty of $2,500 to $10,000 for each false

claim. Ms. Cotham claimed that she was entitled to payment of her expenses and

attorney’s fees in bringing the action as a qui tam plaintiff.

Ms. Cotham subsequently filed an amended complaint on February 27, 2017, and

attached copies of the original contract and the Contract Extension. On April 28, 2017,

Securus filed an answer, denying the material averments of the complaint. Securus

asserted several affirmative defenses, including failure to join indispensable parties, lack

of standing, and unclean hands. Securus also filed a counterclaim against the County,

asserting that it had breached the contract Securus had with the County by unilaterally

canceling it in January or February 2014. Securus alleged that the County was unjustly

enriched because Securus installed expensive equipment at the Anderson County Jail in

anticipation of ongoing revenue from the contract. Securus concomitantly filed a motion

for judgment on the pleadings pursuant to Tennessee Rule of Civil Procedure 12.03, as

well as a motion to dismiss or transfer the matter due to improper venue.

Mr. Yeager filed an answer on May 4, 2017, also concomitantly filing motions to

dismiss for improper venue and for judgment on the pleadings. The County, as counter-

defendant, filed a motion to dismiss Securus’s counterclaims on May 30, 2017.

On July 20, 2017, Ms. Cotham filed a notice of compliance with the provisions of

Tennessee Code Annotated § 4-18-104(c). Securus subsequently filed a response,

alleging that subject matter jurisdiction had not been established. Ms. Cotham filed a

second notice of compliance on August 10, 2017. On October 4, 2017, the Knox County

court entered an agreed order dismissing the counterclaims asserted by Securus against

the County. The Knox County court subsequently entered an order on February 5, 2018,

transferring the matter to the Anderson County Chancery Court (“trial court”). In its

incorporated memorandum opinion, the Knox County court determined that the action

was local in nature, such that venue would properly lie in Anderson County.

Following transfer of the action, Anderson County Chancellor Nichole Cantrell

entered an order recusing herself on November 26, 2018, based on her personal

knowledge of the facts in dispute in the proceeding. The matter was thereafter assigned

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to Senior Judge Robert E. Lee Davies. The trial court, with Judge Davies presiding,

conducted a hearing on January 22, 2019, and subsequently entered a memorandum

opinion and order on February 4, 2019, dismissing Ms. Cotham’s amended complaint for

failure to state a claim upon which relief could be granted.

In its order, the trial court determined that Ms. Cotham had failed to allege facts

establishing that Securus had presented claims for payment to the County that were false.

The court also determined that pursuant to the contract between Securus and the County,

the inmates paid Securus for telephone services, and Securus provided a commission to

the County. Therefore, as the court determined, no county funds were expended.

Because of this, the court concluded that the Purchasing Act did not apply to the Contract

Extension and that Securus did not submit false claims or conspire to deceive the County.

The court further determined that Mr. Yeager did not submit any false claims for

payment by the County. The court accordingly dismissed Ms. Cotham’s claims. Ms.

Cotham timely appealed.

II. Issues Presented

Ms. Cotham raises the following issues on appeal, which we have restated slightly:

1. Whether the trial court erred by determining that the Contract

Extension between Securus and the County for inmate telephone

services was not a contract for “services” subject to the requirements

of the Purchasing Act.

2. Whether the trial court erred by determining that Ms. Cotham failed

to plead allegations of fraud with sufficient particularity so as to

state a claim under the TFCA.

III. Standard of Review

This Court has previously explained that “[w]hen reviewing orders granting a

Tenn. R. Civ. P. 12.03 motion [for judgment on the pleadings], we use the same standard

of review we use to review orders granting a Tenn. R. Civ. P. 12.02(6) motion to dismiss

for failure to state a claim.” Young v. Barrow, 130 S.W.3d 59, 63 (Tenn. Ct. App. 2003).

As our Supreme Court has elucidated concerning a Tennessee Rule of Civil Procedure

12.02(6) motion to dismiss:

The sole purpose of a Tennessee Rule of Civil Procedure 12.02(6)

motion to dismiss is to test the sufficiency of the complaint, not the strength

of the plaintiff's evidence. Doe v. Sundquist, 2 S.W.3d 919, 922 (Tenn.

1999); Riggs v. Burson, 941 S.W.2d 44, 47 (Tenn. 1997). When reviewing

a dismissal of a complaint under Rule 12.02(6), this Court must take the

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factual allegations contained in the complaint as true and review the trial

court’s legal conclusions de novo without giving any presumption of

correctness to those conclusions. See, e.g., Doe v. Sundquist, 2 S.W.3d at

922. Because a motion to dismiss a complaint under Rule 12.02(6)

challenges only the legal sufficiency of the complaint, courts should grant a

motion to dismiss only when it appears that the plaintiff can prove no set of

facts in support of the claim that would entitle the plaintiff to relief. See,

e.g., Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 696 (Tenn.

2002).

Willis v. Tenn. Dep’t of Corr., 113 S.W.3d 706, 710 (Tenn. 2003).

Concerning questions of statutory construction and application, our Supreme

Court has additionally stated that “construction of a statute and its application to the facts

of a case are questions of law, which we review de novo with no presumption of

correctness.” Gautreaux v. Internal Med. Educ. Found., Inc., 336 S.W.3d 526, 531

(Tenn. 2011). Moreover, the High Court has summarized the principles involved in

statutory construction as follows:

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

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). It is only when a statute is

ambiguous that we may reference the broader statutory scheme, the history

of the legislation, or other sources. Parks v. Tenn. Mun. League Risk

Mgmt. Pool, 974 S.W.2d 677, 679 (Tenn. 1998). Further, the language of a

statute cannot be considered in a vacuum, but “should be construed, if

practicable, so that its component parts are consistent and reasonable.”

Marsh v. Henderson, 221 Tenn. 42, 424 S.W.2d 193, 196 (1968). Any

interpretation of the statute that “would render one section of the act

repugnant to another” should be avoided. Tenn. Elec. Power Co. v. City of

Chattanooga, 172 Tenn. 505, 114 S.W.2d 441, 444 (1937). We also must

presume that the General Assembly was aware of any prior enactments at

the time the legislation passed. Owens v. State, 908 S.W.2d 923, 926

(Tenn. 1995).

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In re Estate of Tanner, 295 S.W.3d 610, 613 (Tenn. 2009).

IV. Nature of the Contract Extension

Ms. Cotham’s claims that the defendants violated the TFCA hinge upon her

assertion that the Contract Extension ran afoul of the Purchasing Act’s requirements. Ms.

Cotham argues that the Contract Extension can only be characterized as a contract for

services to which the Purchasing Act would clearly apply. Securus and Mr. Yeager posit

that the Purchasing Act does not apply to the Contract Extension because the County was

not paying Securus for the telephone services Securus provided to inmates. It is

undisputed that Securus paid the County a commission based on revenues received from

the inmates.

The Purchasing Act specifically provides in relevant part that the county

purchasing agent has the exclusive power to “[c]ontract for and purchase all supplies,

materials, equipment and contractual services required by each and every official,

agency, office, department or employee of the county government, or that is supported

by, or under control of, the county government and that expends or encumbers any of the

county’s funds.” See Tenn. Code Ann. § 5-14-105(1) (2015) (emphasis added). This

statutory subsection further provides that “[n]o other official, employee or agent of the

county or of any of its departments or agencies shall be authorized to contract for or

purchase any such materials, supplies, equipment or contractual services.” Id.

The Purchasing Act also specifies that all “purchases of supplies, materials,

equipment and contractual services, and all contracts for the lease or rental of equipment .

. . shall be based wherever possible on competitive bids.” See Tenn. Code Ann. § 5-14-

108(a)(1) (2015). In addition, all such contracts are to be “approved as to form by the

county attorney, and the original copy of each long-term contract shall be filed with the

county clerk.” See Tenn. Code Ann. § 5-14-108(j).

Ms. Cotham’s assertions regarding the Purchasing Act’s applicability focus on the

initial portion of the first sentence in Tennessee Code Annotated § 5-14-105(1), which

states that the county purchasing agent has the exclusive power to “[c]ontract for and

purchase all supplies, materials, equipment and contractual services required by each and

every official, agency, office, department or employee of the county government, or that

is supported by, or under control of, the county government . . . .” See id. Ms. Cotham’s

argument fails to consider the final phrase of that sentence, however, requiring that the

contract be one which “expends or encumbers any of the county’s funds.” See id. We

note that the final phrase is joined to the preceding phrases by the conjunction, “and.”

See id. As our Supreme Court has explained, “statutory phrases separated by the word

‘and’ are usually to be interpreted in the conjunctive.” Stewart v. State, 33 S.W.3d 785,

792 (Tenn. 2000) (citing Tenn. Manufactured Hous. Ass’n v. Metro. Gov’t of Nashville,

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798 S.W.2d 254, 257 (Tenn. Ct. App.1990) (stating that the word “‘and’ is a conjunctive

article indicating that the portions of the sentence it connects should be construed

together”))). Because no County funds were encumbered or expended based on the

Contract Extension, the requirement contained in the final phrase of subsection -105(1)

concerning the Purchasing Act’s applicability has not been met.

In this matter, the original contract executed by Securus and the County in 2008

stated that Securus would provide telephone services for inmates, referred to in the

agreement as “certain inmate-related services and applications (the ‘Application(s)’).”

The agreement provided that the County was granting to Securus:

the right and license to install, maintain, and derive revenue from the

Applications through our inmate systems (including, without limitation, the

related hardware and software) (the “System”) located in and around the

inmate confinement facilities identified on the Schedules (the “Facilities”).

You are responsible for the manner in which you use the Applications.

Unless expressly permitted by a Schedule or separate written agreement

with us, you will not resell the Applications or provide access to the

Applications (other than as expressly provided in a particular Schedule),

directly or indirectly, to third parties. During the term of this Agreement

and subject to the remaining terms and conditions of this Agreement,

Provider shall be the sole and exclusive provider of inmate related

communications, including but not limited to voice, video and data (phone

calls, video calls, messaging, and e-mail) at the Facilities in lieu of any

other third party providing such inmate communications . . . .

The agreement further provided that Securus would pay the County a 43% commission

on all revenue generated by inmates’ collect calls and a 30% commission on all revenue

generated from the sale of prepaid calling cards.

The Contract Extension provided for a continuation of the same calling services

provided by Securus with an increase in the above commission rates paid to the County.

Pursuant to the Contract Extension, the County was to receive a 57% commission on all

revenue generated by inmates’ collect calls and a 50% commission on all revenue

generated from the sale of prepaid calling cards. Ergo, under both the original contract

and the Contract Extension, the County was not obligated to pay Securus anything, such

that no funds of the County were being “expend[ed] or encumber[ed].” See Tenn. Code

Ann. § 5-14-105(1).

Additionally, Tennessee Code Annotated § 5-14-108(a)(1) requires that contracts

for “purchases of supplies, materials, equipment and contractual services” or contracts for

the “lease or rental of equipment” shall be subject to competitive bidding requirements.

In this case, however, the Contract Extension was not a “purchase” of supplies, materials,

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equipment, or services because nothing was paid by the County. In addition, the County

did not agree to lease or rent any of the equipment installed by Securus. Rather, the

original contract and the Contract Extension granted Securus “the right and license to

install, maintain, and derive revenue” from the equipment Securus installed at the

Anderson County Jail. As such, the requirements of Tennessee Code Annotated § 5-14-

108(a)(1) concerning the Purchasing Act’s applicability also have not been met.

Although our research has not revealed any prior Tennessee cases addressing this

precise issue with regard to the applicability of the Purchasing Act to a contract that does

not require expenditure of county funds, we do find an opinion from the Office of the

Attorney General to be instructive. See State v. Black, 897 S.W.2d 680, 683 (Tenn. 1995)

(“Although opinions of the Attorney General are not binding on courts, government

officials rely upon them for guidance; therefore, [the Attorney General’s] opinion is

entitled to considerable deference.”). In 1993, the Attorney General was specifically

asked whether “an arrangement under which a county, in exchange for a portion of

receipts, allows a phone company to install a phone system in the county jail to be used

by inmates and paid for by the recipients of the calls is subject to statutory competitive

bidding requirements.” See Tenn. Op. Atty. Gen. No. 93-02, 1993 WL 349718 (Jan. 11,

1993). After analyzing the Purchasing Act and other statutory provisions, the Attorney

General opined that “such an arrangement may fairly be characterized as a lease of

county property which is not subject to statutory bidding requirements.” See id. The

opinion concluded that:

In general, it would appear that an arrangement properly categorized

as a service contract would involve the county as purchaser and the service

provider as vendor. The provider would furnish specified services to the

county in return for payment out of county funds. In such cases,

compliance with bidding procedures would enable the county to obtain the

necessary services with the most efficient expenditure of county funds. As

described to this Office, the contract in question in effect involves services

to be provided to county jail inmates and the recipients of their calls. The

only county role in the transaction is that of allowing the company to install

and service phone equipment in county jail space. The arrangement

between the county and the phone company could therefore be fairly

characterized as a lease of county property for county fiscal purposes.

Id.

Similarly, in the case at bar, the agreement at issue does not require the

expenditure or encumbrance of any County funds because the County is not purchasing

anything. Rather, the services provided by Securus were completely paid for by inmates

or call recipients with Securus paying a commission on such revenue to the County. As

the trial court determined, “since this arrangement neither expends nor encumbers any of

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Anderson County’s funds, the County Purchasing Act of 1957 does not apply.” We agree

with the trial court’s conclusion that the Contract Extension was not subject to the

requirements of the Purchasing Act.

V. TFCA Claims

Ms. Cotham contends that the trial court erred by determining that she had failed

to plead allegations of fraud with sufficient particularity so as to state a claim under the

TFCA. As this Court has previously elucidated:

The General Assembly enacted the TFCA in 2001, see 2001 Pub.

Acts, Ch. 367 (H.B. 779), “establish[ing] penalties for filing false claims

with state, county, or municipal governments.” State ex rel. Landenberger

v. Project Return, Inc., No. M2007-02859-COA-R3-CV, 2009 WL 637122,

at *3 (Tenn. Ct. App. Mar. 11, 2009). “In addition to authorizing the

attorney general and reporter and local prosecuting authorities to investigate

and prosecute actions under the TFCA, the act allows a complaint to be

filed by a private person or qui tam plaintiff.” Id. (citing Tenn. Code Ann.

§ 4-18-104). As our Supreme Court has explained:

The Tennessee General Assembly has a long history of

enacting statutes authorizing qui tam actions. For more than

two centuries, it followed the traditional approach of enacting

statutes providing a bounty to private plaintiffs who filed qui

tam actions to enforce specific statutes while declining to

adopt a generalized false claims provision similar to the

Federal False Claims Act. However, in 2001, the General

Assembly enacted the False Claims Act which, like its federal

counterpart, targeted a much broader array of fraudulent

activity perpetrated against state and local governments. Just

as Congress did, the General Assembly provided a statutory

jurisdictional bar that is intended to encourage private citizens

to assist state and local government in ferreting out fraud but,

at the same time, to prevent parasitic plaintiffs from

piggybacking on public disclosures of fraud to bring qui tam

actions.

Knox Cnty. ex rel. Envtl. Termite & Pest Control, Inc. v. Arrow

Exterminators, Inc., 350 S.W.3d 511, 522-23 (Tenn. 2011) (footnotes

omitted).

City of Chattanooga ex rel. Lepard v. Elec. Power Bd. of Chattanooga, No. E2015-

01995-COA-R3-CV, 2016 WL 6124118, at *2 (Tenn. Ct. App. Oct. 20, 2016).

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The TFCA is codified at Tennessee Code Annotated § 4-18-101 (2015), et seq. As

pertinent here, Tennessee Code Annotated § 4-18-103 (2015) provides:

(a) Any person who commits any of the following acts shall be liable to

the state or to the political subdivision for three (3) times the amount

of damages that the state or the political subdivision sustains because

of the act of that person. A person who commits any of the

following acts shall also be liable to the state or to the political

subdivision for the costs of a civil action brought to recover any of

those penalties or damages, and shall be liable to the state or political

subdivision for a civil penalty of not less than two thousand five

hundred dollars ($2,500) and not more than ten thousand dollars

($10,000) for each false claim:

(1) Knowingly presents or causes to be presented to an officer or

employee of the state or of any political subdivision thereof, a

false claim for payment or approval;

(2) Knowingly makes, uses, or causes to be made or used a false

record or statement to get a false claim paid or approved by

the state or by any political subdivision;

(3) Conspires to defraud the state or any political subdivision by

getting a false claim allowed or paid by the state or by any

political subdivision;

(4) Has possession, custody, or control of public property or

money used or to be used by the state or by any political

subdivision and knowingly delivers or causes to be delivered

less property than the amount for which the person receives a

certificate or receipt;

(5) Is authorized to make or deliver a document certifying receipt

of property used or to be used by the state or by any political

subdivision and knowingly makes or delivers a receipt that

falsely represents the property used or to be used;

(6) Knowingly buys, or receives as a pledge of an obligation or

debt, public property from any person who lawfully may not

sell or pledge the property;

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(7) Knowingly makes, uses, or causes to be made or used a false

record or statement to conceal, avoid, or decrease an

obligation to pay or transmit money or property to the state or

to any political subdivision;

(8) Is a beneficiary of an inadvertent submission of a false claim

to the state or a political subdivision, subsequently discovers

the falsity of the claim, and fails to disclose the false claim to

the state or the political subdivision within a reasonable time

after discovery of the false claim; or

(9) Knowingly makes, uses, or causes to be made or used any

false or fraudulent conduct, representation, or practice in

order to procure anything of value directly or indirectly from

the state or any political subdivision.

Tennessee Code Annotated § 4-18-102 (2015) defines a “claim” as:

[A]ny request or demand for money, property, or services made to any

employee, officer, or agent of the state or of any political subdivision, or to

any contractor, grantee, or other recipient, whether under contract or not, if

any portion of the money, property, or services requested or demanded

issued from, or was provided by, the state, referred to in this chapter as

“state funds” or by any political subdivision thereof, referred to in this

chapter as “political subdivision funds” . . . .

In her amended complaint, Ms. Cotham alleged, inter alia, violations of Tennessee

Code Annotated § 4-18-103(a)(1)-(3), specifically that Securus presented “a false claim

for payment of the fees it retained” pursuant to the Contract Extension and that Securus

and Mr. Yeager made and used a false record to get such false claim paid by the County,

thereby conspiring to defraud the County. Based on our thorough review of these

statutory provisions, we conclude that because there was no request or demand for

money, property, or services made by any defendant to the County seeking payment from

County funds, the first three listed violations cannot be proven in this matter. See Tenn.

Code Ann. § 4-18-103(a)(1)-(3). Furthermore, the amended complaint contains no

allegation that any of the defendants committed the violations listed in subsections (4)

through (6). See Tenn. Code Ann. § 4-18-103(a)(4)-(6).

With respect to the violations listed in Tennessee Code Annotated § 4-18-

103(a)(7)-(9), Ms. Cotham alleged that Mr. Yeager knowingly made or caused to be

made a false record or statement “to conceal, avoid or decrease Securus’s obligation to

pay or transmit money collected from inmates” to the County in violation of Tennessee

Code Annotated § 4-18-103(a)(7). Ms. Cotham also alleged that if Securus did not know

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that the Contract Extension was “illegal” at the time it was executed, Securus had

violated Tennessee Code Annotated § 4-18-103(a)(8) by failing to disclose the “false

claim” to the County within a reasonable time following discovery of the falsity. Ms.

Cotham made no allegation that Tennessee Code Annotated § 4-18-103(a)(9) had been

violated.

Tennessee Code Annotated § 4-18-103(a)(7) requires proof that a defendant has

“[k]nowingly ma[de], use[d], or cause[d] to be made or used a false record or statement

to conceal, avoid, or decrease an obligation to pay or transmit money or property to the

state or to any political subdivision.” Similarly, subsection (a)(8) requires proof that “a

beneficiary of an inadvertent submission of a false claim to the state or a political

subdivision, subsequently discovers the falsity of the claim, and fails to disclose the false

claim to the state or the political subdivision within a reasonable time after discovery of

the false claim.” The TFCA does not expressly define what constitutes a “false record or

statement” or a “false claim.” See Tenn. Code Ann. § 4-18-102 (containing definitions of

terms used in statutory scheme).

The trial court relied upon a federal court decision construing the similar federal

False Claims Act, codified at §§ 31 U.S.C. 3729-3733, to define the term “false” as used

in the state statute. As our Supreme Court has instructed, however, the “proper starting

point for construing [the provisions of the TFCA] . . . must begin with the words of the

state statute” rather than looking to federal decisions. See Knox Cty. ex rel. Envtl.

Termite & Pest Control, Inc. v. Arrow Exterminators, Inc., 350 S.W.3d 511, 524 (Tenn.

2011). The High Court further elucidated that in order to “ascertain and to give the

fullest possible effect to the General Assembly’s intent and purpose,” courts must “(1)

give [the words used in the statute] their natural and ordinary meaning, (2) consider them

in the context of the entire statute, and (3) presume that the General Assembly intended

that each word be given full effect.” Id. Accordingly, although the statute does not

specifically define the word “false,” we find it appropriate to give the word its natural and

ordinary meaning, see id., rather than relying upon federal court decisions to define it.

“False” is generally defined as something that is “untrue,” “deceitful,” or “not

genuine; inauthentic.” BLACK’S LAW DICTIONARY 635 (8th ed. 2004). We find support

for this meaning in the TFCA’s provisions, which define the term “knowingly” as acting

in deliberate ignorance or reckless disregard of the “truth or falsity” of information. See

Tenn. Code Ann. § 4-18-102(2)(A)(ii)-(iii). The juxtaposition of the terms, “truth” and

“falsity,” in the statute demonstrate that “false” should, with respect to the TFCA, be

defined as the opposite of true.

In this matter, Ms. Cotham’s contentions regarding violations of the TFCA by

defendants are entirely dependent upon her assertion that the Contract Extension ran

afoul of the Purchasing Act’s requirements, such that all commissions paid to the County

thereunder or even the defendants’ reliance upon the Contract Extension as a legally

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binding document should be considered “false.” The allegations contained in Ms.

Cotham’s amended complaint were that (1) Mr. Yeager, by executing the Contract

Extension, knowingly made or caused to be made a false record or statement in order to

decrease Securus’s obligation to pay money to the County and (2) if Securus did not

know that the Contract Extension was “illegal” at the time it was executed, Securus had

violated the TFCA by failing to disclose the “false claim,” the Contract Extension, to the

County within a reasonable time following discovery of the falsity. As such, the only

“falsity” alleged is that the Contract Extension was violative of the Purchasing Act’s

provisions and therefore unlawful. Having determined that the Purchasing Act was not

applicable to the Contract Extension, however, we conclude that none of Ms. Cotham’s

claims of TFCA violations can stand. See, e.g., Riggs v. Burson, 941 S.W.2d 44, 47-48

(Tenn. 1997) (explaining that, pursuant to a motion to dismiss, although courts must

“construe the allegations in the plaintiff’s favor and accept allegations of fact as true,”

“the inferences to be drawn from the facts or the legal conclusions set forth in a

complaint are not required to be taken as true.”).

In her appellate brief, Ms. Cotham relies upon a federal court decision construing

the federal False Claims Act, which explains the required elements of a claim under the

portion of the federal act at issue as follows:

(1) that the defendant make a false statement or create a false record with

actual knowledge, deliberate ignorance, or reckless disregard of the truth or

falsity of the information; (2) that the defendant have submitted a claim for

payment to the federal government; (3) that the defendant’s false statement

have been made with the purpose of getting a false or fraudulent claim paid

or approved by the Government; and (4) that the false statement or record

have been material to the Government’s decision to make the payment

sought in the defendant’s claim.

U.S. ex rel. SNAPP, Inc. v. Ford Motor Co., 618 F.3d 505, 509 (6th Cir. 2010).

Assuming, arguendo, that the same requirements listed above for a claim made pursuant

to the federal False Claims Act would also apply to a claim made pursuant to the state

statute, Ms. Cotham’s claims would fail nonetheless because no defendant in this action

submitted a claim for payment to the County or made a false statement for the purpose of

getting such a claim paid.

Ms. Cotham also alleges that the defendants violated the TFCA by making an

implied false certification that the Contract Extension complied with the requirements of

the Purchasing Act. Having determined that the Purchasing Act is not applicable to the

Contract Extension, we determine that no such violation could have occurred. Although

Ms. Cotham alleges fraud and deceit in the defendants’ execution of the Contract

Extension without complying with the Purchasing Act, such allegation cannot be proven

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when the execution of the Contract Extension was not subject to the requirements of the

Purchasing Act.

Ms. Cotham further alleges that the defendants conspired together to have false

claims paid pursuant to the Contract Extension. Relying upon a federal court decision,

U.S. ex rel. Augustine v. Century Health Servs., Inc., 136 F. Supp. 2d 876, 888 (M.D.

Tenn. 2000), Ms. Cotham concedes that one requirement of such a claim is that a

defendant “made a claim, or made a statement in order to get the Government to pay

money on a claim.” See id. Again, assuming, arguendo, that the actions described in the

federal case would be violative of the TFCA, because no claim for payment was made in

this case, such a violation cannot be proven.

Accepting Ms. Cotham’s allegations of fact as true, we conclude that Ms. Cotham

failed to present facts sufficient to support her claims under the TFCA. We therefore

affirm the trial court’s determination that Ms. Cotham’s amended complaint failed to

state a claim upon which relief could be granted.

VI. Conclusion

For the foregoing reasons, we affirm the trial court’s judgment dismissing Ms.

Cotham’s claims. Costs on appeal are assessed to the appellant, Pamela Cotham. This

case is remanded to the trial court for collection of costs assessed below.

_________________________________

THOMAS R. FRIERSON, II, JUDGE

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