Souder v. Health Partners, Inc.

IN THE COURT OF APPEALS OF TENNESSEE

F L E
I D
AT JACKSON
______________________________________________

BOB T. SOUDER, Individually
O c to b e r 2 7 , 1 9 9 8
and on behalf of all others similarly
situated,
C e c il C r o w s o n , J r .
Plaintiffs-Appellees, A p p e lla t e C o u r t C le r k
Madison Chancery No. 53326
Vs. C.A. No. 02A01-9712-CH-00321

HEALTH PARTNERS, INC.,

Defendant-Appellant.
____________________________________________________________________________

FROM THE MADISON COUNTY CHANCERY COURT
THE HONORABLE JOE C. MORRIS, CHANCELLOR

William H. West; Stokes & Bartholomew of Nashville
William H. Shackelford of Jackson
For Appellees

Robert B. Littleton, Mary Ellen Morris; Trabue,
Sturdivant & DeWitt of Nashville
For Appellant

AFFIRMED AS MODIFIED

Opinion filed:

W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.

CONCUR:

ALAN E. HIGHERS, JUDGE

HERSCHEL P. FRANKS, JUDGE

This case involves a contract arbitration clause and the Tennessee Open Meetings Act

(Act). Defendant, Health Partners, Inc. (HP), appeals the Chancellor’s order denying its motion

to compel arbitration and granting the Plaintiff’s, Dr. Bob T. Souder, M.D. (Souder), motion for
judgment on the pleadings.

HP is a Preferred Provider Organization (PPO) that contracts with insurance companies

and employers from Tennessee and other states. HP provides contracting third-party payors with

a network of physicians. HP was created in 1994 under the authority of the Jackson-Madison

County General Hospital District (District) as a “governmental instrumentality” of the District.

The District created HP in order to further the District’s mission to provide the full range of

health care and allied and incidental services.1 HP is a not-for-profit mutual benefit corporation

which has, as its sole member, the District.

In 1994, Souder entered into a Physician Participation Agreement (PPA) with HP. In late

1996, Souder and other physicians who were participating medical providers in HP’s PPO

received a letter2 dated November 26, 1996 from HP which stated in part as follows:

The Board of Directors of Health Partners recently approved

actions which offer an exclusive provider relationship to West

Tennessee Alliance for Healthcare (WTAH), a Physician Hospital

Organization (PHO), and the Jackson Clinic to serve as the sole

physician networks, for services they render, in Madison County.

...

***

It is our understanding that you are not currently a member of

WTAH. Because of the above described decision, we are hereby

notifying you that your existing contract with Health Partners will

not be renewed.3

The action of the Board of Directors of HP described in the above-quoted letter did not

take place at a board meeting, but instead took place in the form of a written consent resolution

1
According to HP’s charter, its purpose is to “further . . . the statutory mission of the
Jackson-Madison County General Hospital District to make health care available to the public.”
2
This letter was sent to Souder and the others by Joseph McGuire (McGuire), the
Interim Director of Operations of HP.
3
Souder’s contract was due to expire on February 1, 1997.

2
in lieu of a meeting.4 On January 9, 1997, the Board of Directors of HP adopted a resolution in

which it restated its previously adopted policy of limiting HP’s physician provider network in

Madison County. This meeting took place without prior public notice as had all previous

meetings of the Board of Directors of HP.

Subsequently, Souder and the other physicians received a letter from McGuire dated

January 31, 1997, which stated as follows:

You previously received from us a letter dated November 26,
1996, advising that your Physician Participation Agreement with
Health Partners, Inc. would not be renewed. We understand there
may be some misunderstanding as to the effect of the notice of
nonrenewal. In order to clarify any confusion that may exist, and
to assure an orderly transition, this letter is notice, pursuant to
Section 9.2 of the Physician Participation Agreement, that the
agreement is terminated. The effective date of the termination of
your Physician Participation Agreement is sixty (60) days from
the date of this letter, April 1, 1997. Until this date, you will
remain a participating provider in Health Partners, Inc.

On July 29, 1997, the Board of Trustees of the District amended HP’s charter making the

Board of Trustees of the District the Board of Trustees of HP. This meeting was announced to

the public and open to such.5 In addition to amending HP’s charter, the Board of Trustees of the

District ratified and confirmed all actions of the previous Board of Directors of HP and the

management of HP.

In May 1997, Souder filed this suit seeking reinstatement of his PPA with HP alleging

that the actions of HP violated the Act. Souder alleges that the Act is applicable to the Board

of Directors of HP in that it is an entity that falls within the provisions of the Act. Furthermore,

Souder avers that the action of the Board of Directors of HP to limit its network, thereby

excluding himself and other similarly situated physician providers, was taken at meetings

without the required public notice. Souder alleges that all actions taken by the Board of

Directors of HP are void and of no effect since none of its meetings have been open to the public

pursuant to the Act.

HP filed a motion to compel Souder to submit the case to arbitration as required by the

PPA. This motion and a subsequent motion to reconsider were denied by the Chancellor. After

4
The board meeting which was originally called on July 29, 1996 to review this issue
failed to produce a quorum.
5
The District is, as a matter of law, subject to the requirements of the Act.

3
HP’s answer was filed, Souder filed a motion for judgment on the pleadings with regard to the

applicability of the Act to HP and the possible violations of the Act by HP.

The Chancellor granted Souder’s motion. The Chancellor concluded that HP was subject

to the coverage and requirements of the Act because of its status as a governmental

instrumentality according to its charter, and because of its status as a subsidiary entity of the

District according to Chapter 165 of the Private Acts of 1992 of the Tennessee General

Assembly. Furthermore, the Chancellor concluded that HP had committed numerous violations

of the Act in that it has never published or publicized any public notice of the meetings of its

Board of Directors. Finding such, the Chancellor declared, as required by statute, all actions of

HP’s Board of Directors void and of no effect. Thus, the action of HP’s Board of Directors in

terminating Souder’s contract was declared void and of no effect, and the Chancellor declared

the PPA between Souder and HP still in effect. In addition, the Chancellor issued an injunction

enjoining HP from further violations of the Act.6

HP perfected the present appeal, and presents the following issues, as stated in its brief,

for our review:

1. Whether it was error for the chancery court to fail to compel
the Plaintiff to submit his claim against the Defendant to
arbitration.

2. Whether it was error for the chancery court to grant the
Plaintiff a judgment on the pleadings on the applicability of the
Open Meetings Act.

3. Whether it was error for the chancery court to find that the
Open Meetings Act applied to Health Partners.

4. Whether it was error for the chancery court to find that the
termination of the Plaintiff’s contract with Health Partners was an
action of Health Partners’ Board of Directors.

5. Whether it was error for the chancery court not to find that any
violation of the Open Meetings Act that might have occurred was
cured by action of the Board of Trustees of the District.

6. Whether the scope of the injunction entered by the chancery

6
The Chancellor also concluded that HP’s assertion that the subsequent action of the
Board of Trustees cured any violation of the Act to constitute a conclusion of law. As such, the
Chancellor stated that such a conclusion of law is not effective to establish a disputed issue of
fact on the basis of the pleadings in order to avoid entry of a judgment on the pleadings.
Furthermore, the Chancellor rejected HP’s claim that the decision to terminate Souder’s
Physician Provider Agreement was purely a management decision made without reference to the
resolution of the Board of Directors as a legally impossible fact.

4
 court is impermissibly broad.

Standard of Review

It appears from an examination of the Chancellor’s Conclusions of Law, that he relied

on matters outside the pleadings. “When matters outside the pleadings are presented to and

considered by the court, the motion is treated as a motion for summary judgment under Rule 56.

. . .” 3 Nancy F. MacLean and Bradley A. MacLean, Tennessee Practice §12.12, p. 191 (2d ed.

1989). Generally, a motion for summary judgment allows the non-moving party time to present

a defense, Tenn. R. Civ. P. 56.03, but HP makes no complaint that it was denied extra time.

Thus, Souder’s motion will be treated as a summary judgment motion.

A motion for summary judgment should be granted when the movant demonstrates that

there are no genuine issues of material fact and that the moving party is entitled to a judgment

as a matter of law. Tenn. R. Civ. P. 56.04. The party moving for summary judgment bears the

burden of demonstrating that no genuine issue of material fact exists. Bain v. Wells, 936 S.W.2d

618, 622 (Tenn. 1997). On a motion for summary judgment, the court must take the strongest

legitimate view of the evidence in favor of the nonmoving party, allow all reasonable inferences

in favor of that party, and discard all countervailing evidence. Id. In Byrd v. Hall, 847 S.W.2d

208 (Tenn. 1993), our Supreme Court stated:

Once it is shown by the moving party that there is no genuine issue of material
fact, the nonmoving party must then demonstrate, by affidavits or discovery
materials, that there is a genuine, material fact dispute to warrant a trial. In this
regard, Rule 56.05 provides that the nonmoving party cannot simply rely upon
his pleadings but must set forth specific facts showing that there is a genuine
issue of material fact for trial.

Id. at 211 (citations omitted) (emphasis in original).

Summary judgment is only appropriate when the facts and the legal conclusions drawn

from the facts reasonably permit only one conclusion. Carvell v. Bottoms, 900 S.W.2d 23, 26

(Tenn. 1995). Since only questions of law are involved, there is no presumption of correctness

regarding a trial court's grant of summary judgment. Bain, 936 S.W.2d at 622. Therefore, our

review of the trial court’s grant of summary judgment is de novo on the record before this Court.

Warren v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn. 1997).

Arbitration

H P c o n t e n d s th a t th e C h a n c e llo r e rr e d b y n o t c o m p e llin g S o u d e r to s u b m it h is c la im to a rb itr a tio n . H P

5
p r e m i s e s t h i s c o n t e n t i o n u p o n a p r o v i s io n i n t h e P P A w h i c h p r o v i d e s t h a t a n y c o n tr o v e r s y , d i s p u te o r d i s a g r e e m e n t

a r i s i n g o u t o f o r r e l a t i n g t o t h e P P A b e s u b m i tt e d t o a r b i t r a t io n . H P f u r t h e r c o n t e n d s t h a t s u c h a c l a u s e m a n d a ti n g

a r b i t r a t i o n r e q u i r e s t h i s C o u r t t o s u b m i t a d i s p u te o v e r t h e v i o l a t i o n o f t h e A c t t o a r b i t r a t i o n .

W e n o t e th a t S o u d e r ’ s c o m p l a in t d o e s n o t p r e s e n t i s s u e s d e a li n g w i t h t h e t e r m s a n d p r o v i s i o n s o f h i s c o n t r a c t

w i t h H P . T o t h e c o n t ra r y , t h e c o n t e n t i o n i n h i s c o m p l a in t i s th a t H P ’ s a c t i o n i n c u r ta ili n g t h e p r o v i d e r n e tw o r k w a s

t a k e n i n v i o l a t i o n o f t h e A c t . S u c h a c o m p l a i n t i s o u ts id e o f t h e a m b i t o f S o u d e r ’ s c o n t r a c t a n d d e a l s w i t h a n e x t r a n e o u s

m a t t e r t h a t i s n o t p r o p e r l y a s u b j e c t f o r a r b i t r a t i o n . I n City of Blaine v. John Coleman Hays & Assoc.,

Inc., 8 1 8 S . W . 2 d 3 3 ( T e n n . A p p . 1 9 9 1 ) , t h i s C o u r t h e l d t h a t a n a r b i t r a t i o n c l a u s e i n a c o n t r a c t w a s n o t a p p l i c a b l e i n

d e t e r m i n i n g w h e t h e r a c o n t r a c t i n g p a r ty w a s f r a u d u l e n t l y i n d u c e d t o e n t e r i n t o t h e c o n t r a c t . W e d e t e r m i n e d t h a t

i n d u c e m e n t t o e n t e r i n t o t h e c o n t r a c t w a s n o t w i t h i n t h e p u r v i e w o f th e c o n t r a c t i t s e l f . T h e r e f o r e , t h e a r b i tr a t io n c l a u s e

w a s n o t a p p l i c a b l e . A l t h o u g h t h e c a s e a t b a r i s n o t f a c t u a l l y t h e s a m e a s City of Blaine, w e d o h a v e a n a n a l o g o u s

s i t u a t i o n i n t h a t S o u d e r ’ s c o m p l a i n t d e a ls w i th a m a t t e r t h a t i s n o t w i t h i n t h e p u r v ie w o f th e c o n t r a c t b u t r a t h e r th a t H P ’ s

m a n n e r o f d e a li n g w i t h t h e c o n tr a c t w a s i l l e g a l b e c a u s e o f t h e v i o l a t i o n o f t h e A c t. T h e t r i a l c o u r t d i d n o t e r r i n d e n y in g

H P ’ s m o tio n to s u b m it th is m a tte r to a rb itr a tio n .

Judgment on the Pleadings

I n th e s e c o n d i s s u e p r e s e n te d t o t h i s C o u r t, H P c o n t e n d s t h a t i t w a s e rr o r f o r t h e C h a n c e ll o r t o g r a n t S o u d e r

a j u d g m e n t o n t h e p l e a d i n g s . A s w e e x p l a i n e d e a r l i e r , t h e C h a n c e l l o r r e l i e d o n m a t t e r s o u ts id e t h e p l e a d in g s .7 T h i s

r e li a n c e c o n v e r t e d t h e m o t i o n f o r j u d g m e n t o n t h e p l e a d i n g s t o a m o t i o n f o r s u m m a r y j u d g m e n t a n d r e n d e r s H P ’ s

a s s e r ti o n s m o o t .

Open Meetings Act

I n t h e t h i r d a n d m o s t c o m p l e x i s s u e , H P c o n te n d s t h a t t h e A c t d o e s n o t a p p ly b e c a u s e i t s B o a r d o f D i r e c to r s

i s n o t a “ g o v e r n in g b o d y ” a s d e f i n e d b y s ta t u t e a n d c a s e l a w . W e r e s p e c tf u ll y d i s a g r e e .

T h e l e g i s la t u r e h a s d e c la r e d t h a t i t i s th e p o l i c y o f t h i s s t a t e t h a t “ t h e f o r m a t i o n o f p u b l i c p o l i c y a n d d e c i s io n s

is p u b lic b u s in e s s a n d s h a ll n o t b e c o n d u c te d in s e c re t.” T . C .A . § 8 - 4 4 - 1 0 1 ( a ) ( 1 9 9 3 ) . P u b l ic k n o w le d g e o f th e m a n n e r

i n w h i c h g o v e r n m e n t d e c i s io n s a r e m a d e b y p u b l ic o f f ic i a l s is a n e s s e n t i a l e l e m e n t o f a d e m o c r a t i c g o v e r n m e n t .

Metropolitan Air Research Testing Auth., Inc. (MARTA) v. Metropolitan Gov’t, 8 4 2 S . W . 2 d 6 1 1 ,

6 1 6 ( T e n n . A p p . 1 9 9 2 ) . I n o r d e r t o p r o v i d e o p e n n e s s i n g o v e r n m e n t , t h e l e g i s la t u r e p a s s e d t h e O p e n M e e t in g s A c t .

T h e A c t , i n p e r ti n e n t p a r t , p r o v i d e s :

7
The Chancellor relied on Exhibit A of Michael Grafton’s affidavit in rendering his
decision.

6
 Open meetings - “Governing body” defined - “Meeting”
defined. -
( a ) A l l m e e ti n g s o f a n y g o v e r n i n g b o d y a r e d e c l a r e d to b e p u b l i c m e e t i n g s o p e n
to th e p u b lic a t a ll tim e s , e x c e p t a s p r o v id e d b y th e C o n s titu tio n o f T e n n e s se e .
(b )(1 ) " G o v e rn in g b o d y " m e a n s:
( A ) T h e m e m b e r s o f a n y p u b l i c b o d y w h i c h c o n s i s ts o f t w o ( 2 ) o r m o r e m e m b e r s ,
w i t h t h e a u t h o r i t y t o m a k e d e c i s io n s f o r o r r e c o m m e n d a ti o n s to a p u b l i c b o d y o n
p o lic y o r a d m in is tra tio n . . . .

T . C .A . § 8 - 4 4 - 1 0 2 ( 1 9 9 3 & S u p p . 1 9 9 8 ) .

T h e A c t i s r e m e d i a l i n n a t u r e . Dorrier v. Dark, 5 3 7 S . W . 2 d 8 8 8 , 8 9 1 ( T e n n . 1 9 7 6 ) ; Memphis Publ’g

Co. v. City of Memphis, 5 1 3 S . W . 2 d 5 1 1 , 5 1 3 ( T e n n . 1 9 7 4 ) . “ I t s h o u l d , t h e r e f o r e , b e c o n s t r u e d b r o a d l y t o p r o m o t e

o p e n n e s s a n d a c c o u n t a b il i t y i n g o v e r n m e n t, . . . a n d t o p r o te c t t h e p u b l i c a g a i n s t c lo s e d d o o r m e e ti n g s a t e v e r y s ta g e

o f a g o v e r n m e n t b o d y ’ s d e l i b e r a t i o n . ” MARTA, 8 4 2 S . W . 2 d a t 6 1 6 ( c i t a t i o n s o m i t t e d ) . F u r t h e r , “ [ t ] h e [ A ] c t i s t o b e

c o n s t r u e d m o s t f a v o r a b l y t o t h e p u b l i c a n d i s a l l e n c o m p a s s i n g a n d a p p l ie s t o e v e r y m e e ti n g o f a g o v e r n i n g b o d y e x c e p t

w h e r e t h e s t a t u t e , o n i t s f a c e , e x c l u d e s i t s a p p l i c a t i o n . ” State v. Shelby County Bd. of Comm’rs, 1 9 9 0 W L

2 9 2 7 6 , a t * 4 ( T e n n . A p p . W .S . M a r c h 2 1 , 1 9 9 0 ) . T o t h a t e n d , t h e A c t r e q u ir e s p u b l i c n o t ic e o f a ll r e g u l a r o r s p e c i a l

m e e ti n g s o f a g o v e r n m e n t a l b o d y . T . C . A . § 8 - 4 4 - 1 0 3 ( 1 9 9 3 ) . F u r th e r m o r e , s e c r e t v o t e s a r e p r o h i b i t e d , a n d m i n u t e s

o f t h e m e e ti n g a r e r e q u ir e d . T . C . A . § 8 - 4 4 - 1 0 4 ( 1 9 9 3 ) . I n t h e e v e n t t h a t t h e s e r e q u ir e m e n ts a r e n o t m e t, “ [ a ] n y a c ti o n

t a k e n a t a m e e ti n g i n v i o l a ti o n o f t h i s p a r t s h a l l b e v o id a n d o f n o e f f e c t. ” T . C . A . § 8 - 4 4 - 1 0 5 ( 1 9 9 3 ) .

T h e i s s u e b e f o r e u s is o n e o f f i r s t i m p r e s s io n . T h e t e r m “ p u b l i c b o d y ” a s u s e d i n t h e a b o v e s t a t u t e , w a s n o t

d e f i n e d . T h e r e f o r e , w e m u s t f ir s t d e t e r m i n e w h e t h e r th e G e n e r a l A s s e m b l y i n t e n d e d t h a t a P P O ’ s b o a r d o f d i r e c to r s

f a l l w i t h i n t h e c o v e r a g e o f a “ g o v e r n i n g b o d y . ” See Mid-South Publ’g Co. v. Tennessee State Univ. &

Community College Sys. Bd. of Regents, N o . 0 1 - A - 0 1 - 9 0 0 2 C H 0 0 0 7 4 , 1 9 9 0 W L 2 0 7 4 1 0 ( T e n n . A p p . M . S .

D e c . 1 9 ,1 9 9 0 ) .

T h e g r o u n d w o r k f o r d e te r m in i n g w h a t c o n s t itu t e s a “ g o v e r n in g b o d y ” fo r th e p u rp o s e s o f th e A c t is fo u n d in

t h e c a s e o f Dorrier v. Dark, 5 3 7 S . W . 2 d 8 8 8 ( T e n n . 1 9 7 6 ) . J a m e s D a r k w a s a t e a c h e r w i t h t h e D a v i d s o n C o u n t y

s c h o o l s y s te m w h e n th e lo c a l s c h o o l b o a r d b r o u g h t “ n e g le c t o f d u t y a n d c o n d u c t u n b e c o m i n g a t e a c h e r ” c h a r g e s a g a i n s t

h i m . A f t e r a h e a r i n g i n f r o n t o f t h e M e tr o p o l i t a n B o a r d o f E d u c a t i o n , D a r k w a s t e r m i n a te d . D a r k c h a ll e n g e d th e

d e c is io n i n c o u r t a n d “ a s s e r t e d t h a t t h e B o a r d ’ s a c t io n w a s v o i d b e c a u s e i t w a s ‘ f o r m u l a t e d ’ i n a c lo s e d s e s s i o n i n

v i o l a t i o n . . . o f t h e O p e n M e e t i n g s A c t . ” Id. a t 8 8 9 .

T h e S u p r e m e C o u r t d i s c u s s e d th e A c t i n d e p th a n d a tt e m p t e d to c la r i f y T . C . A . § 8 - 4 4 - 1 0 2 . A f t e r c a r e f u l

c o n s i d e r a ti o n , t h e c o u r t c o n c lu d e d th a t t h e t e r m “ p u b li c b o d y ” s h o u l d b e b r o a d ly i n t e r p r e te d . T h e C o u r t n o t e d th a t t h e

t e r m “ p u b l i c b o d y ” a s u s e d i n T .C .A . § 8 - 4 4 - 1 0 2 w a s n o t a n u n c e r t a in t e r m . T h e C o u r t s ta te d :

7
 I t i s c le a r t h a t f o r t h e p u r p o s e o f t h i s A c t , t h e L e g i s la t u r e i n t e n d e d to i n c l u d e a n y
b o a rd , c o m m is s io n , c o m m itte e , a g e n c y , a u th o r ity o r a n y o th e r b o d y , b y w h a t e v e r
n a m e , w h o s e o r i g i n a n d a u th o r i t y m a y b e tr a c e d t o S t a te , C i t y o r C o u n t y
l e g i s l a t i v e a c ti o n a n d w h o s e m e m b e r s h a v e a u th o r i t y t o m a k e d e c i s io n s o r
r e c o m m e n d a t i o n s o n p o l i c y o r a d m i n i s tr a t i o n a f f e c ti n g t h e c o n d u c t o f t h e
b u s in e s s o f t h e p e o p le i n t h e g o v e r n m e n t a l s e c t o r .

Id. a t 8 9 2 .

W h i l e Dorrier p r o v i d e s i n s i g h t i n t o t h e A c t , i t d o e s n o t a d d r e s s t h e p a r t i c u l a r i s s u e b e f o r e t h i s c o u r t . T h e

c a s e o f Northwest Georgia Health Sys., Inc. v. Times-Journal, Inc., 4 6 1 S . E . 2 d 2 9 7 ( G a . A p p . 1 9 9 5 )

i s i n s t r u c t i v e o n t h i s i s s u e . T h e r e , t h e M a r ie t t a D a i l y J o u r n a l f il e d s u i t a l l e g i n g t h a t t h e N o r t h w e s t G e o r g i a H e a l t h

S y s te m , I n c . a n d P r o m i n a H e a lt h S y s te m , I n c . v i o l a t e d t h e G e o r g i a O p e n M e e ti n g s A c t b y r e f u s in g t o h o l d p u b l i c

m e e t i n g s . Id. a t 2 9 8 .

P r o m i n a w a s t h e s o l e m e m b e r o f N o r t h w e s t G e o r g i a H e a l th S y s t e m s . N o r t h w e s t w a s a “ p r i v a t e , n o n p r o f i t

G e o rg ia c o r p o r a tio n . . . o r g a n iz e d ‘f o r th e b e n e f it o f , to p e rf o r m th e fu n c tio n s o f, o r to c a rr y o u t th e p u rp o s e s o f’ ”

s e v e r a l l o c a l c o u n t y h o s p i ta l s . P r o m i n a c h a r a c te r i z e d it s e l f a s a h o l d i n g c o m p a n y a n d p a r e n t c o r p o r a t i o n o f N o r t h w e s t .

F u r th e r , N o r t h w e s t ’ s b o a r d o f t r u s te e s w e r e n o m i n a t e d b y N o r t h w e s t ’ s b o a r d a n d a p p r o v e d b y P r o m i n a ’ s b o a r d . F i n a l l y ,

t h e o n l y t a x d o l l a r s N o r th w e s t r e c e i v e d w e r e c o u n ty f u n d s r e i m b u r s in g N o r t h w e s t f o r p r o v i d i n g i n d i g e n t c a r e . T h e s e

r e i m b u r s e m e n t s a m o u n t e d t o l e s s t h a n t w o ( 2 ) p e r c e n t o f N o r t h w e s t ’ s r e v e n u e s . Id. a t 2 9 8 - 9 9 .

T h e G e o r g i a C o u r t o f A p p e a ls h e l d t h a t N o r t h w e s t w a s a p u b l i c a g e n c y b e c a u s e i t s “ s u b s i d i a r y h o s p it a l

c o r p o r a t i o n s c o n t r a c t u a l l y a g r e e d t o o p e r a t e p u b l ic h o s p i ta l a u t h o r i t y a s s e t s f o r t h e p u b l i c g o o d a n d N o r t h w e s t ’ s

s t a t e m e n t o f c o r p o r a t e p u r p o s e i s ( i n p a r t ) t o o p e r a t e t h o s e a s s e t s f o r t h e b e n e f i t . . . o f p u b l i c h o s p i t a l a u t h o r i t i e s . ” Id.

a t 3 0 0 . C i t i n g t h e G e o r g i a S u p r e m e C o u r t,8 t h e c o u r t o f a p p e a l s s t a t e d “ t h a t a n e n t it y t o w h i c h a p u b l i c a g e n c y h a d

d e le g a te d its o ff ic ia l re sp o n sib ilitie s a n d a u th o rity w a s th e v e h ic le b y w h ic h th e a g e n c y c a rr ie d o u t its r e sp o n sib ilitie s

a n d . . . w a s s u b j e c t t o t h e O p e n M e e t i n g s A c t . ” Id. F i n a l l y , t h e c o u r t c o n c l u d e d :

W i t h o u t q u e s t i o n , t h e s e p r i v a te , n o n p r o f i t c o r p o r a ti o n s b e c a m e t h e v e h i c l e
th r o u g h w h i c h t h e p u b l i c h o s p i ta l a u t h o r i t i e s c a r r ie d o u t t h e i r o f f ic i a l
re s p o n s i b i l i t i e s . C o n s e q u e n t l y , d e s p i t e t h e p r i v a t e , n o n p r o f i t s ta t u s o f d e f e n d a n ts
N o r th w e s t a n d P r o m i n a a n d t h e i r s u b s i d i a r y h o s p i t a l c o r p o r a ti o n s , t h e tr i a l c o u r t
in t h e c a s e s u b j u d i c e w a s a u th o r iz e d t o c o n c l u d e o n t h e f a c ts b e f o r e it t h a t
N o r th w e s t a n d P r o m i n a , a s v e h i c l e s f o r p u b l ic a g e n c i e s , w e r e s u b j e c t t o t h e [ O p e n
M e e tin g s ] A c t. . . .

8
The court relied heavily on the Georgia Supreme Court’s decision in Red & Black
Publ’g Co. v. Board of Regents, 427 S.E.2d 257 (1993). In that case, the Court held that the
Student Organization Court of the University of Georgia was subject to the Open Meetings Act
because a public agency had delegated official responsibilities and authority to the Student
Organization Court. Thus, a subsidiary of a public agency was deemed subject to the Open
Meetings Act.

8
Id. ( c i t a t i o n o m i t t e d ) .

I n a d d i t i o n t o t h e f o r e g o i n g c a s e , t h e c a s e o f Finister v. Humboldt Gen. Hosp., Inc., 9 7 0 S . W . 2 d

4 3 5 ( T e n n . 1 9 9 8 ) p r o v i d e s f u r t h e r i n s i g h t i n t o t h e i s s u e b e f o r e u s . I n Finister, M a r y F i n i s t e r f i l e d s u i t s e e k i n g

w o r k e r s ’ c o m p e n s a ti o n b e n e f i t s f ro m H u m b o l d t G e n e r a l. H u m b o l d t G e n e r a l c l a i m e d i m m u n i ty u n d e r th e T e n n e s s e e

W o r k e r s ’ C o m p e n s a t i o n A c t , T . C . A . § 5 0 - 6 - 1 0 6 ( 5 ) , w h i c h s t a t e s : “ [ t] h e W o r k e r s ’ C o m p e n s a t i o n A c t s h a l l n o t a p p l y

t o . . . [ t ] h e s t a t e o f T e n n e s s e e , c o u n t ie s t h e r e o f a n d m u n i c i p a l c o r p o r a t io n s . ”

H u m b o l d t G e n e r a l a n d H P o c c u p y i d e n t i c a l p o s it i o n s i n r e l a t i o n t o t h e D i s t r i c t . H u m b o l d t G e n e r a l , l i k e H P ,

i s a c r e a ti o n o f t h e J a c k s o n - M a d is o n C o u n t y H o s p i t a l D i s t r i c t . I t w a s o r g a n i z e d i n 1 9 9 1 , a n d t h e D i s t r i c t i s i t s s o l e

m e m b e r . I n d e f e n s e t o F i n i s te r ’s w o r k e r s ’ c o m p e n s a t i o n c l a im , H u m b o l d t G e n e r a l “ a r g u e d t h a t i t i s a s u b s i d i a r y o f t h e

e x e m p t H o s p i t a l D i s t r i c t a n d a s a r e s u l t , i t i s a l s o e x e m p t f r o m t h e W o r k e r s [ s i c ] C o m p e n s a t i o n L a w s . ” Id. a t 4 3 7 .

F i n i s te r a r g u e d t h a t n e i t h e r t h e D i s tr i c t n o r H u m b o l d t G e n e r a l w e r e e x e m p t .

T h e C o u r t d e t e r m i n e d t h a t t h e D i s t r ic t w a s n o t c o v e r e d b y t h e W o r k e r s ’ C o m p e n s a t i o n A c t . R e l y i n g o n

Johnson v. Chattanooga-Hamilton County Hosp. Auth., 7 4 9 S . W . 2 d 3 6 ( T e n n . 1 9 8 8 ) , t h e C o u r t f o u n d

t h a t “ a le g i s la t i v e l y c r e a te d n o n - p r o f i t H o s p it a l D i s tr i c t w h i c h a c t s o n b e h a l f o f a g o v e r n m e n t a l e n t i t y a n d w h i c h

p e r f o r m s a g o v e r n m e n t a l f u n c t i o n i s a ‘ m u n i c i p a l c o r p o r a t i o n ’ w i t h i n t h e m e a n in g o f t h e s t a t u t o r y e x e m p t i o n p r o v i s io n . ”

Finister, 9 7 0 S . W . 2 d a t 4 3 8 . T h e C o u r t f o u n d t h a t t h e D i s t r i c t i n t e n d e d t o a n d d o e s “ a c t o n b e h a l f o f a n d f o r t h e

b e n e f i t o f M a d i s o n C o u n t y a n d t h e C i t y o f J a c k s o n . ” T h e C o u r t h e l d t h a t t h e D i s tr i c t w a s a m u n i c i p a l c o r p o r a t i o n a n d

e x e m p t f r o m w o r k e r s ’ c o m p e n s a t i o n u n d e r t h e s t a t u t e . Id. a t 4 3 9 . T h e C o u r t c o n c l u d e d t h a t a s u b s i d i a r y o f a

m u n i c ip a l c o r p o r a ti o n i s , i n e s s e n c e , “ a d i v i s io n o r d e p a r t m e n t o f th e S t a t e o r c o u n ty o r m u n i c ip a l c o r p o r a ti o n , ” a n d th e

s t a t u t o r y e x e m p t i o n a p p l i e d t o s u c h d i v i s i o n s a n d d e p a r t m e n t s . Id. S e v e r a l f a c t o r s c o n v i n c e d t h e C o u r t t h a t H u m b o l d t

G e n e r a l w a s , i n f a c t, a s u b s i d i a r y o f t h e D i s t r ic t . F i r s t , t h e C o u r t n o t e d t h a t t h e D i s t r ic t o r g a n i z e d H u m b o l d t G e n e r a l

a s a n o n - p r o f i t , p u b l i c b e n e f i t c o r p o r a t i o n . S e c o n d , t h e B o a r d o f T r u s t e e s o f H u m b o l d t G e n e r a l a n d t h e D i s t r ic t w e r e

i d e n t ic a l . T h i r d , t h e b o a r d m e m b e r s r e c e i v e d n o c o m p e n s a t i o n a n d w e r e s e l e c t e d b y c o u n t y a n d c i ty o f f ic i a l s . F o u r th ,

n o n e o f H u m b o l d t G e n e r a l ’ s n e t e a r n i n g s w e r e d i s tr i b u t e d t o a n y p r i v a t e p e r s o n o r e n t i t y . F i f t h , u p o n d i s s o l u t i o n , t h e

D i s t r i c t w o u l d r e c e i v e a n y n e t a s s e t s . I n a d d i t i o n t o t h e f o r e g o i n g , t h e C o u r t f o u n d t w o f a c t o r s v e r y p e r s u a s i v e . First,

the Tennessee General Assembly has provided:

T h e m is sio n a n d p u rp o s e o f th e J a c k so n - M a d is o n C o u n ty G e n e r a l H o s p i ta l
D i s t r i c t s h a l l b e f o r t h e b e n e f i t o f t h e C i ty o f J a c k s o n , T e n n e s s e e a n d M a d i s o n
C o u n t y , T e n n e s s e e , t o p r o v i d e , o n a f e e - f o r - s e r v i c e b a s is w i th d u e r e g a r d f o r t h e
n e e d s o f lo w - in c o m e a n d i n d ig e n t p a t ie n t s , th e f u ll r a n g e o f h e a lth c a r e . . . .
Each nonprofit corporation of which such hospital district is
the sole member existing when this amendment becomes law or
thereafter created, shall be deemed a subsidiary entity of such

9
 hospital district created by this act a n d s h a l l b e a g o v e r n m e n t a l e n t i t y
f o r p u r p o s e s o f th e T e n n e s s e e G o v e r n m e n t a l T o r t L i a b i l i t y A c t . . . .

C h a p t e r 1 6 5 , P r iv a t e A c t s o f 1 9 9 2 ( e m p h a s i s a d d e d ) . S e c o n d l y , H u m b o l d t G e n e r a l ’ s c o r p o r a t e c h a r t e r e m p o w e r s i t

t o : “ f u r n i s h a f f o r d a b l e a n d m o r e a c c e s s i b l e h e a l th c a r e a n d s e r v i c e s t o t h e c i ti z e n s o f t h e C i t y o f J a c k s o n a n d M a d i s o n

C o u n t y a s ‘ a g o v e r n m e n t a l i n s tr u m e n t a l i t y f o r t h e e x c l u s i v e b e n e f it o f t h e J a c k s o n - M a d i s o n C o u n t y H o s p i t a l D i s t r ic t . ’ ”

Finister, 9 7 0 S . W . 2 d a t 4 3 9 - 4 0 .

Finister w a s c o n c e r n e d w i t h t h e a p p l i c a t i o n o f t h e w o r k e r s ’ c o m p e n s a t i o n l a w a n d t h e e x e m p t i o n a f f o r d e d

t o , a m o n g o t h e r s , m u n i c i p a l c o r p o r a t i o n s . H o w e v e r , w e b e li e v e th a t i f t h e D i s tr i c t i s a m u n i c i p a l c o r p o r a t i o n f o r t h e

p u r p o s e s o f t h e w o r k e r s ’ c o m p e n s a t io n l a w , i t i s a l s o a m u n i c ip a l c o r p o r a t i o n a n d a p u b li c b o d y a s r e f e r r e d t o i n T . C . A .

§ 8 - 4 4 - 1 0 2 ( 1 9 9 3 & S u p p . 1 9 9 8 ) . F u r th e r m o r e , t h e s i m i l a r it i e s o f H P i n t h e i n s t a n t c a s e a n d H u m b o l d t G e n e r a l i n t h e

Finister c a s e a r e r e a d i l y a p p a r e n t . H P i s a n o n p r o f i t c o r p o r a t i o n w i t h t h e D i s t r i c t a s i t s o n l y m e m b e r , a n d i s d e e m e d

a s u b s i d i a r y e n t i t y o f t h e D i s tr i c t b y C h a p t e r 1 6 5 , P r iv a t e A c t s 1 9 9 2 . T h e c o r p o r a t e c h a r te r o f H P c l e a r l y s t a t e s t h a t i t

w a s c r e a t e d a s “ a g o v e r n m e n t in s t r u m e n t a l i ty o f t h e J a c k s o n - M a d i s o n C o u n t y G e n e r a l H o s p i t a l D i s t r i c t . ” H P ’ s

e x i s te n c e i s p re m i s e d o n t h e id e a t h a t it w i ll f u r t h e r “ t h e s t a t u t o r y m i s s i o n o f t h e [ D i s t r ic t ] t o m a k e q u a l i t y h e a l th c a r e

a v a i l a b l e t o t h e p u b l i c a t r e a s o n a b l e c o s ts .”

O t h e r f a c t o r s a r e a l s o p e r ti n e n t . H P c o m m i n g l e d f u n d s w i t h t h e D i s t r ic t , a n d H P e v e n a l l o w e d i t s f u n d s a n d

b o o k k e e p in g t o b e h a n d le d b y t h e a c c o u n t i n g d e p a r t m e n t o f t h e D i s tr i c t . H P f u n d s w e r e d e p o s i t e d a n d i n v e s t e d i n t h e

s a m e m a n n e r a s f u n d s o f t h e D i s t r i c t . F u r t h e r m o r e , t h e D i s tr i c t a p p o i n t e d t h e m e m b e r s o f H P ’ s B o a r d , a n d t h e s e

m e m b e r s r e c e i v e d n o c o m p e n s a t i o n . F i n a l l y , i n o r a r o u n d 1 9 9 2 , t h e D i s tr i c t g a v e H P $ 4 0 0 , 0 0 0 i n s e e d c a p i t a l a n d

e x te n d e d a $ 5 0 0 ,0 0 0 lin e o f c re d it.

A f t e r e x a m i n i n g a l l t h e r e l e v a n t f a c t o r s , w e f i n d t h a t H P i s a s u b s i d i a r y o f t h e D i s t r ic t . A s u b s i d i a r y o f a n

e x e m p t m u n i c i p a l c o r p o r a t i o n l i k e t h e D i s t r i c t i s “ c o m p a r a b l e t o a d i v i s i o n o r d e p a r t m e n t o f t h e S t a t e o r c o u n t y . ” See

Finister, 9 7 0 S . W . 2 d a t 4 3 9 . W e a g r e e w i t h t h e G e o r g i a C o u r t o f A p p e a l s r e a s o n i n g i n Times-Journal a n d h o l d

t h a t s u b s i d i a r i e s t o w h i c h m u n i c i p a l c o r p o r a t i o n s h a v e d e l e g a t e d t h e i r o f f ic i a l r e s p o n s i b i l i t i e s a n d a u t h o r it y a r e s u b j e c t

t o t h e O p e n M e e t i n g s A c t . See Northwest Georgia Health Sys. v. Times-Journal, Inc., 4 6 1 S . E . 2 d 2 9 7

( G a . A p p . 1 9 9 5 ) . W ith th e f o re g o i n g , w e c o n c l u d e th a t H P i s s u b je c t to th e p r o v i sio n s a n d r e q u ir e m e n ts o f th e A c t, a n d

t h e m e e ti n g o f i t s g o v e r n i n g b o d y a r e p u b li c m e e ti n g s . T . C . A . § 8 - 4 4 - 1 0 2 ( 1 9 9 3 & S u p p . 1 9 9 8 ) .

Decision of the Board of Directors or of Management

N e x t, H P a s s e r t s th a t e v e n i f t h e A c t i s a p p l i c a b l e , S o u d e r c a n n o t c l a i m t h a t t h e P P A w a s te r m i n a t e d i n

v i o l a t i o n o f t h e A c t b e c a u s e t h e a c t u a l d e c is io n t o t e r m i n a t e t h e P P A w a s i n d e p e n d e n t l y m a d e b y H P ’ s m a n a g e m e n t ,

10
n o t it s B o a r d o f D i r e c t o r s . H P c o n t e n d s t h a t t h e P P A c o n t a in e d a p r o v i s io n t h a t a l l o w e d e it h e r p a r t y t o t e r m i n a te th e

a g r e e m e n t w i t h o r w i t h o u t c a u s e , a n d t h a t s u c h p r o v i s i o n w a s e x e r c i s e d b y H P ’ s m a n a g e m e n t i n a l e t t e r to S o u d e r d a t e d

J a n u a r y 3 1 , 1 9 9 7 n o t i f y in g h i m t h a t t h e P P A w a s te r m i n a t e d p u r s u a n t to t h e p r o v i s i o n i n th e P P A a l l o w i n g s u c h .

H P ’ s c o n t e n t i o n t h a t t h i s w a s a m a n a g e m e n t d e c i s i o n i s w i t h o u t m e r it . F r o m t h e f a c t s i n t h e r e c o r d , i t i s

o b v i o u s t h a t t h e d e c i s io n t o l i m i t t h e n e t w o r k t h e r e b y t e r m i n a t i n g S o u d e r ’ s P P A , i n a d d i t i o n t o t h e c o n t r a c t s o f o t h e r

p h y s ic i a n s , w a s m a d e b y H P ’ s B o a r d o f D i r e c t o r s . I n th e l e t t e r s e n t t o S o u d e r f r o m H P d a t e d N o v e m b e r 2 6 , 1 9 9 6 , i t

i s s t a t e d t h a t “ [ t ] h e b o a r d o f d i r e c t o r s o f H e a l t h P a r tn e r s r e c e n t l y a p p r o v e d a c t i o n s w h i c h o f f e r a n e x c l u s iv e p r o v i d e r

r e l a t i o n s h ip t o t h e W e s t T e n n e s s e e A l l i a n c e f o r H e a l t h c a r e .” T h e l e t t e r c o n t in u e s b y s ta t i n g t h a t “ [ b ] e c a u s e o f t h e a b o v e

d e s c r i b e d d e c is io n , w e a r e h e r e b y n o t i f y i n g y o u t h a t y o u r e x i s ti n g c o n t r a c t w i t h H e a lt h P a r t n e r s w i ll n o t b e r e n e w e d .”

T h i s l e t t e r r e f e r s t o a c ti o n t a k e n b y th e B o a r d o f D i r e c to r s th r o u g h a w r i t t e n c o n s e n t r e s o l u t i o n t o l i m i t H P ’ s n e t w o r k .

F u r th e r m o r e , o n J a n u a r y 9 , 1 9 9 7 , t h e B o a r d o f D i r e c t o r s o f H P a d o p t e d a r e s o l u t i o n i n w h i c h i t r e s t a t e d t h e a b o v e p o l i c y

o f l im i ti n g H P ’ s n e t w o r k i n M a d is o n C o u n t y . I n a d d it i o n t o t h e N o v e m b e r 2 6 , 1 9 9 6 l e tt e r a n d th e J a n u a ry 9 , 1 9 9 7

r e s o l u t i o n , a n a f f i d a v i t, o f M i c h a e l G r a ft o n , V i c e P r e s id e n t f o r F i s c a l A f f a i r s a n d C h i e f F i n a n c i a l O f f i c e r o f t h e D i s t r i c t ,

s ta t e d t h a t t h e B o a r d o f D i r e c to r s o f H P m a d e th e d e c i s io n t o l i m i t i t s n e t w o r k .

I n c o n s i d e r a t i o n o f t h e f o r e g o i n g i t e m s , i t a p p e a r s to t h i s C o u r t t h a t t h e d e c i s io n t o l i m i t H P ’ s n e t w o r k t h e r e b y

r e q u i r i n g t h e t e r m i n a t i o n o f S o u d e r ’ s P P A w a s m a d e b y th e B o a r d o f D i r e c to r s o f H P . T h e c o n t e n ti o n o f H P t h a t t h i s

w a s a m a n a g e m e n t d e c is io n i s u n te n a b le i n t h e f a c e o f t h e f a c t s p r e s e n t e d . T h u s , w e a g r e e w i t h t h e C h a n c e l l o r i n h i s

c o n c lu s io n t h a t t h e “ a c t i o n s r e f e r e n c e d i n t h e J a n u a r y 3 1 , 1 9 9 7 l e t t e r . . . m a k e it c l e a r t h a t t h e t e r m i n a t i o n o f t h e

p h y s i c i a n p a r t i c i p a t i o n a g r e e m e n t w a s e n t i r e ly c o n s i s t e n t w i t h , a n d w a s r e q u i r e d b y , t h e a c t i o n o f t h e b o a r d o f d i r e c to r s

o f H e a l t h P a r tn e r s , I n c .”

Ratification

H P f u r t h e r a s s e r t s th a t i f i t i s s u b j e c t t o t h e A c t a n d t h a t t h e a c t i o n o f t h e B o a r d o f D i r e c to r s r e s u l t e d i n t h e

t e r m i n a t i o n o f S o u d e r ’ s P P A , S o u d e r h a s n o b a s i s f o r r e l i e f b e c a u s e a n y v i o l a t i o n o f th e A c t h a s b e e n c u r e d b y t h e

su b se q u e n t ra tific a tio n o f a ll a c tio n s o f H P ’s B o a rd o f D ire c to rs b y th e B o a rd o f T ru ste e s o f th e D istr ic t in a m e e tin g

h e ld in c o m p lia n c e w ith th e A c t.

A s p r e v i o u s ly s ta t e d , T . C . A . § 8 - 4 4 - 1 0 5 p r o v i d e s t h a t “ [ a ] n y a c ti o n t a k e n a t a m e e ti n g i n v i o l a t i o n o f [ t h e

A c t ] s h a l l b e v o i d a n d o f n o e f f e c t. ” H o w e v e r , i t w a s n o t t h e i n t e n t o f t h e l e g i s la t u r e t o f o r e v e r b a r a g o v e r n i n g

b o d y f r o m r a t i f y i n g a p r i o r d e c i s i o n m a d e i n v i o l a t i o n o f t h e A c t . Neese v. Paris Special Sch. Dist., 8 1 3

S . W . 2 d 4 3 2 , 4 3 6 ( T e n n . A p p . 1 9 9 0 ) . O n t h e o t h e r h a n d , i t w a s n o t t h e i n t e n t o f t h e l e g i s la t u r e t o a l l o w a g o v e r n i n g

b o d y t o r a t i f y a d e c i s i o n i n a s u b s e q u e n t m e e t i n g b y a “ p e r f u n c t o r y c r y s t a l l i z a t i o n ” o f i t s p r e v i o u s a c t i o n . Id.

11
R a t h e r , “ t h e p u r p o s e o f t h e a c t is s a t i s f i e d i f t h e u l ti m a t e d e c i s io n i s m a d e i n a c c o r d a n c e w i th t h e [ A c t ] , a n d i f i t is a

n e w a n d s u b s t a n t i a l r e c o n s i d e r a ti o n o f th e i s s u e s i n v o l v e d , in w h i c h t h e p u b l i c i s a f f o r d e d a m p l e o p p o r t u n i ty t o

k n o w t h e f a c t s a n d t o b e h e a r d w i t h r e f e r e n c e t o t h e m a t t e r s a t i s s u e . ” Id.

C o n c e d in g t h a t t h e a c t i o n o f t h e B o a r d o f D i r e c to r s c o u l d h a v e b e e n r a ti f i e d th r o u g h t h e s u b s e q u e n t a c ti o n

o f t h e B o a r d o f T r u s t e e s , S o u d e r a s s e r ts t h a t t h e J u l y 2 9 , 1 9 9 7 m e e t i n g o f th e B o a r d o f T r u s t e e s o f t h e D i s t r ic t f a il e d

t o c u r e a n y p r e v i o u s v io l a t i o n o f t h e A c t i n t h a t n o t i c e o f t h e m e e ti n g w a s n o t i n c o m p l i a n c e w i t h t h e p r o v i s io n s o f

t h e A c t. S o u d e r c o n te n d s t h a t t h e n o ti c e f a il e d to m e n ti o n a n y c o n te n t o f t h e m e e ti n g a n d f a il e d to g i v e th e p u b li c

a n y n o t i c e o f w h a t i s s u e s w o u l d b e d i s c u s s e d a t s u c h m e e t i n g . T h u s , s in c e n o t i c e o f th e m e e t i n g w a s d e f e c t i v e , t h e

a c t i o n o f th e B o a r d o f T r u s t e e s f a i l e d t o c o m p l y w i t h t h e A c t t h e r e b y r e n d e r in g s u c h a c t i o n v o i d a n d o f n o e f f e c t .

T .C .A . § 8 - 4 4 - 1 0 3 p r o v i d e s t h a t “ a d e q u a t e p u b l i c n o t ic e ” m u s t b e g i v e n o f m e e t i n g s b y t h e g o v e r n m e n t a l

b o d y h o l d i n g s u c h m e e t i n g s b e i t a r e g u l a r o r s p e c i a l m e e t i n g . In c o n s id e r in g t h e p h r a s e “ a d e q u a t e p u b l i c n o t ic e ,”

th e T e n n e ss ee S u p re m e C o u r t h a s o b s erv e d :

W e t h i n k i t i s im p o s s ib l e t o f o r m u l a t e a g e n e r a l r u le i n r e g a r d t o w h a t t h e p h r a se
“ a d e q u a t e p u b l i c n o t ic e ” m e a n s . H o w e v e r , . . . a d e q u a t e p u b li c n o ti c e m e a n s
a d e q u a t e p u b l i c n o t ic e u n d e r th e c i r c u m s t a n c e s , o r s u c h n o t i c e b a s e d o n t h e
t o t a l i t y o f t h e c i r c u m s t a n c e s a s w o u l d f a i r ly i n f o r m t h e p u b l i c .

Memphis Publ’g Co. v. City of Memphis, 5 1 3 S . W . 2 d 5 1 1 , 5 1 3 ( T e n n . 1 9 7 4 ) .

T h u s , t h e c i r c u m s ta n c e s o f e a c h c a s e m u s t b e ta k e n in t o a c c o u n t i n o r d e r t o d e te r m i n e t h e a d e q u a c y o f t h e n o ti c e g iv e n .

A c c o r d i n g t o t h e f a c ts a s p r e s e n t e d i n t h e r e c o r d , t h e B o a r d o f T r u s t e e s o f t h e D i s t r ic t h e l d a m e e ti n g o n J u ly

2 9 , 1 9 9 7 , i n w h i c h t h e B o a r d o f T r u s t e e s a m e n d e d t h e c h a r t e r o f H P m a k i n g t h e B o a r d o f T r u s t e e s o f t h e D i s t r ic t t h e

B o a r d o f T r u s t e e s o f H P . F u r th e r m o r e , t h e B o a r d o f T r u s t e e s r a t i f ie d a n d c o n f i r m e d a l l a c t i o n s o f t h e p r e v i o u s B o a r d

o f D i r e c t o r s o f H P a n d t h e m a n a g e m e n t o f H P “ i n c lu d i n g w i t h o u t l i m i t a ti o n t h e le tt i n g a n d te r m i n a ti o n o f c o n tr a c ts o f

a l l k i n d s . ” T h e B o a r d o f T r u s te e s a n n o u n c e d t h is m e e t i n g t o th e p u b l i c b y m a i l i n g n o t i c e o f th e m e e t i n g t o th e l o c a l

n e w s p a p e r , l o c a l r a d i o s ta t i o n s , a n d t h e l o c a l t e l e v i s io n s ta t i o n a p p r o x i m a t e l y e i g h t d a y s b e f o r e t h e m e e ti n g w a s h e l d .

A c c o r d i n g t o S o u d e r ’ s b ri e f , t h e n o ti c e o f t h e m e e ti n g , w h i c h S o u d e r c o n te n d s d o e s n o t c o n s t i t u t e a d e q u a te p u b li c

n o t ic e , s t a t e d , “ [ t ] h e b o a r d o f t r u s t e e s o f W e s t T e n n e s s e e H e a l th c a r e w i ll m e e t in t h e c i t y - c o u n t y c o n f e r e n c e o f J a c k s o n -
9
M a d i s o n C o u n t y G e n e r a l H o s p it a l a t 5 : 0 0 p . m . o n T u e s d a y , _ _ _ _ _ _ _ _ _ _ _ . ”

W h ile th e A c t r e q u ir e s a ll m e e tin g s o f e n titie s su b j e c t to th e A c t b e o p e n to th e p u b lic , it d o e s n o t g u a r a n te e

a l l c i t i z e n s t h e r i g h t t o p a r t i c i p a t e i n t h e m e e t i n g s . Whittemore v. Brentwood Planning Comm’n, 8 3 5

9
The record was deficient with regard to a copy of the notice of the July 29, 1997
meeting of the Board of Trustees of the District.

12
S .W .2 d 1 1 , 1 8 ( T e n n . A p p . 1 9 9 2 ) .

[ T ] h e n o t ic e r e q u ir e d b y T e n n . C o d e A n n . § 8 - 4 4 - 1 0 3 i s s u f f i c ie n t a s lo n g a s i t
g i v e s i n t e r e s t e d c it i z e n s a r e a s o n a b le o p p o r t u n i t y t o e x e r c is e t h e i r r i g h t t o b e
p r e s e n t a t a g o v e r n in g b o d y ’ s m e e t i n g . T h e n o t i c e n e e d n o t i n v i t e p u b li c
p a r t i c i p a t io n i n a p u b l ic m e e t in g i n o r d e r t o s a t i s f y t h e [ A c t ’ s ] r e q u i r e m e n t s .

State ex rel. Akin v. Town of Kingston Springs, N o . 0 1 - A - 0 1 - 9 2 0 9 - C H 0 0 3 6 0 , 1 9 9 3 W L 3 3 9 3 0 5 , a t * 5

( T e n n . A p p . M .S . S e p t. 8 , 1 9 9 3 ) .

I n v i e w o f t h e t o t a l i t y o f t h e c ir c u m s ta n c e s , t h e n o t i c e o f t h e m e e ti n g c o m p o r t s w i t h t h e p r o v i s i o n s o f t h e A c t .

N o t i c e w a s g i v e n t o t h e m e d i a i n o r d e r t o n o t i f y t h e p u b l i c o f t h e m e e ti n g . T h e n o t i c e p r o v i d e d th e p u b li c w i t h a

r e a s o n a b le o p p o r t u n i t y t o b e p r e s e n t a t t h e m e e t i n g . I n f a c t, a c c o r d i n g t o t h e m i n u t e s o f t h e m e e ti n g , m e m b e r s o f t h e

m e d ia a n d t h e p u b l ic w e r e i n a t t e n d a n c e a t t h e m e e t i n g . F u r th e r m o r e , w h i l e S o u d e r p r o te s ts th e c o n t e n t s o f t h e n o t i c e

i n n o t r e f e r r i n g t o t h e p r o p o s e d a c ti o n o f l i m i t i n g t h e p h y s i c ia n n e tw o r k , t h e m e e ti n g w a s n o t l i m i t e d t o t h i s s o l e s u b j e c t .

T h e a g e n d a o f th e m e e t i n g p r e s e n t e d s e v e r a l d i f fe r e n t a r e a s re g a r d in g t h e b u s i n e s s o f t h e D i s t r i c t . T h u s , f a i l i n g t o

s p e c i f ic a l l y s ta t e i n t h e n o t i c e th e i s s u e c o n c e r n i n g H P d i d n o t m a k e th e n o t ic e i n a d e q u a t e i n l i g h t o f t h e s e v e r a l p u r p o s e s

o f t h e m e e t i n g . W e a r e o f th e o p i n i o n t h a t n o t ic e w a s g i v e n w h i c h “ w o u l d f a ir l y i n f o r m t h e p u b li c ” u n d e r t h e

circum stanc es.

W h i l e t h e n o t i c e m a y c o m p o r t w i t h t h e A c t , w e f in d t h a t t h e r a ti f ic a t i o n a n d c o n f ir m a t i o n o f a ll a c ti o n s o f t h e

B o a r d o f D irec tors o f H P b y th e B o a r d o f T r u ste e s o f th e D istr ic t w a s m e re ly a p e rf u n c to ry ru b b e r s ta m p th e re b y fa ilin g

t o c u r e t h e p r e v i o u s v io l a t i o n s o f t h e A c t . A c c o r d i n g t o t h e m i n u t e s o f t h e J u l y 2 9 , 1 9 9 7 m e e ti n g , t h e o n l y r e s o l u t i o n

p e r t a in i n g t o H P t h a t w a s r a is e d d u r i n g t h e m e e ti n g i n d i s c u s s i o n w a s th e e s t a b l i s h m e n t o f t h e B o a r d o f T r u s t e e s o f t h e

D i s t r i c t a s th e B o a r d f o r H P . T h e m i n u t e s s ta t e t h a t “ M r . M o s s e x p l a i n e d t o th e B o a r d th e p u r p o s e o f r e o rg a n i z i n g

H e a l t h P a r t n e r s w h i c h w i l l e s t a b l i s h t h e D i s t r ic t ’ s B o a r d o f T r u s t e e s a s t h e B o a r d f o r H e a l t h P a r tn e r s a s o u t l i n e d i n t h e

r e s o lu tio n p r e s e n te d . D r . N e w e l l m a d e a m o t io n t o a p p r o v e , s e c o n d e d b y M r . M a n s f ie l d a n d t h e B o a r d u n a n i m o u s l y

a p p r o v e d .”

T h e r e w a s n o d i s c u s s i o n b y t h e B o a r d o f T r u s t e e s p e r t a i n i n g t o t h e l i m i t a t i o n o f H P ’ s p h y s ic i a n n e tw o r k

p r e v i o u s ly a d o p t e d b y t h e B o a r d o f D i r e c t o r s o f H P . A s p r e v i o u s l y s t a t e d , t h e a d o p t e d r e s o lu t i o n o f t h e B o a r d o f

T r u s t e e s m e r e l y s t a t e s th a t a l l a c t i o n s o f t h e B o a r d o f D i r e c to r s o f H P a r e r a ti f i e d a n d c o n f i r m e d in c lu d i n g t h e

t e r m i n a t i o n o f a ll c o n t r a c t s . S i n c e t h e r e w a s n o d i s c u s s io n o f th e m a t t e r o f l i m i t i n g t h e n e t w o r k a n d t h e o n l y m e n t i o n

o f s u c h i s th e a d o p te d r e s o l u t i o n o f w h i c h t h e r e i s n o e v i d e n c e o f a n y d i s c u s s i o n o n t h e m a t t e r , t h e a c t i o n o f th e B o a r d

o f T r u s t e e s i s m e r e l y a “ p e r f u n c t o r y c r y s t a l l iz a t io n ” o f t h e d e c i s i o n m a d e b y t h e B o a r d o f D i r e c t o r s .

I n t h a t t h e B o a r d o f T r u s t e e s f a i l e d t o g i v e “ n e w a n d s u b s t a n t i a l r e c o n s i d e r a ti o n ” o f th e a c t i o n s t a k e n b y t h e

13
B o a r d o f D i r e c t o r s , t h e a c t i o n o f th e B o a r d o f T r u s t e e s w a s a s u b t e r f u g e a n d n o t h i n g m o r e t h a n a m e r e r a t i f i c a ti o n o f

t h e p r e v i o u s a c t i o n s t a k e n i n c o n tr a v e n ti o n o f t h e A c t. A s s u c h , t h e a c ti o n s o f t h e B o a r d o f T r u s t e e s d i d n o t c u r e th e

p r e v i o u s v io l a t i o n s o f t h e A c t b y t h e B o a r d o f D i r e c to r s . T h e r e f o r e , t h e a c t i o n b y t h e B o a r d o f D i r e c to r s is v o id a n d

o f n o e f f e c t a n d r e m a i n s s u c h s i n c e i t w a s n o t c u r e d b y t h e a c t io n s o f t h e B o a r d o f T r u s t e e s .

Injunction

T h e F i n a l J u d g m e n t a n d I n j u n c ti o n o f th e C h a n c e l lo r p r o v i d e s in p e r t i n e n t p a r t :

4 . P r io r t o a n y a c t i o n t a k e n b y t h e c u r r e n t b o a r d o f H e a l t h P a r tn e r s , I n c . a g a in s t
t h e c o n t r a c t u a l i n t e r e s t s o f D r . S o u d e r t o b e e f f e c t i v e , H e a l t h P a r tn e r s , I n c .,
b e c a u s e o f i t s h i s to r y o f i g n o r i n g t h e c le a r r e q u i r e m e n t s o f t h e O p e n M e e ti n g s
A c t , m u s t e s t a b li s h , t o t h e s a ti s fa c ti o n o f t h i s C o u r t , t h a t s u c h a c ti o n s w e r e t a k e n
i n f u ll c o m p l i a n c e w i t h t h e r e q u i r e m e n t s o f t h e O p e n M e e ti n g s A c t . U n t i l s u c h
a d e t e r m i n a t i o n o c c u r s , a ll p r e fe r re d p r o v i d e r a g r e e m e n t s b e tw e e n H e a lth
P a r t n e r s , I n c . a n d a n y p a r t i c i p a t i n g p r o v i d e r s h a l l r e m a i n i n e f f e c t u n t il t h e y
e x p i r e b y o p e r a t io n o f t h e i r o w n t e r m s .

5 . T h i s C o u r t s h a l l r e ta i n j u r i s d i c t i o n o v e r t h e p a r t i e s h e r e to , a n d H e a l t h P a r t n e r s ,
I n c . s h a l l r e p o r t t o t h i s C o u r t i n w r it i n g e v e r y s i x m o n t h s f o r a p e r i o d o f o n e y e a r
f r o m t h e d a te o f t h e e n tr y o f t h i s O r d e r w i t h r e g a r d t o t h e f a c t o f it s c o m p l i a n c e
o f th e O p e n M e e tin g s A c t. . . . H e a lth P a r tn e rs , I n c . is h e r e b y re s tr a in e d fr o m
v io la tin g a n y o f th e r e q u ir e m e n ts o f th e O p e n M e e tin g s A c t. . . .

H P c l a im s th a t t h e i n j u n c t io n i s i m p e r m i s s i b l y b r o a d i n th a t i t w e n t f u r t h e r th a n n e c e s s a r y to g r a n t S o u d e r

r e li e f , t h e o n l y p l a in t i f f b e f o r e t h e c o u r t. H P c o n t e n d s t h a t t h e C h a n c e l lo r o v e r s t e p p e d h i s j u r i s d i c t i o n b y g r a n t i n g

s u c h a b r o a d i n ju n c t io n d e s p i t e t h e f a c t t h a t S o u d e r n e v e r t o o k s t e p s t o h a v e t h e c a s e c e r t i f ie d a s a c l a s s a c t i o n .

F u r th e r m o r e , H P a s s e r t s t h a t t h e r e is n o t h i n g i n t h e r e c o r d t o i n d i c a te t h a t o t h e r p h y s i c i a n s w h o s e P P A s w e r e

t e r m i n a t e d h a v e a n y d e s i r e to r e m a i n m e m b e r s o f H P . I n a d d i t i o n , H P c o n t e n d s t h a t t h e i n j u n c t io n i s i n t e r n a ll y

i n c o n s is te n t i n t h a t i t d e c l a r e s a ll a c ti o n s e v e r ta k e n b y H P ’ s B o a r d o f D i r e c t o r s n u l l a n d v o i d t h e r e b y v o i d i n g a l l

P P A s e n t e r e d i n t o b y H P w h i l e s i m u l t a n e o u s l y r e q u i r in g t h a t a l l P P A s r e m a i n i n e f f e c t .

T .C .A . § 8 - 4 4 - 1 0 6 p r o v id e s in p e r tin e n t p a rt:

( a ) T h e c i r c u it c o u r ts , c h a n c e r y c o u r t s , a n d o th e r c o u r t s w h i c h h a v e e q u i t y
j u r i s d i c t i o n , h a v e ju r i s d ic t i o n t o i s s u e i n j u n c ti o n s , i m p o s e p e n a l t i e s , a n d o t h e r w i s e
e n f o rc e th e p u r p o s e s o f [th e A c t] u p o n a p p lic a tio n o f a n y c itiz e n o f th is sta te .
* * *
( c ) T h e c o u r t s h a l l p e r m a n e n tl y e n jo i n a n y p e r s o n a d j u d g e d b y i t i n v i o l a t i o n o f
[th e A c t] f ro m fu rth e r v io la tio n o f [ th e A c t]. E a c h s e p a ra te o c c u r re n c e o f s u c h
m e e t i n g s n o t h e l d i n a c c o r d a n c e w i t h t h i s p a r t c o n s t i t u t e s a s e p a r a te v i o l a t i o n .

( d ) T h e f in a l j u d g m e n t o r d e c r e e in e a c h s u i t s h a l l s ta t e th a t th e c o u rt r e ta in s
j u r is d ic t i o n o v e r th e p a r tie s a n d s u b j e c t m a tte r f o r a p e rio d o f o n e (1 ) y e a r fro m
d a te o f e n tr y , a n d t h e c o u r t s h a l l o r d e r t h e d e f e n d a n ts to r e p o r t i n w r i t i n g
s e m ia n n u a lly to th e c o u r t o f th e i r c o m p l i a n c e w i t h [ th e A c t] .

W e a g re e w ith th e C h a n c e llo r in P a r a g ra p h 5 o f th e a b o v e - q u o te d p o rtio n o f th e in ju n c tio n . T h i s s e c tio n is

i n k e e p in g w i t h t h e p r o v i s io n s o f T . C . A . § 8 - 4 4 - 1 0 6 ( c ) - ( d ) . O n t h e o t h e r h a n d , P a r a g r a p h 4 o f t h e a b o v e - q u o t e d p o r t i o n

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i s u n d u l y b r o a d i n it s r e a c h . S o u d e r w a s t h e o n ly p l a in t i f f b e f o r e th e C h a n c e l l o r . A s s u c h , t h e in j u n c ti o n a f f e c ti n g a l l

p r e f e r r e d p r o v i d e r a g r e e m e n t s is im p e r m i s s i b l y b r o a d b e c a u s e i t g o e s w e l l b e y o n d w h a t i s n e c e s s a r y to a f fo r d S o u d e r

r e l i e f a s t h e o n l y p l a i n t i f f i n v o l v e d i n t h e l a w s u it . F u r th e r m o r e , P a r a g r a p h 4 i s q u e s ti o n a b l e i n t h a t i t s t a t e s t h a t “ [ p ] r i o r

t o a n y a c t i o n t a k e n . . . H e a l t h P a r tn e r s , I n c . . . . m u s t e s t a b l i s h . . . t h a t s u c h a c t i o n s w e r e t a k e n i n f u l l c o m p l i a n c e ” w i t h

t h e A c t . T h i s p a r a g r a p h i s u n w o r k a b l e a n d u n n e c e s s a r y . P a r a g r a p h 5 p r o v i d e s th e p r o p e r m e c h a n i s m f o r a s s u r i n g

c o m p l ia n c e w ith t h e A c t in t h e f o r m o f a c o n te m p t a c tio n i f th e A c t is v io l a te d b y H P i n th e f u tu r e .

W e c o n s t r u e t h e ju d g m e n t t o p e r m a n e n tl y e n jo i n H P f r o m f u r t h e r v i o l a ti o n s o f t h e A c t a s r e q u ir e d b y T . C . A .

§ 8 - 4 4 - 1 0 6 ( c ) . T h e r e f o r e , t h e j u d g m e n t s h a l l b e m o d i f i e d t o e l im i n a t e P a r a g r a p h 4 . T h u s , H P i s e n j o i n e d f r o m v i o l a t i n g

a n y o f th e re q u ir e m e n ts o f th e A c t a n d s h a ll r e p o rt to th e C h a n c e llo r a s p r o v id e d fo r in P a r a g ra p h 5 .

Conclusion

T h e j u d g m e n t o f t h e C h a n c e l l o r , a s m o d i f i e d i n r e g a r d t o t h e i n j u n c t i o n , i s a f f i r m e d , and the case is

remanded for such further proceedings as necessary. Costs of appeal are assessed against the

appellants.

_________________________________
W. FRANK CRAWFORD,
PRESIDING JUDGE, W.S.
CONCUR:

____________________________________
ALAN E. HIGHERS, JUDGE

____________________________________
HERSCHEL P. FRANKS, JUDGE

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