Davidson v. Bredesen

330 S.W.3d 876

Karl S. DAVIDSON

v.Governor Phillip BREDESEN, in His Individual Capacity, et al.

Sept. 15

2009 Session.Nov. 23

2009.Order Denying on Rehearing Dec. 16

2009.Application for Permission to Appeal

Court of Appeals of Tennessee.

Denied by Supreme Court

June 18, 2010.

Joseph Howell Johnston and John Herbison, Nashville, Tennessee, for the appellant, Karl S. Davidson.Robert E. Cooper, Jr., Attorney General and Reporter, Steven A. Hart, Special Counsel, and Janet M. Kleinfelter, Senior Counsel, for the appellees, Governor Phillip Bredesen, Commissioner Gina Lodge, (former) TennCare Director J.D. Hickey, Commissioner David Goetz, Commissioner Paula Flowers and (former) Deputy Governor David Cooley.DAVID R. FARMER, J., delivered the opinion of the court, in which ALAN E. HIGHERS, P.J., W.S. and HOLLY M. KIRBY, J., joined.

OPINION

Plaintiff filed a cause of action against several State officials, in their individual capacities, asserting multiple claims after being disenrolled from TennCare following amendments to TennCare in 2005. The trial court granted Defendants' motion to dismiss Plaintiff's claims for failure to state a claim. We affirm in part, reverse in part, and remand for further proceedings.

This lawsuit arises from the disenrollment of Plaintiff Karl S. Davidson (Mr. Davidson) from TennCare following amendments to TennCare in 2005. On October 17, 2007, Mr. Davidson filed a complaint in the Chancery Court for Davidson County naming as Defendants Governor Phillip Bredesen, in his individual capacity; Gina Lodge, Commissioner of Department of Human Services, in her individual capacity; J.D. Hichey, Director of Bureau of TennCare, in his individual capacity; David Geotz, Commissioner of Department of Finance and Administration, in his individual capacity; Paula Flowers, Commissioner of Department of Commerce and Insurance, in her individual capacity, and David Cooley, Deputy to the Governor, in his individual capacity (collectively, “Defendants”).¹ In his complaint Mr. Davidson asserted that, at all times material to his action, he was and remained eligible for TennCare benefits, and that he was a “person” within the scope of the Racketeer Influence and Corrupt Organizations Act (“RICO”) as codified at 18 U.S.C. § 1961, et seq. and under 42 U.S.C. § 1983. He asserted that he suffers from several chronic medical conditions, is uninsurable, and that in 2002 he applied and was declared eligible for TennCare benefits. He further asserted that, from June 20 through September 14, 2005, he and other TennCare enrollees participated in a continuous sit-in demonstration to protest approved amendments to TennCare that would result in the disenrollment of thousands of TennCare enrollees. Mr. Davidson additionally asserted that the Bureau of TennCare (“the Bureau”) notified him on August 16, 2005, that he was being disenrolled from TennCare; that on August 30 he filed an appeal with the Bureau which should have extended his coverage for six months; and that his appeal was denied and his benefits terminated on December 12, before the expiration of the six-month extension period. He asserted that he filed a timely motion with the Bureau to alter or amend its December decision to deny his appeal, and that the motion was pending when he commenced his action in chancery court.

Mr. Davidson alleged that, during the June–September sit-in, he and other participants were “regularly harassed and intimidated by Defendant Dep. Gov. Cooley and others under the direction and control of Defendant Gov. Bredesen.” He alleged that demonstrators were denied access to food and water on several occasions, which jeopardized his health because of his medical conditions, including diabetes. Mr. Davidson further alleged that food and clothing items were seized from him on at least six occasions. In his complaint, Mr. Davidson asserted that “[t]hese willful and malicious acts of harassment and intimidation were done by Defendant Dep. Gov. Cooley and others under the direction of Defendant Gov. Bredesen in order to suppress [his] civil rights to free speech, freedom of assembly, and freedom to petition the government for redress of grievances guaranteed under the U.S. Constitution and the Tennessee Constitution.” He further asserted that the decision to disenroll him from TennCare constituted willful and malicious retaliation against him for exercising his constitutional rights.

In his complaint, Mr. Davidson also asserted that, beginning November 2004, Defendants had begun a series of meetings to “covertly conspire, plan for, and to willfully and maliciously carry out the systematic and illegal dismantling of TennCare which called for disenrolling more than 300,000 TennCare enrollees.” He alleged that the “covert plan to systematically dismantle TennCare was based on the false pretense that ... the State of Tennessee would become bankrupt and that there were no other alternatives available to stave off this alleged imminent financial disaster[.]” Mr. Davidson alleged Defendants engaged in a series of “top-level covert meetings” to formulate the plan in order to “cover up the State's history of mismanagement, graft, and corruption and to cast blame on non-profit TennCare advocate groups and previous federal court consent decrees which the State had previously entered into as a result of federal litigation.” He further alleged that Defendants “conspired by a pattern of deliberate misrepresentation and deceit to exacerbate the financial problems of TennCare by willfully and maliciously preventing any alternative proposals” and that Defendants made public statements falsely accusing TennCare advocate groups of causing the demise of TennCare. Mr. Davidson also alleged that some Defendants profited from the TennCare “reforms” affecting interstate commerce.

Mr. Davidson asserted multiple causes of action in his complaint. He asserted Defendants had violated: 1) his First Amendment right to free speech; 2) his Fourteenth Amendment due process rights; 3) RICO; 4) the Tennessee Human Rights Act; and 5) Article I, § 19 of the Tennessee Constitution. He further asserted Defendants had committed constructive fraud and had breached their fiduciary duty to the beneficiaries of TennCare. Mr. Davidson sought declaratory and injunctive relief, and prayed for an injunction directing Defendants to reinstate his TennCare benefits to their original scope. He also sought damages arising from pain and suffering which he alleged resulted from the withdrawal of medications and pharmaceuticals that he could not afford but which were needed to treat his chronic medical conditions; damages resulting from mental distress; unliquidated compensatory damages; and treble damages for willful misconduct pursuant to RICO. Mr. Davidson also prayed for prejudgment interest; reasonable attorneys fees and costs; and discretionary costs and other general relief. He demanded a trial by jury. Mr. Davidson attached nine exhibits to his complaint to support his allegations.

In January 2008, Defendants filed a motion to dismiss Mr. Davidson's action under Tennessee Rules of Civil Procedure 12.02(1) and (6). In their motion, Defendants asserted Mr. Davidson's claims based on allegations of deliberate misrepresentation and fraud were barred by collateral estoppel and lack of standing. They further asserted that the court lacked subject matter jurisdiction to adjudicate any claims attempting to reach the State treasury, and that Mr. Davidson's claims under 42 U.S.C. § 1983 were barred by the one-year statute of limitations. Defendants asserted that they had qualified immunity from an award of damages where they had not violated any clearly established law, and that injunctive relief could not be issued against State officials in their individual capacity. Defendants further asserted Mr. Davidson had failed to plead his claim of fraud with sufficient particularity; that he had failed to state a claim for constructive fraud; and that there is no private cause of action to recover damages for violation of the Tennessee Constitution by a State officer. Additionally, Defendants asserted Mr. Davidson had failed to state a claim under the Tennessee Human Rights Act where he did not allege harassment based on race, color, religion, ancestry or national origin; and that he had failed to state a claim under RICO where he did not sufficiently plead and set-forth the pre-requisites of a RICO civil claim and where he failed to demonstrate a causal connection between the alleged acts and an injury to his business or property. Defendants also asserted that Mr. Davidson failed to state a claim for violation of his free speech rights or for any breach of a fiduciary duty. Finally, Defendants asserted Mr. Davidson had failed to properly exhaust his administrative remedies under the Administrative Procedures Act, and that he had failed to state a claim for deprivation of due process rights.

In March 2008, Mr. Davidson filed a motion to disqualify the Attorney General from representing Defendants on the grounds that it was foreseeable that the Attorney General would be called as a witness at the trial of the matter. He also filed a response to Defendants' motion to dismiss. The trial court heard Mr. Davidson's motion to disqualify the Attorney General on April 4, 2008, and held the motion in abeyance pending judgment on Defendants' motion to dismiss. Following a hearing on May 2, 2008, the trial court granted Defendants' motion to dismiss. By order entered May 15, 2008, the trial court dismissed the matter for failure to state a claim under Tennessee Rule of Civil Procedure 12.02(6). The trial court incorporated into its order the reasoning and legal authorities set forth in Defendants' memorandum and reply memorandum in support of their motion to dismiss. The trial court also dismissed Mr. Davidson's motion to disqualify the Attorney General as counsel for Defendants as moot, and...