Sewell, et al., v. Amerigroup Tennessee, Inc.,
Filing
67
MEMORANDUM OPINION OF THE COURT. Signed by Chief Judge Waverly D. Crenshaw, Jr on 12/14/2018. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(am)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
C.S. SEWELL, M.D. P.C. and
CHRISTOPHER SEWELL, M.D.,
Plaintiffs,
v.
AMERIGROUP TENNESSEE, INC.
d/b/a AMERIGROUP COMMUNITY
CARE,
Defendant.
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NO. 2:17-cv-00062
CHIEF JUDGE CRENSHAW
MEMORANDUM OPINION
Christopher Sewell, M.D. (“Dr. Sewell”), and his medical practice C.S. Sewell, M.D. P.C.
(together “Sewell”), bring this action against Amerigroup Tennessee, Inc. d/b/a Amerigroup
Community Care (“Amerigroup”) for declaratory and injunctive relief, as well as damages,
alleging violations of the Sherman Antitrust Act, 42 U.S.C § 1983, the United States and Tennessee
Constitutions, and various Tennessee state laws. Before the Court is Amerigroup’s Motion to
Dismiss. (Doc. No. 43.) As explained below, the motion will be granted in part and denied in part.
Before proceeding, the Court notes that, despite the litany of issues presented in this case, at heart,
the matter is a simple billing dispute.
I. Factual Allegations
Dr. Sewell provides primary care medical services to patients in Jamestown, Tennessee.
(Doc. No. 42 at 1.) A significant portion of Dr. Sewell’s patient pool includes persons who are
participants in TennCare, Tennessee’s Medicaid program. (Id. at 2-3.) Dr. Sewell provides his
patients, including TennCare patients, with a variety of preventive and primary care services,
including allergy care and allergen immunotherapy. (Id. at 3.) Moreover, in order to administer
these allergy care services, Dr. Sewell contracts with United Allergy Services (“UAS”), which
provides auxiliary personnel to assist him in performing certain ancillary allergy services such as
application of the skin-prick test. (Id. at 6.)
Defendant Amerigroup operates as a health insurance and managed care organization
(“MCO”) that is authorized to arrange for the provision and reimbursement of healthcare services
provided to patients enrolled in TennCare. (Id. at 2.) Prior to 2016, Dr. Sewell submitted claims
for reimbursement for allergy-related services that he provided to TennCare patients, and
Amerigroup promptly paid those allergy-related reimbursement claims. (Id. at 5.) However,
starting in 2016, Amerigroup began denying allergy-related claims Dr. Sewell submitted for
reimbursement. (Id.) Sewell alleges that Amerigroup, in concert with its affiliates, began
systematically rejecting reimbursement for primary care physicians who provided allergy-related
services with the help of UAS. (Id. at 7.) In conjunction with these systematic reimbursement
denials, Amerigroup also opened an investigation into Dr. Sewell. (Id.) Sewell alleges that (1)
Amerigroup launched the investigation to find a pretext to support its denial of the allergy care
reimbursement claims; and (2) Amerigroup communicated with its corporate parent, Anthem, Inc.,
and other affiliates to develop such a pretext. 1 (Id. at 7-8.) In pursuit of this effort, Amerigroup
relied upon Office of Inspector General (“OIG”) Advisory Opinion No. 11-17 (the “Opinion”),
which questioned whether the provision of allergy related medical services by primary care
physicians, like Dr. Sewell, amounted to improper “inappropriate use of allergy services.” (Id. at
8.)
1
The Court takes judicial notice of Anthem Inc.’s 2017 Annual Report (Doc. No. 44-1),
which states that Amerigroup and its affiliates are subsidiaries of Anthem, Inc. See Campbell v.
Nationstar Mortg., 611 F. App’x 288, 291 (6th Cir. 2011) (“In addition to the allegations in the
complaint, [the Court] may also consider other materials that are integral to the complaint, are
public records, or are otherwise appropriate for the taking of judicial notice.”)
2
Sewell alleges that, after internal discussions and communications with other Tennessee
MCOs, Amerigroup justified its reimbursement denials on the basis that Dr. Sewell’s allergyrelated services and contract with UAS violated the Opinion. (Id.) Moreover, in September 2016,
Sewell alleges that Amerigroup attempted to convince its MCO competitors, United Healthcare
(“United”) and BlueCare, to adopt this same position regarding eliminating reimbursement for
allergy testing or immunotherapy at the primary care level. (Id. at 9.) Sewell alleges that
Amerigroup did so (1) during a Healthcare Fraud Working Group meeting; (2) in a meeting at
BlueCare’s office in Chattanooga; and (3) in a subsequent monthly coordination call between the
MCOs. (Id.)
According to the Amended Complaint, Amerigroup met with TennCare in September 2016
and discussed its concerns regarding Dr. Sewell and other primary care physicians offering allergy
services in conjunction with UAS. (Id.) Sewell alleges that, through its actions, Amerigroup placed
considerable pressure on primary care physicians offering these allergy services, successfully
forcing at least one primary care provider to stop working with UAS and cease billing for such
services. (Id. at 10.) In addition to the above-referenced conduct, another part of this alleged
pressure included Amerigroup’s manipulation of the reimbursement appeals process. (Id. at 1011.) Sewell appealed each of the denied allergy care reimbursement claims through the normal
appeals process, but Amerigroup (1) initially never responded; and (2) incorrectly stated in its
appeals response that the reimbursement denials were based on Dr. Sewell’s failure to obtain
written approval before subcontracting the provision of the allergy-related services to UAS. (Id. at
11.) Dr. Sewell refuted Amerigroup’s claim that he subcontracted the provision of these allergyrelated medical services to UAS, arguing that UAS only provided certain services that were
ancillary to the allergy treatments. (Id. at 12.)
3
Around this same period of time, Amerigroup allegedly began reaching out to boardcertified allergists, seeking a consensus on a “standard of care” that would recommend primary
care providers cease providing allergy testing and allergy immunotherapy and reserve those
services to specialists. (Id.) Sewell alleges that, in March 2017, Amerigroup again met with
TennCare to discuss terminating contracts with primary care physicians using UAS, based on the
alleged “quality risk” associated with primary care physicians, rather than allergists, providing
allergy care. (Id.) TennCare voiced reservations about consequential network deficiencies that
could arise from the proposed terminations, as board-certified allergists were not prevalent its
network (specifically, the closest allergist to Dr. Sewell was 90 to 100 miles away). (Id. at 13.) At
a subsequent meeting in April 2017, Amerigroup decided to defer termination. (Id.) In the
meantime, Amerigroup allegedly continued its reimbursement denials, maintaining that Dr.
Sewell’s allergy treatments were essentially being performed by UAS under an undisclosed
subcontract without prior approval from Amerigroup and TennCare. (Id.)
Despite Amerigroup’s alleged efforts, including the sharing of information with other
MCOs and board-certified allergists, TennCare ultimately decided not to take any adverse action
with respect to Dr. Sewell’s continued provision of allergy care. (Id. at 14.) Thereafter, in June
2017, Dr. Sewell, along with another Tennessee primary care provider, made a complaint to the
Tennessee Department of Commerce and Insurance (“TDCI”) regarding Amerigroup’s conduct.
(Id.) Subsequently, before formally responding to the TDCI complaint, Amerigroup sent Dr.
Sewell a letter, detailing his alleged reimbursement violations, and threatening sanctions, including
automatically recouping all previously paid allergy care claims and terminating him from the
Amerigroup network. (Id. at 15.) Amerigroup’s letter formed the basis for a second complaint by
Dr. Sewell to the TDCI in August 2017. (Id.) In September 2017, in response to Dr. Sewell’s
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complaints, the TDCI informed Dr. Sewell that he was free to pursue his own legal and contractual
remedies outside of the administrative process. (Id. at 16.)
Sewell alleges that, as a result of Amerigroup’s actions, it suffered damages and lost the
ability to treat Amerigroup patients with allergy problems. (Id. at 17.) Sewell also claims that
consumers have been harmed because there are no available alternatives for certain necessary
healthcare services in North Central Tennessee, including allergy testing and immunotherapy. (Id.)
Sewell raises state law claims for breach of contract, violation of Tennessee’s Prompt Payment
Act, and tortious interference with a business relationship. (Id. at 18-23.) Moreover, Sewell raises
a Sherman Antitrust Act claim, asserting that Amerigroup combined, conspired or attempted to
conspire with competitor MCOs and board-certified allergists to restrict competition for allergy
testing and immunotherapy services in North Central Tennessee and other areas within Tennessee.
(Id. at 23.) Finally, Sewell raises claims under the Declaratory Judgment Act, 42 U.S.C. § 1983,
and the U.S. and Tennessee Constitutions. (Id. at 26-30.)
II. Standard of Review
For purposes of a motion to dismiss, the Court must take all of the factual allegations in
the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive a motion to dismiss,
a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that
is plausible on its face. Id. A claim has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged. Id. Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice. Id. When there are well-pleaded factual allegations, a court should
assume their veracity and then determine whether they plausibly give rise to an entitlement to
relief. Id. at 679. A legal conclusion couched as a factual allegation need not be accepted as true
5
on a motion to dismiss, nor are recitations of the elements of a cause of action sufficient. Fritz v.
Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010).
III. Analysis
A. Sherman Antitrust Act Claim
Amerigroup first moves to dismiss Sewell’s Sherman Antitrust Act claim, arguing that
Sewell fails to (1) allege an actual agreement or concerted action to restrain trade; (2) define the
relevant product or geographic market implicated by the alleged anticompetitive conduct; and (3)
establish an antitrust injury. (Doc. No. 44 at 9-20.) Sewell responds that there are sufficient facts,
as set out in the Amended Complaint, demonstrating that Amerigroup engaged in a conspiracy to
restrain the provision of allergy services in North Central Tennessee. (Doc. No. 56 at 13-23.)
Section One of the Sherman Act, 15 U.S.C. § 1, prohibits unreasonable contracts,
combinations, and conspiracies in restraint of trade. Leegin Creative Leather Prods., Inc. v. PSKS,
Inc., 551 U.S. 877, 885 (2007). To state a Section One claim, a plaintiff must plead more than a
restraint of trade; it must plead an agreement in restraint of trade. Twombly, 550 U.S. at 553
(“[T]he crucial question is whether the challenged anticompetitive conduct stems from
independent decision or from an agreement, tacit or express.”). An agreement, either tacit or
express, may ultimately be proven either by direct evidence of communications between the
defendants or by circumstantial evidence of conduct that, in the context, negates the likelihood of
independent action and raises an inference of coordination. Brown v. Pro Football, Inc., 518 U.S.
231, 241 (1996).
When asserting direct evidence of an agreement “these allegations must be specific enough
to establish the relevant who, what, where, when, how or why.” Carrier Corp. v. Outokumpu Oyj,
673 F.3d 430, 445 (6th Cir. 2012). Stray remarks speaking directly of agreement are insufficient
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for purposes of a motion to dismiss. In re Travel Agent Comm’n Antitrust Litig., 583 F.3d 896,
903 (6th Cir. 2009) (quoting Twombly, 550 U.S. at 564). The relevant question when considering
circumstantial evidence of a conspiracy is “[d]o the factual allegations point to nothing more than
parallel conduct of the sort that is the product of independent action, or do they plausibly raise an
inference of unlawful agreement.” Erie Cty., Ohio v. Morton Salt, Inc., 702 F.3d 860, 869 (6th Cir.
2012).
Sewell stops short of directly alleging that Amerigroup, other MCOs, and board-certified
allergists agreed with one another to exclude primary care physicians from providing allergy
testing and immunotherapy services. Sewell alleges, in pertinent part, that Amerigroup (1)
“attempted to convince” United Healthcare and BlueCare (its competitor MCOs) to adopt the same
position regarding eliminating reimbursement for allergy testing and immunotherapy at the
primary care level; and (2) met with the competitor MCOs at several junctures (on conference
calls, at BlueCare’s office, at a workgroup) to “attempt to persuade” them to adopt this position.
(Doc. No. 42 at 9.) Sewell’s most direct allegation on the issue is that Amerigroup contacted
competitor MCOs, board-certified allergists, and third parties in an “attempt to persuade, entice,
or coerce them not to do business with Dr. Sewell or other primary care physicians, or to fix prices
to competitively disadvantage them to discourage competition in the market.” (Id. at 24.) Because
Sewell does not directly or indirectly allege facts from which to infer an actual agreement between
Amerigroup, other MCOs (United Healthcare and BlueCare), and board-certified allergists, the
Court concludes that his allegations are legally insufficient to establish the “relevant who, what,
where when, how or why” necessary to proceed on a direct evidence theory. Carrier Corp., 673 F.
3d at 445.
7
The Court must therefore consider whether Sewell has alleged sufficient circumstantial
facts that, in context, negate the likelihood of independent action and raise an inference of
coordination. Erie Cty., Ohio, 702 F.3d at 868. The Court is also not convinced that Sewell has
alleged sufficient circumstantial facts to plausibly raise an inference of an unlawful agreement. In
essence, Sewell has alleged that Amerigroup (1) created a pretext, in the form of the Opinion and
other safety concerns, to exclude primary care physicians from providing allergy medical services;
and (2) shared this pretextual information with its MCO competitors (United and BlueCare) and
TennCare in an attempt to persuade them to adopt this position. (See Doc. No. 42 at 8-17.)
However, there are no circumstantial allegations regarding the results of these efforts, namely,
whether United and BlueCare adopted the position urged by Amerigroup. There are no allegations
that (1) United and BlueCare actually ceased reimbursement for allergy medical services provided
by primary care physicians; (2) TennCare took any action on the issue; or (3) the board-certified
allergists’ “standard of care” was ever actually promulgated. Without any indication that
Amerigroup’s alleged actions resulted in Amerigroup, United, and BlueCare adopting the same
position regarding reimbursement, the Court is prevented from making an inference that an
unlawful agreement was actually reached. Erie Cty., Ohio, 702 F.3d at 869.
To be sure, Sewell alleges a host of actions on the part of Amerigroup supporting its own
decision to cease reimbursement. In its response to Amerigroup’s motion to dismiss, Sewell again
focuses on Amerigroup’s actions, such as its use of the Opinion to deny Dr. Sewell reimbursement,
its “abnormal behavior” in denying reimbursement appeals, and its inconsistent reasons for
denying reimbursement. Nonetheless, again, what is missing from Sewell’s Amended Complaint,
and its response, is any allegation or circumstantial evidence that its efforts in enlisting boardcertified allergists, the competitor MCOs or TennCare were actually successful and resulted in the
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cessation of reimbursement activity among the various parties. Accordingly, because the Court
cannot plausibly draw an inference that an unlawful agreement was reached, Sewell’s Sherman
Antitrust Act claim will be dismissed.
B. 42 U.S.C. § 1983 Claim
Amerigroup next contends that Sewell’s 42 U.S.C. § 1983 claim fails because it does not
qualify as a state actor. (Doc. No. 44 at 22.) Amerigroup argues that, whether it or its actions are
viewed under the public function, state compulsion, nexus, or entwinement tests, there is no
question that it is not a state actor. (Id. at 22-27.) Amerigroup also asserts that, even if it qualifies
as a state actor, Sewell does not have a federal enforceable right under § 1983. (Id. at 27-30.)
“A § 1983 claim must satisfy two elements (1) the deprivation of a right secured by the
Constitution or laws of the United States; and (2) the deprivation was caused by a person acting
under color of state law.” Ellison v. Garbarino, 48 F.3d 192, 194 (6th Cir. 1995). A plaintiff may
not proceed under § 1983 against a private party “no matter how discriminatory or wrongful” the
party’s conduct. Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50 (1999).
Nevertheless, there are circumstances under which private persons may, by their action,
become “state actors” for § 1983 purposes. Tahfs v. Proctor, 316 F.3d 584, 590 (6th Cir. 2003). A
“private party can fairly be said to be a state actor if: (1) the deprivation complained of was ‘caused
by the exercise of some right or privilege created by the State’ and (2) the offending party ‘acted
together with or has obtained significant aid from state officials, or because his conduct is
otherwise chargeable to the State.’” Id. (citation omitted). The Sixth Circuit has recognized “as
many as four tests to aid courts in determining whether challenged conduct is “fairly attributable”
to the State: (1) the public function test; (2) the state compulsion test; (3) the symbiotic relationship
or nexus test; and (4) the entwinement test.” Marie v. Am. Red Cross, 771 F.3d 344, 362 (6th Cir.
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2014). A plaintiff need only show state action under one of the tests in order to proceed with his
claim. Wilcher v. City of Akron, 498 F.3d 516, 519 (6th Cir. 2007).
Here, Amerigroup argues that, under any of the four state actor tests, the result is the
same—it does not qualify as a state actor. (Doc. No. 44 at 22-27.) Sewell asserts that Amerigroup
qualifies as a state actor under the nexus test based on its close relationship with Tennessee in
administering the TennCare program. (Doc. No. 56 at 26-27.) Accordingly, the parties suggest that
the Court must determine whether a MCO qualifies as a state actor under § 1983. However, the
Court need not do so because whether Sewell has an enforceable right under § 1983 is dispositive.
As the basis for its § 1983 claim, Sewell relies on the antidiscrimination provision of the
Medicaid Act, 42 U.S.C. § 1396u-2(b)(7), which provides that a Medicaid managed care
organization, like Amerigroup, shall not discriminate with respect to participation or
reimbursement of providers who act within the scope of the provider’s license. (Doc. No. 56 at 2829.) Amerigroup, in its motion, argues that the antidiscrimination prohibition set out in § 1396u2(b)(7) is not an enforceable right, and, therefore, Sewell has failed to state a valid § 1983 claim.
(Doc. No. 44 at 27-28.) The Court agrees.
A plaintiff asserting a claim under § 1983 must demonstrate that it has enforceable rights
secured by a federal statute. See Appalachian Reg’l Healthcare, Inc. v. Coventry Health & Life
Ins. Co., 214 F. Supp. 3d 606, 614 (E.D. Ky. 2016) (“Only violations of rights, not laws, give rise
to § 1983 actions.”); Medevac MidAtlantic, LLC v. Keystone Mercy Health Plan, 817 F. Supp. 2d
515, 521 (E.D. Pa. 2011) (“Section 1983 provides a remedy for deprivation of rights secured by
federal statute, not for violations of federal law.”). Under the Medicaid Act’s antidiscrimination
provision, 42 U.S.C. § 1396u-2(b)(7), a Medicaid managed care organization is prohibited from
discriminating “with respect to participation, reimbursement, or indemnification as to any provider
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who is acting within the scope of the provider’s license or certification under applicable State law,
solely on the basis of such license or certification.” 42 U.S.C. § 1396u-2(b)(7). The Medicaid
implementing regulations require that “provider selection policies and procedures . . . must not
discriminate against particular providers that serve high-risk populations or specialize in
conditions that require costly treatment.” 42 C.F.R. § 438.214(c).
“The question [of] whether a statute creates a cause of action, either expressly or by
implication, is basically a matter of statutory construction . . . [and] what must ultimately be
determined is whether Congress intended to create the private remedy asserted.” Transamerica
Mort. Advisors, Inc. v. Lewis, 444 U.S. 11, 16 (1979) (citing Touche Ross & Co. v. Redington,
442 U.S. 560, 568 (1979)). In the absence of express statutory authorization, Supreme Court
precedent reflects continued reluctance to create private causes of action in the absence of clear
direction from Congress. See Touche Ross & Co., 442 U.S. at 560 (noting the Court will create a
private right of action only upon a showing of affirmative congressional intent to do so) (emphasis
added).
The Supreme Court, in considering the Medicaid Act, has expressed significant doubt that
providers, like Dr. Sewell, are intended beneficiaries or able to maintain a § 1983 cause of action
under the statute. See Armstrong v. Exceptional Child Center, Inc., 135 S. Ct. 1378, 1387-88
(2015). The Supreme Court, in considering the statute, opined:
We doubt, to begin with, that providers are intended beneficiaries (as opposed to
mere incidental beneficiaries) of the Medicaid agreement, which was concluded for
the benefit of the infirm whom the providers were to serve, rather than for the
benefit of the providers themselves. More fundamentally, however, the modern
jurisprudence permitting intended beneficiaries to sue does not generally apply to
contracts between a private party and the government, much less to contracts
between two governments. Our precedents establish that a private right of action
under federal law is not created by mere implication, but must be unambiguously
conferred. Nothing in the Medicaid Act suggests that Congress meant to change
that . . .
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Id. (citations omitted). Further, in Armstrong, the Supreme Court reaffirmed its previous holding
that for a statute to create private rights “its text must be phrased in terms of the persons benefited.”
See Gonzaga Univ. v. Doe, 536 U.S. 274, 283 (2002). Courts addressing the Medicaid Act have
overwhelmingly held that its provisions do not afford a provider enforceable rights. See Med
Diagnostic Labs., LLC v. Horizon Healthcare Servs., Inc., No. 2:18-616 (WJM), 2018 WL
1932707, at *2 (D.N.J. Apr. 24, 2018) (dismissing provider’s § 1396u-2(b)(7) claim because the
provision did not provide a right of action); see also Medevac MidAtlantic, LLC, 817 F. Supp. 2d
at 521-27 (holding that emergency service provider did not state a § 1983 claim against managed
care plan because provisions of the Medicaid Act which provider sought to enforce did not confer
on providers individual enforceable rights); Appalachian Reg’l Healthcare, Inc., 214 F. Supp. 3d
at 617 (same); Hawaii Coal. for Health v. Hawaii, Dep’t of Human Servs., 576 F. Supp. 2d 1114,
1123 (D. Hawaii 2008) (dismissing plaintiff’s claim premised on a violation of § 1396u-2(b)(5)
with prejudice because the language of the statute did not indicate an intent to confer any specific,
enforceable rights to individuals).
In considering § 1396u-2(b)(7), the Court, apprised of the relevant authority, concludes
that the Medicaid antidiscrimination provision does not create a private federal cause of action
enforceable through § 1983. The provision is phrased in terms of benefitting Medicaid insured,
rather than providers. See Armstrong, 135 S. Ct. at 1387-88; Med Diagnostic Labs, LLC, 2018
WL 1932707 at *2. Further, the provision is aimed at giving MCOs, like Amerigroup, the
parameters to manage their networks to meet the needs of their enrollees, as opposed to providing
providers, like Sewell, a private right of action. See 42 U.S.C. § 1396u-2(b)(7). Thus, with regard
to providers like Sewell, there is no express unambiguous indication that Congress created a right
of action to enforce the provision. See Touche Ross & Co., 442 U.S. at 560.
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Further, Sewell cannot rely on the Medicaid Act antidiscrimination provision’s
implementing regulation, as the federal regulation alone cannot create a private cause of action
unless the enabling statute creates such right or else authorizes the appropriate regulatory agency
to do so. See Alexander v. Sandoval, 532 U.S. 275, 291 (2001) (“Language in a regulation may
invoke a private right of action that Congress through statutory text created, but it may not create
a right that Congress has not.”). Accordingly, because there is no enforceable right, Sewell has
failed to state a valid § 1983 claim. 2 The Court will dismiss Sewell’s § 1983 claim.
C. First Amendment Retaliation Claim
Amerigroup also argues that Sewell fails to state a First Amendment retaliation claim,
under both the United States and Tennessee Constitutions, because: (1) it is not a state actor; (2)
Sewell has not alleged that Amerigroup’s purported retaliation impaired its ability to continue its
free speech activity; and (3) the First Amendment allegations fail to demonstrate any causal
connection between the alleged protected conduct and the retaliatory conduct. (Doc. No. 44 at 2830.) Sewell responds that: (1) Amerigroup qualifies as a state actor; and (2) Amerigroup’s conduct
in threatening to “sanction” Dr. Sewell for filing complaints with the TDIC states a First
Amendment retaliation claim sufficient to survive the motion to dismiss. (Doc. No. 56 at 29-31.)
A plaintiff may bring a First Amendment retaliation claim under 42 U.S.C. § 1983. See
Valot v. Southeast Local Sch. Dist. Bd. of Educ., 107 F.3d 1220, 1226 (6th Cir. 1997). A plaintiff
must first make a prima facie case of retaliation,” which has three elements: “(1) he engaged in
constitutionally protected speech or conduct; (2) an adverse action was taken against him that
2
Sewell cites to Judge Haynes’ 2015 decision in Snodgrass-King Pediatric Dental Assocs.,
P.C. v. DentaQuest USA Ins. Co., Inc., 79 F. Supp. 3d 753, 767-68 (M.D. Tenn. 2015), for the
proposition that § 1396u-2(b)(7) creates an enforceable right of action. However, that opinion
predated the Supreme Court’s opinion in Armstrong that clarified this issue. Accordingly, the
Snodgrass decision is not outcome determinative.
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would deter a person of ordinary firmness from continuing to engage in that conduct; [and] (3)
there is a causal connection between elements one and two—that is, the adverse action was
motivated at least in part by his protected conduct.” Dye v. Office of the Racing Comm’n, 702
F.3d 286, 294 (6th Cir. 2012); see also Thaddeus–X v. Blatter, 175 F.3d 378, 394 (6th Cir. 1999)
(en banc).
The Court need not consider whether Amerigroup is a state actor for purposes of Sewell’s
First Amendment retaliation claim, as the Amended Complaint fails to set out what, if any, First
Amendment impairment was suffered. Sewell alleges that the first letter to the TDIC caused
Amerigroup to retaliate by sending the responsive letter threatening monetary sanctions and
Amerigroup’s responsive letter constituted First Amendment retaliation. (Doc. No. 42 at 28-29.)
However, as noted in the Amended Complaint, Dr. Sewell subsequently sent a second complaint
letter to the TDIC on August 23, 2017 regarding Amerigroup’s conduct, its threatening “sanctions”
letter, and other improper behavior. (Id. at 15.) Sewell’s continued exercise of his First
Amendment rights in the face of Amerigroup’s allegedly adverse action belies any impairment of
Sewell’s First Amendment rights. Accordingly, without impairment, Sewell cannot maintain a
First Amendment retaliation claim. See Marcilis-Bey v. Klujeak, 110 F.3d 64, 64 (6th Cir. 1997)
(unpublished) (holding that plaintiff failed to state a claim of First Amendment retaliation because
he had not shown any adverse consequences resulting from his First Amendment activity); see
also Am. Civil Liberties Union of Maryland, Inc. v. Wicomico Cty., Md., 999 F.2d 780, 785 (4th
Cir. 1993) (“A plaintiff alleging [retaliation] in violation of [his] constitutional rights must
demonstrate, inter alia, that [he] suffered some adversity in response to [his] exercise of protected
rights.”) Put plainly, here, Sewell has not shown any impairment of his First Amendment rights
nor any actual adversity because of the initial complaint to the TDIC (the identified First
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Amendment activity). Although Sewell alleges that the letter from Amerigroup threatening
sanctions constituted adverse consequences, there is no allegation that Amerigroup imposed the
monetary sanctions. Therefore, because there has been no showing of any impairment or actual
adversity in relation to Sewell’s First Amendment rights, Sewell has failed to state a claim for First
Amendment retaliation.
D. Tortious Interference with a Business Relationship
Amerigroup asserts that Sewell’s claim for tortious interference with a business
relationship must be dismissed because (1) there are no allegations that Amerigroup acted with the
intent to cause third parties to cease their business with Sewell; and (2) there are no allegations
that Sewell actually lost business from any particular patient, vendor, or other business partner.
(Doc. No. 44 at 21-22.) Sewell responds that the allegations in its Amended Complaint clearly
show that Amerigroup engaged in wrongful conduct, including the denial of reimbursement for
allergy care, with the intent of preventing it from offering allergy care, thereby destroying its
business relationships with patients, other MCOs, and UAS. (Doc. No. 56 at 24-25.) Sewell alleges
that Amerigroup’s conduct was not accidental, but, rather, designed to inflict damage and disrupt
various business relationships. (Id. at 25.) Moreover, Sewell contends that this conduct had a real,
substantial economic effect, resulting in reduced services supplied to patients and damage to its
business relationships with BlueCare and United. (Id.)
The tort of interference with business relationships in Tennessee requires that a plaintiff
demonstrate:
(1) an existing business relationship with specific third parties or a prospective
relationship with an identifiable class of third persons; (2) the defendant’s
knowledge of that relationship and not a mere awareness of the plaintiff’s business
dealings with others in general; (3) the defendant’s intent to cause the breach or
termination of the business relationship; (4) the defendant’s improper motive or
improper means; and finally, (5) damages resulting from the tortuous interference.
15
Brown v. Nabors, No. 3:09-cv-0927, 2011 WL 2443882, at 17-18 (M.D. Tenn. June 15, 2011)
(citing Trau–Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 701 (Tenn. 2002)). With regard
to the requisite improper motive, the Tennessee Supreme Court has elaborated:
It is clear that a determination of whether a defendant acted “improperly” or
possessed an “improper” motive is dependent on the particular facts and
circumstances of a given case, and as a result, a precise, all-encompassing definition
of the term “improper” is neither possible nor helpful. However, with regard to
improper motive, we require that the plaintiff demonstrate that the defendant’s
predominant purpose was to injure the plaintiff.
Moreover, in the attempt to provide further guidance, we cite the following methods
as some examples of improper interference: those means that are illegal or
independently tortious, such as violations of statutes, regulations, or recognized
common-law rules; violence, threats or intimidation, bribery, unfounded litigation,
fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of
inside or confidential information, or breach of a fiduciary relationship; and those
methods that violate an established standard of a trade or profession, or otherwise
involve unethical conduct, such as sharp dealing, overreaching, or unfair
competition.
Trau–Med of Am., Inc, 71 S.W.3d at 701 n. 5.
In the instant case, Sewell has pleaded both improper motive and actual damages resulting
from the tortuous interference. First, Sewell alleges that Amerigroup knew of its business
relationships with its patients, other MCOs, and UAS. (Doc. No. 42 at 22.) Further, Sewell
specifically alleges that Amerigroup interfered with those business relationships by orchestrating
the false denial of reimbursement claims for allergy care (including on the basis of Sewell’s
contractual relationship with UAS) and urging United and BlueCare to adopt a similar position.
(Id. at 9-14.) As a result of Amerigroup’s alleged conduct, Sewell contends that it suffered
substantial economic harm in the form of revenue reduction, a decreased patient pool, and a
strained relationship with UAS. (Doc. No. 56 at 25.) Sewell also alleges that Amerigroup’s
predominant motive was to drive Sewell out of providing allergy care to patients in order to control
16
and limit its own expenses. (Doc. No. 42 at 17-18.) Viewing these factual allegations in a light
most favorable to the plaintiff, the Court finds that Sewell has sufficiently stated a claim for
tortious interference with a business relationship.
E. Declaratory Judgment Claim
Finally, Amerigroup argues that, because all of Sewell’s substantive claims fail, its
Declaratory Judgement Act claim likewise fails as a matter of law. (Doc. No. 44 at 30.) Sewell
argues that if at least one of its substantive claims survives Amerigroup’s Rule 12(b)(6) motion,
its Declaratory Judgment claim is viable. (Doc. No. 56 at 31.)
The Declaratory Judgement Act is “‘an enabling Act, which confers a discretion on the
courts rather than an absolute right upon the litigant.’” Wilton v. Seven Falls Co., 515 U.S. 277,
287 (1995) (quoting Public Serv. Comm’n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). In
deciding whether to entertain a declaratory judgment claim, the court should consider: (1) whether
the judgment would settle the controversy; (2) whether the declaratory judgment action would
serve a useful purpose in clarifying the legal relations at issue; (3) whether the declaratory remedy
is being used merely for the purpose of procedural fencing or to provide an arena for a race for res
judicata; (4) whether the use of a declaratory action would increase the friction between federal
and state courts or improperly encroach on state jurisdiction; and (5) whether there is an alternative
remedy that is better or more effective. Bituminous Casualty Corp. v. J & L Lumber Co., 373 F.3d
807, 813 (6th Cir. 2004).
As a preliminary matter, the Court notes that, contrary to Amerigroup’s argument,
substantive claims remain in this action, including Sewell’s claims for breach of contract, tortious
interference with a business relationship, and violation of Tennessee’s Prompt Payment Act.
Nonetheless, neither Amerigroup nor Sewell address the above-referenced factors. Turning to
17
these factors, the Court first finds that a declaratory judgment could settle the controversy as to the
appropriateness of Amerigroup’s reimbursement denials. Therefore, this first factor weighs in
favor of exercising jurisdiction with regard to the declaratory judgment claim at issue because it
would settle the primary controversy between the parties (i.e., the billing dispute between Sewell
and Amerigroup). Accordingly, because the Court concludes that the judgment would settle the
primary controversy between Amerigroup and Sewell, the judgment would also necessarily serve
a useful purpose in clarifying the legal relations at issue. Scottsdale Ins. Co. v. Flowers, 513 F.3d
546 (6th Cir. 2008) (“[I]t is almost always the case that if a declaratory judgment will settle the
controversy, then it will clarify the legal relations in issue.”). Deciding this issue will allow the
Court to better gauge the merits of Sewell’s remaining state law claims, all of which are based on
Amerigroup’s allegedly unlawful actions in denying allergy-related reimbursements. Thus, the
Court finds that this factor weighs in favor of not dismissing the Declaratory Judgment Act claim.
The Court finds Sewell has not asserted his Declaratory Judgment Act claim as an attempt
at procedural fencing or to win a race for res judiciata. This third factor is meant to resist
jurisdiction for “declaratory plaintiffs who file their suits mere days or weeks before the coercive
suits filed by a ‘natural plaintiff’ and who seem to have done so for the purpose of acquiring a
favorable forum.” AmSouth Bank v. Dale, 386 F.3d 763, 788 (6th Cir. 2004). “The question is . .
. whether the declaratory plaintiff has filed in an attempt to get her choice of forum by filing first.”
Id. at 789. Amerigroup, as opposed to Sewell, removed this action to the Court. (See Doc. No. 1.)
Thus, the Court concludes that there is no record evidence demonstrating that Sewell’s Declaratory
Judgment Act is an attempt at procedural fencing or to win a race for res judicata, and the third
factor weighs in Sewell’s favor.
18
Fourth, the Court believes that, given that there are no current state proceedings, a
declaratory judgment action here does not risk causing friction between federal and state courts,
nor creating an improper encroachment into state jurisdiction. See Bituminous Casualty Corp., 373
F.3d at 813. Finally, the Court considers whether there is a better, more effective alternative
remedy available. This “inquiry [ ] must be fact specific, involving consideration of the whole
package of options available to the federal declaratory plaintiff.” Scottsdale, 513 F.3d at 562. The
Court finds this factor also weighs in favor of Sewell, as Amerigroup does not suggest any
alternative remedy, and the Court does not find a ready alternative remedy.
In balancing the above-discussed factors, the Court finds that it is appropriate to exercise
jurisdiction over Sewell’s claim under the Declaratory Judgment Act.
IV. Conclusion
For the foregoing reasons, Amerigroup’s Motion to Dismiss (Doc. No. 55) is granted in
part and denied in part. 3
The Court will file an accompanying order.
___________________________________
WAVERLY D. CRENSHAW, JR.
CHIEF UNITED STATES DISTRICT JUDGE
3
Although not addressed by Amerigroup or Sewell, the Court notes that Sewell’s Amended
Complaint contains a confusing subsection entitled “Application for Temporary and Permanent
Injunctive Relief.” (Doc. No. 42 at 29.) In that section, Sewell asks for a temporary restraining
order, a preliminary injunction, and, upon conclusion of the instant action, a permanent injunction.
(Id.) The Court interprets the request for a permanent injunction as a prayer for injunctive relief.
However, as to the requests for a temporary restraining order or a preliminary injunction, Sewell
has filed no motions or memoranda with the Court seeking such relief, as required by the Court’s
Local Rules. See LR 7.01(a), 65.01.
19
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