Franks v. Sykes

• Decision Date: 01 May 2020
• Docket Number: No. W2018-00654-SC-R11-CV,W2018-00654-SC-R11-CV
• Citation: 600 S.W.3d 908
• Parties: Roy FRANKS et al. v. Tiffany SYKES et al.
• Court: Tennessee Supreme Court

600 S.W.3d 908

Roy FRANKS et al.

v.Tiffany SYKES et al.

No. W2018-00654-SC-R11-CV

Supreme Court of Tennessee, AT JACKSON.

November 6, 2019 Session

Filed May 1, 2020

Charles L. Holliday, Jackson, Tennessee, for the appellants, Roy Franks and Cindy Edwards.

Michael L. Mansfield, Jackson, Tennessee, for the appellees, Professional Account Services, Inc., Dyersburg Hospital Corporation, and Martin Hospital Corporation, individually and d/b/a Tennova Healthcare.

Ashley Holliday, Jackson, Tennessee, David Kozlowski, Columbia, Tennessee, and David Tarpley, Nashville, Tennessee, for the amicus curiae, Tennessee Alliance for Legal Services.

Sharon G. Lee, J., delivered the opinion of the Court, in which Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Holly Kirby, and Roger A. Page, JJ., joined.

Sharon G. Lee, J.

A person who is injured because of an unfair or deceptive act or practice that affects the conduct of any trade or commerce has a cause of action under the Tennessee Consumer Protection Act of 1977 ("the Act"), Tennessee Code Annotated sections 47-18-101 to -132 (2013 & Supp. 2019). We granted review to determine whether the Act applies to the business aspects of a health care provider's practice. The plaintiffs were injured in car accidents and received hospital medical services. The hospitals did not bill the plaintiffs' health insurance companies but filed hospital liens against the plaintiffs' claims for damages arising from the accidents. The hospital liens were for the full amount of the hospital bills with no reduction for the plaintiffs' health insurance benefits. The plaintiffs sued the hospitals, asserting the filing of undiscounted hospital liens was an unlawful practice under the Act. The trial court dismissed the case, ruling that the plaintiffs had failed to state a cause of action. The Court of Appeals affirmed, holding that the Act did not apply to a claim in which the underlying transactions involved medical treatment. We hold that the Act applies to health care providers when they are acting in their business capacities. The plaintiffs, who were consumers of medical services, may state a claim under the Act against the hospitals for conduct arising out of the hospitals' business practices. We reverse and remand this case to the trial court for further proceedings.

I.

In 2015, Roy Franks was treated at Tennova-Dyersburg, which previously did business as Dyersburg Regional Medical Center,¹ for injuries he received in a collision with a vehicle driven by Tiffany Sykes. Professional Account Services, Inc., acting for Dyersburg Hospital Corporation, filed a hospital lien against Franks' cause of action against Sykes for the full amount of the $3,812.92 hospital bill, and did not file a claim with Franks' health insurance company. In 2014, Cindy Edwards was injured in an automobile accident caused by the negligence of another driver. Edwards received medical treatment at Tennova-Martin, which previously did business as Volunteer Community Hospital.² Professional Account Services, Inc., acting for Martin Hospital Corporation, filed a hospital lien against Edwards' cause of action for the full amount of the $408 hospital bill, and did not file a claim with Edwards' health insurance company.

After Franks sued Sykes for his personal injuries, he amended his complaint to add Edwards as a plaintiff³ and as defendants, Professional Account Services, Inc., Dyersburg Hospital Corporation, and Martin Hospital Corporation, individually and d/b/a Tennova Healthcare ("the Hospitals"). Franks' amended complaint alleged that the Hospitals violated section 104(b)(12)⁴ of the Act by filing hospital liens under the Hospital Lien Act,⁵ Tennessee Code Annotated sections 29-22-101 to -107 (2012 & Supp. 2019), for the full, undiscounted amount of the Hospitals' charges rather than billing Franks' and Edwards' health insurance companies and accepting the negotiated discounted charges.

The trial court granted the Hospitals' motion for judgment on the pleadings and dismissed Franks' case for failure to state a claim under the Act.⁶ The trial court dismissed Edwards' claim for lack of venue.

The Court of Appeals affirmed the dismissal of Franks' case, noting that the filing of a hospital lien constitutes a debt collection activity, and the Act does not apply unless the underlying transaction is a consumer transaction as defined by the Act. Franks v. Sykes , No. W2018-00654-COA-R3-CV, 2018 WL 6253820, at *4–5 (Tenn. Ct. App. Nov. 28, 2018) (citing West v. Shelby Cnty. Healthcare Corp. , 459 S.W.3d 33, 37, 40 (Tenn. 2014) ; Wright v. Linebarger Googan Blair & Sampson, LLP , 782 F. Supp. 2d 593, 609 (W.D. Tenn. 2011) ). The Court of Appeals determined that "the underlying transaction—the treatment of Mr. Frank's [sic] injuries from a motor vehicle accident—epitomizes a doctor's practice of their [sic] profession" and therefore did not fit within the Act's definition of a "consumer transaction." Id. at *5. The Court of Appeals reversed the trial court's dismissal of Edwards' claim based on lack of venue and directed the trial court on remand to dismiss Edwards' case for failure to state a claim under the Act. Id. at *6. We granted Franks and Edwards' application for permission to appeal under Rule 11 of the Tennessee Rules of Appellate Procedure.

II.

We review a trial court's dismissal of a claim on a motion for judgment on the pleadings under Tennessee Rule of Civil Procedure 12.03 using the same standard that governs our review of a dismissal under Rule 12.02(6) for failure to state a claim. Young v. Barrow , 130 S.W.3d 59, 63 (Tenn. Ct. App. 2003) (citing Waller v. Bryan , 16 S.W.3d 770, 773 (Tenn. Ct. App. 1999) ). The standard of review requires us to review the trial court's ruling de novo with no presumption of correctness and "construe the complaint liberally in favor of" the plaintiffs, taking all allegations of fact as true. Id. (citing Stein v. Davidson Hotel Co. , 945 S.W.2d 714, 716 (Tenn. 1997) ); Waller , 16 S.W.3d at 773. We review a trial court's interpretation of a statute de novo with no presumption of correctness. In re Estate of Davis , 308 S.W.3d 832, 836–37 (Tenn. 2010) (citing In re Estate of Tanner , 295 S.W.3d 610, 613 (Tenn. 2009) ).

At issue is whether the Act applies to the business aspects of a health care provider's practice. Courts in jurisdictions throughout the country have held that their states' consumer protection laws apply to health care providers when the providers are acting in their business capacities.

The United States Supreme Court cleared the way for the business – professional distinction in Goldfarb v. Virginia State Bar , 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975). In Goldfarb , the Supreme Court held that the Virginia State Bar was not exempt from a price-fixing claim under the Sherman Act.⁷ Id. at 791–92, 95 S.Ct. 2004. Rejecting the argument that lawyers did not engage in "trade or commerce," the Supreme Court recognized that learned professionals, such as lawyers, engage in business roles as well as professional roles. Id. at 787–88, 95 S.Ct. 2004. In their business roles, lawyers are "subject to the same antitrust and consumer protection laws as any other business." Brookins v. Mote , 367 Mont. 193, 292 P.3d 347, 358 (2012) (quoting Goldfarb , 421 U.S. at 787–88, 95 S.Ct. 2004 ). Before Goldfarb , learned professionals were historically exempt from federal consumer protection laws because they were not considered to be engaged in trade or commerce. Brookins , 292 P.3d at 358 (citations omitted). The reasoning behind the exemption was that, unlike those practicing a trade or running a business, "competition is inconsistent with the practice of a profession because enhancing profit is not the goal of professional activities; the goal is to provide services necessary to the community." Id. (citations omitted) (internal quotation marks omitted).

The Goldfarb business distinction has been extended to other learned professionals, including health care providers. Brookins , 292 P.3d at 359 (citations omitted). See also Dorn v. McTigue , 157 F. Supp. 2d 37, 46–48 (D.D.C. 2001) (explaining that the consumer protection statute applies when a plaintiff establishes by clear and convincing evidence the threshold requirements of a merchant/consumer relationship and a nexus between the plaintiff's claim and the entrepreneurial aspects of the medical practice); Haynes v. Yale-New Haven Hosp. , 243 Conn. 17, 699 A.2d 964, 972–73 (1997) (finding that the consumer protection statute applied to the entrepreneurial and commercial aspects of medical and legal practices); Henderson v. Gandy , 280 Ga. 95, 623 S.E.2d 465, 468 (2005) (holding that the consumer protection statute applied to physicians in the entrepreneurial, commercial, or business aspects of medical practice); Barnett v. Mercy Health Partners-Lourdes, Inc. , 233 S.W.3d 723, 730 (Ky. Ct. App. 2007) (stating that the consumer protection act applied to business aspects of medical practice—e.g., advertising a particular treatment then failing to advise of risks or alternatives, financial arrangements intended to increase profits although possibly detrimental to patients, or advertising services at one price then charging a higher price); Darviris v. Petros , 442 Mass. 274, 812 N.E.2d 1188, 1193–94 (2004) (finding that the consumer protection statute may apply to entrepreneurial aspects of medical practice, including an informed consent claim, if the doctor's sole motive for selecting the treatment was financial gain); Nelson v. Ho , 222 Mich.App. 74, 564 N.W.2d 482, 486 (1997) (stating that the consumer protection statute applies to the entrepreneurial, commercial, or business aspects of medical practice, reasoning that since "the practice of medicine clearly has a business aspect, a blanket exemption for the learned professions would be improper"); Karlin v. IVF Am., Inc. , 93 N.Y.2d 282, 690 N.Y.S.2d 495, 712 N.E.2d 662, 666–68 (1999) (...