Snodgrass-King Pediatric Dental Assocs., P.C. v. Dentaquest USA Ins. Co.

• Decision Date: 12 January 2015
• Docket Number: Case No. 3:14–cv–654.
• Citation: 79 F.Supp.3d 753
• Parties: SNODGRASS–KING PEDIATRIC DENTAL ASSOCIATES, P.C. and David J. Snodgrass, D.D.S., Plaintiffs, v. DENTAQUEST USA INSURANCE CO., INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Tennessee

79 F.Supp.3d 753

SNODGRASS–KING PEDIATRIC DENTAL ASSOCIATES, P.C. and David J. Snodgrass, D.D.S., Plaintiffs

v.DENTAQUEST USA INSURANCE CO., INC., et al., Defendants.

Case No. 3:14–cv–654.

United States District Court, M.D. Tennessee, Nashville Division.

Signed Jan. 12, 2015.

Erin Palmer Polly, Gibeault C. Creson, John C. Hayworth, Robert Jackson Walker, Walker, Tipps & Malone, Nashville, TN, for Plaintiffs.

Russell B. Morgan, R. Brandon Bundren, Bradley Arant Boult Cummings LLP, Nashville, TN, for Defendants.

MEMORANDUM

WILLIAM J. HAYNES, JR., Senior District Judge.

Plaintiffs Snodgrass–King Pediatric Dental Associates, P.C. (“Snodgrass–King”), a Tennessee corporation, and David J. Snodgrass, D.D.S., a Tennessee citizen, filed this action under 42 U.S.C. § 1983 against the Defendant DentaQuest USA Insurance Company, Inc. (“DentaQuest USA”).¹ Plaintiffs assert claims for retaliation for their criticisms and legal actions against DentaQuest USA's affiliates in violation of their First Amendment rights of free speech and their rights under the Due Process and Equal Protection Clauses of the Fourteenth Amendment. Plaintiffs' claims arise out of the Defendant's exclusion of Plaintiffs from participation in Tennessee's Medicaid program that provides dental services to eligible citizens. Plaintiffs also assert a violation of the federal Medicaid statute for the Defendant's discrimination against Plaintiffs. Plaintiffs also assert claims for violation of Article I, Section 8 of the Tennessee Constitution, the state's equal protection provisions. Plaintiffs' other state law claims are for the unlawful delegation of State authority to Defendant DentaQuest USA to determine Medicaid participation, as well as for breach of contract and the duty of good faith and fair dealing. In essence, Plaintiffs allege that, due to Plaintiffs' long-standing and contentious relationship with DentaQuest USA's affiliates, DentaQuest USA intentionally excluded Plaintiffs from Tennessee's Medicaid dental provider network. Plaintiffs seek compensatory and punitive damages as well as declaratory judgment and injunctive relief to restore Plaintiffs to the TennCare dental provider network.

Before the Court are Defendant DentaQuest USA's motion to dismiss under Fed.R.Civ.P. 12(b)(6) (Docket Entry No. 24) and motion to dismiss under Fed.R.Civ.P. 12(b)(7) and Fed.R.Civ.P. 19 (Docket Entry No. 56). In sum, the Defendant contends: (1) that for their First Amendment claims, Plaintiffs fail to allege any speech critical of DentaQuest USA and refer only to its criticism of DentaQuest Tennessee, its independent affiliate; (2) that Plaintiffs' past conduct is so remote in time to lack any causal connection to Defendant's alleged retaliatory act; (3) that, as to their procedural due process claim, Plaintiffs do not possess a constitutionally protected interest in participating in the TennCare dental benefits program; (4) that, for Plaintiffs' equal protection claim, Plaintiffs fail to allege both sufficient facts to overcome the legal presumption of rationality for DentaQuest USA's selection of TennCare's network providers and sufficient facts that Plaintiffs were treated differently than other similarly situated dental providers; (5) that Tennessee law grants the State Commissioner for Tennessee's Medicaid program the express authority to delegate the selection of dental providers; (6) that because Plaintiffs lack a contract with the Defendant that was not a party to any settlement agreement, Plaintiffs' state-law claims for breach of contract or duty of good faith and fair dealing fail as a matter of law; and (7) that Plaintiffs' voluntary dismissal of their claims against the State Defendants precludes any relief for lack of an indispensable party required by Rule 19.

In response, Plaintiffs assert, in essence: (1) that their First Amendment claims are supported by specific facts that establish a plausible claim of retaliation and that the settlement agreement with DentaQuest USA's affiliate expressly applied to DentaQuest USA's affiliate's successors and assigns to the administration of the Tennessee's Medicaid dental program; (2) that for their equal protection claims, Plaintiffs allege specific facts of the parties' longstanding acrimonious relationship for a class of one claim and the lack of a rational basis for Defendant's exclusion to show an impermissible discrimination against multi-location dental providers for which temporal proximity is not a prerequisite; (3) that federal Medicaid law, 42 U.S.C. § 1396u–2, prohibits discrimination against providers that serve high risk populations and creates an enforceable property interest; (4) that, for their due process claims, both Plaintiffs' prior longstanding participation as a dental provider and Tenn.Code Ann. § 71–5–118's imposition of sufficient restraints on governmental administration of Tennessee's Medicaid providers, creates an enforceable property interest; (5) that, under Tennessee law, DentaQuest USA's contract lacks sufficient safeguards to qualify as a proper delegation of State officials' authority; and (6) that the State officials are not indispensable parties, as relief can be afforded without State officials who elected not to intervene in this action and whose interests are represented by DentaQuest USA.

For the reasons set forth below, Defendant DentaQuest USA's motions to dismiss (Docket Entry Nos. 24 and 56) are granted as to Plaintiffs' equal protection claim, but otherwise denied.

I. Analysis of the Complaint

Plaintiff Snodgrass–King provides pediatric dental, orthodontic, general dental, and oral surgery services. (Docket Entry No. 1, Complaint, at ¶ 1). Snodgrass–King has dental care offices in Davidson County, Williamson County, Rutherford County, Wilson County, and Maury County, Tennessee. Id. Dr. Snodgrass has been practicing in Tennessee since 1984 and, in 1986, was board-certified as a specialist in pediatric dentistry. Id. at ¶ 2. Plaintiff David J. Snodgrass, currently practices pediatric dentistry at Snodgrass–King. Id.

Since 1994, Plaintiff Snodgrass–King has provided dental care to TennCare enrollees and have served over 12,000 TennCare enrollees. Id. at ¶¶ 27, 61. Plaintiffs describe the majority of their TennCare patients as members of high-risk populations with very poor dental health requiring costly treatments that other providers are not as well equipped to provide given the skills and costs to render such services. Id. at ¶¶ 65–67. Plaintiffs allege that, since their exclusion from Tennessee's Medicaid program, many of their former TennCare patients have reported to Plaintiffs that they have been unable to find new TennCare dental providers willing to treat their specialized and costly conditions. Id. at ¶ 69. Except in emergency situations, dental providers in Tennessee cannot receive reimbursement for dental services rendered to TennCare enrollees unless the provider is approved for TennCare's provider network formed by DentaQuest USA. Id. at ¶ 18.

Defendant DentaQuest USA is a Texas insurance corporation with its principal office in Mequon, Wisconsin. Id. at ¶ 3. DentaQuest Tennessee is a Texas corporation. (Docket Entry Nos. 24–1, 24–2). DentaQuest USA concedes that DentaQuest Tennessee is its affiliate, but represents that DentaQuest USA is not a successor in interest to DentaQuest Tennessee. (Docket Entry No. 25, Memorandum of Law in Support of Motion to Dismiss at ¶ 9). In 2004, DentaQuest Tennessee acquired Doral Dental of Tennessee, LLC (“Doral Dental”), then a subsidiary of Doral Dental USA, LLC. (Docket Entry No. 1, Complaint at ¶ 30). In 2010, Delta Dental of Tennessee replaced DentaQuest Tennessee as TennCare's dental benefits manager. Id. at ¶ 57. Plaintiffs were members of the TennCare dental provider network during the entirety of Delta Dental's management of the network, from 2010 until May 2013. Id. at ¶ ¶ 58–59.

In 1998, Doral Dental was the administrator of BlueCross BlueShield of Tennessee's TennCare dental program. Id. at ¶ 31. In 2002, Doral Dental became the sole manager of TennCare's dental program. Id. Since 1998, Plaintiffs allege that Dr. Snodgrass was a highly vocal critic of Doral Dental's administration of the TennCare dental program. Id. Dr. Snodgrass's primary complaints against Doral Dental of Tennessee concerned failure to reimburse certain dentists within the provider network, while fully reimbursing other dentists in the TennCare network.Id. at 135. Between 1998 and 2003, Dr. Snodgrass initiated a letter-writing campaign complaining of Doral Dental's contracting processes and reimbursement practices, including contacts with members of the Tennessee General Assembly, TennCare officials, and various other state officials involved with the TennCare program. Id. at ¶¶ 32–42.

According to Plaintiffs, in 2003, Dr. Snodgrass's public complaints led Doral Dental to wrongfully remove him from the TennCare dental provider network. Id. at ¶ 41. When large numbers of Dr. Snodgrass's patients complained to the TennCare Bureau, TennCare's Dental Director initiated an investigation of Dr. Snodgrass by the Tennessee Bureau of Investigation (“TBI”), but the investigation concluded in 2004 without any finding of criminal wrongdoing by Dr. Snodgrass. Id. at ¶¶ 42–45. During 2004, DentaQuest Tennessee acquired Doral Dental.

In 2008, Dr. Snodgrass filed an action against DentaQuest Tennessee for the above controversies and, in 2009, Plaintiffs and DentaQuest Tennessee executed a confidential settlement agreement that Plaintiffs assert includes a provision that the agreement was “binding” on Doral Dental's “successors and assigns.” Id. at ¶¶ 46–49; see also Docket Entry No. 1–5, Confidential Settlement Agreement at ¶ 13. Plaintiffs allege that, in this agreement, DentaQuest Tennessee waived its right to terminate any Snodgrass–King provider from the dental network without cause. (Docket Entry No. 1, Complaint at ¶ 48). In 2010, Dr. Snodgrass filed a...