Pamela Cotham v. Nicholas Jay Yeager ( 2020 )

01/24/2020
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs November 1, 2019
PAMELA COTHAM v. NICHOLAS JAY YEAGER ET AL.
Appeal from the Chancery Court for Anderson County
No. 18CH72 Robert E. Lee Davies, Senior Judge
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No. E2019-00423-COA-R3-CV
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The plaintiff filed this action seeking to recover damages on behalf of Anderson County
based upon the plaintiff’s allegations that the defendants had submitted false claims for
payment by the county. The trial court dismissed the action, determining that the
plaintiff’s amended complaint had failed to state a claim upon which relief could be
granted. The plaintiff has appealed. Discerning no reversible error, we affirm the trial
court’s judgment of dismissal.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed; Case Remanded
THOMAS R. FRIERSON, II, J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J., W.S., and W. NEAL MCBRAYER, J., joined.
Gregory Brown, Knoxville, Tennessee, for the appellant, Pamela Cotham.
Jonathan Swann Taylor and Caitlin C. Burchette, Knoxville, Tennessee, for the appellee,
Nicholas Jay Yeager.
Steven H. Trent and Chelsea N. Hayes, Johnson City, Tennessee, for the appellee,
Securus Technologies, Inc.
OPINION
I. Factual and Procedural Background
On October 25, 2016, the plaintiff, Pamela Cotham, filed a complaint in the Knox
County Chancery Court (“Knox County court”), naming Nicholas Jay Yeager; Securus
Technologies, Inc. (“Securus”); and Avery Johnson as defendants. Ms. Cotham stated
that she was a resident of Oliver Springs, Tennessee, and was employed as a Purchasing
Agent for Anderson County (“the County”). Ms. Cotham sought to bring her action as a
qui tam plaintiff on behalf of the County.1 Ms. Cotham explained that Mr. Yeager was
the Law Director for the County and that Mr. Johnson was, at the time of the alleged
incident, the Chief Jailer for the Anderson County Sheriff’s Department.
According to Ms. Cotham, Securus provided telephone services for inmates in the
Anderson County Jail pursuant to a contract that began on July 1, 2008, and ended on
June 30, 2013. Ms. Cotham stated that Securus was the winning bidder when bids for
such telephone services were solicited by the County and that the resulting contract was
properly approved and filed pursuant to the provisions of the County Purchasing Law of
1957, codified at Tennessee Code Annotated § 5-14-101, et seq. (“the Purchasing Act”),
and duly adopted by the County.2 Ms. Cotham further stated that she spoke to Mr.
Johnson before the contract’s expiration date to inquire about soliciting bids for a new
contract when he told her that he wanted to wait until construction at the Anderson
County Jail was completed. Mr. Johnson subsequently retired in November 2013.
Ms. Cotham alleged that when she prepared a draft request in January 2014 for
contract proposals to replace the expired Securus contract, she became aware of a
contract extension between the County and Securus, dated August 21, 2012, which
purported to extend the term of the contract for telephone services until June 30, 2015
(“Contract Extension”). Ms. Cotham further alleged that the Contract Extension was
signed as to form by Mr. Yeager and that Mr. Yeager had also “forged” Mr. Johnson’s
signature on the contract. According to Ms. Cotham, the Contract Extension did not
comply with the provisions of the Purchasing Act for several reasons, including that it
was not competitively bid and was not signed by the Purchasing Agent. Ms. Cotham
averred that Mr. Yeager and Securus were aware that the Contract Extension did not
comply with applicable law. She further alleged that Mr. Johnson either misled her
concerning his awareness of the Contract Extension during her discussions with him in
2012 and 2013 or testified falsely during a subsequent 2015 deposition in an unrelated
case when he stated that he was aware of the Contract Extension when it was signed by
Mr. Yeager.
In addition to her allegations concerning the defendants’ awareness of the issues
with the allegedly unlawful Contract Extension, Ms. Cotham claimed that Mr. Yeager
“threatened” her in order to induce her to “cover up” any problem with the Contract
Extension. Ms. Cotham also asserted that the County had failed to take any action to deal
1
A qui tam action has been defined as one “‘brought under a statute that allows a private person to sue for
a penalty, part of which the government or some specified public institution will receive.’” State ex rel.
Landenberger v. Project Return, Inc., No. M2007-02859-COA-R3-CV, 2009 WL 637122, at *1 n.1
(Tenn. Ct. App. Mar. 11, 2009) (quoting BLACK’S LAW DICTIONARY 1282 (8th ed. 2004)).
2
The parties do not dispute that the Purchasing Act has been adopted by Anderson County.
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with the unlawful Contract Extension. According to Ms. Cotham, the contractor who
eventually replaced Securus in providing telephone services to inmates was paid much
less than Securus, such that the County was damaged by having to expend exorbitant
funds during the term of the Contract Extension. Ms. Cotham alleged that Securus had
violated Tennessee Code Annotated § 4-18-103 of the Tennessee False Claims Act
(“TFCA”) by presenting false claims for payment to the County pursuant to the Contract
Extension and that Mr. Yeager and Mr. Johnson had also violated the TFCA by making
or using a false record in order to have such claims paid by the County. Ms. Cotham
further alleged that all three defendants were jointly and severally liable to the County for
three times the amount of the funds paid to Securus under the unlawful Contract
Extension, costs of the civil action, and a penalty of $2,500 to $10,000 for each false
claim. Ms. Cotham claimed that she was entitled to payment of her expenses and
attorney’s fees in bringing the action as a qui tam plaintiff.
Ms. Cotham subsequently filed an amended complaint on February 27, 2017, and
attached copies of the original contract and the Contract Extension. On April 28, 2017,
Securus filed an answer, denying the material averments of the complaint. Securus
asserted several affirmative defenses, including failure to join indispensable parties, lack
of standing, and unclean hands. Securus also filed a counterclaim against the County,
asserting that it had breached the contract Securus had with the County by unilaterally
canceling it in January or February 2014. Securus alleged that the County was unjustly
enriched because Securus installed expensive equipment at the Anderson County Jail in
anticipation of ongoing revenue from the contract. Securus concomitantly filed a motion
for judgment on the pleadings pursuant to Tennessee Rule of Civil Procedure 12.03, as
well as a motion to dismiss or transfer the matter due to improper venue.
Mr. Yeager filed an answer on May 4, 2017, also concomitantly filing motions to
dismiss for improper venue and for judgment on the pleadings. The County, as counter-
defendant, filed a motion to dismiss Securus’s counterclaims on May 30, 2017.
On July 20, 2017, Ms. Cotham filed a notice of compliance with the provisions of
Tennessee Code Annotated § 4-18-104(c). Securus subsequently filed a response,
alleging that subject matter jurisdiction had not been established. Ms. Cotham filed a
second notice of compliance on August 10, 2017. On October 4, 2017, the Knox County
court entered an agreed order dismissing the counterclaims asserted by Securus against
the County. The Knox County court subsequently entered an order on February 5, 2018,
transferring the matter to the Anderson County Chancery Court (“trial court”). In its
incorporated memorandum opinion, the Knox County court determined that the action
was local in nature, such that venue would properly lie in Anderson County.
Following transfer of the action, Anderson County Chancellor Nichole Cantrell
entered an order recusing herself on November 26, 2018, based on her personal
knowledge of the facts in dispute in the proceeding. The matter was thereafter assigned
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to Senior Judge Robert E. Lee Davies. The trial court, with Judge Davies presiding,
conducted a hearing on January 22, 2019, and subsequently entered a memorandum
opinion and order on February 4, 2019, dismissing Ms. Cotham’s amended complaint for
failure to state a claim upon which relief could be granted.
In its order, the trial court determined that Ms. Cotham had failed to allege facts
establishing that Securus had presented claims for payment to the County that were false.
The court also determined that pursuant to the contract between Securus and the County,
the inmates paid Securus for telephone services, and Securus provided a commission to
the County. Therefore, as the court determined, no county funds were expended.
Because of this, the court concluded that the Purchasing Act did not apply to the Contract
Extension and that Securus did not submit false claims or conspire to deceive the County.
The court further determined that Mr. Yeager did not submit any false claims for
payment by the County. The court accordingly dismissed Ms. Cotham’s claims. Ms.
Cotham timely appealed.
II. Issues Presented
Ms. Cotham raises the following issues on appeal, which we have restated slightly:
1. Whether the trial court erred by determining that the Contract
Extension between Securus and the County for inmate telephone
services was not a contract for “services” subject to the requirements
of the Purchasing Act.
2. Whether the trial court erred by determining that Ms. Cotham failed
to plead allegations of fraud with sufficient particularity so as to
state a claim under the TFCA.
III. Standard of Review
This Court has previously explained that “[w]hen reviewing orders granting a
Tenn. R. Civ. P. 12.03 motion [for judgment on the pleadings], we use the same standard
of review we use to review orders granting a Tenn. R. Civ. P. 12.02(6) motion to dismiss
for failure to state a claim.” Young v. Barrow, 130 S.W.3d 59, 63 (Tenn. Ct. App. 2003).
As our Supreme Court has elucidated concerning a Tennessee Rule of Civil Procedure
12.02(6) motion to dismiss:
The sole purpose of a Tennessee Rule of Civil Procedure 12.02(6)
motion to dismiss is to test the sufficiency of the complaint, not the strength
of the plaintiff's evidence. Doe v. Sundquist, 2 S.W.3d 919, 922 (Tenn.
1999); Riggs v. Burson, 941 S.W.2d 44, 47 (Tenn. 1997). When reviewing
a dismissal of a complaint under Rule 12.02(6), this Court must take the
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factual allegations contained in the complaint as true and review the trial
court’s legal conclusions de novo without giving any presumption of
correctness to those conclusions. See, e.g., Doe v. Sundquist, 2 S.W.3d at
922. Because a motion to dismiss a complaint under Rule 12.02(6)
challenges only the legal sufficiency of the complaint, courts should grant a
motion to dismiss only when it appears that the plaintiff can prove no set of
facts in support of the claim that would entitle the plaintiff to relief. See,
e.g., Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 696 (Tenn.
2002).
Willis v. Tenn. Dep’t of Corr., 113 S.W.3d 706, 710 (Tenn. 2003).
Concerning questions of statutory construction and application, our Supreme
Court has additionally stated that “construction of a statute and its application to the facts
of a case are questions of law, which we review de novo with no presumption of
correctness.” Gautreaux v. Internal Med. Educ. Found., Inc., 336 S.W.3d 526, 531
(Tenn. 2011). Moreover, the High Court has summarized the principles involved in
statutory construction as follows:
When dealing with statutory interpretation, well-defined precepts apply.
Our primary objective is to carry out legislative intent without broadening
or restricting the statute beyond its intended scope. Houghton v. Aramark
Educ. Res., Inc., 90 S.W.3d 676, 678 (Tenn. 2002). In construing
legislative enactments, we presume that every word in a statute has
meaning and purpose and should be given full effect if the obvious
intention of the General Assembly is not violated by so doing. In re
C.K.G., 173 S.W.3d 714, 722 (Tenn. 2005). When a statute is clear, we
apply the plain meaning without complicating the task. Eastman Chem.
Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn. 2004). Our obligation is
simply to enforce the written language. Abels ex rel. Hunt v. Genie Indus.,
Inc., 202 S.W.3d 99, 102 (Tenn. 2006). It is only when a statute is
ambiguous that we may reference the broader statutory scheme, the history
of the legislation, or other sources. Parks v. Tenn. Mun. League Risk
Mgmt. Pool, 974 S.W.2d 677, 679 (Tenn. 1998). Further, the language of a
statute cannot be considered in a vacuum, but “should be construed, if
practicable, so that its component parts are consistent and reasonable.”
Marsh v. Henderson, 221 Tenn. 42, 424 S.W.2d 193, 196 (1968). Any
interpretation of the statute that “would render one section of the act
repugnant to another” should be avoided. Tenn. Elec. Power Co. v. City of
Chattanooga, 172 Tenn. 505, 114 S.W.2d 441, 444 (1937). We also must
presume that the General Assembly was aware of any prior enactments at
the time the legislation passed. Owens v. State, 908 S.W.2d 923, 926
(Tenn. 1995).
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In re Estate of Tanner, 295 S.W.3d 610, 613 (Tenn. 2009).
IV. Nature of the Contract Extension
Ms. Cotham’s claims that the defendants violated the TFCA hinge upon her
assertion that the Contract Extension ran afoul of the Purchasing Act’s requirements. Ms.
Cotham argues that the Contract Extension can only be characterized as a contract for
services to which the Purchasing Act would clearly apply. Securus and Mr. Yeager posit
that the Purchasing Act does not apply to the Contract Extension because the County was
not paying Securus for the telephone services Securus provided to inmates. It is
undisputed that Securus paid the County a commission based on revenues received from
the inmates.
The Purchasing Act specifically provides in relevant part that the county
purchasing agent has the exclusive power to “[c]ontract for and purchase all supplies,
materials, equipment and contractual services required by each and every official,
agency, office, department or employee of the county government, or that is supported
by, or under control of, the county government and that expends or encumbers any of the
county’s funds.” See Tenn. Code Ann. § 5-14-105(1) (2015) (emphasis added). This
statutory subsection further provides that “[n]o other official, employee or agent of the
county or of any of its departments or agencies shall be authorized to contract for or
purchase any such materials, supplies, equipment or contractual services.” Id.
The Purchasing Act also specifies that all “purchases of supplies, materials,
equipment and contractual services, and all contracts for the lease or rental of equipment .
. . shall be based wherever possible on competitive bids.” See Tenn. Code Ann. § 5-14-
108(a)(1) (2015). In addition, all such contracts are to be “approved as to form by the
county attorney, and the original copy of each long-term contract shall be filed with the
county clerk.” See Tenn. Code Ann. § 5-14-108(j).
Ms. Cotham’s assertions regarding the Purchasing Act’s applicability focus on the
initial portion of the first sentence in Tennessee Code Annotated § 5-14-105(1), which
states that the county purchasing agent has the exclusive power to “[c]ontract for and
purchase all supplies, materials, equipment and contractual services required by each and
every official, agency, office, department or employee of the county government, or that
is supported by, or under control of, the county government . . . .” See id. Ms. Cotham’s
argument fails to consider the final phrase of that sentence, however, requiring that the
contract be one which “expends or encumbers any of the county’s funds.” See id. We
note that the final phrase is joined to the preceding phrases by the conjunction, “and.”
See id. As our Supreme Court has explained, “statutory phrases separated by the word
‘and’ are usually to be interpreted in the conjunctive.” Stewart v. State, 33 S.W.3d 785,
792 (Tenn. 2000) (citing Tenn. Manufactured Hous. Ass’n v. Metro. Gov’t of Nashville,
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798 S.W.2d 254, 257 (Tenn. Ct. App.1990) (stating that the word “‘and’ is a conjunctive
article indicating that the portions of the sentence it connects should be construed
together”))). Because no County funds were encumbered or expended based on the
Contract Extension, the requirement contained in the final phrase of subsection -105(1)
concerning the Purchasing Act’s applicability has not been met.
In this matter, the original contract executed by Securus and the County in 2008
stated that Securus would provide telephone services for inmates, referred to in the
agreement as “certain inmate-related services and applications (the ‘Application(s)’).”
The agreement provided that the County was granting to Securus:
the right and license to install, maintain, and derive revenue from the
Applications through our inmate systems (including, without limitation, the
related hardware and software) (the “System”) located in and around the
inmate confinement facilities identified on the Schedules (the “Facilities”).
You are responsible for the manner in which you use the Applications.
Unless expressly permitted by a Schedule or separate written agreement
with us, you will not resell the Applications or provide access to the
Applications (other than as expressly provided in a particular Schedule),
directly or indirectly, to third parties. During the term of this Agreement
and subject to the remaining terms and conditions of this Agreement,
Provider shall be the sole and exclusive provider of inmate related
communications, including but not limited to voice, video and data (phone
calls, video calls, messaging, and e-mail) at the Facilities in lieu of any
other third party providing such inmate communications . . . .
The agreement further provided that Securus would pay the County a 43% commission
on all revenue generated by inmates’ collect calls and a 30% commission on all revenue
generated from the sale of prepaid calling cards.
The Contract Extension provided for a continuation of the same calling services
provided by Securus with an increase in the above commission rates paid to the County.
Pursuant to the Contract Extension, the County was to receive a 57% commission on all
revenue generated by inmates’ collect calls and a 50% commission on all revenue
generated from the sale of prepaid calling cards. Ergo, under both the original contract
and the Contract Extension, the County was not obligated to pay Securus anything, such
that no funds of the County were being “expend[ed] or encumber[ed].” See Tenn. Code
Ann. § 5-14-105(1).
Additionally, Tennessee Code Annotated § 5-14-108(a)(1) requires that contracts
for “purchases of supplies, materials, equipment and contractual services” or contracts for
the “lease or rental of equipment” shall be subject to competitive bidding requirements.
In this case, however, the Contract Extension was not a “purchase” of supplies, materials,
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equipment, or services because nothing was paid by the County. In addition, the County
did not agree to lease or rent any of the equipment installed by Securus. Rather, the
original contract and the Contract Extension granted Securus “the right and license to
install, maintain, and derive revenue” from the equipment Securus installed at the
Anderson County Jail. As such, the requirements of Tennessee Code Annotated § 5-14-
108(a)(1) concerning the Purchasing Act’s applicability also have not been met.
Although our research has not revealed any prior Tennessee cases addressing this
precise issue with regard to the applicability of the Purchasing Act to a contract that does
not require expenditure of county funds, we do find an opinion from the Office of the
Attorney General to be instructive. See State v. Black, 897 S.W.2d 680, 683 (Tenn. 1995)
(“Although opinions of the Attorney General are not binding on courts, government
officials rely upon them for guidance; therefore, [the Attorney General’s] opinion is
entitled to considerable deference.”). In 1993, the Attorney General was specifically
asked whether “an arrangement under which a county, in exchange for a portion of
receipts, allows a phone company to install a phone system in the county jail to be used
by inmates and paid for by the recipients of the calls is subject to statutory competitive
bidding requirements.” See Tenn. Op. Atty. Gen. No. 93-02, 1993 WL 349718 (Jan. 11,
1993). After analyzing the Purchasing Act and other statutory provisions, the Attorney
General opined that “such an arrangement may fairly be characterized as a lease of
county property which is not subject to statutory bidding requirements.” See id. The
opinion concluded that:
In general, it would appear that an arrangement properly categorized
as a service contract would involve the county as purchaser and the service
provider as vendor. The provider would furnish specified services to the
county in return for payment out of county funds. In such cases,
compliance with bidding procedures would enable the county to obtain the
necessary services with the most efficient expenditure of county funds. As
described to this Office, the contract in question in effect involves services
to be provided to county jail inmates and the recipients of their calls. The
only county role in the transaction is that of allowing the company to install
and service phone equipment in county jail space. The arrangement
between the county and the phone company could therefore be fairly
characterized as a lease of county property for county fiscal purposes.
Id.
Similarly, in the case at bar, the agreement at issue does not require the
expenditure or encumbrance of any County funds because the County is not purchasing
anything. Rather, the services provided by Securus were completely paid for by inmates
or call recipients with Securus paying a commission on such revenue to the County. As
the trial court determined, “since this arrangement neither expends nor encumbers any of
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Anderson County’s funds, the County Purchasing Act of 1957 does not apply.” We agree
with the trial court’s conclusion that the Contract Extension was not subject to the
requirements of the Purchasing Act.
V. TFCA Claims
Ms. Cotham contends that the trial court erred by determining that she had failed
to plead allegations of fraud with sufficient particularity so as to state a claim under the
TFCA. As this Court has previously elucidated:
The General Assembly enacted the TFCA in 2001, see 2001 Pub.
Acts, Ch. 367 (H.B. 779), “establish[ing] penalties for filing false claims
with state, county, or municipal governments.” State ex rel. Landenberger
v. Project Return, Inc., No. M2007-02859-COA-R3-CV, 2009 WL 637122,
at *3 (Tenn. Ct. App. Mar. 11, 2009). “In addition to authorizing the
attorney general and reporter and local prosecuting authorities to investigate
and prosecute actions under the TFCA, the act allows a complaint to be
filed by a private person or qui tam plaintiff.” Id. (citing Tenn. Code Ann.
§ 4-18-104). As our Supreme Court has explained:
The Tennessee General Assembly has a long history of
enacting statutes authorizing qui tam actions. For more than
two centuries, it followed the traditional approach of enacting
statutes providing a bounty to private plaintiffs who filed qui
tam actions to enforce specific statutes while declining to
adopt a generalized false claims provision similar to the
Federal False Claims Act. However, in 2001, the General
Assembly enacted the False Claims Act which, like its federal
counterpart, targeted a much broader array of fraudulent
activity perpetrated against state and local governments. Just
as Congress did, the General Assembly provided a statutory
jurisdictional bar that is intended to encourage private citizens
to assist state and local government in ferreting out fraud but,
at the same time, to prevent parasitic plaintiffs from
piggybacking on public disclosures of fraud to bring qui tam
actions.
Knox Cnty. ex rel. Envtl. Termite & Pest Control, Inc. v. Arrow
Exterminators, Inc., 350 S.W.3d 511, 522-23 (Tenn. 2011) (footnotes
omitted).
City of Chattanooga ex rel. Lepard v. Elec. Power Bd. of Chattanooga, No. E2015-
01995-COA-R3-CV, 2016 WL 6124118, at *2 (Tenn. Ct. App. Oct. 20, 2016).
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The TFCA is codified at Tennessee Code Annotated § 4-18-101 (2015), et seq. As
pertinent here, Tennessee Code Annotated § 4-18-103 (2015) provides:
(a) Any person who commits any of the following acts shall be liable to
the state or to the political subdivision for three (3) times the amount
of damages that the state or the political subdivision sustains because
of the act of that person. A person who commits any of the
following acts shall also be liable to the state or to the political
subdivision for the costs of a civil action brought to recover any of
those penalties or damages, and shall be liable to the state or political
subdivision for a civil penalty of not less than two thousand five
hundred dollars ($2,500) and not more than ten thousand dollars
($10,000) for each false claim:
(1) Knowingly presents or causes to be presented to an officer or
employee of the state or of any political subdivision thereof, a
false claim for payment or approval;
(2) Knowingly makes, uses, or causes to be made or used a false
record or statement to get a false claim paid or approved by
the state or by any political subdivision;
(3) Conspires to defraud the state or any political subdivision by
getting a false claim allowed or paid by the state or by any
political subdivision;
(4) Has possession, custody, or control of public property or
money used or to be used by the state or by any political
subdivision and knowingly delivers or causes to be delivered
less property than the amount for which the person receives a
certificate or receipt;
(5) Is authorized to make or deliver a document certifying receipt
of property used or to be used by the state or by any political
subdivision and knowingly makes or delivers a receipt that
falsely represents the property used or to be used;
(6) Knowingly buys, or receives as a pledge of an obligation or
debt, public property from any person who lawfully may not
sell or pledge the property;
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(7) Knowingly makes, uses, or causes to be made or used a false
record or statement to conceal, avoid, or decrease an
obligation to pay or transmit money or property to the state or
to any political subdivision;
(8) Is a beneficiary of an inadvertent submission of a false claim
to the state or a political subdivision, subsequently discovers
the falsity of the claim, and fails to disclose the false claim to
the state or the political subdivision within a reasonable time
after discovery of the false claim; or
(9) Knowingly makes, uses, or causes to be made or used any
false or fraudulent conduct, representation, or practice in
order to procure anything of value directly or indirectly from
the state or any political subdivision.
Tennessee Code Annotated § 4-18-102 (2015) defines a “claim” as:
[A]ny request or demand for money, property, or services made to any
employee, officer, or agent of the state or of any political subdivision, or to
any contractor, grantee, or other recipient, whether under contract or not, if
any portion of the money, property, or services requested or demanded
issued from, or was provided by, the state, referred to in this chapter as
“state funds” or by any political subdivision thereof, referred to in this
chapter as “political subdivision funds” . . . .
In her amended complaint, Ms. Cotham alleged, inter alia, violations of Tennessee
Code Annotated § 4-18-103(a)(1)-(3), specifically that Securus presented “a false claim
for payment of the fees it retained” pursuant to the Contract Extension and that Securus
and Mr. Yeager made and used a false record to get such false claim paid by the County,
thereby conspiring to defraud the County. Based on our thorough review of these
statutory provisions, we conclude that because there was no request or demand for
money, property, or services made by any defendant to the County seeking payment from
County funds, the first three listed violations cannot be proven in this matter. See Tenn.
Code Ann. § 4-18-103(a)(1)-(3). Furthermore, the amended complaint contains no
allegation that any of the defendants committed the violations listed in subsections (4)
through (6). See Tenn. Code Ann. § 4-18-103(a)(4)-(6).
With respect to the violations listed in Tennessee Code Annotated § 4-18-
103(a)(7)-(9), Ms. Cotham alleged that Mr. Yeager knowingly made or caused to be
made a false record or statement “to conceal, avoid or decrease Securus’s obligation to
pay or transmit money collected from inmates” to the County in violation of Tennessee
Code Annotated § 4-18-103(a)(7). Ms. Cotham also alleged that if Securus did not know
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that the Contract Extension was “illegal” at the time it was executed, Securus had
violated Tennessee Code Annotated § 4-18-103(a)(8) by failing to disclose the “false
claim” to the County within a reasonable time following discovery of the falsity. Ms.
Cotham made no allegation that Tennessee Code Annotated § 4-18-103(a)(9) had been
violated.
Tennessee Code Annotated § 4-18-103(a)(7) requires proof that a defendant has
“[k]nowingly ma[de], use[d], or cause[d] to be made or used a false record or statement
to conceal, avoid, or decrease an obligation to pay or transmit money or property to the
state or to any political subdivision.” Similarly, subsection (a)(8) requires proof that “a
beneficiary of an inadvertent submission of a false claim to the state or a political
subdivision, subsequently discovers the falsity of the claim, and fails to disclose the false
claim to the state or the political subdivision within a reasonable time after discovery of
the false claim.” The TFCA does not expressly define what constitutes a “false record or
statement” or a “false claim.” See Tenn. Code Ann. § 4-18-102 (containing definitions of
terms used in statutory scheme).
The trial court relied upon a federal court decision construing the similar federal
False Claims Act, codified at §§ 31 U.S.C. 3729-3733, to define the term “false” as used
in the state statute. As our Supreme Court has instructed, however, the “proper starting
point for construing [the provisions of the TFCA] . . . must begin with the words of the
state statute” rather than looking to federal decisions. See Knox Cty. ex rel. Envtl.
Termite & Pest Control, Inc. v. Arrow Exterminators, Inc., 350 S.W.3d 511, 524 (Tenn.
2011). The High Court further elucidated that in order to “ascertain and to give the
fullest possible effect to the General Assembly’s intent and purpose,” courts must “(1)
give [the words used in the statute] their natural and ordinary meaning, (2) consider them
in the context of the entire statute, and (3) presume that the General Assembly intended
that each word be given full effect.” Id. Accordingly, although the statute does not
specifically define the word “false,” we find it appropriate to give the word its natural and
ordinary meaning, see id., rather than relying upon federal court decisions to define it.
“False” is generally defined as something that is “untrue,” “deceitful,” or “not
genuine; inauthentic.” BLACK’S LAW DICTIONARY 635 (8th ed. 2004). We find support
for this meaning in the TFCA’s provisions, which define the term “knowingly” as acting
in deliberate ignorance or reckless disregard of the “truth or falsity” of information. See
Tenn. Code Ann. § 4-18-102(2)(A)(ii)-(iii). The juxtaposition of the terms, “truth” and
“falsity,” in the statute demonstrate that “false” should, with respect to the TFCA, be
defined as the opposite of true.
In this matter, Ms. Cotham’s contentions regarding violations of the TFCA by
defendants are entirely dependent upon her assertion that the Contract Extension ran
afoul of the Purchasing Act’s requirements, such that all commissions paid to the County
thereunder or even the defendants’ reliance upon the Contract Extension as a legally
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binding document should be considered “false.” The allegations contained in Ms.
Cotham’s amended complaint were that (1) Mr. Yeager, by executing the Contract
Extension, knowingly made or caused to be made a false record or statement in order to
decrease Securus’s obligation to pay money to the County and (2) if Securus did not
know that the Contract Extension was “illegal” at the time it was executed, Securus had
violated the TFCA by failing to disclose the “false claim,” the Contract Extension, to the
County within a reasonable time following discovery of the falsity. As such, the only
“falsity” alleged is that the Contract Extension was violative of the Purchasing Act’s
provisions and therefore unlawful. Having determined that the Purchasing Act was not
applicable to the Contract Extension, however, we conclude that none of Ms. Cotham’s
claims of TFCA violations can stand. See, e.g., Riggs v. Burson, 941 S.W.2d 44, 47-48
(Tenn. 1997) (explaining that, pursuant to a motion to dismiss, although courts must
“construe the allegations in the plaintiff’s favor and accept allegations of fact as true,”
“the inferences to be drawn from the facts or the legal conclusions set forth in a
complaint are not required to be taken as true.”).
In her appellate brief, Ms. Cotham relies upon a federal court decision construing
the federal False Claims Act, which explains the required elements of a claim under the
portion of the federal act at issue as follows:
(1) that the defendant make a false statement or create a false record with
actual knowledge, deliberate ignorance, or reckless disregard of the truth or
falsity of the information; (2) that the defendant have submitted a claim for
payment to the federal government; (3) that the defendant’s false statement
have been made with the purpose of getting a false or fraudulent claim paid
or approved by the Government; and (4) that the false statement or record
have been material to the Government’s decision to make the payment
sought in the defendant’s claim.
U.S. ex rel. SNAPP, Inc. v. Ford Motor Co., 618 F.3d 505, 509 (6th Cir. 2010).
Assuming, arguendo, that the same requirements listed above for a claim made pursuant
to the federal False Claims Act would also apply to a claim made pursuant to the state
statute, Ms. Cotham’s claims would fail nonetheless because no defendant in this action
submitted a claim for payment to the County or made a false statement for the purpose of
getting such a claim paid.
Ms. Cotham also alleges that the defendants violated the TFCA by making an
implied false certification that the Contract Extension complied with the requirements of
the Purchasing Act. Having determined that the Purchasing Act is not applicable to the
Contract Extension, we determine that no such violation could have occurred. Although
Ms. Cotham alleges fraud and deceit in the defendants’ execution of the Contract
Extension without complying with the Purchasing Act, such allegation cannot be proven
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when the execution of the Contract Extension was not subject to the requirements of the
Purchasing Act.
Ms. Cotham further alleges that the defendants conspired together to have false
claims paid pursuant to the Contract Extension. Relying upon a federal court decision,
U.S. ex rel. Augustine v. Century Health Servs., Inc., 136 F. Supp. 2d 876, 888 (M.D.
Tenn. 2000), Ms. Cotham concedes that one requirement of such a claim is that a
defendant “made a claim, or made a statement in order to get the Government to pay
money on a claim.” See id. Again, assuming, arguendo, that the actions described in the
federal case would be violative of the TFCA, because no claim for payment was made in
this case, such a violation cannot be proven.
Accepting Ms. Cotham’s allegations of fact as true, we conclude that Ms. Cotham
failed to present facts sufficient to support her claims under the TFCA. We therefore
affirm the trial court’s determination that Ms. Cotham’s amended complaint failed to
state a claim upon which relief could be granted.
VI. Conclusion
For the foregoing reasons, we affirm the trial court’s judgment dismissing Ms.
Cotham’s claims. Costs on appeal are assessed to the appellant, Pamela Cotham. This
case is remanded to the trial court for collection of costs assessed below.
_________________________________
THOMAS R. FRIERSON, II, JUDGE
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