In May of 2023, the Tennessee Supreme Court decided Emergency Medical Care Facilities, P.C. v. Division of TennCare.3 At issue in the case was the UAPA’s definition of a “rule.” Under the UAPA, an agency “rule” must go through various procedures before taking effect, including notice and an opportunity for public comment.4 Under the terms of the UAPA, a rule that is not adopted in compliance with these procedures “shall be void and of no effect.“5 Thus, it is crucially important whether an agency statement qualifies as a “rule.”
The UAPA defines a “rule” as an “agency statement of general applicability that implements or prescribes law or policy or describes the procedures or practice requirements of any agency.“6 But the UAPA also sets out some exceptions to this definition. One such exception was at issue in Emergency Medical, namely the so-called “internal-management exception.” This exception applies to agency statements “concerning only the internal management of state government and not affecting private rights, privileges or procedures available to the public.“7
In Emergency Medical, the Tennessee Supreme Court was asked to decide whether this “internal-management exception” applied to a statement issued by TennCare, a state agency that operates Tennessee’s state Medicaid program. Under the program operated by TennCare, medical providers sign a contract with the state agreeing to treat enrollees in the program and to accept reimbursement from the state as “payment in full.“8 Although signing such a contract is optional, emergency-department physicians have little practical choice but to do so. That is because, unlike other medical providers, emergency-department physicians are “legally obligated to provide certain care to all patients who walk through the door.“9 Emergency-department physicians thus must treat TennCare enrollees no matter what, and signing the contract is the only way to be reimbursed for that treatment.
In 2011, TennCare faced a budget shortfall.10 To partially make up for that shortfall, the agency attempted to change how it reimbursed emergency-department physicians. The agency sent an email announcing that reimbursements for non-emergency visits to emergency departments would be capped at $50.11 The change announced in the email did not go through the UAPA procedures of notice and comment.12
After TennCare sent the email announcing this change, the agency was sued by Emergency Medical Care Facilities, P.C., a corporation composed of emergency-department professionals. Emergency Medical argued that the $50 cap was a “rule” that needed to go through notice and comment and that the cap was therefore void. Emergency Medical won in a Tennessee chancery court, but then lost in a Tennessee court of appeals.13 The court of appeals held that the cap fell under the “internal-management exception” because it only affected healthcare providers in a contractual relationship with the agency, not the general public as a whole.14 The Tennessee Supreme Court then agreed to hear Emergency Medical’s appeal.
In a unanimous opinion authored by Justice Sarah Campbell, the Tennessee Supreme Court held that the $50 cap was indeed a “rule” that was required to go through notice and comment.15 First, the court held that the $50 cap met the basic definition of a rule under the UAPA because it was a statement of “general applicability.“16 Looking to dictionary definitions, the court explained that a rule need not apply to every single Tennessean to be “generally applicable.” Rather, the court held that a statement is of general applicability “when it is capable of being applied or is relevant to an entire class or category.“17 The cap met that definition because it applied “to every member of a class,” namely all emergency-department physicians who have signed contracts with TennCare and who treat TennCare enrollees.18