# FILED

July 24, 1998

Cecil Crowson, Jr. Appellate C ourt Clerk IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON THE EYE CLINIC, P.C. and its ) shareholders; DR. BEN HOUSE, ) DR. JIM PRICE, DR. ARTHUR ) WOODS, DR. MARK BATEM AN and ) DR. BRUCE HERRON, ) ) Plaintiffs/Appelle

es, ) Madison Chancery No. 51932

) vs. ) ) Appeal No. 02A01-9707-CH-00143 JACKSON-MADISON COUNTY ) GENERAL HOSPITAL, WEST ) TENNESSEE HEALTHCARE, INC., ) and HEALTH PARTNERS, INC. ) ) Defendants/App

ellants. ) APPEAL FROM THE CHANCERY COURT OF MADISON COUNTY

AT MEMPHIS, TENNESSEE THE HONORABLE JOE C. MORRIS, CHANCELLO R For the Plaintiffs/Appellees : For the Defendan ts/Appellants : William H. West Gayle Malone, Jr. Nashville, Tennessee Dan H. Elrod Mary Ellen Morris Amanda Haynes Young Nashville, Tennessee For the Intervening Defendant/Appellant : For the Amici Curiae, Tennessee Hospital Association, Tennessee Public and Teaching John Knox Walkup Hospitals, Inc. and Hospital Alliance of Michael E. Moore Tennessee, Inc. : Ann Louise Vix Nashville, Tennessee William B. Hubbard Carlos C. Smith Mark W. Smith Jerry W. Taylor Nashville, Tennessee REVERSED AND REMANDED

HOLLY KIRBY LILL

ARD, J.

CONCUR:

W. FRANK CRAWFORD, P.J., W.S.

ALAN E. HIGHERS, J

.OPINION

This suit involves a challenge by various eye doctors to the business activitie s of a public hospital district and its spin-offs. The trial court granted summary judgment to the plaintiffs after determining that the defendants’ business activities violat ed the Tennessee Constitution. We r everse. Defendant/Appellant

Jackson-Madison County General Hospital District (“the District”) is

a quasi-governmental entity created by a Private Act by the Tennessee legislature. The District wa s created to provide health care services for area residents. The District created De fendant/Appellant Health Partners, Inc. (“Health Partners”) and Defendant /Appellan t West Tennessee Alliance for Healthcare, Inc. (“West

Tennessee Allia

nce”) to furthe

r its objectives. West Te

nnessee Allianc

e is

a physician-hospital

organization (“PHO”), crea ted to permit hospita

ls and doctors to joi

ntly obtain provider contracts with payors of health care benefits. The District owns fifty (50%) percent of West Tennessee Allia

nce, and the othe

r fifty (50% ) percent is owne d by private

physicians. Health Partners is a pre

ferred provide

r organization (

“PPO”), and th

e District is its sole member. Health Partners contracts with health care providers to create a ne twork to of

fer to customers. In addition, He alt h Par tners contracts with third-party payor s to offer health care services. In 1995, the District created another PPO called Sight Care Network (“Sight Care”). Sight Care is not an inde

pendent entity ; it is a network of e ye doctors c

reated to provide

services. Plaintiff/Appellee The Eye Clinic, P.C. is a professional corporation. All of its shareholders

are opthamologists and optometrists, who are also plaintiffs in this suit. All of the individual doctor plaintiffs had preferred

provider agreements with Health Partners at one time, but they have since been terminated. The parties’ stipluation explains t he reason for the

termination of the

plaintiffs’ agreements: After

the effective date of those terminations, Health Providers, Inc., plans to limit its provider netwo

rk in Madison County

to The Jackson Clinic , P.A., the West Tennessee Alliance for Healthcare, L.L.C., and physicians practicing in specialties or subspecialties not available through either of those organizations. None of the individual doctor plaintifs are members of the Jackson Clinic and none were invited

to participate in West Tennessee Alliance or Sight Care. The plaintiffs filed this lawsuit, alleging that Article II, §§ 29 and 31 of the Tennessee Constitution prohibit the District from jointly owning provider networks with private

individuals. In addition, the plain

tiffs asserted th

at th e T ennessee Constitution prohibits the District from operating PPOs, such as Health Partners and Sight Care. The plaintiffs maintained that the District’s2

operation of such PPOs results in a public entity

engaging in

a business

carried o n by private ente rprise and violates the constitutional provisions for due process and equal protection . Th e plaintiffs sought to

enjoin the District from oper ating West Tenne

ssee Alliance, a

nd also sought to enjoin the defendants from engaging in any similar enterprises in the future. The defendants file

d a motio n for sum mary judgm ent. The defenda

nts argued that t

heir actions were authorized by the Private ActHospital Authority Act of 1996 (“Hos

pital Authority Act”), Tenn. Code Ann. §§ 7 -57-601 et seq., a nd that the state c

onstitution does not f

orbid thei r conduct. This motion was denied. The plaintiffs filed a

motion for partial

summary judg

ment and for a pre

li minary an d permanent injunction. The trial court iss ued an order man

dating notifica

tion to the State

Attorney General that

the constitutionali

ty of portions of the Hospital Authority Act were being challenge d. Con seq uen tly, the Attorney General intervened as a defendant in this action. The defendants then filed a cross motio

n for partial summa

ry judgmen

t. In a cursory opinion, the trial court gran ted summary judg

ment in favor of th

e plaintiffs, concludi n g that the defendants’ actions violated Article II, §§ 29 and 31 of the Tennessee Constitution. The tri al c our t fo und tha t th e Di str ict “is a jo int ven tur e of t he C ity of Jackson and Madison County.” The defendants were also enjoined from operating West Tennessee Alliance or any other company

in which it co-owne

d shares of stock w

ith private entities. The defendants were also enjoined from operating PPOs, such as Health Partners and Sight Care. From this order, the defendants now a

ppeal. On appeal, the defen dants conte nd tha t the t rial c ourt e rred b y concl uding that A rticl e II, §§ 29 and 31 prohibit the Distri ct from co-owning with private entities shares of West Tennessee Alliance or any other company . They argue that the District is not a “county,

city or town”

within the meani ng of A rticl e II, § 29 of the Tennessee Co

nstitution. They

note that the Hospit

al Authority Act authorizes the District to own a provider network jointly with private individuals. They contend that Article II, § 31 of the Tennessee Constitution, prohibits “the State,” but notan entity such as the District, from operating

PPOs, such as Health Partners a nd Sight Care. The

Attorney Ge

neral asserts1 An Amici Curiae br ief was filed by th

e Te nnessee Hospital Association, the Tennessee Association of Public and Teaching Hospitals, Inc., and the Hospital Alliance of Tennessee, Inc.. 3 that th e tri al court erred to the extent that it found that the Hospital Authority Act violates the Tennessee Constitution. 1 Summary judgment should be g ranted when the m

ovant demonstrate

s th at the re are no genuine issues of material fact and that the moving party

is entitled to a judgment as a matter of law. Tenn. R. Civ. P. 56.03. The party moving for summary judgment bears the burden of demonstrating that no genuine issue of material fact exists. Byrd v. Hall , 847 S.W.2d 208, 211 (Tenn. 1993). On

a motion for summary judgment, the court must take the strongest legitimate view of the evidence in favor of the nonmoving party, allow all reasonable inferences in favor of

that party, and discard all countervailing evidence. Id. at 210-11. Summary judgment is only appr opriate when the

facts and the legal conclusions drawn from the facts reasonably permit only one conclusion. Carvell v. Bottoms , 900 S.W.2d 23, 26 (T enn. 1995). Since only questions of law are involved, there is no presumption of correctness regarding a trial court's gr

ant of summary judg

ment. Id. Therefore, our review of the trial court’s grant of su mmary judgment is de novo on the record be fore this Court. Id. LEGISLATION The defendants argue first that their actions are not prohibited by Article I I, § 29 of the Tennessee Constitution because the District is not a “county, city or town” within the meaning of that provision. Against the background of the pertinent legislation, we shall exam ine Secti on 29. The Hospital Authority Act was passed to enable private act hospitals to compete in the health care market. Several of

its provisions incor

porate by refer

ence the Private

Act Metropolitan Authorities Act of 1995 (“M etro politan Authorities Act”), Tenn. Code Ann. §§ 7-57-501 et seq. (Supp. 1997). The Metropolitan Authorities Act sets forth its purpose:

The general assembly hereby finds that the demand for hospital, medical and health care services is rapidly changing as is the way and manner in w hich s uch services are purchase

d and delivered; that the market for hospital and health care services is becoming incre asingly competitive ; and that the hospit al and other hea

lth care providers need flexibility to be able to respond to changing conditions by having the power to develop efficient and cost-e ffective method

s to provide for hos

pital, medical and health care

needs. The gene

ral assembly also

finds that the increasing competition and changing con ditions forces hos

pitals and other health care providers to develop market strategies and strategic plans to effectively compete. The general assembly further finds tha

t public hospitals

in metropolitan ar

eas are presen

tly at a competitive disadvantage, and that significan t investments in the public assets of4

private act metropolitan hospital authori ties could be jeopa rdized by inability

to compete with private hospit

als because of le

gal constraints

upon the scope of their operations and limitations upon the power granted to public hospitals under existing law. Tenn. Code Ann. § 7-57-501(b). The Hospital Authority Act broadened the powers of hospitals created by private act. The broadened powers include the power to: participate

as a shareholder in a

corporation, as a

joint venturer in a joint venture, as a general partne

r ina general partn

ership, as a limite

d partner in

a limited partner

ship or a general partnership, as a member in a nonprofit corporation or as a member

of any other lawful form

of business organization, which provides hospital, medical or health care or engages in any activity s upporting or related to the exercise of any power granted to a private act metropolitan hospital authority; Tenn. Cod e Ann. § 7-57-603 ( incorporating Te

nn. Code Ann. § 7-57 -502(b)(1)). Su ch hospital s may: acquire, manage, lease, purchase, sell, c

ontract for or ot

herwise participate sole

ly or withothers in the ownership or operation of hospital, medical or health program properties and facilities and properties, facilities, and programs supporting or relating thereto of any kind and nature whatsoever and in any form of ownership whenever the board of trustees in its discretion shall determine it is consistentwith the purposes and policies of this par

t or any private a

ct appli cable to it, and may exercise such powers regardless of the competitive consequences thereof. Tenn. Code Ann. § 7-57-603 (incorporating Tenn. Code Ann. § 7-57-502(c)). The District was created by Chapter 686 of the 1949 Private Acts to own the Jackson

Madison County General Hospital. Its “mission and purpose”: shallbe for the benefit of the City of Jackson , T ennessee and Madison County, Tennessee, to provide, on a f ee-for-service basis with due regard for the needs of low-income

and indigent patients, the full rang e of h ealth care (including mental illness), illness pr

evention and allie

d and incidental se

rvices and oper

ations. 1992 Tenn. Priv. Acts ch. 165, § 1. The Act c reated a Board o

f Trustees, whose

directors are to serve without comp

ensation. 1949 Ten

n. Priv. Acts ch. 68 6, § 3. The Board’s power includes: full, absolute and complete authority and responsibility for the operation, management,

conduct and control of thebusiness and affairs of the Hospital District herein cre ated , which business and affairs may include without limitation the provision of health care s

ervices for per

sons in their

homes; . . . . Said authority and responsibilit

y sh all include, but sha ll not be limited to, the establishment, promulgation and enforcement of the rules, regulations, and policies of the District, the upkeep and

maintenance of all property, the administration of all financial affairs of the District, the execution of all contracts, agreements and other instruments,and the employment, co

mpensation, discha

rge and supervis

ion of all personne

l. Id. ch. 686, § 8 (as ame

nded by 1989 Tenn.

Priv. Acts ch. 26, §

2). The private a

ct provides that: the County Legislative

Body of Madison Count

y is hereby authori

zed to appropria

te to the Hospital District from the General Fund of the County one-half

of such sums5

as may be required to commence the op e ration of said District, and thereafter onehalf of such sums as may b

e required to pay

any deficits aris

ing in the operation and maintenance of said District; and are authorized and empowered, also, to levy a tax sufficient for the purpose upon all taxable property within the said County. Id. ch. 686, § 13 (as amended by 1992 Tenn. Priv. Act ch. 165, § 2). SECTION 29 Article II, § 29 of

the Tennessee Co

nstitution states as

follows: The General Assembly shall have p ower to authorize the several counties and incorporated

towns in this State, t o im pose taxes for County and Corporation purposes respectively, in suchmanner as shall be prescribed by law; and all pro

perty shallbe taxed accor

ding to its value, upo

n the principles e

stablished in rega

rd to State taxation. Butthe credit of no County, City or Town sh all be given or loa

ned to or in aid of any person, company, association or corporation, except upon an election to be first held by the qualified voters of such county, city or town, and the assent of three-fourths of the votes cast a t said electi

on. N or shall any county

, city or town become a stockholder with oth ers in any company, association or corporation except upon a like electi

on, and the assent of

a like majority

. . . . (emphasis added). The defen d ants argue that the trial court effectively declared the Hospital Authority Act unconstitutional by interpreting Section 29 to include the District within the meaning of the phrase, “county, city or town.” Since the trial court’s ruling precludes the District from exercising powers expressly authorized by the

Hospital Authority

Act, they contend that the trial court has rendered the statute a nullity. The plaintiffs maintain that the defendants have exag g erated the consequences of the trial court’s ruling. They insist t hat the trial cour

t at no point deemed

the statute to be un

constitutional. They notethat the Metropolitan Hospital Authorities Act limi ts the powers gra

nted under the sta

tute “to the extent at the time [that the powers granted a re] not prohib

ited by the Constitution of Tennessee.” Tenn. Code Ann. § 7-57-502(b). They emphasize that the Hospital Authority Act does notexplicitly

authorize the Dis

trict to co-own sha

res with private

entities. The plaintiffs assert that the trial court’s holding is limited to the determination that the District itself ac ted ultra vires by unconstitutionally c

o-owning shares w

ith others. In response to the defendants’ argument on the meaning of Section 29, the plaintiffs argue that the District is encompassed within the meaning of “county, city or town.” The trial court found that the District “is a j oint venture of the Ci t y of Jackson and Madison county.” The plaintiffs contendthat the District’s ownership of West Tennessee Alliance is prohibited since the District coowns shares of the PHO with pr ivate entities. The defendants argue that, as a matter of law, the2 Article II, § 31 was also added to the Tennessee Constitution at this time. 6 District is a distinct entity from the City of Jackson and Madison County and that, therefore, Section 29 does not apply. They assert that the District’s ownership of Wes t Tennessee Allia

nce is explicitly authorized by the

Hospital Authority A

ct. No published Tennessee decisions directly address the interpretation of

the phrase, “county, city or town,” in Secti

on 29. Originally, Section 29 consisted of only the first sentence. The remaining language was added in 1870 during the period of Reconstruction. 2 Tennessee, like many other states, added this prohibition to its Constitution to prevent itself from becoming burdened by debt resulting from “public finan cial support of privately s ponsored ‘intern al improvements.’ ” Lewis L. La ska, A Legal and Constitutional History of Tennessee, 1772-1972 , 6 Mem. St. L. Rev. 563, 640-41 (1976). Th

e reason for the

se provisions has be

en described as

follows: Early in the nineteenth century it seems to have been the general practice of states to encourage the b

uilding of railroa

ds by permitting the s

tateor a subdivision thereof to purchase stock i n railroad corporations, to issue bonds or lend credit in aid of railroads,or to make outright donations to them. However, due to the large number of insolvencies or r

ailroads, cau sed by frauds or economic conditions, states and subdivisions thereof

foun d themselves largely indebted, and were themselves occasionally insolvent because of large investments in such enterprises.Therefore a reversal of policy set in. As early as 1851 Ohio adopted a constitution containing a provision prohibitin

g stock subscriptio

ns or other forms o

f aid to corporations. In the ensuing twenty-f

ive years most of th

e other states ad

opted simil ar p rovisions, either prohib i ting aid altogether or requiring a vote of the people before a subscription to stock or other sort of aid could be made or extended. Annotation, Constitutional or statut ory provisions prohibiting municipalities or other subdivisions of the state from subscribing to, or acquiring stock of, private corporations , 152 A.L.R. 495, 495-96 (1944). Adoption o

f such provisions: represents the reaction

of public opinion to the orgies of extravagant dissipation of public funds by counties, townships , ci ties, and towns in aid of construction of railways, canals, and other like undertakings during the half century preceding 1880, and it was designed to primarily to prevent the use of public funds raised by general taxation in aid of enterprises apparently devoted to quasi public pur poses, but actually engage

d in private busine

ss. Th aan um v. Bynum Irr. Dist. , 232 P. 528 (Mont. 192 5); see also Arthur P. Roy, Note, State Constitutional Provisions Prohibiting the Loaning of Credit to Private Enterprise--A Suggested A nalysis , 4 1 U. Colo. L. Rev. 135 (1969); Stewart E. Sterk & Elizabeth S. Goldman, Controlling Legislative Shortsightedness: The Effectiveness of Constitutional Debt Limitations , 1991 Wis . L. Rev. 1301 (1991).7

In interpreting a constitutional provision, effect must be given to its “ordinary and inherent

mean ing.” Gaskin v. Collins , 661 S.W.2d 865, 867 (Tenn. 1983). The intent at the time o f enactment must be

examined: Since constitutions deriv

e their power an

d authority

from the people, our articulation of constitutional principles must capture the intentions of the persons who ratified the constitution. These intentions are r eflec ted in the words of the constitution itself, rather than our o

wn subjective notio

ns of unexpresse

d constitutional inte

nt. Martin v. Beer Bd. , 908 S.W.2d 941, 947 (Tenn. App. 1995) (internal citation omitted). The language of Section 29 suggests that the dra fters intended that the phrase, “county, city or town,” be confined to its literal meaning. The first sentence of Section 29 empower

s the General Ass

embly to authorize coun ties and towns to impose ta xes. The second s

entence limits the

ability of cities, counties, and towns to lend cr edit. The second s

entence begin

s with the wo rd, “but.” The third sentence, prohibiting such cities, counties, and towns from co-owning stock, begins with the word, “nor.” Considering these three sentences together, the limitations in the second and third sentences plainly modify the entities described in the first sentence. In Lipscomb v. Dean , 69 (1 Lea) Tenn. 546 (Dec. Term 1878), the Court considered whether the General Assembly could delegate the power to levy taxes to school districts or civil districts withina county. Finding that the General Asse

mbly could not deleg

ate such a task, th

e Cour t reasoned as foll

ows: The power to authorize incorporated towns and counties to levy tax es for corporation and county purposes, is the only part of our Constitution which we can find that gives the Legislature any power to delegate the right of taxation. The clause appeared for the first time in the Constitution of 1834 , an d was copied in that of 1870. It is a sufficient fa

ct, that in the constitutional convention of 1870, when sec. 29, a rt. 2, was under c

onsideration, Mr.

Seay offered a

n amendment to inse

rt c ivi l districtsafter the word c

ounties, so as to give the Legislature power to authorize the civildistricts to levy and collect taxes, but the amendment offer ed was at once rejected. All the authorities, as well as common sense, agree in the rules that language must be interpreted in the light of things surrounding t

he parties using th

e words to be interpreted. When the Constitution of 1834 was framed and ratified, there was no such thing in this State as an incorporated town other than one of fixed and defined limits , invested with powers of municipal gover nment, and this

for local and police purposes. Such was the condition of things in 1870, an d such alone is

the sense in which the “incorporated towns” were used, and to this it must be confirmed. Id. at 552-53 (emphasis added). Thus, the Court

in Lipscomb indicates that the drafter s of the Constitution in

tended for only cities, counties, or towns, in the plain sense of the words, to have the power to levy taxes. It notes8

that an effort to broaden the phrase to include “civil districts” was defeated during the 1870 constitutional convention. Id. Since the third sentence of Section 29 refer

s to such cities, count

ies,

or towns, the limitation in the third sentence appears to apply only to cities, counties,

and towns with taxing powers. In Gibson County Special School Dist. v. Palmer , 691 S.W.2d 544 (Tenn. 1985), the Court addressed whether a speci

al school distr

ict, created by the G

eneral Assembly,

could assess taxe

s. The Court held: Article 2, § 29 of the Tenne

ssee Constituti

o n permits the legisl

ature to delegat

e its taxing power to counties and towns. It has beenpreviously held by Tennessee cour

ts that special school districts do not fall within the purview of § 2 9 of Artic le 2 and that legislation granting t o special school districts the power to levy taxes is an unconstitutional delegation of the taxing authority. Id. at 549 (citing Williamson v. McClain , 147 T e nn. 491, 249 S.W. 811 (1923)); see also West Tennessee Flood Control & Soil Conserv. Dist. v . Wya tt , 193 Tenn. 566, 247 S.W.2d 56 (1952) (holding that the West Tennessee Flood Control and Soil Conservation District was not authorized to assess taxes). Several Ten nessee cases have addressed whether agencies and instrumentalities of municipalities have the power to issuebonds without being subject to the limitation set forth in the secondsentence of Section 29. In each of these cases, the Court narrowly defined the term “county, city or town” and found that Section 29 did not prevent the entities from issuing bonds so long as the municipality was not compelled to invoke its taxing power to make payment on the issuance. See West v. Industrial Dev. Bd. , 206 Tenn. 154, 159, 332 S.W.2d 201, 203 (1960) (bonds issued by

an industrial development board); Fort Sanders Presbyterian Hosp. v. Health & Educ. Facilities Bd. , 224 Tenn. 240, 250, 453 S.W.2d 771, 775 (1970) (bonds issued by he alth & educational facilities board); Metropolitan Dev. & Housing Agency v. Le ech , 591 S.W.2d 427, 429 (Tenn. 1979) (bonds issued by housing agency). In this case, we must determine whether the District should be considered

a city, county, or town. The District is a “quasi-municipal corporation.” Finis ter v. Hum boldt Gen. Hosp. , No. 02501-9704-CH-00038, 1998 WL 321850, at *4 (T enn. May 26, 1998) ; Professional Home Health & Hospice, Inc. v. Ja

ckson-Madison County G enera l Hosp. Dist. , 759 S.W.2d 416, 419 (Tenn. App. 1988). The plaintiffs argue that the Private Act creating the District obligates

Madison County to9

finance any deficits that may arise. However, the Private Act states only that Mad

ison County

“is hereby authorized to appropriate” funds to commence operations and pay operating deficits; it is not obligated to do so. See 1949 Tenn. Priv. Acts ch. 686, § 13 (as amended by 19 92 Tenn. Priv. Act. ch. 165, § 2). The record indicates that revenues generated

by the District are controlled solely by the District’s Board and are autonomous from the general funds controlled by the city and county. Under these circumstances, the District is clearly not a taxing power within the meaning o f t he phrase “city, co

unty or town” in Sec

tion 29. Instead, it

is an autonomous quasi-municipal entity. This conclusion is consistent with the Tennessee Supreme Court’s holding that the office of trustee for the hospital authority in Chattanooga-Hamilton Coun ty i s not a “county off ice” within the me aning of Article XI, § 17 of the constitution, but “rather an office of an independ en t governmental entity.” Chattanooga-Hamilton County Hosp. Auth. v. City of Chattanooga , 580 S.W.2d 322, 329 (Tenn. 1979). The plainti ffs respond that, nine years later

, the Supreme Court

, interpreting the same private act hospital authority, held that the authority was “a

subdivision of the state and county.” Johnson v. Chattanooga-Hamilton County Hosp. Aut h. , 749 S.W.2d 36, 37 (Tenn. 1988). In Johnson , however, the Cou rt held that the Chattanooga-Hamilton County Hospital Authority was exempt from the worker’s compensation statute, which doe

s not apply to “the st

ate of Tennessee, counties thereof, and municipal corporations.” Id. at 37-38; Tenn. Code Ann. § 50-6- 106 (Supp. 1997). See also Finister , supra , at *4 (holding that a hospital district is an “exempt quasi-municipal corporatio n” pursuant to the Tennessee Workers’ Compensation Act). The determination of whether a hospital authority is exempt from the worker’s co

mpensation statute

is an issue separat

e from whether a

hospital authority

is a “county, city or town” within the meaning of the Tennessee Constitution. As noted above, to determinethe meaning of the phrase “county,

city

or town” in Section 29, we must look to the intent of the framers of the Constitutional provision, not the intent of a later legislature in enacting a wholly unrelated statute. Similarly, the plaintif

fs ci te Crowe v. John W. Harton Mem’l Hosp. , 579 S.W.2d 888 (Tenn. App. 1979), for the proposition that a public hospital is considered to be an “instrumentality” of a municipality so

that it is covered by the Governmental Tort Liability Act (“GTLA”), Tenn. Code Ann. §§ 29-20-101 et seq. (1980 & Supp. 1997). The GTLA applies to “ gove rnmental entities,” which include: any political subdivision of the state of Tennessee including . . . any instrumenta lity3 See, e.g., Ala. Const. art. IV, § 94 (“county, city, town, or other subdivision of this state

. . . ”); Ark. Const. XII, § 5 (“county, city, town or other municipal corporation . . .” ); Fla. Const. art. VII, § 10 (“state nor any county, school district, municipality, special district, or agency of any of them . . .”); Ky. Const. § 179 (“county or subdivision thereof, city, town, or incorporated district

. . .”); Miss. Const. art. VII, §183 (“coun ty, city, town , or other municipal corporation . . .”); Mo. Const. art. XIII, § 1 (“state, no r an y county, city, town, municipality, nor other subdivision of the state . . .”); Okl. Const. art. X, § 1 7 (“county or subdivision thereof, city, town, or incorporated district. . .”); Tex. Co

nst. art. I II, § 52 (“county, city, town or other political corporation or subdivision of the State . . .”). 10 of government created by any one (1) or more of the her ein na med local governmental ent

ities. Tenn. Code Ann. § 29-20-102(3) (Supp. 1997). Ag ain, the definition of “ governmental ent

ities” pursuant to a statute such as the GTL A has n o bearing on the definition of “county, city or town” pursuant to Article II, § 29. This holding is consistent with decisions inter pr eting similar constitutional provisions of other states. The language “city, county or town,” con tained in Article II, Section 29 of the Tennessee Constitution is more narrow than the language found in the correlating provisions of the majority of the constitutions of other states. The constitutions of most states extend restrictions on stock ownership to

entities beyond co

unties, cities and

towns. 3 In Harshman v. Bates County , 92 U.S

. 569, 23 L.Ed. 747 (1876), overruled on other grounds by Cass County v. Johnston , 95 U.S. 360, 365, 24 L.Ed. 416 (1877 ), the United S tates Supreme Court considered a Missouri constitutional provision restricting the state legislature from “authoriz[ing] any county, city or town to become a stockholder in . . . any company, association or corporation.” The issue concerned whether the phrase, “county, city or town,” inc luded townships, which were subdivisions of counties. Harshman , 23 L.Ed. at 747. The Cour t held that the “manifest intention and spirit” of the term included townships, since they had “no power to act as corporate bodies.” Id. The Court, never theless, surmised t

hat: [h]ad counties alone been mentioned, there might have been no restriction as to cities and towns; because they are sepa rate and distinct organiza tions, corporate

in character, an

d often clothed wi

th legislative func

tions. Id. The Kentucky Court of Appeals considered whether a municipal housing commission could privately insure its housing pr ojects in City of Louisville Mun. Housing Comm’n v. Public Housing Admin. , 261 S.W.2d 286 (Ky. App. 1953). The applicable constitutional provision prohibits “any county or subdivision thereof, city, town, or incorporated district, [from] becom[ing] a stockholder11

in any company, asso

ciation or corpor

ation.” Ky. Const. §

179. The comm

ission, fo rmed by the Kentucky legislature, retained “some of the attributes of a state agency although it [was] controlled by the Mayor of Louisville.” City of Louisville , 261 S.W.2d at 287. The parties did not contend that the commission was a county, subdivision of a county, city, or town; instead the iss ue concerned whether the commission qualified as an “incorporated district” pursuant to the constitutiona l provision. Id. After applying an “ordinary and commonly accepted” interpretation of the terminology, as wellas taking into consideration the intent of the draf ters, the Court hel

d that “the ordinary meaning of the word, ‘Commission,’ denot es something different from ‘District.’” Id. at 288. The Court found that the fa c t that the commission operated within defined territorial boundaries did not “transform the Commission into a District.” Id. The Court reasoned that the commission: is neither “fish nor fowl” within the definitive ter[m] of sectio[n] . . . 179. It may be said to be a hybrid, conceived for a purpose not contemplated by the framers of our Constitution. Id. In Thaanum v. Bynum Irr. Dist . , 232 P. 528 (Mont. 1925), the Montana legislature created

an irrigation district for the purpose of irrigating land in the Grand Teton area. The district’s board

was granted broad authority to take steps to accomplish its objective. Id. The suit arose after the districtacquired an option to purchase certain shares of stock of a private

company or, alternatively, the right to purchase from the acqu irers of t hese shares the right to use the water owned by the private company. Id. The Montana Constitution proscribes the “state, nor any county, city, town, municipality, nor other subdivision of the state” from becoming a “subscriber to, or a shareholder in, any company or corporation . . . .” Mont. Const. art. 13, § 1. After considering the history behind the constitutional provision, the Court concluded that the irrigation district did not constitute the “state, . . . c ount y, city, town, municipality, [or] other subdivision of the state.” Id. ; Thaanum , 232 P. at530-31. The Court n oted that one cha

racteristic that distinguished the district from the entities expressly mentioned in the constitutional provision was the power to impose taxes. Id. at 531. In Day v. Buckeye Water Conserv. Drainage Di st. , 237 P. 636 (Ariz. 1925), an irrigation districtwas formed pursuant to an Arizona statute. The district entered into an elaborate agreement witha private company. Id. a t 637-38. T he plaintiff challenged the district’s conduct based on12

Article IX, § 7 of

the state constitut

ion. This provision p

rovides that: Neither the state, nor any county, city, town, municipality, or other subdivision of the state shall ever

give or loan its cr

edit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individua l, assoc iation, or corporation, or become a subscriber

to, or a sh areholder in, any company or corporation or become a joint owner w ith any person, company, or corporation, except as to such ownerships as may accrue to the state by operation or provision of law. Ariz. Const. art. IX, § 7. The issue in Day was whether the district was included within the phrase, “other subdivision of the state.” Day , 237 P. at 638. After considering the history behind the provision and after applying the canon of ejusdem generis , the Court found that the district was not within the phrase “other subdivision of the state”

as contemplated by the framers of the Arizona Constitution. Id. The Court found that the district’s functions were markedly dissimilar from the functions of c

ounties, cities,

towns, and municipalities mentioned in the provision. Id. The Court noted tha t: irrigation districts and sim ilar public corpora

tions, while in some senses subdivisions of the state, are in a very different class. Their function is purely business and economic, and not

political and gove

rnmental. Id. The Court also emphasiz ed that a contrar

y ruling would jeopa

rdize the viabilit

y of such public corporations. It reasoned: In many cases the on

ly way in which th

ey can car

ry out the sole purp

ose of their existence is by some

plan of joint control or ownership forbidden by section 7, supra. To hold that they belong to the “other subdivisions of the state” referred to in t ha t section would be in effect to prohibit their existence. Id. at 638-39. Citing Thaanum , supra , the Court held tha t the district did not

fall within the ambi

t of the constit

utio nal provision. Day , 237 P. at 639; see also Maricopa County Mun. Water Conserv. Dist. No. 1. v. La Prade , 40 P.2d 94, 99-100 (Ariz. 1935). Courts of other states utilized similarly narrow interpretations of comparable constitutional provisions in decisions rendered not long after the provisions were ratified. See, e.g., In re Bonds of Madera Irrigation D ist. , 28 P. 675, 676 (Cal. 1892) (“Thi

s prohibition in the c

onstitutio n i s Limited [sic] to the public corporations enumerated

in that sec tion, viz., ‘county, city, tow n, township, board

of education, or

schooldistrict,’ and, under

familiarrules of construc tion, cannot be ex

tended to any othe

r public corporation.”); cases cited in Ann., 152 A.L.R. at 505-08. In Arkansas Unif. & Linen Supply Co. v. Institutional Serv. Corp. , 700 S.W.2d 358 (Ark. 1985), a group of plaintiffs operating commer cial laundries c

hallenged the ac

tivity of an Arkansas4 This provision state s: No county, ci ty, t own, or other municipal corporation shall become a stockholder in any company, association or corporation; or obtain or appropriate money for, or loan its credit to, a

ny corporation, a

ssociation, institut

ion or individual. Ark. Const. art. 12, § 5. 13 city and a hospital located within the city. The city owned the hospital facility and the land, and leasedthem to the hospital. Id. at 359. New board members of the hospital were nominated by the board, and confirmed by the city council. Id. In the event that the hospital should dissolve, the city

was granted ownership of all of the hospital’s assets. I d. The pl aintiffs brought suit when the hospital incorporated a laundry service business. Id. The plaintiffs cla imed that the defe

ndants violated Article XII, § 5 of the Arkansas Constitution, since the city was lending credit to and becoming a stockholder in a private company. 4 Id. The Arkansas Supreme

Court held that the issue was whether the hospital was the “alter ego” of the city council. Id. at 360. Although the city council confirmed the board’s nominees, the Court noted that it had never

rejected any of the board’s nominees in the past. Id. The Court also pointed outthat the dissolution provision was dra fted to comply with

a statutory charitable tax exemption provisi on and that the leasi ng arrangement b

etween the city a

nd the hospital was

expressl y authorized

by an Arkansas sta

tute. Id. Thus, the Court foun d that the hospital w

as sufficiently autonomous to a void being “the arm of the city council.” Id. at 361. See also Fairfax County Indus. Dev. Auth. v. Coyner , 150 S.E.2d 87, 94 (Va. 1966) (industrial development authority not

a “county, city or town” when it issues revenue bond s sin ce no municipality “grants its credit or becomes liable in any manner for the payment of the bonds and obligations of the [a]uthority.”); Public Utility Dist. No. 1 v. T axpayers & Ratepay

ers of Snohomish County , 479 P.2d 61, 63-64 (Wash. 1971) (joint ownership of power plant by municipalcorporations and private companie

s did not violate

state constitution s

ince the public sha

reholders reta

ined veto power a

nd, thus, were not “subject to the overriding control of a shareholder majority.”); but cf. Wilmington Parki ng Auth.

v. Ranken , 105 A.2d 614, 627-28 (D el. 1954) (constitutional phrase “county, city, town or other municipality” included a parking authority). Consequently, we h

oldthat the District is nota “county, city or town” within the meaning of Article II, Section 29 of

the Tennessee Constitution andthat, therefore, the defendants’ actions14

do not violate Section 29. The trial court is reversed on this issue. SECTION 31 Article II, § 31 of

the Tennessee Co

nstitution states: The credit of this State shall not be hereafter loa ned or given to

or in aid of any pe rson, association, company, corporation or municipality; nor shall the S tat e become the owner in whole or in part of any bank or a stockholder with others in any association, company, corporation or municipality. Since the trial court fo

und that t h e District’s part ownership of West Tennessee Alliance violated Section 31, it implicitly foun d that the District i

s an “arm of the State.” The defendants contend that the provision applies o

nly to the State itsel

f. In the alterna

tive, the defenda

nts maintain

that even if the District is an “arm of the S tate,” the Distric

t’s activities do no

t violate Section 31 since it is performing a public function, rather than a proprietary function. The plaintiffs cite no cases indicating that the term “State” as set fo

rth in Section 31 shou

ld be construed broadly, so as to include an “arm” of the State. Indeed, if “State” in Section 31 were broadly construed, Section 29 would be unnecessary. Section 29 permits a county, city or town to

own stock with others if the arrangement is approved by the electorate. If the term “State” in Section 31 were interpreted broadly, it would include co unties, cities and

towns and would

render Section 29 meaningless. The existence of Section 29 indicates that the term “State” in Section31 should be narrowly construed. See Summers v. Thompson , 764 S.W.2d 182, 195 (Tenn. 1988) (holding that the Tennessee Constitution must be construed in pari materia ). Courts in other states have also interpreted the term narrowly when c

onsidering compar

able constitutional provisions. In City of Louisville , supra , the Kentucky Court of Appeals considered whether a constitutional provision barring “the Commonwealth [ from] beco m[ing] an owner or stockholder” proscribed the housing commission’s activities. City of Louisville , 261 S.W.2d at 287 (citi ng Ky. Const. § 177). The Court held that “[o]bviously, the Housing Commission is not the Commonwe alth.” Id

. The Court maintaine

d that, regardle

ss of whether the

commission is considered

an agency of the Commonwealth, “[w]e have nodoubt the prohibitio n in that section is dir ected to the Commonwealth

as such and not to a

n agency such as t

his Housing Commiss

ion i s shown to be.” Id. Thus, the Court held that the commission was “neither ‘fish nor fowl’ within the definitive terms” of the constitutional provisions. Id. at 288. Oklahoma, like Tennessee and Kentucky, has separate constitutional provisions that add ress5 The provision state s: Neither the State nor any city, county, townor other municipa lity in this State, shall ever lend its credit for any purpose whatever . . . Ark. Const. art. XVI, § 1. 15 governmental aid to corporatio ns. Article X, § 15 o

f the Oklahoma Cons

titution prohib

its the “State” from becoming a stockholder. Article X, § 17 prohibits “any county or subdivision thereof, city, town, or incorporated district” from becoming a stockholder. Oklahoma courts h ave held that § 15 does not apply to municipa lities since that pr

ovision is limited to the state. See Fretz v. City of Edmund , 168 P. 800, 804 (Okl . 1916); Lawrence v. Schellstede , 348 P. 2d 107 8, 1081 (Okl. 1960). In Andres v . First Ark ansas Dev. Fin. Corp. , 324 S.W.2d 97 (Ark. 1959), the Arkansas legislature passed a statute creating corporations to provide financial assistance to industrial development. The plaintiffs cla imed t hat the statute violated a state constitutional provision restricting the state from “lend[ing] its credit.” 5 Id. at 100. The Court dismissed the argument that the development corporations were an alter ego of the state. Id. The Court reasoned that “[t]he

State is not ‘lending its credit’ merely because it authorizes the organization of a corporation which may finance industrial development corporations.” Id. Plaintiffs in Steup v. Indiana Housing Fi n. Auth. , 402 N.E.2d 1215 (Ind. 1980), challenged

a statute by the Indiana legislature creating a finance authority. Thefinance authority was authorized to create an entity to provide facilities for lower income persons a nd families. Id. at 1220. The plaintiffs alleged that this authorization violated a constitutional provision prohibitin g the state from “becom[ing] a stockholder.” Id. ; Ind. Const. art. XI, § 12. Finding that the authority “is not the state in its sovereign ca

pacity,” the Indi

ana Supreme Court

held that the const

itutional provision w

as inapplicable. Steup , 402 N.E.2d at 1220; see also Sendak v. T rustees of Indiana

Univ. , 260 N.E.2d 601, 602-04 (Ind. 1970) (Indiana University not considered “ state” ); Thaanum , 232 P. at 530 (irrigation district “is not the state”); citati

ons liste d in Ann., 152 A.L.R. at 505-08; Coyner , 150 S.E.2d at 94 (constitutional credit clause does not apply to industrial development authority since the Commonwealth is n

ot liable for bonds

issued by the autho

rity); Sprague v. Straub , 451 P.2d 49, 57-59 (Ore. 1969) (constitutional prohibition of state ownership of corporate stock does not applyto investment of industrial accident commission fund and public employees’ retirement fund,16

since the state has no pr

oprietary intere

st in these funds); but cf. Board of Trustees of the P ubli c Employees’

Retire me nt Fund of Indiana v. Pearson , 459 N.E.2d 715, 717-18 (Ind. 1984) (investment

of state employees’ retirement fun d in stock of priv ate companies violated constitutional provision since the state c ould suffer a loss

if the stock value fe

ll); West Virginia Trust

Fund, Inc.

v. Bailey , 485 S.E.2d 407, 420-21 (W. Va. 1997) (state trust fund violated constitutional provision since it was an “alter ego” o f the state); State ex rel. Gainer v. West Virginia Bd. of Investments , 459 S.E.2d 531, 534-37 (

W. Va. 1995) (unt

il publicemployees’ pensionfunds actually withdrawn, the state has a beneficial ownership interest and, thus, the state has unconstitutionally b ecomea stockholder). In the case at bar, under a narrow interpretation of the term “State” in Section 31, the District clearly is not the State. The District’s boa rd of directors is

not selected by the

State, its operations

are not supported by State revenue, and the State is under no obligation to cover any deficit that

the District may incur. The plaintiffs argue that the State may not delegate a powe r that i t does not itself poss ess. Citing State ex rel. Bd. of Dental Examiners v. Allen , 192 Tenn. 396, 241 S.W.2d 505 (1951), the plaintiffs claim that since Section 31 prohibits the General Asse

mbly from co-owning shares, it may not avoid this prohibition by creating hospital authorities and granting them authority to c o-ow n shares. In Allen , a state statute authori zed a county to permit an unlicensed person to practice dentistry. Id. , 192 Tenn. at 397, 241 S.W.2d at 505. Thus, the statute carved out an exception to the “generallaw applicable to the entire State,” forbidding the unlicensed practice of dentistry. Id. , 19217

Tenn. at 398, 241 S.W.2d at 506. The Cour t held that the statute violated Article XI, § 8, which prohibits suspending: any general la

w for the benefit of any particular individual, or to pass any law granting to any individual rights, privileges, or immunities not extended to any other member of the community who may be able to bring himself within the provisions of such law. Id. (quoting Lineberger v. State ex rel. Beeler , 174 Tenn. 538, 541, 129 S.W.2d 198, 199 (1939)). The Court reasoned th

at the General A

ssembly may not “delegate

to the Quarterly Cou

rt of a County the authority to do an act which the Constitution forbids the Legislatur e from d oing.” Allen , 192 Tenn. at 399, 241 S.W.2d at 506. The plaintiffs’ reliance on Allen is misplac ed. Alle n holds that municipal ordinances are subject to the same constitutional restraints as statutes. Since the General Assembly may not enact

a statute suspending a gener al prohibit ion, it may not circumvent Article XI, § 8 by authorizing a county to suspend the gene

ral prohibit

ion. Allen has no bearing on whether Section 31 forbids governmental entities other tha n the State

from co-owning sh

ares. The Tennessee Co

nstitution is a limitation of powers, not a sourceof power. Perry v. Lawrence County Election Comm’n , 219 Tenn. 548, 551, 411 S.W.2d 538, 539 (1967). Thus, the General Assembly may enact any legislation that is not forbidden by the Tennessee or federal constitutions. Fentress County Beer B d. v. Cravens , 209 Tenn. 679, 687, 356 S.W.2d 260, 263 (1962).

Therefore, the District’s co-ownership of West Tennessee A lliance or similar enti ties,

now or in the future, does not violate Article II, Section 31 of the Tennessee Constitution. T h e decision of the trial court on this issue is reversed. ARTICLE I, SECTION 8 In its ruling, the tria

l court also enjoin

ed th e Dis trict from opera ting Sight Care, Hea

lth Partners, or any other PPO in th e future, despite

the fact that

these entities are solely

owned by the District. The trial court did not articu late its reasoning. The defendants assert that the Hospital Authorit ies Act a

uthorizes their participation in the PPO business and that nothing in the Constitution prohibits such activity. Presumably

the trial court

agr eed with the plaintiffs’ argument that Article I, § 8 of the Tennessee Constitution bars the governmental operation of PPOs. Article I, § 8, known as the “law18

of the land” prov

ision, states: That no man shall

be taken or imprisoned, or disseized of his freehold, liberties or privileges,or outlawed, or exiled, or in anymanner destroyed or deprived of his life, liberty or property, but by the judgment of his peers or the law of the land. Tenn. Const. art. I, § 8. The plaintiffs’ argument is three-fold: 1) that the notion of a governmental entityengaging in a business already served by a private enterprise is repugnant to this provision and the spirit of the constitution; 2) that the defendants deprived the plaintiffs of proc

edural due proc

ess of law; and 3) tha

t the defendants d

eprived the plain

tiffs of equal pro

tection of the law

s. The plaint iffs cite

no authority for the proposition that Tennessee law forbids governmental entities from engaging in a proprietary capacity. I n fac t, governmental entities frequently

act as market participants. See, e.g., Reeves, Inc. v. Stake , 447 U.S. 429, 100 S.Ct. 2271, 65 L.Ed.2d 244 (1980) (state owned and operated a cement plant). Under the plaintiffs’ reasoning, state and local govern

ments could not oper

ate a hospital, sin

ce private hospit

als exis t . As noted above, the Tennessee Constitution is a limitation of powers, not a source of power. Perry , 219 Tenn. at 551, 411 S.W.2d at 539. Thus, the General Assembly may enact any legislation not forbidden by the Tennessee or federal constitutions. Cravens , 209 Tenn. at 687, 356 S.W.2d at 263. Under the Hospital Authorities Act, th e General Assem

bly granted the Dist

rict the right to participate in the PPO business. The District’s ownership of PPOs, such as Sight Care or Health Partners, i s aut horizedby the legislature and not forbidden by the Tennessee Constitution. This argu ment i s without merit. The plaintiffs also argue that the defendants deprived them of procedural due process of law. The plaintiffs assert that

they were denied due process when they were denied membership in Sight Care and when their contracts with Health Partners were terminated, because they were not afforded a hearing or an explanation for the defendants’ action or inaction. The due process prov

ision in Artic

le I, § 8 is consonant with the due process clause in the Fourteenth Amendment of the United States Constitution. Riggs v. Burson , 941 S.W.2d 144, 51 (Tenn. 1997). In Rowe v. Board of Educ. of the City of Chattanooga , 938 S.W.2d 351, 354 (Tenn. 1996), the Tennessee Supreme Court held: In a ddressing a claim of an unconstitutional denial of procedural due process, we applya two -step analysis. Initially we must determine whether [the plaintiffs’] interest rises to the level of a constitutionally protected property interest. If there is a constitutionally protected pro pe rty interest, then the second step is to weigh the competing interests of the plaintiff and government to determine what process is due19

and whether deprivation has occurred. With regard to the first step of the two-step analysis, the Court stated: To be entitled to procedural due process protection, a property interest must be more than a “u nilateral expec tation” or an “abstract need or de sire.” It must be a “legitimate claim

of entitlement” to

a specific bene

fit. Id. (quoting Board of Regents of State Colleges v. Roth , 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972) ). Thus, the claimant must have a “veste

d right” in order t

o assert this provision. Kaylor v. Bradley , 912 S.W.2d 728, 735 (Tenn. App. 1995). Once an e ntitle ment is shown, “the Due Process Claus

e simply does not man

date that all government

decisionmaking comply with standards that assure perfect, error-free

determinations.” State, ex rel. McCormick v. Burson , 894 S.W.2d 739, 743-44 (Tenn. App. 1994) (quoting Mackey

v. Montrym , 443 U.S. 1, 13, 99 S.Ct

. 2612, 2618, 61 L.Ed.2d 321 (1979)). Instead, “[d]ue process is flexible and calls for such procedural protections as the particular situation demands.” State v. Pearson , 858 S.W.2d 879, 885 (Tenn. 1993) (quoting Matthews v. Eldridge , 424 U.S. 319, 334, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976)). Three factors should be considered when determining the procedural safeguards that should be utilized: (1) the private interest affected by the official action; (2) the risk of erron eous deprivation of the interest through the procedures used and the probable value, if any, of additional saf

eguards; and, (3 ) the government’ s interest. Id. (quoting Matthews , 424 U.S. at 335, 96 S.Ct. at 903). The defendants

do not dispute that the

due process cla

use applies to them

since they opera

te in a governmental capacity. See Tennessee Cent . Ry. Co. v. Pharr

, 183 Tenn. 658, 664, 194 S.W.2d 486, 489 (1946) (“the r equirement s of due process of law extend to every case of the exercise of governmental power”); Hinton v. Threet , 280 F.Supp. 831, 840 (M.D. Tenn. 1968). The question then becomes whether the individual plaintiffs have demonstrated a vested interest. A “plaintiff has

no constitutional right to practice his profession at a public facility.” Meredith v. Allen County War Mem’l Hosp. Corp. , 397 F.2d 33, 35 (6th Cir. 1968) (citing Hayman v. City of Galveston , 273 U.S. 414, 47 S.Ct. 363, 71 L.Ed. 714 (1927)). Thus, there is no merit in the proposition that the plaintiffs have an entitlement

to be come members of Sight Care or any other network arrangement. Rowe , 938 S.W.2d at 354. No contract, statute, regulation, or any other act of law entitles them to6 Equa l protection is root ed in Article I, § 8

as well as Article

XI, § 8. Artic

le XI, § 8 declares: The Legislature shall have no power to suspend any general law for the benefit of any 20 membership

in Sight Care. Inste

ad, the only intere

st articulated by t

he plaintiffs is a

mere unilateral expectation or desire to be members. Id. However, the individual plaintiffs were members of He alth Par tners. Their memb

ership with Health Partners was governed by a preferred provider agreement. Outside of this agreement, there is no act of

law, statutory or other

wise, that entitles

the plaintiffs to be

members of Healt

h Partners. The agreement stated that either party may terminate the agreemen t “at any time, with or without

cause, by giving atleast 60 days prior written notice to the other party.” The plaintiffs do not allege that the defendants f

ailed to adhere t

o the terms of this contract and there is no allegation that Health Partners failedto follow its own pro cedures. The pla

intiffs do not argu

e that their contr

acts could be terminated only for good cause. Under these circumstances, the plai ntiffs si mply had no proper ty interest in an ind

efinite continuation of

their con tractual relati

onship with Health Pa

rtners. The membe

rship in Health Partners is analog ous to employment at will. See Rowe , 938 S.W.2d at 355 (“Substitute teachers

are nottenured . . . and have no ‘legitimate claim of entitlement’ to continued employment sufficient to give rise to a pr

operty interest. ”); Gregory v. Hunt , 24 F.3d 781, 785-87 (6th Cir. 1994) (under Tennessee law, “an at-will employee does not have a property intere st in continued employment unle ss it c an be shown that the employee had a reasonable expectation that termination would be only for good cause.” Id. at 785). The plaintiffs do not allege that they have been denied staff privileges at a pu

blic hospital. Cf. Armstrong v. Board o f Directors , 553 S.W.2d 77 (Tenn. App. 1976). The nature of the parties relation

ship does not e

ntitle the pla

intiffs to a hearing and an explanation for t

he termination of t

heir contracts. Their only interest is a unilateral expectation or desire for the contractualrelationship with Health Partners to continue. Rowe , 938 S.W.2d at 354. Therefore, the denial of the individual plaintiffs’ members hip in Sig ht Care and the termination of their contrac ts with Health Partn

ers w ithou t a hearing or an explanation does not violate the requirements of due process. In addition, the plaintiffs argue that the defendants

denied them equal protection of the law by treating “similarly situated citizens unequally.” 6 The plain tiffs argue that the de

fendantsparticular individual, nor to pass any law for the benefit of individuals inconsistent withthe general laws of

the land; nor to pass any law granting to any individual or individuals, rights, privileges, immunitie, [immunities] or exemptions other than su ch as may be, by the same

law extended to

any member

of the community, who may be able to bring himself within the provisions of such law. No cor po ration shall be created or its powers in creased or diminished by special laws but the General Assembly shall provide by general laws for the organization of all corpor a tions, hereafter created, which laws may, at any time, be altered or repealed and n o such alteration or repeal shall interfere with or divest rights which have become vested.

21 discriminated against

them by denying them membership into the network while inviting similarly situated doctors to join. Equal protection analysis under the Tennessee Constitution is identical to equal protection analysisunder the United States Constitution. Riggs , 941 S.W.2d at 52. The standard of scrutiny app lied depends on the nature of the right asserted or the class of persons affected. Id. Three standards of scr

utiny exist: (1) strict s crutiny, (2) heightened scrutiny, and (3) reduced scrutiny, applying the rational basis test. Brown v. Campbell Bd. Of Educ. , 915 S.W.2d 407, 413 (Tenn. 1995). In this case, the plaintiffs do not claim that th

ey are a suspec t class or that the defendants have denied them a fundamental ri ght. Therefore, we apply rational basis review. Riggs , 941 S.W.2d at 53. U nder rati onal basi s review: if some reasonable basis can be found for the classification . . . or

if any state of fa

cts may reasonably be conceived to justify it, the classification will be upheld. Id. (quoting Tennessee Small School Systems v. McWherter , 851 S.W.2d 139, 153 (Tenn. 1993); Newton v. Cox , 878 S.W.2d 105 , 110 (Tenn. 1994)). This is a “lenient” standard under which a defendant may satisfy its burden merely by demonstrating “ any possible reason or justification for the [the statute’s] passage.” Exxon Corp. v. Eagerton , 462 U.S. 176, 195, 103 S.Ct. 2296, 2308, 76 L.Ed.2d 497 (1983) ; Kelley v. 3-M C o. , 639 S.W.2d 437, 439 (Tenn. 1982) (emphasis added). The policy underlying t

he General Asse

mbly’s decision to a

uthorize the Distr

ic t to creat e PPOs is articulatedin Tennessee Code Annotated § 7-57-

501. The statute

states that “the increasing competition and changing con ditions forces hos

pitals and other he

alth care provid

ers to deve lop market strategies and str

ategic plans to effectively compete.” Id. In order to compe te in the health

care market, provider networks must be exclusionary. The individual plaintiffs’ provi der agreements22

withHealth Partners w

ere terminated b

ecause Health

Partners sought

to “limit its provider network in Madison County to

The Jackson Clinic, P.A., the West Tennessee Alliance for Healthcare, L.L.C., and physicians pract

icing in specia

lti es or subspecialt

ies not available

through either of

those organizations.” A resolution adopted by the Health Partners’ Board of Direct or s states that its provider network shall be limi ted so that it can enhance its ability to operate its managed care network. The re

solution states that

: t his enhancement can be accomplished in the most cost-effective manner b y contracting for physician servic es to the greates

t extent possible wi

th large multispecialty entities which off

er a st ructu re for the development of internal medical management

and utilization review programs and which effectively can enforce such programs with their member o

r employee physic

ians, thus limiting the

cost to Health Partners, Inc., of such programs[.] Soon th ereafter, the Board of Governors of West Tennessee Alliance approve d criteria f

o r membership, which includes the following provision: As an expression of

the commitment o

f the Company to integrity in the referral process, pract it ioners who have an Economic Conflict of Interest shall not be permitted to become or to remain Class P members of the Company. Since the individual plaintiffs retain an interest in an outpatient ophthalmologic surgery center that competes with the District, Health Partners could reasonably have concluded that they hadsuch an “Economic

Conflict of Inter

est.” Courts rare

ly “interfere w

ith decisions which further the hospital’s health care mission, even if they are at the expense of

a doctor or group of doctors.” Alfredson v. Lewisburg

Commun. Hosp. , No. 88-311 -II, 1989 WL 134739, *4 (Tenn. App. Nov. 8, 1989), reversed in part on other grounds, 805 S.W.2d 756 (Tenn. 1991). Consequently, we find a rational basis for the defendants’ denial of membership in the PPOs to the individual plaintiffs. Accordingly,

we hold that the defendants did not deprivet he plaintiffs of the constitutional right of equal protection of law by denying them membership in the provider networks. In sum, since the Distr

ict i s not a “ county, city or town” within the meaning of Article II, Section 29 of the Tennesse e Constitution, the de

fendants’ actio

ns do not viola

te Se ction 29. Likewise, the District is not w ithin the meaning of

“the State” unde

r Article II, Sec

tion 31 of th

e Tennessee Constitution, and the defendants’ actions do not violate Section 31. The Tennessee Constitution does not prohi bit the Di strict from operating a PPO simply because such entities are also operated by private businesses

. The defendants’ denial of membership in Sight Care to the individual plaintiffs and the termination of their contracts with Health Partners does not violate due23

processbecause the plaintiffs had no vested right in memb

ership in Sight Care

or Health Partne

rs; they had only a unilater

al expectation. Fi

nally, since the de

fendants have articulated a rational basis for the denial of

membership in the PPOs to the individual pla intiffs, the defendants’ actions do not deprive the individual plaintiffs of their right to equal protectionunder the law. Therefore, the trial court ’s grant of summary judgment and injunctive relief to the plaintiffs is reversed. Under the undisputed facts,

summary judgment mus

t be granted in fa

vor of the defen

dants. The decision of the trial court is reversed and remanded for further proceedings consistent withthis Opinion. Costs on appeal are taxed to A ppel lees, for which e xecution may issue

, if necessary.

HOLLY KIRBY LILLARD, J.

CONCUR:

W. FRANK CRAW

FORD, P. J., W.

S.

ALAN E. HIGHERS, J.