                IN THE COURT OF APPEALS OF TENNESSEE
                             AT JACKSON
                                  July 19, 2012 Session

     CITY OF MEMPHIS CIVIL SERVICE COMMISSION v. STEVEN
                           PAYTON

              Direct Appeal from the Chancery Court for Shelby County
                 No. CH-11-0253-2     Arnold B. Goldin, Chancellor


               No. W2011-02501-COA-R3-CV - Filed November 7, 2012


A City of Memphis firefighter who participated in the City’s employee assistance program
was terminated after his second positive drug screen. The firefighter appealed his
termination to the Civil Service Commission. He argued that his drug screen results were
confidential under federal law and that he had not executed a consent form to authorize the
disclosure of the results to the City. The Commission overruled the firefighter’s motion to
exclude the test results and upheld his termination. The chancery court reversed, finding that
the drug screen results were inadmissible because the City had failed to comply with federal
law. We find substantial and material evidence to support the decision of the Commission,
and therefore reverse the decision of the chancery court.


 Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Reversed

A LAN E. H IGHERS, P.J., W.S., delivered the opinion of the Court, in which D AVID R. F ARMER,
J., joined and H OLLY M. K IRBY, J., concurred separately.

Iyona Hilliard Houston, Assistant City Attorney, Memphis, Tennessee, for the appellant, City
of Memphis Civil Service Commission

Darrell J. O’Neal, Memphis, Tennessee, for the appellee, Steven Payton
                                         OPINION

                           I.   F ACTS & P ROCEDURAL H ISTORY

       Steven Payton (“Payton”) was employed as a lieutenant with the City of Memphis
Division of Fire Services. On or about December 10, 2008, Payton submitted to a random
drug screen while on duty, and he tested positive for marijuana. Following an administrative
hearing at fire headquarters on December 18, 2008, Payton was suspended without pay for
360 hours, and he received a management referral to the City’s Employee Assistance
Program (“EAP”). Payton executed an agreement that provided, in pertinent part:

                                   CITY OF MEMPHIS

                          EMPLOYEE AGREEMENT
                         MANAGEMENT REFERRAL
            RETURN-TO-DUTY REQUIREMENTS and FOLLOW-UP TESTING

       The City of Memphis Government is a drug-free workplace. As a condition
       of your continued employment with the City, you must agree to the following
       terms:

       1.      To be assessed by an EAP counselor within seven (7) calendar days of
               this agreement.
       2.      To comply with all recommendations set forth by the EAP counselor.
       3.      To agree to the release of regular compliance reports regarding EAP
               recommendations.
       4.      To remain free of illegal drugs.
       5.      To refrain from misusing prescription drugs or alcohol.
       6.      To agree to return-to-duty and periodic drug and/or alcohol testing for
               a period of four (4) years as directed by the Drug Testing
               Coordinator/designee and your Division Director or designee.
       7.      To immediately report for drug/alcohol testing when notified.

       . . . You will not be allowed to work or to be on City property until you pass
       a return-to-duty test and you have obtained a written release from your
       Employee Assistance Program counselor or the City's Drug Testing
       Coordinator/designee.
       ....
Approximately six weeks later, on February 4, 2009, Payton was given a return-to-duty drug
screen, which was negative. Payton was permitted to return to work, and over the next

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several months, he passed several follow-up drug screens. However, on May 17, 2010, he
again tested positive for marijuana. Following another administrative hearing, Payton was
terminated effective May 26, 2010.

        Payton appealed his termination to the City’s Civil Service Commission. Prior to his
hearing, he filed a motion to exclude any documents or statements related to his drug
treatment records, including the positive drug screens. Payton basically argued that because
the City’s EAP is a federally assisted alcohol and drug abuse program, the records maintained
in connection with the program are confidential, and he had not consented to the release of
his records. Payton cited numerous federal statutes and regulations in support of his position,
and he also relied upon this Court’s opinion in Dickson v. City of Memphis Civil Service
Comm’n, 194 S.W.3d 457 (Tenn. Ct. App. 2005). In response, the City argued that it had
not obtained Payton’s drug test results from the EAP, and therefore, Dickson was
distinguishable. The Civil Service Commission denied Payton’s motion to exclude the
records upon concluding that the Return to Duty and Follow-up Testing Agreement, as well
as Payton’s positive follow-up drug test, “were part of the City’s disciplinary process . . . and
were not part of a Federally Funded EAP Program.” After considering the positive test
results and other evidence, the Commission concluded that Payton’s termination was justified
under all the circumstances.

        Payton filed a petition for writ of certiorari in the Shelby County Chancery Court.
Upon reviewing the record, the chancery court reversed the decision of the Civil Service
Commission and ordered Payton reinstated. The chancery court concluded that the facts of
this case are “identical” to those in Dickson, and that Payton’s test results were inadmissible
because of the City’s failure to comply with federal law. The City of Memphis and the Civil
Service Commission timely filed a notice of appeal.

                                   II.   I SSUES P RESENTED

       On appeal, the issues raised by the parties are essentially:

1.     Whether the trial court erred in concluding that Payton’s test results should have been
       excluded pursuant to federal law and Dickson v. City of Memphis Civil Serv.
       Comm’n, 194 S.W.3d 457 (Tenn. Ct. App. 2005); and
2.     Whether the Commission’s decision to uphold Payton’s termination was unsupported
       by substantial and material evidence and therefore arbitrary and capricious.

For the following reasons, we reverse the decision of the chancery court and affirm the
decision of the Commission to uphold Payton’s termination.



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                               III.   S TANDARD OF R EVIEW

       Judicial review of this matter is governed by the Uniform Administrative Procedures
Act, Tenn. Code Ann. § 4-5-322. See Tenn. Code Ann. § 27-9-114(b)(1).

       (h) The court may affirm the decision of the agency or remand the case for
       further proceedings. The court may reverse or modify the decision if the rights
       of the petitioner have been prejudiced because the administrative findings,
       inferences, conclusions or decisions are:
       (1) In violation of constitutional or statutory provisions;
       (2) In excess of the statutory authority of the agency;
       (3) Made upon unlawful procedure;
       (4) Arbitrary or capricious or characterized by abuse of discretion or clearly
       unwarranted exercise of discretion; or
       (5)(A) Unsupported by evidence that is both substantial and material in the
       light of the entire record.
       (B) In determining the substantiality of evidence, the court shall take into
       account whatever in the record fairly detracts from its weight, but the court
       shall not substitute its judgment for that of the agency as to the weight of the
       evidence on questions of fact.

Tenn. Code Ann. § 4-5-322. “Substantial and material evidence” has been defined as “such
relevant evidence as a reasonable mind might accept to support a rational conclusion and
such as to furnish a reasonably sound basis for the action under consideration.” Macon v.
Shelby County Gov’t Civil Serv. Merit Bd., 309 S.W.3d 504, 509 (Tenn. Ct. App. 2009).
It requires “‘something less than a preponderance of the evidence, but more than a scintilla
or glimmer.’” Id. (quoting Wayne County v. Tenn. Solid Waste Disposal Control Bd., 756
S.W.2d 274, 280 (Tenn. Ct. App. 1988)). We may reject the Commission’s factual findings
“only if a reasonable person would necessarily reach a different conclusion based on the
evidence.” Davis v. Shelby County Sheriff's Dep’t, 278 S.W.3d 256, 265 (Tenn. 2009)
(citing Martin v. Sizemore, 78 S.W.3d 249, 276 (Tenn. Ct. App. 2001)). However, the
“substantial and material evidence” standard still requires a “searching and careful inquiry”
that subjects the Commission’s decision to close scrutiny. Freedom Broadcasting of TN,
Inc. v. Tenn. Dep't of Revenue, 83 S.W.3d 776, 781 (Tenn. Ct. App. 2002). A court's
deference to an agency or commission's expertise is “‘no excuse for judicial inertia.’”
Willamette Indus., Inc. v. Tenn. Assessment Appeals Comm'n, 11 S.W.3d 142, 147 (Tenn.
Ct. App. 1999) (quoting Wayne County, 756 S.W.2d at 279). “An agency decision that is not
supported by substantial and material evidence is, by definition, arbitrary and capricious.”

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Outdoor Resorts at Gatlinburg, Inc. v. Utility Mgmt. Review Bd., No. E2011-01449-COA-
R3-CV, 2012 WL 1267858, at *5 (Tenn. Ct. App. Apr. 13, 2012) (citing Jackson Mobilphone
Co. v. Tenn. Pub. Serv. Comm'n, 876 S.W.2d 106, 110 (Tenn. Ct. App. 1993)).

                                           IV.     D ISCUSSION

       Federal statutes and regulations impose restrictions upon the disclosure and use of the
records of alcohol and drug abuse patients maintained in connection with the performance
of any federally assisted alcohol and drug abuse program. See 42 C.F.R. § 2.3(a). These
confidentiality rules “are intended to insure that an alcohol or drug abuse patient in a
federally assisted alcohol or drug abuse program is not made more vulnerable by reason of
the availability of his or her patient record than an individual who has an alcohol or drug
problem and who does not seek treatment.” 42 C.F.R. § 2.3(b)(2).

        The relevant federal statute is 42 U.S.C.A. § 290dd-2, which provides, in part:
        Records of the identity, diagnosis, prognosis, or treatment of any patient which
        are maintained in connection with the performance of any program or activity
        relating to substance abuse education, prevention, training, treatment,
        rehabilitation, or research, which is conducted, regulated, or directly or
        indirectly assisted by any department or agency of the United States shall,
        except as provided in subsection (e) of this section, be confidential and be
        disclosed only for the purposes and under the circumstances expressly
        authorized under subsection (b) of this section.

42 U.S.C.A. § 290dd-2(a). One of the circumstances in which disclosure is permitted under
subsection (b) is in case of the patient’s prior written consent:

        The content of any record referred to in subsection (a) of this section may be
        disclosed in accordance with the prior written consent of the patient with
        respect to whom such record is maintained, but only to such extent, under such
        circumstances, and for such purposes as may be allowed under regulations
        prescribed pursuant to subsection (g) of this section.1

42 U.S.C.A. § 290dd-2(b)(1). Federal regulations specifically address the form of written
consent that is required for disclosure of a patient’s records. There are nine “required


        1
           The federal regulations implementing these confidentiality provisions are found at 42 C.F.R. § 2.1,
et seq. “The patient records to which these regulations apply may be disclosed or used only as permitted by
these regulations and may not otherwise be disclosed or used in any civil, criminal, administrative, or
legislative proceedings conducted by any Federal, State, or local authority.” 42 C.F.R. § 2.13(a).

                                                     -5-
elements” that must be included on a written consent form,2 and “disclosure may not be made
on the basis of a consent which . . . [o]n its face substantially fails to conform to any of the
requirements[.]” 42 C.F.R. § 2.31.

       In the case before us, the City’s drug testing coordinator, who testified before the
Commission, admitted that she was not aware of any consent form executed by Payton that
authorized her, or the City, to access his drug screen results. We note that the written
agreement executed by Payton in which he agreed to the EAP assessment, entitled
“Management Referral - Return-to-Duty Requirements and Follow-up Testing,” provided:

       Confidentiality will be observed to the extent permitted by law. However,
       substance abuse and employment with the City of Memphis Government are
       incompatible. . . . Any information regarding the resumption of alcohol misuse
       or drug abuse will be reported to the Drug Testing Coordinator and to your
       Division Director or designee and will result in disciplinary action. . . .

       My signature below indicates that I have read, understand, and agree to these
       provisions for returning to duty with the City of Memphis Government. I also
       understand that a record will be maintained regarding my drug/alcohol testing
       results and my compliance with the recommendations made by my Employee
       Assistance Program counselor. I understand that this information can be used
       in my behalf or in the City’s behalf in any administrative or legal proceedings


       2
           The required elements, listed in 42 C.F.R. § 2.31, are:

       (1) The specific name or general designation of the program or person permitted to make
       the disclosure.
       (2) The name or title of the individual or the name of the organization to which disclosure
       is to be made.
       (3) The name of the patient.
       (4) The purpose of the disclosure.
       (5) How much and what kind of information is to be disclosed.
       (6) The signature of the patient [or person authorized to sign for a minor, incompetent, or
       deceased patient]
       (7) The date on which the consent is signed.
       (8) A statement that the consent is subject to revocation at any time except to the extent that
       the program or person which is to make the disclosure has already acted in reliance on it.
       Acting in reliance includes the provision of treatment services in reliance on a valid consent
       to disclose information to a third party payer.
       (9) The date, event, or condition upon which the consent will expire if not revoked before.
       This date, event, or condition must insure that the consent will last no longer than
       reasonably necessary to serve the purpose for which it is given.

                                                     -6-
        or situations wherein the records are relevant to my employment, including,
        but not limited to, disciplinary matters, grievance and arbitration matters, Civil
        Service Commission appeals, court proceedings and/or Unemployment
        Compensation matters.

However, this document clearly failed to contain all of the “required elements” of a proper
patient consent form pursuant to the aforementioned federal regulations. In fact, the City
concedes that this document is not a valid patient consent form under the federal regulations.3
The City basically claims that there was no need for a consent form in the instant case
because Payton’s drug screen was not part of the Employee Assistance Program, and
therefore, it was not subject to the federal regulations. The question before us, then, is
whether Payton’s drug screen results were subject to the federal confidentiality rules.

        Again, the relevant federal statute states that
        Records of the identity, diagnosis, prognosis, or treatment of any patient which
        are maintained in connection with the performance of any program or activity
        relating to substance abuse education, prevention, training, treatment,
        rehabilitation, or research, which is conducted, regulated, or directly or
        indirectly assisted by any department or agency of the United States shall,
        except as provided in subsection (e) of this section, be confidential and be
        disclosed only for the purposes and under the circumstances expressly
        authorized under subsection (b) of this section.

42 U.S.C.A. § 290dd-2(a). There is surprisingly little information in the record regarding
the nature of the City’s EAP program.4 However, the City’s drug testing coordinator testified
that when the drug test in question was administered, Payton had already been “released”
from the EAP and placed in the “follow-up program.” She explained that this is the standard
procedure for employees who have completed their “treatment status.” We find that this
testimony provides substantial and material evidence to support the Commission’s finding
that the follow up drug screen administered to Payton was for disciplinary reasons; it was not
for treatment. There is simply no evidence in this record from which we could conclude that



        3
          Before the Commission, the City acknowledged that the written agreement executed by Payton was
“not a consent form” to release patient records.
        4
          We note that, throughout the proceedings below, the City alternatively argued that it could release
and use drug test results of federal program participants without their consent, according to 49 C.F.R. §
40.323. The Commission agreed. The chancery court reversed this finding upon concluding that the cited
regulation applies only to DOT testing, and therefore, it was inapplicable in this matter. The City did not
appeal the chancery court’s finding in that regard.

                                                    -7-
the drug screen was for the purpose of “diagnosis, prognosis, or treatment.” 5 See 42
U.S.C.A. § 290dd-2(a) Therefore, we agree with the Commission’s conclusion that the
record of Payton’s drug screen was not subject to the federal confidentiality rules cited
above.

        Although Dickson v. City of Memphis Civil Service Comm’n, 194 S.W.3d 457 (Tenn.
Ct. App. 2005) is factually similar, it does not resolve the issues presented in this case. In
Dickson, a Memphis firefighter voluntarily reported to the City’s EAP for treatment due to
marital problems. Approximately six weeks later, he signed a “Follow–Up Substance Abuse
Testing Agreement,” in which he agreed to periodic drug and alcohol testing for a period of
four years. After he passed a return-to-duty drug screen, he was “discharged from the initial
treatment program” and permitted to return to work. A few months later, the firefighter
submitted to a follow-up drug screen, which tested positive for cocaine. His positive test
results were released to the EAP and to the City, and following an administrative hearing, the
firefighter was terminated. On appeal to the Civil Service Commission, the firefighter
objected to the admission of the positive drug screen on grounds that such admission violated
his federal privacy rights. The Commission overruled the objection, allowed the positive test
results into evidence, and upheld the termination. The chancery court reversed, and this
Court affirmed the chancery court’s decision. We concluded that the “Follow-Up Substance
Abuse Testing Agreement” signed by the firefighter did not contain the required elements
for a valid patient consent form under 42 C.F.R. § 2.31. As such, the follow-up drug screen
results were inadmissible due to the City’s failure to comply with the federal regulations.
Clearly, the focus of our analysis in Dickson was on the sufficiency of the consent forms
signed by the patient. The Dickson opinion does not specifically state how the Court reached
its conclusion that the drug screen results were subject to the federal confidentiality rules in
the first place. It simply applied 42 U.S.C. § 290dd-2, as the federal statute "that covers what
an agency must do in order to be in compliance with the federal law when they receive
federal funds." Id. at 464. In the case before us, we are squarely presented with issues that
were not discussed in Dickson.




        5
          The parties failed to discuss the relevant statutory language in their briefs on appeal, so Payton has
not presented any argument to suggest that the drug screen result was a record regarding diagnosis, prognosis,
or treatment.

                                                      -8-
                                    V.   C ONCLUSION

       For the aforementioned reasons, the decision of the circuit court is hereby reversed,
and the Commission’s decision to uphold termination is affirmed. Costs of this appeal are
taxed to the appellee, Steven Payton, for which execution may issue if necessary.

                                                  _________________________________
                                                  ALAN E. HIGHERS, P.J., W.S.




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