Private contractors who provide government services and depend largely on the government for their revenues are subject to state audit and must open their records under the state's Public Records Act.
The decision from the Tennessee Supreme Court in September came in a case involving Cherokee Children and Family Services in Shelby County. After two children in its care died in 1999, the Memphis Commercial Appeal sued Cherokee to release its records. "In the Cherokee case, and in a growing number of cases as government increasingly turns to private contractors to deliver public services, public interests are at stake," the newspaper wrote in an editorial.
The court ruling could open other contractors to scrutiny and audits, including health maintenance organizations that provide services under TennCare, the state's Medicaid insurance program. "If an agency is created solely to provide services to government," says Dennis Dycus, director of the state division of municipal audit, "then we have the right to audit their records."
There has already been one follow-up lawsuit in wake of the decision. The Memphis Convention and Visitors Bureau, although it derives more than 90 percent of its funding from taxes, is suing the Commercial Appeal to block the paper from viewing its financial and travel records. The bureau argues its promotion of tourism is not a government function and that opening its records will benefit its competitors.