TO BE PUBLISHED
December 9, 1993
IN RE: James L. Thomerson/Kentucky Department of Insurance
OPEN RECORDS DECISION
This appeal originated in a request for records submitted by Lexington Herald-Leader reporter, Kit Wagar, to the Kentucky Department of Insurance on August 26, 1993. Mr. Wagar requested access to: (1) "all documents relating to lawsuits between Kentucky Central Life Insurance Company and its agents or former agents," and (2) "all correspondence between the Insurance Department or any official of the department and Steven Young, Tom LeDuc or Bernard Stroum" generated after January 1, 1992.
Mr. Gordon Goad, Counsel for the Department of Insurance, responded to Mr. Wagar's request on August 30, 1993. Noting that the Department "was not a party to the lawsuits between Kentucky Central Life Insurance Company and its agents or former agents," he nevertheless permitted Mr. Wagar to inspect the file maintained by the Department with the exception of:
1. 'Fax transmission' between Department of Insurance General Counsel and outside counsel for Kentucky Central Life Insurance.
2. 'Fax transmission' between outside counsel for Kentucky Central Life Insurance Company and the Department of Insurance General Counsel.
3. Letter from Kentucky Central counsel to the Department of Insurance General Counsel.
Mr. Goad argued that KRS 61.878(1)(k) and KRS 422A.050(3) operate in tandem to authorize nondisclosure of records protected by the attorney client privilege. In addition, he cited Kentucky Rule of Civil Procedure 26.02, prohibiting the discovery of privileged matter, and Supreme Court Rule 3.130-1.6 pertaining to the confidentiality of information relating to the representation of a client. It was Mr. Goad's position that the Department could not provide these documents without the consent of the client.
On behalf of his clients, The Lexington Herald-Leader Company and Mr. Wagar, Mr. James R. Thomerson appealed the decision of the Department of Insurance. He rejected Mr. Goad's invocation of the attorney client privilege, codified at KRS 422A.050(3), remarking:
The Department claims that the correspon-
dence are communications among attorneys representing the same client. [Patrick] Watts represented [Don W.] Stephens as the Commissioner of the Department. Stites [& Harbison] represented Stephens in his role as Rehabilitator of Kentucky Central. The Department is attempting to have Stephens wear both hats simultaneously and, thereby, make all communications between the Depart-
ment and Stites privileged despite the fact that none of the communications was with their respective clients -- Stephens the Commissioner and Stephens the Rehabili-
Continuing, Mr. Thomerson observed:
The Department cannot have the best of both worlds. It has denied that Kentucky Central became an arm of the Department by reason of it being placed in rehabilitation. Thus, when Stephens was acting as Rehabilitator, he was not acting in his role as a public official. When Stephens was acting as the Rehabilitator for Kentucky Central, he could
not have been Watts' client. Similarly, when Stephens was acting as Commissioner for the Department, he could not have been the client of Stites & Harbison. Thus, communi-
cations between the Department (Watts) and Stites & Harbison can never be communica-
tions between counsel for the same client. The communications between Watts, as general counsel for the Department and Stites & Harbison, as counsel for Kentucky Central, cannot be protected by any attorney-client privilege.
Mr. Thomerson notes that the consequences of the Department's "simultaneous hats" argument are significant.
If Stephens never steps out of his role as Commissioner, it would appear that all records, including Kentucky Central records, relating to his actions as the Rehabilitator should be made open under the Open Records Act. The Department denies this, arguing that Stephens is separate from the Depart-
ment when he is acting as the Rehabili-
tator. Clearly, the Department is attempt-
ing to deem Stephens to be a public official only when the end result will be to close Department records from public inspection.
Mr. Thomerson strongly objects to this "circuitous and contra-
On September 13, 1993, this Office requested addi-
tional information from the Department of Insurance to sub-
stantiate its position. Mr. Goad responded on September 22. He began by noting that under the Franklin Circuit Court's February 12, 1993, Order Directing Rehabilitation of Kentucky Central, Commissioner Stephens was appointed Rehabilitator. The Department's General Counsel, he explained, "represents the Commissioner in his role as [R]ehabilitator, as well as Commis-
sioner." In his view:
The disputed correspondence is between one attorney who represents the rehabilitator and another attorney who represents the company which is in rehabilitation. Both
attorneys indirectly represent the same client and correspondence or discussions between them is privileged.
To facilitate our review of the Department's decision, Mr. Goad furnished us with copies of the documents which are the subject of this appeal. Those documents were not disclosed to other parties, and have since been destroyed.
In his September 28 reply, Mr. Thomerson restated his objections to the Department's attempt to characterize Mr. Stephens as a public official only when it precludes release of otherwise public records. He argues:
If Mr. Stephens is acting as a public offi-
cial in both his capacities as Commissioner and [R]ehabilitator, then he is always the client of the General Counsel and is never the client of Stites & Harbison, counsel for Kentucky Central. If the '[R]ehabilitator' of Kentucky Central is not a public offi-
cial, then Mr. Stephens is the client of the law firm, rather than the General Counsel, with respect to his actions in this role. Either way, he can never be the client of both the firm and the General Counsel simul-
In conclusion, Mr. Thomerson asserts that since the two attorneys do not represent the same client, their correspon-
dence is not protected by the attorney client privilege and must be made available for inspection.
The question presented in this appeal is whether the Department of Insurance properly relied on KRS 61.878(1)(k) and KRS 422A.050(3) in denying Mr. Wagar's request for correspon-
dence between the Department's General Counsel and outside counsel for Kentucky Central Life Insurance Company's Rehabili-
tator. For the reasons set forth below, we conclude that the Department properly denied Mr. Wagar's request.
KRS 61.878(1)(k) excludes from the mandatory disclo-
sure provisions of the Open Records Act, "Public records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly." The new Kentucky Rules of Evidence provide
a clear evidentiary privilege for attorney client communica-
tions. KRS 422A.0503(2) defines the privilege:
A client has a privilege to refuse to disclose and to prevent any other person from disclosing a confidential communication made for the purpose of facilitating the rendition of professional legal services to the client:
* * *
(e) Among lawyers and their representatives representing the same client.
The attorney client privilege, which includes the work product doctrine, "applies in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client." Supreme Court Rule 3.130-1.6, Comment 5. The latter rule imposes an additional duty on an attorney representing a client to preserve the con-
fidentiality of information relating to representation of a client, "which applies in situations other than those where evidence is sought from the lawyer through compulsion of law." SCR 3.130-1.6, Comment 5. It is the opinion of this Office that the documents requested by Mr. Wagar, which consist of letters and fax transmissions by and between Patrick Watts and outside counsel for Kentucky Central's Rehabilitator, are protected from disclosure by the attorney client privilege, codified at KRS 422A.0503(2), and are therefore exempt from public inspection under KRS 61.878(1)(k).
In a recent decision, this Office analyzed in some depth the applicability of the Open Records Act to records which are "prepared, owned, used, in the possession of or retained by" the Commissioner of the Department of Insurance in his role as Rehabilitator of Kentucky Central. 93-ORD-113. There we recognized "that the line between the Commissioner's dual roles is not a clear one." At page 6 of 93-ORD-113 we observed:
Clearly, the Commissioner is a state govern-
ment officer, within the meaning of KRS 61.870(1)(a). Admittedly, he "wears two hats" in his dual roles as Rehabilitator and Commissioner. In our view, his appointment as Rehabilitator is a direct consequence of
the fact that he occupies the position of Commissioner, and it is only through his actions as Commissioner, in seeking reha-
bilitation of a troubled insurer, that he is so appointed. Simply stated, Rehabilitator Stephens cannot completely disassociate himself from Commissioner Stephens.
Based on this reasoning, we concluded that records which are "prepared, owned, used, in the possession of or retained by" the Commissioner must be treated as "public records" as defined in KRS 61.870(2).
Pursuant to KRS 304.33-160(1), the Commissioner as Rehabilitator is empowered to employ "such counsel, clerks, and assistants as deemed necessary." Patrick Watts, in his capac-
ity as General Counsel for the Department of Insurance, repre-
sents Commissioner Stephens as Rehabilitator of Kentucky Central. On February 19, 1993, the Franklin Circuit Court entered an order approving Stites & Harbison as counsel to the Rehabilitator. (Copy attached.) On March 10, 1993, the Court entered an order approving Geralds, Moloney & Jones as counsel to the Rehabilitator in "cases where there is a conflict and Stites and Harbison cannot serve, and in designated insurance defense matters for Kentucky Central Life Insurance Com-
pany[.]" (Copy attached). Clearly, each of these attorneys represents the same client, and confidential communications between them made for the purpose of facilitating the rendition of professional legal services are protected from disclosure by the attorney client privilege. Accordingly, we conclude that the Department of Insurance properly denied Mr. Wagar's re-
Mr. Thomerson may challenge this decision by ini-
tiating action in the appropriate circuit court pursuant to KRS 61.880(5) and 61.882. The Attorney General shall be notified of any actions filed against the Department of Insurance
pursuant to KRS 61.880(3), but he shall not be named as a party to these actions or in any subsequent proceedings.
AMYE B. MAJORS
ASSISTANT ATTORNEY GENERAL
Hon. Gordon Goad
Department of Insurance
229 West Main Street
Frankfort, KY 40601
Hon. James L. Thomerson
Stoll, Keenon & Park
201 East Main Street
Lexington, KY 40507-1380