TO BE PUBLISHED
August 5, 1993
IN RE: G. Townsend Underhill III/University Diagnostic Imaging
OPEN RECORDS DECISION
This matter comes to the Attorney General on appeal from the actions of University Diagnostic Imaging Associates, P.S.C., and its former president, Dr. Hollis Thomas, in responding to a series of requests to inspect the Corporation's records. Those requests were made by "a group of senior faculty members of the Department of Diagnostic Radiology at the University of Louisville and former employees and beneficiaries of [the Corporation]," who are represented in this appeal by Mr. G. Townsend Underhill III, Esq. Mr. Underhill indicates that Dr. Thomas "has maintained a strict non-disclosure policy in regard to his former employees and beneficiaries."
It is Mr. Underhill's position that his clients are entitled to inspect the records of the Corporation under the Open Records Act. His argument is premised on the following set of facts:
[University Diagnostic Imaging Associates, P.S.C.] was physically sheltered in a publicly-owned facility (University Hospital) and generated its income through the use of publicly purchased equipment. The employees of the corporation who generated the majority of the income through their professional fees and services were largely funded by state funds (Employees of the University of Louisville). Furthermore, the corporation received medical
reimbursements for professional services rendered through Medicaid and Medicare from 1986 to 1992.
Mr. Underhill urges this Office to issue a decision consistent with these views.
On behalf of University Diagnostic Imaging Associates, P.S.C., Mr. William H. Hollander, Esq., responded to these arguments. He explained that his firm's client is a Kentucky professional service corporation, organized in 1984, whose sole shareholder, since 1986, has been Dr. Thomas. Although the Corporation used the facilities of Humana Hospital University of Louisville in rendering radiological services to patients, Humana, Inc., which is not a public agency, leased the hospital, the Corporation's contract to perform services at the hospital was with Humana, Inc., and the equipment which the Corporation's physicians used in their work was owned by Humana, Inc.
Moreover, Mr. Hollander asserts:
[T]he fact that the Corporation's employees worked out of a publicly-owned facility clearly would not make the Corporation a 'public agency,' even if Humana was not the lessee of the facility. Most radiologists, and a number of other medical specialists such as anesthesiologists, routinely use the facilities of public hospitals in their practices, and it has never been held that such private practitioners become 'public agencies' by that fact.
In support of his position, Mr. Hollander cites OAG 91-15 in which this Office held that records relating to concession moneys collected at city-owned golf courses by golf professionals who had entered into lease agreements with the Louisville and Jefferson County Parks Department were not subject to public inspection. This Office ruled that the financial records maintained by the golf professionals were private records which were not in the possession of a public agency, and were therefore not subject to the Open Records Law.
In response to Mr. Underhill's argument that the Corporation is a public agency because many of its employees
were employees of the University of Louisville, Mr. Hollander observes:
The employees to whom Mr. Underhill refers are physicians who taught at the University of Louisville Medical School. Their contracts with the University specifically allowed them to engage in the private practice of medicine -- and they did so through their employment by the Corporation. Mr. Underhill does not seek records regarding the physicians' employment by the University, which are public records. Instead, he seeks records regarding the physicians' employment by a private corporation. If Mr. Underhill's theory was followed, the records of private corporations for whom public employees moonlight would automatically be public records, an absurd result.
He notes that in OAG 91-15, this Office distinguished between records dealing with the golf professionals' work as city employees and records dealing with their private concession businesses.
Turning to Mr. Underhill's final argument, Mr. Hollander contends that the fact that the Corporation received medical reimbursement for professional services rendered through Medicare and Medicaid from 1986 to 1992 does not place the Corporation in a different position from any other medical practice. He notes that neither this Office nor the courts have ever held that private medical practitioners become "public agencies" by virtue of the fact that they receive government funds as direct payment for services rendered to patients. "If that were so," Mr. Hollander argues, "many private physicians and hospitals would be subject to the Open Records Law, and they would thereby be discouraged from serving senior citizens and the poor, who benefit from the Medicare and Medicaid programs."
In a follow-up letter to this Office, Mr. Underhill disputes a number of these contentions. He states that it was only by virtue of Dr. Thomas' appointment as chairman of the Diagnostic Radiology Department in 1986 that he was "permitted" to become president of University Diagnostic Imaging Associates. As chairman, Mr. Underhill maintains, Dr. Thomas
was involved in policy making in the Department of Diagnostic Radiology. He therefore extrapolates that University Diagnostic Imaging Associates falls within the definition of KRS 61.870(1)(f), relating to "[e]very state or local government agency, including the policy-making board of an institution of education, created by or pursuant to state or local statute, executive order, ordinance, resolution, or other legislative act [.]"
Mr. Underhill also disputes Mr. Hollander's contention that the Corporation had no office space at Humana Hospital University and that its billings were done by a private Corporation located elsewhere. His clients inform him that both Dr. Thomas and the Corporation's business manager were "housed in a public building, namely University Hospital . . . ." Further, the business manager was a University employee. In his view, "the billing was intimately connected, and had a definite nexus to University Hospital and the University of Louisville."
With respect to the analogy drawn by Mr. Hollander to OAG 91-15, Mr. Underhill observes:
My clients are all teachers as Professors within the University of Louisville. Their practice of medicine is mandated by University policy that they participate in the private practice plan. This is no way a moonlighting issue. It is their teaching that supplied the services for which Dr. Thomas billed and controlled U.D.I.A. . . . My client's contract and commitment is with the University of Louisville and not with Dr. Thomas or U.D.I.A.
In response to Mr. Hollander's assertion that the Corporation's receipt of Medicare and Medicaid payments does not render it a public agency for purposes of the Open Records Law, Mr. Underhill maintains that it was his client's understanding that because they were University of Louisville faculty these funds would be distributed within the Department in accordance with the Professional Practice Plan.
In closing, Mr. Underhill asserts that his clients are not disgruntled employees but are instead Dr. Thomas' professional colleagues who "only seek to acquire basic
information concerning their medical services that were supplied to U.D.I.A. from 1986 to 1992."
We are asked to determine whether University Diagnostic Imaging Associates, P.S.C., is a "public agency" for purposes of the Open Records Law. We are persuaded by Mr. Hollander's well-reasoned response to Mr. Underhill's argument, and conclude that the Corporation is not subject to the Open Records Law.
KRS 61.870(1) defines a "public agency" as:
(a) Every state or local government officer;
(b) Every state or local government department, division, bureau, board, commission, and authority;
(c) Every state or local legislative board, commission, committee, and officer;
(d) Every county and city governing body, council, school district board, special district board, and municipal corporation;
(e) Every state or local court or judicial agency;
(f) Every state or local government agency, including the policy-making board of an institution of education, created by or pursuant to state or local statute, executive order, ordinance, resolution, or other legislative act;
(g) Any body created by state or local authority in any branch of government;
(h) Any body which derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds;
(i) Any entity where the majority of its governing body is appointed by a public agency as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (j) or (k) of this subsection; by a member or employee of such a public agency; or by any combination thereof;
(j) Any board, commission, subcommittee, ad hoc committee, advisory
committee, council, or agency, except for a committee of a hospital medical staff, established, created, and controlled by a public agency as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (k) of this subsection; and
(k) Any interagency body of two (2) or more public agencies where each public agency is defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (j) of this subsection[.]
It is immediately apparent that the Corporation may be deemed a "public agency" for purposes of the Open Records Law only if it derives "at least 25% of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds[.]"
We reject Mr. Underhill's assertion that the Corporation falls within the definition of "public agency" set forth at KRS 61.870(1)(f) insofar as Dr. Thomas was involved in policy making as chairman of the Diagnostic Radiology Department. In our opinion, this has no bearing on his "extracurricular" activities on behalf of University Diagnostic Imaging Associates, which was clearly not the policy making board of an educational institution. Nor, in our view, can it be characterized as a state or local government agency created by ordinance, within the meaning of KRS 61.870(1)(f). The University's Professional Practice Plan is not a local ordinance as that term is typically defined. See e.g., KRS 67.075(1) defining a county ordinance as "an official written act of a fiscal court, the effect of which is general and lasting in nature." Moreover, we question Mr. Underhill's assertion that the Corporation "was created by and according to the [Practice Plan]." As noted by Mr. Thomas H. Lyons, University Counsel, in a letter to this Office dated July 1, 1993, "The form of practice and specific organization of the practice is a private matter not controlled by this plan." The Corporation's Articles of Incorporation indicate that University Diagnostic Imaging Associates was organized in 1984 as a professional service corporation under Chapter 274 of the Kentucky Revised Statutes "to engage in the practice of medicine." The remaining question is, therefore, from what source does the Corporation derive its funding.
We concur with Mr. Hollander in his view that OAG 91-15 is largely dispositive of this appeal. In that opinion, a copy of which is attached, this Office was asked to determine
whether the records of five golf professionals were "public records" for purposes of the Open Records Law. The golf professionals had been hired by the City of Louisville, at a salary of $1,300 a year, to supervise and maintain municipal golf courses and collect green fees, and had also entered into a lease agreement with the Louisville and Jefferson County Parks Department granting them the exclusive right to operate food and golf accessory concessions, and to retain all proceeds from these concessions. It is instructive to quote at length:
There appears to be no dispute among the parties that the records sought for inspection by the Courier-Journal are in the possession of five individual 'golf professionals.' These five individuals serve both as employees of the City of Louisville and as lessees with the Louisville and Jefferson County Parks Department. The City of Louisville has apparently made available for inspection all records and correspondence requested by the Courier-Journal which are maintained by these individual golf professionals in their capacity as employees of the city. Such records and correspondence include receipts of green fees collected by the golf professionals on behalf of the City of Louisville. These are clearly public records in the possession of a public agency, regardless of whether these golf professionals are defined as employees or officers.
However, these individuals also generate and maintain various records in their capacity as lessees with the Louisville and Jefferson County Parks Department. These records pertain to sale of food, beverages, golf supplies, equipment and accessories, and furnishing golf lessons which are 'concession' rights granted to these individuals in their capacities as lessees. It is these records which the Courier-Journal apparently wishes to inspect. The records of 'concession' money earned and collected by these five individuals is not subject to mandatory audit by the City of Louisville or Jefferson
County and the 'concession' fees do not at any time become public money so as to constitute funding by state or local authority. Therefore, records pertaining to these transactions are in the possession of private individuals responsible for their generation, maintenance, and storage in their capacity as lessees with the Louisville and Jefferson County Parks Department. These records are therefore not 'in the possession of or retained by a public agency' as argued by the Courier-Journal. See OAG 82-216.
OAG 91-15, at p. 5. The Attorney General thus concluded that the fact that the golf professionals were "physically sheltered" in publicly owned property and generated their income using that property did not transform records relating to their private concession business into public records. A contrary ruling, we concluded, "would have a 'chilling effect' and discourage individuals, businesses, and corporations from entering into contracts with public agencies." OAG 91-15, at p. 5-6.
The arguments against treating University Diagnostic Imaging Associates as a public agency are even more convincing. Like other medical specialists, the radiologists employed by the Corporation used the facilities of Humana Hospital University of Louisville. However, the Corporation's lease, and its contract to perform services, was with Humana, Inc., not a public agency. In addition, the equipment used by the radiologists was owned by Humana, Inc. Hence, the "physical" link between the Corporation and Humana Hospital University was more tenuous than that which existed between the golf professionals and the Parks Department in OAG 91-15. This fact notwithstanding, we agree with Mr. Hollander that the mere use of public facilities by a private practitioner does not transform the Corporation with which that practitioner is associated into a "public agency." See e.g., OAG 84-382 and OAG 92-62, holding that the Kentucky Educational Foundation, Inc. and the Eastern Kentucky University Interfraternity and Panhellenic Councils, respectively, were not "public agencies" within the meaning of KRS 61.870(1) despite the fact that they used public facilities to conduct their meetings. Compare, OAG 89-92, holding that the Kentucky State University Foundation, Inc., whose offices were located at KSU, whose records were in the possession of KSU, whose operations were overseen by KSU,
and whose key officers were employees of KSU, was a "public agency" as defined in KRS 61.870(1).
We find equally persuasive Mr. Hollander's argument that the Corporation cannot be properly characterized as a "public agency" simply because many of its employees were also employees of the University of Louisville. Like the golf professionals who were the subject of OAG 91-15, the physicians who were employed by the University of Louisville were permitted to engage in private practice, and did so through their association with the Corporation. In that opinion, we distinguished between records relating to the golf professional's private and public employment. Mr. Hollander concedes that if Mr. Underhill wished to inspect records relating to their public employment, the Corporation would be obligated to release them. Here, however, he requests access to records relating to their private employment. As Mr. Hollander correctly observes, if this theory were followed to its logical conclusion, "all records of private corporations for whom public employees moonlight would automatically be public records . . . ." We fully concur with Mr. Hollander in the view that the legislature could not have intended such an absurd result.
We do not find the analogy between these physicians and the golf professionals in OAG 91-15 drawn by Mr. Hollander to be inapposite or in any sense demeaning. In our view, this is a "moonlighting" issue. Although under the Practice Plan faculty members are encouraged to participate in outside professional practice, that practice is independent of their University affiliation. Contrary to Mr. Underhill's assertions, it was not the physicians' medical school teaching that supplied the services for which Dr. Thomas billed, but their services as private practitioners with University Diagnostic Imaging Associates. The only funds which passed between the University and U.D.I.A. under the Plan, passed from U.D.I.A. to the University. In other words, the University received funds from the physicians who engaged in private practice through U.D.I.A., but U.D.I.A. received no funds from the University in support of their private practice. The Corporation therefore cannot be said to have derived twenty-five percent (25%) of its funds from state or local authority.
We also reject Mr. Underhill's final argument. It is his position that the Corporation is a "public agency" because it received reimbursement for professional services rendered through Medicare and Medicaid. While this Office has never directly addressed this issue in the context of an open records appeal, we believe that the language of KRS 61.870(1)(h), and its underlying rationale, do not support his argument.
KRS 61.870(1)(h) defines a "public agency" as:
Any body which derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds[.]
In our view, the provision was intended to insure that bodies which receive 25% or more of their funding from state or local authority funds could be held publicly accountable for those funds. It was not intended to subject to public scrutiny the records of private physicians who receive state or federal funds as reimbursement for their services. Other mechanisms exist for holding these individuals accountable for the funds they receive. See, e.g., KRS 205.845 et seq. If, as Mr. Hollander correctly observes, private physicians and hospitals were treated as "public agencies," subject to the Open Records Law, because they receive government funds as direct payment for services rendered to patients, they would be discouraged from serving senior citizens and the poor, who benefit from the Medicare and Medicaid programs. We therefore hold that Medicare and Medicaid funds do not constitute "state or local authority funds" in determining whether a body receives 25% or more of its funds from public coffers.
In OAG 88-64, this Office expounded upon its limitations in resolving open records disputes. At page 2 of that opinion, we observed:
Given the limited role for the Attorney General contemplated by the statutes and the office's limited resources, the Attorney General cannot truly be a 'judge' in the sense of reviewing volumes of documents, listening to testimony, considering briefs, etc. In the final analysis, the application and meaning of the Open Records Act can only be determined by a court of law.
As is so often the case, there are factual disputes present in this appeal which we are not equipped to resolve. The overwhelming weight of the evidence suggests to us, however, that University Diagnostic Imaging Associates, P.S.C., is not a "public agency" within the meaning of KRS 61.870(1), and is therefore not subject to the Open Records Law.
Mr. Underhill may challenge this decision by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882.
AMYE B. MAJORS
ASSISTANT ATTORNEY GENERAL
Hon. G. Townsend Underhill III
100A Kentucky Towers
Louisville, KY 40202
Hon. Tom Luber
Wyatt, Tarrant & Combs
Louisville, KY 40202
Hon. William H. Hollander
Wyatt, Tarrant & Combs
Louisville, KY 40202