May 24, 1994





IN RE: Erlindo G. Valera, M.D./Pikeville United

Methodist Hospital of Kentucky, Inc.






This matter comes to the Attorney General as an appeal by legal counsel for Erlindo G. Valera, M.D., in connection with his attempts to secure copies of various documents from the Pikeville United Methodist Hospital of Kentucky, Inc.


In a letter to the administrator of the hospital, dated August 27, 1993, Donald H. Combs, Esq., legal counsel for Erlindo G. Valera, M.D., requested access to various documents.


Pamela Todd Robinette, Esq., legal counsel for the hospital, in a letter to Mr. Combs, dated September 2, 1993, acknowledged receipt of his letter and replied as follows relative to the requests submitted under the Kentucky Open Records Act and the Freedom of Information Act:


I am most curious as to what provisions you feel of those Acts apply to the hospital and your legal justification as to the basis upon which you claim these documents should be released to you. After I receive this information I will respond appropriately.


In a letter to Ms. Robinette, dated September 7, 1993, Mr. Combs said in part that it is his position that the Open Records Act applies to the hospital as the hospital is a public agency under KRS 61.870(1). He maintained that the hospital is owned by the city and that it derives at least twenty-five percent of its funds from state or local authority. He further stated that the records requested are public because they are

prepared, owned, used, in the possession of, or retained by a public agency.


Mr. Combs, in a letter to the Attorney General, also dated September 7, 1993, requested that his letter be treated as an appeal under the Open Records Act as the hospital's "letter inquiry" is an attempt to subvert the intent of the Open Records Act short of issuing a denial. KRS 61.880(4).


Ms. Robinette advised Mr. Combs in a letter dated September 9, 1993, that the hospital is not a public agency under the Open Records Act and that copies of the requested documents would not be furnished.


The Attorney General's Office directed a letter to Ms. Robinette, dated September 14, 1993, requesting in part that she respond to the question of whether the hospital is a "public agency" under KRS 61.870(1) of the Open Records Act.


That letter evidently crossed in the mail with Ms. Robinette's letter to the Attorney General, dated September 13, 1993, in which she again denied that the Open Records Act applied to the hospital. In attempting to explain the relationship between the hospital and the city she said in part:


In the late 1960's and early 1970's, pursuant

to a Holding Company Plan of Bond Financing, then recognized in Baker v. City of Lexington, Ky.App., 273 S.W.2d 34 (1954) and now codified in KRS Chp. 58, the City of Pikeville issued bonds for the construction of a 221 bed general acute care hospital. Those bonds totalling almost three million dollars were issued to the Department of Housing and Urban Development of the United States of America and to the Economic Development Administration of the Department of Commerce of the United States of America. At the time the bonds were sold, it was necessary to create a corporation known by the name of Pikeville, Kentucky Public Hospital Corporation, an agency of Pikeville City Government to issue the bonds. At the time the bonds were sold it was mandated by Federal Law that the title to the real estate on which the hospital was located, which was then held by Methodist

Hospital of Kentucky, Inc., be transferred to the City of Pikeville. The City of Pikeville then transferred ownership of the hospital property to Pikeville, Kentucky Public Hospital Corporation which now holds title to the real estate in question. Pikeville Public then in turn leased the property to the City of Pikeville, which in turn subleased the facility to Pikeville United Methodist Hospital of Kentucky, Inc. Pursuant to the terms of the sublease agreement the hospital has the right to operate and manage the facility and to supervise the operations of all departments thereof. Pikeville United Methodist Hospital was not an agency created by statute nor by government entity, but in fact has been a private corporation in existence since the early 20's.


Ms. Robinette further stated that the sublease is a management contract and is annually renewable through the year 2009 when the bonds are scheduled for retirement. The hospital pays the city an annual rental fee for the right to operate the facility. The city and state do not provide any funding for the operation of the hospital facility. The corporation, therefore, does not derive twenty-five percent of its funds from state or local authority.


Mr. Combs, in a letter to the Attorney General, dated September 14, 1993, referred to his letter to the Attorney General of September 7, 1993 and again requested a decision as to the applicability of the Open Records Act to the hospital.


The last document reviewed by this office is a letter from Ms. Robinette, dated November 30, 1993, in which she said that there have been further changes which have decreased the city's involvement in the oversight of the hospital. New bonds have been issued, the old bonds have been paid off, and the property has been transferred from the Pikeville, Kentucky Public Hospital to the city. Ms. Robinette said in part:


One of the most important aspects of the transaction as it relates to this request was the execution of a new lease between the City of Pikeville and Pikeville United Methodist Hospital Corporation. The lease as executed by the City is a 15 year lease.

In the lease itself, the City retains no right to control management nor operation of the hospital unless the hospital enters into a financial situation where it is so unstable that it is unable to make the necessary payments on the Industrial Revenue Bonds. As in the past, no funds will flow from the City to the hospital and the new indebtedness will not expose the City to any liability. As stated earlier, Pikeville United Methodist Hospital is merely a corporation that leases property from the City to operate a not-for-profit hospital.


While we have spent a substantial amount of time in setting forth the somewhat complicated factual situation involved in this appeal, two previously issued decisions of this office will reduce the necessity of a lengthy analysis of those facts to the applicable law.


In OAG 92-66, copy enclosed, an opinion dealing with a request for access to documents involving the Pikeville United Methodist Hospital of Kentucky, Inc., this office concluded that the records were properly withheld pursuant to KRS 61.878(1)(b), now codified as KRS 61.878(1)(b) and (c). While the records involved were ruled to have been properly withheld pursuant to a statutorily recognized exception to public inspection, those records were said to be public records under KRS 61.870(2) because they were in the possession of a public agency, the city. In this situation the records are apparently in the custody of the hospital, a private nonprofit corporation which receives no funds from the city or state.


Assuming that the requested records are in the possession of the hospital, a private nonprofit corporation which receives no funds from the city or state, and that the city is not involved in the operation of the hospital at this time, the records in this situation were properly withheld because they are not public records of a public agency as those terms are defined in KRS 61.870(1) and (2). Since no funds are received from the city and state the hospital cannot be a public agency under KRS 61.870(1)(h) as it is not an entity which receives at least twenty-five percent of its funds expended from state or local authorities.


In 94-ORD-1, copy enclosed, we dealt in part with an entity known as River Park Center, a private nonprofit

corporation responsible under a lease agreement for managing a public facility. The corporation received no public funds and was not considered to be a public agency. It was not created or controlled by a governmental unit and was a self-sustaining, income generating entity which paid an annual fee to the city for the privilege of operating the facility. We think the basic analysis set forth in 94-ORD-1 is applicable here and we direct the attention of the parties to that decision.


Either party to this appeal may challenge this decision by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. The Attorney General shall be notified of any action filed in the circuit court, pursuant to KRS 61.880(3), but he shall not be named as a party to that action or in any subsequent proceedings.
















Copies of this decision

have been mailed to:


Donald H. Combs, Esq.

Combs Building

411 Main Street - P. O. Drawer 31

Pikeville, Kentucky 41502-0031


Pamela Todd Robinette, Esq.

P. O. Box 1439

343 Main Street

Pikeville, Kentucky 41502