TO BE PUBLISHED

94-ORD-13

February 1, 1994

IN RE: Frank F. Chuppe/Governmental Services Corporation

OPEN RECORDS DECISION

This appeal originated in a request for records submitted by Mr. Frank F. Chuppe to Governmental Services Corporation, hereinafter referred to as GSC. On November 15, 1993, Mr. Chuppe requested access to various documents in the custody of GSC. Those records are identified as:

1. All documents relating in any way to the calculation of the "Budget Expenditures" submitted by GSC for payment by the Kentucky Association of Counties-Kentucky League of Cities Group Self-Insurance Fund ('Fund') pursuant to the January 1, 1984 Agreement ('Agreement') between GSC and the Fund, for each year from 1988 to the present.

2. All documents that constitute, or relate to, contract(s) between GSC and Willis-Carroon relating in any way to the administration of claims of the Kentucky Association of Counties - Kentucky Municipal League Group Self-Insurance Fund.

3. All correspondence between GSC and Willis-Carroon from the period of January 1, 1988, to November 15, 1993.

4. All documents, including but not limited to correspondence, between GSC and any other person or entity relating to the subcontracting, or possibility of subcontracting, the administration of the claims of the Kentucky Association of Counties-Kentucky Municipal League Group Insurance Fund.

5. All Financial Statements and Income Statements of GSC for any year from 1988 to the present.

6. Any and all audits of GSC from January 1, 1988, to the present.

GSC responded to Mr. Chuppe's request through its attorney, Mr. Stuart E. Alexander, III. Mr. Alexander advised Mr. Chuppe that GSC is not subject to the Open Records Act, and therefore would not produce the requested records. Mr. Chuppe disagrees, and cites as authority OAG 93-78. In OAG 93-78, this Office held that because it receives more than 25% of its funds from state or local authority funds, GSC is a public agency within the meaning of KRS 61.870(1)(h), and must comply with the Open Records Act.

The issue presented in this appeal is whether GSC is a public agency for purposes of the Open Records Act. Although this same issue was presented in OAG 93-78, it did not come to us in the posture of an open records appeal. Accordingly, OAG 93-78 was only an advisory opinion, and did not carry the force of law. Since the issue is now before us in an appeal, our decision will be legally binding unless appealed in circuit court. KRS 61.880(5)(b).

On December 13, 1993, the Attorney General requested additional information from GSC. Specifically, we asked Mr. Alexander to substantiate his position that GSC is not a public agency in light of OAG 93-78. We encouraged him to correct any erroneous information which may have been provided to this Office by the Program Review and Investigations Committee, whose Chairperson requested the opinion, and which formed the basis of the opinion. Having considered Mr. Alexander's response to this request, we conclude that GSC is a public agency for purposes of the Open Records Act, and affirm our opinion in OAG 93-78.

KRS 61.870(1) provides:

(1) 'Public agency' means:

(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[.]

A "public record" is defined as:

[A]ll books, maps, photographs, cards, tapes, discs, diskettes, recordings or other documentary materials regardless of physical form or characteristics, which are prepared, owned, used, in the possession of or retained by a public agency. 'Public record' shall not include any records owned or maintained by or for a body referred to in subsection (1)(h) of this section that are not related to functions, activities, programs, or operations funded by state or local authority[.]

If an agency falls within this definition, it is subject to the Open Records Act, and is required to comply with the law by responding to requests for records within three working days. We therefore asked Mr. Alexander to explain by what mechanism GSC was created, and from what source it derives it funds.

In a response dated January 5, 1993, Mr. Alexander asserted that "OAG 93-78 is fundamentally flawed and is not an accurate reflection of the legal status of KACo-KLC Workers' Compensation Self Insurance Fund (KACo-KLC) and of Governmental Services Inc." He explained that KACo-KLC, which was created and is regulated by the Workers' Compensation Board, "exists only for the purpose of pooling its workers' compensation risks, administering, adjusting and paying claims." [1] It has "no other function and has no other authority or power to conduct any business, governmental or otherwise." Continuing, Mr. Alexander observes:

This entity had no life beyond the authority granted to it by the Workers' Compensation Board and had no authority to perform any of the functions of a 'public agency' as public agency is defined by KRS 61.870(1).

KACo-KLC was not a body created by state or local authority (KRS 61-870(1)(g)) [sic] nor was it a state or local agency, legislative board, commission, committee, department, division, bureau or judicial agency (KRS 61.870(1)(f)).

In his view, the "real issue" is whether KACo-KLC is a public agency because it was created by state or local authority, and receives at least 25% of its funds from this state or local authority pursuant to KRS 61.870(h).

Mr. Alexander next argues that this Office improperly equated the term "public agency" with the term "state or local authority" in OAG 93-78, noting that we offered "no legal support for this conclusion." He reasons:

An examination of KRS 61.870(1) reveals that the Kentucky General Assembly did not consider the term 'public agency' and 'state or local authority' to be synonymous because it makes a clear distinction between the two terms.

KRS 61-870(1) [sic] paragraphs (b), (g) and (h) make specific reference to state and local authority.

61.670(i), (j) and (k) make specific reference to public agency as 'defined in Paragraphs (a), (b), (c), (d), (e), (f), (g), (h), (j) and (k) of the subsection.'

By specifically requiring in Paragraph (h) that the funds be derived from state or local authority, the General Assembly has by definition excluded funds derived from any other type of 'public agency' as defined in the statute.

A fundamental rule of statutory construction is that the inclusion of one thing is the exclusion of another (expressio unius est exclusio alterius) Burgin v. Forbes, Ky., 169 S.W.2d 321, 325 (1943) Louisville Water Co. v. Wells, Ky., 664 S.W.2d 525. This is particularly true when both terms are used within the same statute.

The plain language of KRS 61.870(1)(h) contemplates a situation in which a 'body' acts as a conduit for state and local authority funds. Paragraph (h) refers to '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"'.

Without fully explaining why KACo-KLC is not a "public agency" within the scope of KRS 61.870(1), Mr. Alexander proceeds to the conclusion that GSC is not a "public agency." He observes:

Governmental Service Inc. as a private, for-profit corporation has contracted with KACo-KLC to provide administrative services in a highly competitive insurance market. It is not a conduit by which state or local authority funds are 'expended' in the Commonwealth. Governmental Service Inc. receives payment from KACo-KLC which is not a 'state or local authority'.

He takes exception to OAG 93-78, which, in his view, "would require that every private, for-profit company doing significant business with an entity (which at best is a public agency) reveal its confidential business records and its proprietary information to the public."

In the alternative, Mr. Alexander argues that KRS 61.878(1)(b) [2] authorizes GSC to withhold the requested records. He maintains that disclosure of GSC's financial structure and methods of administration "would significantly benefit competitors and is sought by Mr. Chuppe for this purpose." He does not correct, or otherwise rebut, any of the information provided to this Office by the Program Review and Investigations Committee. However, in closing, he requests that this Office reconsider OAG 93-78 and 93-ORD-96. [3] As noted, we decline to do so.

In 92-ORD-1245, this Office held that KACo-KLC is a public agency, within the meaning of KRS 61.878(1)(k), because it is an interagency body of two or more public agencies formed pursuant to KRS 342.350(4). At page 4 of that decision, we observed:

KACo-KLC was organized pursuant to KRS 342.350(4), which allows two or more employers to establish a workers' compensation self-insurance fund. That statute provides, in part:

[T]he board, under rules and regulations as it shall prescribe, may permit eleven (11) or more employers or two (2) or more city, county, municipal, or urban, county employers or their agencies to enter into agreements to pool their liabilities under this chapter for the purpose of qualifying as self-insurers.

As an interagency body of two or more public agencies in which each public agency is defined in one of the preceding subsections of the definition, KACo-KLC clearly falls within the parameters of KRS 61.870(1)(k). Although [KACo-KLC] does not reveal the identity of the two employers, we may reasonably assume they were either a city, county, municipal, or urban county employer. By the express terms of KRS 61.870(1)(k) and KRS 342.350(4), KACo-KLC is a public agency, and its records are public records.

We affirm this decision.

Moreover, we believe that Mr. Alexander's argument that the entity was created and is regulated by the Workers' Compensation Board supports, rather than undermines, the position that we took in 92-ORD-1245. KRS 61.870(1)(j) defines a "public agency" as "[a]ny 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[.]" Clearly, the Workers' Compensation Board is a public agency as defined in KRS 61.870(1)(b). If, in fact, KACo-KLC owes its existence to the Board, and the Board continues to regulate or control it, it is also a public agency within the meaning of KRS 61.870(1)(j).

Contrary to Mr. Alexander's apparent belief, the "real issue" is not whether KACo-KLC was created by state or local authority and whether it receives at least 25% of its funds from this state or local authority. The public character of KACo-KLC is premised on KRS 61.870(1)(k), and, by his own admission, KRS 61.870(1)(j). [4] Additionally, KRS 61.870(1)(h), to the extent that it applies to GSC, does not require that in order to be characterized as a public agency, for Open Records purposes, an entity be both created by state or local authority, and receive at least 25% of its funds from that state or local authority. GSC may be properly characterized as a public agency if it "derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds[.]"

Mr. Alexander characterizes GSC as "a private, for-profit corporation [which] has contracted with KACo-KLC to provide administrative services . . . ." In OAG 93-78, we held that any funds which GSC receives from KACo-KLC must be treated as "state or local authority funds" within the meaning of KRS 61.870(1)(h). Based on figures provided to us by the Program Review and Investigation Committee, we found that 100% of the $611,058 in gross revenue generated by GSC in 1992 was derived from KACo-KLC. Mr. Alexander does not challenge these figures, but instead develops an argument which is premised on a specious distinction between the terms "public agency" and "state or local authority." Suffice it to say that the all-encompassing term "public agency" is defined as "[e]very state or local government department, division, bureau, board, commission, and authority[.]" KRS 61.870(1)(b). Clearly, the two terms are synonymous.

Moreover, and as noted in 93-ORD-96, the term "authority" "is commonly understood to mean 'a government agency that administers a project,' New World Dictionary, 94 (2d ed. 1978) or 'a public agency or corporation with administrative powers in a specified field,' Webster's II New Riverside University Dictionary, 139 (2d ed. 1988)." KRS 446.080(4) provides that "[a]l words and phrases shall be construed according to the common and approved usage of language . . . ." We believe that this rule of statutory construction mandates the result reached in OAG 93-78.

In view of the basic policy of the Open Records Act, set forth at KRS 61.871, [5] it is the opinion of this Office that any other conclusion would be absurd. "The obvious purpose of the Open Records Law is to make available for public inspection, all records in the custody of public agencies by whatever label they have at the moment. Statutes are to be interpreted with a view to promote their objects and to carry out the intent of the legislature. KRS 446.080." Frankfort Publishing Co., Inc. v. Kentucky State University Foundation, Inc., Ky., 834 S.W.2d 681, 682 (1992). We believe that the Act is expressly intended to require private, for-profit companies which do significant business with a public agency, and which receive 25% or more of their funds from that agency, to disclose all nonexempt records which relate to functions, activities, programs, or operations funded by the agency. KRS 61.870(2). In the absence of evidence controverting that which formed the basis for our opinion in OAG 93-78, to wit, that GSC receives 100% of its funds from KACo-KLC, we affirm that opinion.

Having resolved this threshold issue, we turn to the question of whether GSC may properly withhold the disputed records under authority of KRS 61.878(1)(c). In order to sustain its burden of proof under this exception, an agency must establish that the records: 1) were confidentially disclosed to it in conjunction with an application for a loan, in conjunction with the regulation of a commercial enterprise, or for the grant or review of a license to do business; 2) are generally recognized as confidential or proprietary; and 3) if openly disclosed would permit an unfair advantage to competitors of the entity which disclosed them. See, e.g., 92-ORD-1238. Although Mr. Alexander asserts that disclosure of GSC's financial structure and methods of administration would benefit competitors, he does not attempt to satisfy, nor do we believe he could satisfy, the remaining parts of this three part test. Simply stated, GSC fails to sustain its statutory burden of proof relative to its denial of Mr. Chuppe's request, and is directed to release the disputed documents to him forthwith. KRS 61.880(2); KRS 61.882(3).

GSC may challenge this decision by initiating action in the appropriate circuit court. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceedings.

CHRIS GORMAN

ATTORNEY GENERAL

AMYE B. MAJORS

ASSISTANT ATTORNEY GENERAL

jgh/1710

Distributed to:

Hon. Stuart E. Alexander, III

Tilford, Dobbins, Alexander & Buckaway

1406 One Riverfront Plaza

Louisville, KY 40202

Hon. Frank F. Chuppe

Wyatt, Tarrant & Combs

Citizens Plaza

Louisville, KY 40202

Footnotes

[1]There appears to be some question as to whether KACo-KLC still exists. Mr. Alexander states that it "ceased operation" in July, 1993, but acknowledges that it "is still a self-insured group regulated by the Kentucky Department of Workers' Claims for purposes of a [two year] 'run-out.'" Mr. Chuppe responds that although KACo and KLC have now created separate funds, KACo-KLC is still active, with more than 3,600 open claim files as of July 1, 1993. For purposes of this appeal, we will assume the continued existence of KACo-KLC.

[2]KRS 61.878(1)(b) exempts from disclosure "[r]ecords confidentially disclosed to an agency and compiled and maintained for scientific research." We assume that Mr. Alexander intended to cite KRS 61.878(1)(c), which exempts: 1. Records confidentially disclosed to an agency, generally recognized as confidential or proprietary, which if openly disclosed would permit an unfair commercial advantage to competitors of the entity that disclosed the records, and which are compiled and maintained: a. In conjunction with an application for a loan;b. In conjunction with the regulation of commercial enterprise, including mineral exploration records, unpatented, secret commercially valuable plans, appliances, formulae, or processes, which are used for the making, preparing, compounding, treating, or processing of articles or materials which are trade commodities obtained from a person; or c. For the grant or review of a license to do business.

[3]In 93-ORD-96, this Office held that the Kentucky Association of Counties (KACo) itself is a public agency within the meaning of KRS 61.870(1)(h). This decision has little bearing on the issue presented in the instant appeal, and we reject Mr. Alexander's attempt to raise it as a sort of "pendent claim," particularly in view of that fact that 93-ORD-96 could have been challenged in circuit court pursuant to KRS 61.880(5) and KRS 61.882.

[4]Since 92-ORD-1245 was not, to our knowledge, appealed in circuit court, that decision has the force and effect of law. KACo-KLC is a public agency for purposes of the Open Records Law.

[5]KRS 61.871 provides: The General Assembly finds and declares that the basic policy of KRS 61.870 to 61.884 is that free and open examination of public records is in the public interest and the exceptions provided for by KRS 61.878 or otherwise provided by law shall be strictly construed, even though such examination may cause inconvenience or embarrassment to public officials or others.