PREMIERTOX 2.0 AND PREMIERTOX, INC., REAL PARTIES IN INTEREST APPELLANTS
HON. VERNON MINIARD, JUDGE, RUSSELL CIRCUIT COURT AND KENTUCKY SPIRIT HEALTH PLAN, INC., CENTENE CORPORATION AND JEAN RUSH APPELLEES
ON APPEAL FROM COURT OF APPEALS CASE NO. 2012-CA-001437-MR RUSSELL CIRCUIT COURT NO. 1 l-CI-00627
Appellants, PremierTox, Inc. and PremierTox 2.0 (collectively referred to as "PremierTox") appeal from the issuance of a writ of prohibition by the Court of Appeals. Appellees are Kentucky Spirit Health Plan, Inc. (Kentucky Spirit); Centene Corporation; and Jean Rush.
PremierTox commenced the underlying action in the Russell Circuit Court, alleging that it was then owed $1, 880, 293.46 by Kentucky Spirit for services it had provided to Medicaid recipients, and for which Kentucky Spirit had been paid by the Commonwealth of Kentucky. Upon motion of PremierTox, the Russell Circuit Court ordered Appellees to deposit $1, 880, 293.46 into an escrow account controlled by the circuit court pending adjudication of the claim. The circuit court concluded that, because the funding for the services originated from state and federal Medicaid monies, the money should be placed in escrow to prevent "significant financial harm to Kentucky citizens" in the event that Kentucky Spirit failed to pay sums ultimately determined to be due and owing.
The Court of Appeals issued a writ to prohibit enforcement of the circuit court's order. This appeal followed. For the reasons set forth below, we affirm the issuance of the writ of prohibition.
I. FACTUAL AND PROCEDURAL HISTORY
Kentucky Spirit entered into a "Medicaid Managed Care Contract" with the Commonwealth of Kentucky. Under this contract, Kentucky Spirit agreed to manage the Medicaid payments to providers of certain "covered services" received by Medicaid recipients. In return, Kentucky Spirit receives a monthly payment from the state. The payment is entirely funded by Kentucky and federal Medicaid funds.
PremierTox is a laboratory that performs requested urinalysis testing for medical service providers. Through contractual arrangements with Commonwealth Health Corporation, doing business as Center Care, PremierTox agreed to provide laboratory services for Kentucky Spirit's Medicaid recipients. Under the same contractual arrangements, Kentucky Spirit agreed to pay PremierTox for those services.
Alleging that Kentucky Spirit had failed to make payments as required by the contracts, PremierTox filed suit in the Russell Circuit Court. Motivated by concern that Kentucky Spirit would leave the state and abandon its obligations in Kentucky, PremierTox moved for an order requiring Kentucky Spirit to pay immediately or, in the alternative, to hold funds in escrow until the pending adjudication was completed. The circuit court denied PremierTox's motion for immediate payment, but granted the alternative request. Consequently, the circuit court ordered Kentucky Spirit to deposit $1, 880, 293.46 into an escrow account controlled by the Russell Circuit Court Clerk. The circuit court held:
Given the newness of the MCO relationship in Kentucky, the uncertain financial circumstances of Kentucky Spirit, . . . and the fact that failure of the MCO to pay any sums properly due and owing would cause significant financial harm to Kentucky citizens, this Court finds it appropriate that Kentucky Spirit be ORDERED to escrow funds sufficient to satisfy the billed amount [$1, 880, 293.46] which is the subject of this action.
After entry of the order, Kentucky Spirit filed an original action with the Court of Appeals seeking a writ of prohibition to prohibit the circuit court from enforcing the order described above. The Court of Appeals issued the writ after concluding, pursuant to CR 67.02 and J.R.E., Inc. v. Asbury, 993 S.W.2d 960 (Ky. 1999), that a circuit court has no authority "to require a party to pay a demanded judgment into court in advance of an adjudication that he owes it." See Asbury, 993 S.W.2d at 962. The Court of Appeals reasoned that:
CR 67.02 requires that the party admit that the money is available and is being held as trustee for another party. While Kentucky Spirit may have the funds available, it has not admitted that the funds are held as trustee for PremierTox because it disputes the validity of PremierTox's claims for payment.
PremierTox appeals the issuance of the writ of prohibition upon the grounds that the Court of Appeals erred in its conclusion that the circuit court acted erroneously. PremierTox further argues that the writ was not properly issued because Kentucky Spirit failed to show that there was ...