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University of Kentucky v. Lexington H-L Services, Inc.

Court of Appeals of Kentucky

September 14, 2018

UNIVERSITY OF KENTUCKY APPELLANT
v.
LEXINGTON H-L SERVICES, INC., D/B/A LEXINGTON HERALD-LEADER APPELLEE

          APPEAL FROM FAYETTE CIRCUIT COURT HONORABLE PAMELA R. GOODWINE, JUDGE ACTION NOS. 16-CI-03065 & 16-CI-03594

          BRIEF FOR APPELLANT: Joshua M. Salsburey Bryan H. Beauman Megan K. George Lexington, Kentucky William E. Thro General Counsel University of Kentucky Lexington, Kentucky

          Oral Argument for Appellant: Joshua M. Salsburey Lexington, Kentucky

          BRIEF FOR APPELLEE: Thomas W. Miller Elizabeth C. Woodford Lexington, Kentucky

          Oral Argument for Appellee: Thomas W. Miller Lexington, Kentucky

          BEFORE: COMBS, DIXON AND MAZE, JUDGES.

          OPINION

          MAZE, JUDGE.

         The University of Kentucky (the University) appeals from an Opinion and Order by the Fayette Circuit Court which affirmed an opinion by the Attorney General on an Open Records Act request by Lexington H-L Services, Inc. d/b/a the Lexington Herald Leader (the Herald-Leader). The University argues that certain audit records were exempt from disclosure under the Act because they were preliminary and not incorporated into its final action, and because they were protected by the attorney-client privilege or the work-product doctrine. We find that the circuit court correctly found that the records were not exempt from disclosure under the Open Records Act. Hence, we affirm.

         I. Facts and Procedural History

         The relevant facts of this action are not in dispute. In the summer of 2013, the University pursued an affiliation with the Appalachian Heart Center in Hazard, Kentucky ("the Clinic"). Under the terms of the affiliation, the University would purchase the Clinic's assets and enter into professional and adjunct medical facility staff agreements with the cardiologists. Prior to the acquisition, the University sought an independent valuation of the agreements with the physicians, and independent reviews of the care provided by the physicians and of the Clinic's operations and revenue.

         Approximately a year after the acquisition, the University received two complaints concerning treatment practices at the Clinic. In response to these complaints, the University directed an audit of the physicians' medical documentation and the billing for their services. Those records were ultimately provided to the University's Chief Medical Compliance Officer and its General Counsel.

         The audits revealed that the Clinic's medical record documentation was inadequate and likely resulted in overpayments. Rather than determining the precise amount of the overpayments, the University elected to refund all payments received for the period in question. The University subsequently terminated its affiliation with the Clinic. At a May 2, 2016, dinner meeting, the University's outside counsel presented a summary of this information to the University's Board of Trustees.

         Upon learning of the information provided at the dinner meeting, the Herald-Leader requested a copy of the audit performed in response to the University's description of the problems that were uncovered at the Clinic. The Herald-Leader also requested a copy of the agenda and the PowerPoint presentation shown at the dinner meeting. The University denied these requests.

         On June 7, 2016, the Herald-Leader sought the Kentucky Attorney General's review of the University's failure to produce the documents. The Herald-Leader also sought review of the University's failure to prepare an agenda or to keep minutes of the dinner. The University refused to grant the Attorney General's office access to the materials in camera, taking the position that it may be considered a waiver of its claims of privilege.

         On August 31, 2016, the Attorney General's office issued an opinion on the Herald-Leader's Open-Records Request. In re: Lexington Herald Leader/University of Kentucky, 16-ORD-193, 2016 WL 4607945 (2016) (A. Beshear, A.G.). The Attorney General held that the audit records were not preliminary and, therefore, were not exempt from disclosure under the Act. In a separate opinion, the Attorney General concluded that: (1) the University violated the requirements of Kentucky Revised Statute (KRS) 61.835 by not creating minutes of the dinner meeting; (2) the Board of Trustees' discussion at the dinner meeting with the outside counsel was not privileged; (3) the University was required to create minutes that "reflect the substance" of that discussion; (4) even if the Board of Trustee's discussion with counsel was privileged, the privilege is not an exception to the Open Meetings Act unless the discussion concerned actual proposed or pending litigation per KRS 61.810(1)(c). In re: Lexington Herald-Leader/University of Kentucky, 16-OMD-154 (2016) (A. Beshear, A.G.).

         The University brought an appeal from both opinions, and the matters were consolidated into the current action. The circuit court directed the University to provide the documents at issue for an in camera review. There were three categories of documents at issue. The first category consists of documents relating to the audit initiated by the University's Medical Chief Compliance Officer in August 2014. The second category consisted of the PowerPoint presentation presented by outside counsel at the May 2, 2016, dinner meeting. The third category consisted of the unredacted invoices by outside counsel to the University of Kentucky from April 2, 2015, through May 31, 2016. Only the documents in the first category are at issue in this appeal.

         In pertinent part, the circuit court concluded that the audit documents, excluding any patient records or identifying information, were subject to disclosure under the Open Records Act. The court first found that the audit records ceased to be preliminary in nature after the University took its final action of refunding the payments received during the period in question. The court further found that the audit records were not prepared for the sole purpose of rendering legal advice or in anticipation of litigation. Consequently, the court concluded that the ...


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