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Landrum v. Lassiter

Court of Appeals of Kentucky

November 16, 2018

WILLIAM M. LANDRUM, III, SECRETARY OF THE KENTUCKY FINANCE AND ADMINISTRATION CABINET APPELLANT
v.
FRANK LASSITER APPELLEE

          APPEAL FROM WOODFORD CIRCUIT COURT HONORABLE THOMAS D. WINGATE, JUDGE ACTION NO. 16-CI-00293

          BRIEFS FOR APPELLANT: Brett R. Nolan Finance and Administration Cabinet Frankfort, Kentucky

          BRIEF AND ORAL ARGUMENT FOR APPELLEE: J. Guthrie True Frankfort, Kentucky

          ORAL ARGUMENT FOR APPELLANT: Aaron Herzig Cincinnati, Ohio

          BEFORE: ACREE, JONES AND THOMPSON, JUDGES.

          OPINION REVERSING AND REMANDING

          THOMPSON, JUDGE.

         William M. Landrum, III, Secretary of the Kentucky Finance and Administration Cabinet (Secretary) appeals from an order of the Woodford Circuit Court ruling that the Secretary did not have power to issue an administrative subpoena duces tecum to Frank Lassiter as part of an investigation into the award of no-bid contracts to SAS Institute, Inc. (SAS) during former Governor Beshear's administration. We conclude that the Secretary had the power to issue the subpoena and reverse and remand for the circuit court to determine whether Lassiter should be compelled to comply.

         This is a discovery dispute that arises out of Beshear's Finance and Administration Cabinet's award of six contracts worth more than $10.7 million to SAS. Because the issue presented is limited to the subpoena power of the Secretary, we avoid reciting more facts than necessary to reach its resolution.

         From 2008 until July 2011, Lassiter was the executive director of the Office of Administrative Technology Services within the Cabinet for Health and Family Services. After his departure from state government in 2012, Lassiter became a consultant for SAS. During the relevant time frame, Lassiter's wife served in the Beshear administration's executive cabinet, first as State Budget Director and then as Secretary of the Executive Cabinet.

         In 2012 through 2015, a series of contracts were awarded to SAS by the Finance and Administration Cabinet. The first contract was for SAS to provide anti-fraud protection to Kentucky's health benefit exchange. Under the five subsequent contracts, SAS contracted to provide anti-fraud protection to other state agencies. The last contract was entered into on December 7, 2015, near the end of the Beshear administration, for SAS to provide one year of fraud prevention services to the state for $3, 079, 000.

         Shortly after taking office, Governor Matt Bevin ordered the Finance and Administration Cabinet to investigate whether the six contracts awarded to SAS complied with the Kentucky Model Procurement Code (KMPC), embodied in KRS[1] Chapter 45A, and the Finance and Administration Cabinet's practices and procedures. As part of that investigation, in October 2016, the Secretary served an administrative subpoena duces tecum commanding Lassiter "to appear before [the Secretary] or his designee … to testify on behalf of the Office of Inspector General's investigation into the procurement and award of no-bid contracts to [SAS]."

         Lassiter refused to comply with the subpoena on the basis that the Secretary lacked power to issue the subpoena to compel his testimony or the production of documents when investigating possible violations of KRS Chapter 45A. Additionally, he argued that the Secretary had no authority to compel testimony or the production of documents from a person not in the employ of Kentucky state government. The Secretary filed a motion in the Woodford Circuit Court to compel Lassiter's compliance arguing that its subpoena power arises from KRS 45.142. The circuit court denied the motion concluding that the Secretary has no authority to issue a subpoena when investigating a possible violation of the KRS Chapter 45A. This appeal followed.

         Our decision depends on the scope of the Secretary's investigative subpoena power under KRS 45.142. Matters of statutory construction are reviewed de novo without giving deference to the circuit court's determination. Cumberland Valley Contractors, Inc. v. Bell Cty. Coal Corp., 238 S.W.3d 644, 647 (Ky. 2007).

         The judiciary's role when construing a statute "is neither a populist exercise nor an elitist endeavor; it is a judicial obligation, an undertaking guided by time-worn principles, with the polestar being legislative intent." Jefferson Cty. Bd. of Educ. v. Fell, 391 S.W.3d 713, 727 (Ky. 2012). In discerning that intent, "[t]he most logical and effective manner by which to determine the intent of the legislature is simply to analyze the plain meaning of the statutory language[.]" Stephenson v. Woodward, 182 S.W.3d 162, 169-70 (Ky. 2005). While we may not add words to a statute, Hatchett v. City of Glasgow, 340 S.W.2d 248, 251 (Ky. 1960), no single statute is to be read in isolation. "We presume that the General Assembly intended for the statute to be ...


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