Judge rules UK HealthCare foundation must disclose records

Kentucky Medical Services Foundation in Lexington | Courtesy Lexington Herald-Leader

By Linda Blackford | Lexington Herald-Leader

The foundation that bills patients and collects millions of dollars for UK HealthCare doctors is a public agency and must turn over documents under the Kentucky Open Records Act, a Fayette Circuit Court judge ruled.

Judge Kimberly Bunnell agreed with a 2015 decision from Kentucky Attorney General Andy Beshear’s office that the Kentucky Medical Services Foundation is a public agency because it was created by the University of Kentucky and is still run by doctors at UK HealthCare.

“Just considering everything, I absolutely believe the University of Kentucky was involved in creating, establishing KMSF,” Bunnell said in a videotaped hearing on April 25. She ruled from the bench that day and an agreed order was signed on May 29.

“When you consider all the things that cannot happen without the consent of the university … I think there is control by the university and the College of Medicine, so I uphold the opinion of the Attorney General,” Bunnell said.

In a separate case in March, Bunnell affirmed another opinion from the attorney general’s office and ruled that the UK HealthCare Compensation Planning Committee, which decides how much doctors should be paid, is also subject to Kentucky’s open records and open meetings laws.

Both cases were initiated by a former UK medical student, Lachin Hate-mi, who was seeking various financial records of KMSF and the compensation committee.

The foundation appealed both decisions by the attorney general’s office to Fayette Circuit Court. A ruling by the attorney general in an open-records dispute carries the weight of law unless it is appealed.

“These two rulings clearly show that KMSF, and the related Healthcare Compensation Planning Committee, are public agencies and, in accordance with the law, require full transparency,” said Lexington attorney Andre Regard, who represented Hatemi. “This has been an uphill battle that I am sure will be appealed. I give credit to Lachin Hatemi, who, as a private citizen, has taken up this battle.”

Harry Dadds, an attorney for KMSF, declined to comment. Jay Grider, a UK anesthesiologist who is president and CEO of the foundation, also declined to comment on the decision. The foundation could still appeal Bunnell’s decision to the Kentucky Court of Appeals.

The foundation was created in 1978 to help the university pay doctors competitive salaries and support its academic and service missions.

According to 2017 tax documents, the foundation took in gross revenue of $258 million in 2016. That money pays UK doctors, but its vast coffers have also been used to help UK in real estate transactions, construct a daycare at UK, pay for use of a private airplane for UK officials, and fund contracts worth millions of dollars with consultants and lawyers. Those contracts haven’t been subject to state procurement rules and don’t go through a bidding process or receive approval from the UK Board of Trustees.

In the past, the foundation has provided the Herald-Leader with documents the newspaper requested under the state open records law while reiterating that it did not have to do so. UK calls the foundation an affiliated corporation but insists it is a separate entity that is not subject to the state’s Open Records Act.

Amye Bensenhaver, who wrote numerous open records opinions as an assistant attorney general and recently co-founded the Kentucky Open Government Coalition, applauded Bunnell’s decision.

“I think it emphasizes the fact that you can’t establish a private entity as an alter ego to conduct public business behind closed doors,” she said.

Lawyers for the foundation and Hatemi must still meet to determine if the foundation properly redacted certain confidential information contained in the documents requested by Hatemi.