Judge rules foundation that pays UK doctors and bills patients is a public agency and must follow the Kentucky Open Records Act

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A Fayette Circuit Court judge has ruled that the Kentucky Medical Services Foundation, which bills patients and collects millions of dollars for UK HealthCare doctors, is a public agency and must follow the state open-records law, Linda Blackford reports for the Lexington Herald-Leader.

Judge Kimberly Bunnell agreed with a 2015 decision by the state attorney general’s office that KMSF is a public agency because the University of Kentuckycreated it and UK doctors run it.

Bunnell ruled from the bench April 25 and an agreed order was signed May 29.

In a separate case in March, Blackford reports,  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 state open-records and open-meetings laws.

Both cases were initiated by former UK medical student Lachin Hatemi, who was seeking various financial records of KMSF and the compensation committee. His attorney, Andre Regard, told Blackford, “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.”

KMSF could take the case to the Kentucky Court of Appeals. Jay Grider, a UK anesthesiologist who is president and CEO of the foundation, declined to comment to the Herald-Leader.

The foundation was created in 1978 to help the university pay doctors competitive salaries and support its academic and service missions, Blackford reports. According to 2017 tax documents, it had 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,” Blackford notes. “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.”

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.

In support of the ruling, Amye Bensenhaver, who wrote numerous open records opinions as an assistant attorney general and recently co-founded the Kentucky Open Government Coalition, told Blackford, “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.”

In an op-ed for Kentucky newspapers, Bensenhaver says the issue is “whether a public agency can avoid the application of the open records law by secreting away its records in a ‘foundation’ that is, in reality, established, created, and controlled by the agency seeking to evade accountability.”

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