Request By:
Hon. Karl F. Hohmann, Jr.
Department of Workers' Claims
Perimeter Park West
1270 Louisville Road, Building C
Frankfort, Kentucky 40601
Opinion
Opinion By: Frederic J. Cowan, Attorney General; William B. Pettus, Assistant Attorney General
Mr. Charles Cravens has appealed to the Attorney General pursuant to KRS 61.880 your denial of his request to inspect pertinent financial information concerning the Kentucky Associated General Contractors Self-Insurers' Fund in the possession of the Department of Workers' Claims.
Mr. Cravens requested copies of said documents by letter dated August 24, 1988. You denied this request by letter dated August 26, 1988, citing KRS 61.878(1)(b), (g), and (h). The only explanation offered for this denial was that the divulgence of the information would give an unfair advantage to competitors.
Mr. Cravens requested the Attorney General to review this denial by letter dated December 12, 1988. In support of his claim that the records requested do not fall within the exceptions cited by you, Mr. Cravens states as follows:
It is my contention that the Kentucky Associated General Contractors Self Insurers' Fund (which pays 5% commission to independent agents), is one of many markets for Workers Compensation insurance in Kentucky. Other self-insurance funds, commercial insurance companies, and perhaps other mechanisms, make up the total market -- each competing with the others for business.
Commercial insurance companies are regulated by the Kentucky Department of Insurance. Each of those companies is required to file full financial information at least each year, and this information is considered a matter of public record. Anyone may examine these records in an effort to satisfy themselves about the financial stability and reliability of a commercial insurance company.
I maintain that a self-insurance fund, competing in the open marketplace with commercial insurance companies, is no more compromised by the divulgence of its financial information than is the commercial insurance company. The only difference here is that a different state agency is responsible for maintaining the financial information.
Examination of the financial information of a self-insurance fund is especially important in protecting the interests of the insurance consumer because there is no protection from the Kentucky Insurance Guaranty Fund in the event of bankruptcy of a self-insurance fund as there would be in the case of a commercial insurance company admitted to do business in the commonwealth.
OPINION OF THE ATTORNEY GENERAL
Before proceeding to the ultimate issue of whether the material in question was properly withheld, we direct your attention to KRS 61.880(1) in regard to your letter of denial dated August 26, 1988, to Mr. Cravens. This statute provides in part as follows:
An agency response denying, in whole or in part, inspection of any record shall include a statement of the specific exception authorizing the withholding of the record and a brief explanation of how the exception applies to the record withheld.
Your letter gave no explanation of how KRS 61.878(1)(g) and (h) apply to the records withheld. Furthermore, the only explanation given to explain how KRS 61.878(1)(b) applied to the records withheld was to recite a brief portion of this statutory provision. In the future, any response by the Department of Workers' Claims denying inspection of any public record should adhere to the requirements set forth in KRS 61.880(1) and explain how all statutory exceptions apply to the specific situation.
Mr. Cravens' request for copies of all financial and other pertinent records concerning the Kentucky Associated General Contractors Self-Insurers' Fund is not specific. However, it is evident that he is not seeking intra-office memoranda or preliminary correspondence which would be exempt from inspection pursuant to KRS 61.878(1)(g) and (h). Therefore, to the extent that Mr. Cravens is seeking information sent by Kentucky Associated General Contractors Self-Insurers' Fund to the Department of Workers' Claims, then these documents are public records which are not exempt pursuant to KRS 61.878(1)(g) and (h).
It would appear that Mr. Cravens is seeking copies of those documents sent to the Department of Workers' Claims by the Kentucky Associated General Contractors Self-Insurers' Fund as required by KRS 342.350 and 803 KAR 25:025. This would include a copy of the most recent certified audit that was filed by the Associated General Contractors Self-Insurers' Fund and any other pertinent financial information filed by this self-insurers' fund.
This office rejects the contention that this information is exempt from inspection pursuant to KRS 61.878(1)(b) because disclosure would permit an unfair advantage to competitors. Commercial insurance companies must file similar information with the Department of Insurance. See KRS 342.382(1). The Department of Insurance routinely permits inspection of this type of financial information upon receipt of a proper request. This office agrees with Mr. Cravens that this information should be available for public inspection in order that potential insureds may satisfy themselves about the financial stability and reliability of an insurance company.
It is therefore the opinion of the Attorney General that the records sought for inspection by Mr. Cravens are not exempt under the provisions cited in your letter of denial and should be made available. The Department of Workers' Claims may institute proceedings within thirty (30) days for injunctive or declaratory relief in the circuit court of the district where the public records are maintained pursuant to KRS 61.880(5).