Opinion
Opinion By: Albert B. Chandler III, Attorney General; James M. Ringo, Assistant Attorney General
Open Records Decision
This matter comes to the Attorney General on appeal from the actions of the Permedion, Inc. relative to Heidi Schissler Lanham's two open records requests for a copy of:
1. Permedion's policies and procedures governing the utilization review process in Kentucky.
2. Permedion's contract with Kentucky for utilization review services.
3. All related correspondence between Permedion and the Commonwealth.
In her letter of appeal, Ms. Lanham asked this office to review Permedion's denials of the two requests and its failure to timely respond to the requests.
After receipt of Ms. Lanham's letter of appeal and in order to obtain additional information and documentation relating to the issues raised in this appeal, and as authorized by KRS 61.880(2) and 40 KAR 1:030, we requested that Permedion provide this office with additional information to assist our determination as to whether Permedion fell within the definition of a "public agency" , as defined in KRS 61.870(1) .
By letter dated May 16, 2002, Kenneth A. Gamble, counsel for Permedion, advised, in relevant part:
We understand from your letter that, consistent with the statute [KRS 61.870(1)] and reported case law, a private company, such as Permedion, does not come within the purview of the Open Records Act unless it "derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds."
Currently, Permedion has a contract to perform medical review services for the Medicaid program in the Commonwealth of Kentucky. Annually, Permedion is paid $ 11,183,940 to complete these tasks. Seventy-five percent (75%) of that amount derives from federal funds and twenty-five percent (25%) or $ 2,795,985 derives from the Commonwealth of Kentucky. Permedion spends $ 8,387,955 of funds that were derived from the federal government and $ 264,045 of funds that were derived from the Commonwealth of Kentucky, for a total expenditure of $ 8,653,000 in the Commonwealth of Kentucky. Thus, $ 264,045 divided by $ 8,653,000 or three (3%) of the funds that Permedion spends in the Commonwealth of Kentucky is derived from the Commonwealth of Kentucky.
Since, Permedion does not derive twenty-five (25%) or more of the funds expended by Permedion in the Commonwealth of Kentucky from the Commonwealth of Kentucky, I would contend that Permedion, being a private company, does not come within the purview of the Open Records Act.
The threshold issue in this appeal is whether Permedion is a "public agency" as defined by KRS 61.870(1). For the reasons that follow, we conclude Permedion is not a public agency and its records are exempt from public inspection under the Open Records Act.
This office has consistently recognized that a private corporation comes within the purview of the Open Records Act only if it derives at least 25% of its funds from state or local authority funds. 92-ORD-1114; OAG 88-61; OAG 81-377. Those opinions were premised on the following definition of "public agency" set out in KRS 61.870(1)(h):
Any body which derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds.
In 93-ORD-90, we held that Medicare and Medicaid funds do not constitute "state or local funds" in determining whether an entity receives 25% or more of its funds expended by it in the Commonwealth. As noted in Mr. Gamble's supplemental response, only three percent (3%) of the funds that Permedion spends in the Commonwealth of Kentucky is derived from the state funds.
Thus, Permedion does not fall within the definition of a "public agency" to which the Open Records Act applies. Accordingly, it is not required to either release its records, or to adhere to KRS 61.880(1), in response to a request for its records. 93-ORD-127.
We further note that, in a letter dated March 18, 2002, John H. Walker, Assistant General Counsel, Cabinet for Health Services, advised this office that the Department for Medical Services was compiling the information Ms. Lanham had requested in item numbers 1 and 2 and those records would be made available to her and in response to her request in item number 3 (all related correspondence between Permedion and the Commonwealth), had ask for a more narrow request in order provide her with the precise records she was seeking.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.
Heidi Schissler LanhamKentucky Protection and Advocacy Division100 Fair Oaks Lane, 3rd FloorFrankfort, KY 40601
Gary Hinzman, MD, MPHPermedion, Inc.350 Worthington Road, Ste. HWesterfield, OH 43082
Kenneth A. GambleGamble, Hartshorn, Johnson Co. LPAOne East Livingston AvenueColumbus, OH 43215-5700
John H. WalkerAssistant General CounselCabinet for Health ServicesCHR Building, 5W-CFrankfort, KY 40621