Opinion
Opinion By: Andy Beshear,Attorney General;James M. Herrick,Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether Kentucky Medical Services Foundation, Inc. ("KMSF"), violated the Open Records Act in the denial of Dr. Lachin Hatemi's February 22, 2016, request for "[t]he coding and billing audit of the Hazard Cardiology Practice for the year 2012, 2013, 2014." For the reasons stated below, we find that KMSF violated the Act, as it has not met its burden of showing a proper basis for the denial.
KMSF responded to the request on February 25, 2016, stating that "any information that may be responsive to your request would be subject to claims of attorney client privilege and attorney work product or other exemption." Dr. Hatemi appealed to this office on March 10, 2016.
On March 31, 2016, attorney Harry L. Dadds responded to the appeal on behalf of KMSF. KMSF argues, first of all, that it is not subject to the Open Records Act. That argument was rejected by our recent ruling in 15-ORD-205, which we find controlling on that issue. Because that decision has been appealed to circuit court, KMSF alternatively argues that the present appeal should be "held in abeyance" pending the outcome of that action. KRS 61.880(2), however, does not give this office the option of placing an appeal in abeyance. 16-ORD-033, n.1. Accordingly, we resolve this threshold issue in accordance with our recent precedent and find that KMSF is a public agency for purposes of the Open Records Act. 1
More substantively, KMSF argues that all responsive records are exempt from disclosure for various reasons:
[T]his appeal should be dismissed because it seeks materials that are exempt from disclosure under the Act as being subject to the attorney client privilege and/or attorney work product, constituting preliminary drafts, and/or containing information that is personal in nature or generally recognized as confidential or proprietary or exempt from disclosure under federal law. As such the information is exempt from release under KRS §§ 61.878(1)(c)(1); (i) (j) (k) or (l) respectively.
As set forth in Dr. [Marcus E.] Randall's Affidavit, . . . [r]esponsive documents included only matters requested or prepared by attorneys or consultants engaged by attorneys and that had been furnished to KMSF for compliance purposes subject to a joint defense arrangement. . . . Those documents, however, are protected by the attorney client privilege and/or are subject to confidentiality provisions . . .. Moreover, the University of Kentucky, the holder of the privilege will not waive the privilege and/or allow KMSF to produce an[y] of these documents.
William E. Thro, General Counsel for the University of Kentucky, states in correspondence submitted as an interested party:
[I]n 2014, a routine audit of the University's Hazard cardiology clinic raised concerns about billing documentation. In order to ascertain if there were billing documentation problems and, if so, to develop a strategy for correcting those problems, the University engaged outside counsel and outside counsel engaged specialized consultants. Of course, any communications, reports, or analyses from those outside counsel or the outside consultants engaged by outside counsel are privileged.
(Footnote omitted.)
In follow-up correspondence submitted April 27, 2016, Mr. Dadds explains that the routine audit from 2014, initiated by the University, is not among the records at issue in this appeal, all of which "constitute portions of preliminary reports/analysis and communications between KMSF and outside counsel for the purposes of investigating and providing legal advice to the University of Kentucky and KMSF regarding certain billing issues" arising after that audit. He elaborates:
KMSF serves as the contractual billing agent for individual physicians employed by the University of Kentucky. As a result thereof, the University of Kentucky and KMSF share a common legal interest in ensuring that billing documents are complete and accurate and in compliance with all federal and state statutes. Because the undisclosed documents concern legal advice regarding such interest, they are protected by the attorney-client and attorney work product privileges, and KMSF cannot waive such privileges without the consent of the University of Kentucky[.]
. . .
. . . Based upon its long held policy[,] the University of Kentucky [has] refused to provide consent for the disclosure of the subject documents and/or waive the attorney-client or attorney work product privileges. . . .
. . .
. . . All of the documents . . . constitute information and preliminary analysis prepared by KMSF or Blue & Co. [accountants] at the direction of outside counsel and/or exchanged with such counsel for the purposes of rendering legal advice concerning billing issues, a matter of common interest between the University of Kentucky and KMSF. KMSF has further confirmed that it has not received a copy of any final report regarding outside counsel's investigation nor is it aware of whether a final report has ever been issued.
The Kentucky Court of Appeals has recognized that "the protections generally afforded by the attorney-client privilege have been recognized and incorporated into the [Open Records Act] by the Kentucky General Assembly." Hahn v. University of Louisville, 80 S.W.3d 771, 774 (Ky. App. 2001). The court reasoned as follows:
[The attorney-client privilege, codified at KRE 503,] recognizes that sound legal advice and advocacy serve vital public purposes and that such advice and advocacy depend upon a guarantee of confidentiality between attorney and client. Upjohn v. United States, 449 U.S. 383, 389, 101 S. Ct. 677, 682, 66 L. Ed. 2d 584, 591 (1981).
KRE 503(b) provides that:
KRE 503(a)(5) states that a communication is deemed
The privilege attaches to confidential communications made for the purpose of facilitating the process of rendering professional legal services to a client; counsel must be acting in the course and scope of employment for the client, and the communication must pertain to the matter within the course and scope of that employment. KRE 503(a)(2); Underwood and Weissenberger, Kentucky Evidence 2001 Courtroom Manual, § 503 (2000).
Hahn at 775-776.
The decisions of this office have also consistently held that the attorney-client privilege is incorporated into the Open Records Act through KRS 61.878(1)(l). In 97-ORD-127, we stated:
KRS 61.878(1)(l) . . . operates in tandem with KRE 503 to exclude from public inspection otherwise public records protected by the attorney-client privilege. KRE 503(b) establishes the general rule of privilege, [which] consists of three elements: The relationship of attorney and client, communication by or to the client relating to the subject matter upon which professional advice is sought, and the confidentiality of the expression for which the protection is claimed . Robert G. Lawson, The Kentucky Evidence Law Handbook § 5.10 (Michie, 3rd ed. 1993), citing United States v. Schwimmer, 892 F.2d 237, 243 (2nd Cir. 1989). Its purpose is to [e]nsure that confidences exchanged by an attorney and client are protected, thereby encouraging them to freely communicate. . . . The privilege extends to communications from attorney to client "if they constitute legal advice, or tend directly or indirectly to reveal the substance of a client confidence." Kentucky Evidence Law Handbook at § 5.10 citing United States v. Defazio, 899 F.2d 626, 635 (7th Cir. 1990).
(Emphasis added.) The attorney-client privilege also extends to communications from a "representative of the lawyer," defined as "a person employed by the lawyer to assist the lawyer in rendering professional legal services. " KRS 503(a)(4); see also Kentucky Evidence Law Handbook, supra , at § 5.10 (privileged communications can "occur in the presence of accountants, physicians, engineers or experts of other types needed for the performance of legal services" ).
While the attorney-client privilege is generally waived if communications are made in the presence of a third party, an exception to waiver exists in situations of "joint defense" or "common interest. " The common interest doctrine applies "when two or more clients share a common legal or commercial interest and, therefore, share legal advice with respect to that common interest. " Broessel v. Triad Guaranty Ins. Corp., 238 F.R.D. 215, 220 (W.D. Ky. 2006) (internal quotation omitted). "Notably, unlike the joint defense privilege, the common interest does not require or imply that an actual suit is or ever will be pending." Id. (internal quotation omitted).
As the court noted in Broessel , this variant of the common interest doctrine is a creature of "federal common law" and not Kentucky law. Id. at 218. Nevertheless, the same interests served by the guarantee of confidentiality in KRE 503 that were recognized by the Court of Appeals in Hahn, supra, are likewise served by the attorney-client privilege existing under federal common law. Conversely, it would serve no purpose to restrict the application of the attorney-client privilege in an open records context to the boundaries set by state rules of evidence, when confidentiality mandated by federal law is also a recognized exception under KRS 61.878(1)(k) . We therefore acknowledge the federal common law of attorney-client privilege as a protection from disclosure under the Open Records Act, in those limited situations where it may apply.
Although KMSF has confidentially provided a privilege log to this office, the records themselves have not been provided for our review in camera pursuant to our request under KRS 61.880(2)(c). As we noted in 16-ORD-101, the Kentucky Court of Appeals has recently affirmed the Attorney General's authority to obtain documentation from a public agency to facilitate the review of an open records appeal, in Cabinet for Health & Family Services v. Todd County Standard, Inc., 2015 WL 8488991 (Ky. App. December 11, 2015). Explicitly included in this office's authority under KRS 61.880(2)(c) is the ability to "request a copy of the records involved." We made that request in this case, in view of the fact that "[t]he burden of proof in sustaining the action shall rest with the agency." KRS 61.880(2)(c).
The refusal by the University of Kentucky to permit KMSF to make the confidential disclosure of the disputed records for in camera review has "frustrated the Attorney General's statutory review under KRS 61.880." Todd County Standard, supra, at *6. As such, KMSF "cannot benefit from intentionally frustrating the Attorney General's review of an open records request; such result would subvert the General Assembly's intent behind providing review by the Attorney General under KRS 61.880(5)." Id. For the same reason that we are unable to conduct an adequate review of KMSF's claim of attorney-client privilege, neither can we adequately adjudicate KMSF's remaining claims of exemption under KRS 61.878(1)(c)(1), (i), (j), or (k). We accordingly find that KMSF has failed to meet its burden of proof under KRS 61.880(2)(c).
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 proceedings.
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