Attorney general: Medical foundation controlled by UK must let public inspect its records

UK hospital and Kentucky Children's Hospital on the University of Kentucky campus in Lexington, Ky., on Sept. 11, 2012.
UK hospital and Kentucky Children's Hospital on the University of Kentucky campus in Lexington, Ky., on Sept. 11, 2012. Herald-Leader

A foundation affiliated with the University of Kentucky that was questioned during the controversial ouster of a UK surgeon must turn over its records for public inspection, Attorney General Jack Conway has ruled.

The Kentucky Medical Services Foundation — a nonprofit entity that pays all UK doctors — was created by UK and remains under its control, the ruling says, and therefore is a public agency that is subject to the state's Open Records Act.

Dr. Paul Kearney, a long-time surgeon at UK, lost his clinical privileges in August for unprofessional behavior. He alleged that UK administrators decided to pursue the revocation only after he started asking questions about how the foundation was spending money.

One of Kearney's former students, Lachin Hatemi, filed an appeal with the attorney general after the foundation turned down parts of his request for records.

Hatemi said he started asking questions after Kearney's ouster.

"Kentucky Medical Services Foundation operated as a secretive entity within UK for more than 30 years," Hatemi said. "I have significant concerns about the university's money being mismanaged under the disguise of KMSF without any oversight from UK Board of Trustees."

UK officials said Monday they would review the opinion to decide if they will appeal in Fayette Circuit Court. A ruling by the attorney general in an open-records dispute carries the weight of law unless it is appealed.

"It should be noted, though, that in the interest of transparency, KMSF has for some time been responsive to open-records requests and other inquiries — including those of the media and those in question in this opinion," KMSF chairman Marc Randall said in a statement.

Randall is also chairman of the UK College of Medicine's radiation department.

He said the KMSF board "will be considering changes to its bylaws that make explicit the intent to comply with open meetings and open-records provisions."

The Herald-Leader has made several requests for documents to the foundation in recent months. Officials have provided the requested documents but have maintained they were not required to do so by law.

The foundation was created in 1978 because UK medical school was having trouble offering competitive salaries to prospective faculty, who also would be doctors at Chandler Hospital. The foundation was set up to administer "practice plans," which regulate medical charges and doctor pay, and to offer better benefits than UK could offer at the time.

The foundation's board is made up of 18 clinical department heads in the UK College of Medicine and six other medical faculty, who are elected by their peers.

UK's argument that the foundation is private relied on a 1982 decision by the attorney general which found that the foundation was not subject to the Open Records Act. But subsequent decisions by the attorney general found the University Medical Center, which administers the University of Louisville's practice plan, was a public agency because U of L appointed a majority of its board.

The same is true for KMSF, the attorney general ruled.

"Documents submitted to this office ... confirm that the University of Kentucky and the College of Medicine exercise extensive and continuing control of the foundation," the opinion states.

The ruling cites numerous examples of UK's control of the foundation, including bylaws that prohibit the foundation from accepting gifts or merging with another entity without the university's consent and require the foundation to submit to audits by UK's internal audit office.