State v. Great Plains of Kiowa County, Inc. , 425 P.3d 290 ( 2018 )


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  •               IN THE SUPREME COURT OF THE STATE OF KANSAS
    No. 115,932
    STATE OF KANSAS,
    Appellee,
    v.
    GREAT PLAINS OF KIOWA COUNTY, INC.,
    Appellant.
    SYLLABUS BY THE COURT
    1.
    When a county commission acts under K.S.A. 19-4605 to establish a board, either
    appointed by the elected commission or directly elected by the voters of the county, to
    operate a hospital, and the board acts under K.S.A. 19-4611 to enter into a lease
    agreement allowing a separate entity, such as a private, not-for-profit corporation, to
    carry out the regular management of the county hospital, the managing entity serves as an
    instrumentality of the county government.
    2.
    An instrumentality of a county government is a public agency under K.S.A. 2015
    Supp. 45-217(f)(1).
    3.
    An entity is not a public agency for open records purposes if the only relationship
    that the agency has with state or local government is the provision of property, goods, or
    services to the governmental division in exchange for payment.
    1
    Review of the judgment of the Court of Appeals in 
    53 Kan. App. 2d 609
    , 
    389 P.3d 984
    (2017).
    Appeal from Kiowa District Court; VAN Z. HAMPTON, judge. Opinion filed August 24, 2018. Judgment
    of the Court of Appeals affirming the district court and remanding the case with directions is affirmed in
    part and reversed in part. Judgment of the district court is affirmed.
    Alan L. Rupe, of Lewis Brisbois Bisgaard & Smith LLP, of Wichita, argued the cause, and
    Jessica L. Skladzien, of the same firm, and Nathan D. Leadstrom, of Goodell, Stratton, Edmonds &
    Palmer, LLP, of Topeka, were with him on the briefs for appellant.
    Dwight R. Carswell, assistant solicitor general, argued the cause, and J. Scott James, county
    attorney, Jeffrey A. Chanay, chief deputy attorney general, Bryan C. Clark, assistant solicitor general, and
    Derek Schmidt, attorney general, were with him on the briefs for appellee.
    The opinion of the court was delivered by
    ROSEN, J.: Great Plains of Kiowa County, Inc., (Great Plains) appeals from a
    judgment holding it subject to the Kansas Open Records Act (KORA) and compelling it
    to provide records requested by the State of Kansas through the Kiowa County
    Commission.
    Kiowa County Memorial Hospital (Hospital) in Greensburg, Kansas, is a hospital
    organized and operated under K.S.A. 19-4601 et seq. The Hospital is managed and
    controlled by a Hospital Board of Trustees that is elected under the terms and authority of
    K.S.A. 19-4605. As provided by K.S.A. 19-4605(a), the Board may annually levy a tax
    for the purpose of operating and maintaining the Hospital.
    Great Plains is a Kansas not-for-profit corporation that is a wholly owned
    subsidiary of the not-for-profit corporation Great Plains Health Alliance. Great Plains is
    responsible for operating the Hospital, which it operates under the terms of a lease
    agreement initiated in 2001 between the Hospital Board of Trustees and Great Plains. By
    2
    the lease agreement terms, Great Plains is responsible for all aspects of operating the
    Hospital and must operate the Hospital "for the benefit of the community."
    The lease agreement also provides that, if Great Plains deems tax support
    necessary for sustaining the Hospital's operations, it will inform the Hospital Board of the
    need, and the Board will request of the county that it levy an ad valorem tax, applying its
    best efforts to obtain the tax. The tax may be used for the payment of insurance on the
    hospital building; for funding a depreciation account for equipment replacement; and for
    maintaining "adequate cash flow in the operation of the Hospital."
    In 2012, a tax levy contributed about $300,000 to the operations of the Hospital; in
    2013, $950,000; and, in 2014, approximately $1,050,000. These sums constituted 14%,
    16%, and 20% of the Great Plains budget for those three years.
    The Kiowa County Commission sought information about the Hospital's budget
    and the calculations by Great Plains in order to answer public interest questions
    concerning Hospital finances and use of taxpayer dollars.
    On October 6, 2014, the Kiowa County Attorney's Office sent a letter to Mary
    Sweet, the hospital administrator, requesting, under KORA:
    "1) A copy of the document or documents setting out the working budget for the Hospital
    for 2014 and 2015 from which the 'Year to Date' figures labelled 'Budget and broken
    down into various categories are drawn in the printout attached to this request as an
    enclosure dated September 22, 2014 [sic].
    "2) Vouchers or an itemization for the figures labelled 'professional fees' and
    'management fees' under 'operating expenses' in the same document.
    3
    "3) Salaries and titles of any and all persons employed in an administrative or executive
    capacity by Kiowa County Memorial Hospital. This should include all compensation,
    whether retirement benefits, deferred compensation, vacation pay, sick pay, stock
    options, or bonuses. Also the collective sum totals of all similar compensation for
    executives/administrative/board personnel for Great Plains of Kiowa County, Inc.,
    without providing any individually identifiable taxpayer information. Please include also
    the number of persons employed in such a capacity for full-time, part-time, consulting, or
    on a contracting basis in each category.
    "4) Registration for any vehicles operated, whether owned or leased by Kiowa County
    Memorial Hospital or Great Plains of Kiowa County, Inc.
    "5) Copies of the three (3) most recent Federal Income Tax Returns filed by Great Plains
    of Kiowa County, Inc. If redacted in any form, please cite the specific legal privilege
    which applies to each such redaction."
    Great Plains resisted this attempt to obtain records, responding through counsel in
    a letter of October 10, 2014, that it was not a public agency and was exempt from KORA.
    The County, designated as the State of Kansas, then filed a petition in district court
    seeking enforcement of KORA and access to the requested records, as well as a fine for
    bad-faith rejection of the request.
    The district court granted the State's motion for summary judgment and denied
    Great Plains' cross-motion for summary judgment. The court ordered disclosure of the
    requested records and imposed a $500 fine on Great Plains. On appeal, our Court of
    Appeals affirmed the district court holding that Great Plains was subject to KORA but
    remanded the case to the district court to determine which specific requested records
    were relevant to evaluating Great Plains' performance of its contract terms.
    4
    Both parties filed petitions for review, and this court granted the petitions without
    limitation.
    We are initially called upon to decide whether Great Plains is a public agency
    subject to KORA.
    The district court decided this case on cross-motions for summary judgment.
    Summary judgment is appropriate when the pleadings, depositions, answers to
    interrogatories, admissions on file, and affidavits demonstrate that no material fact is
    substantially contested and that the moving party is entitled to judgment as a matter of
    law. When there are no genuine material factual disputes, the issue becomes one of law,
    and review by this court is unlimited. This unlimited review includes the interpretation or
    construction of statutory language. Heartland Apartment Ass'n v. City of Mission,
    
    306 Kan. 2
    , 9, 
    392 P.3d 98
    (2017).
    KORA, K.S.A. 2016 Supp. 45-215 et seq., provides for public access to records
    maintained by "public agencies." K.S.A. 2015 Supp. 45-217(f)(1) defines a public agency
    to be
    "the state or any political or taxing subdivision of the state or any office, officer, agency
    or instrumentality thereof, or any other entity receiving or expending and supported in
    whole or in part by the public funds appropriated by the state or by public funds of any
    political or taxing subdivision of the state."
    Great Plains contends that it is not a public agency for KORA purposes. We look
    to the statutory language and the uncontested facts to determine whether Great Plains
    falls within the statutory definition.
    5
    The State argues, for the first time on review, that the Hospital qualifies as a
    statutory instrumentality, subjecting it to the KORA requirements. We note that the
    instrumentality argument was not raised until the arguments before this court. While we
    disfavor arguments that were not raised before lower courts, we are not jurisdictionally
    barred from addressing all such arguments. The instrumentality argument is not
    evidentiary in nature and does not invoke the statutory jurisdictional requirement of
    preservation. See, e.g., K.S.A. 60-404 (no appellate review of admission of evidence if
    not timely and specific objection). The rule that an issue must be submitted to the district
    court or to the Court of Appeals before we may consider it is prudential in character. See
    State v. Frye, 
    294 Kan. 364
    , 368-69, 
    277 P.3d 1091
    (2012); see also State v. Williams,
    
    298 Kan. 1075
    , 1085, 
    319 P.3d 528
    (2014) (considering argument raised for the first time
    on appeal when court had allowed such arguments in the past).
    This court will exercise its discretion to address such an argument when failure to
    acknowledge the argument would tend to create bad precedent or mislead parties
    attempting to navigate the complexities of legal rights and duties. See State v.
    Kirkpatrick, 
    286 Kan. 329
    , 337-38, 
    184 P.3d 247
    (2008) (court will not build its analysis
    on legally defective foundation even if parties fail to preserve issue of legal defect),
    abrogated on other grounds by State v. Barlett, 308 Kan. ___, 
    418 P.3d 1253
    (2018).
    In the present case, failing to consider whether the Hospital is an instrumentality would
    compel this court to dance around the duties that the Legislature created in enacting
    KORA, resulting in either a contrived or an erroneous decision. This court will, at its
    discretion, consider a newly asserted theory that involves only a question of law arising
    from proven facts and that is finally determinative of the case under such circumstances.
    See, e.g., State v. Barnes, 
    293 Kan. 240
    , 255, 
    262 P.3d 297
    (2011). We therefore analyze
    this case in light of whether the Hospital is an instrumentality because, in our view, this
    produces the most credible and legally accurate resolution of the broader question that the
    parties present to this court.
    6
    KORA explicitly includes instrumentalities of political and taxing subdivisions of
    the state in its definition of public agencies. An instrumentality is "a thing used to achieve
    an end or purpose, or a means or agency through which a function of another entity is
    accomplished." Purvis v. Williams, 
    276 Kan. 182
    , 189, 
    73 P.3d 740
    (2003) (citing Black's
    Law Dictionary 802 [7th ed. 1999]).
    Great Plains meets the definition of an instrumentality of the county government,
    which is a political or taxing subdivision of the state. Under K.S.A. 19-4605, a county
    commission may establish a board, either appointed by the elected commission or
    directly elected by the voters of the county, to operate a hospital. K.S.A. 19-4611
    authorizes such a board to enter into a lease agreement that may allow another entity,
    such as a private, not-for-profit corporation, to carry out the regular management of the
    county hospital. This is what happened in the present case. Instead of managing the
    Hospital directly through an elected board, Kiowa County chose to have Great Plains
    manage the Hospital. Great Plains thus became the instrumentality for fulfilling the will
    of the voters of Kiowa County that they should have access to hospital facilities.
    There is no question that the parties intended the Hospital to be an arm of the
    county government. The lease agreement defines the Hospital to be "a governmental
    county hospital." A significant goal of the Hospital is "providing quality non-profit
    health-care services to the residents of the area served by the Hospital." Under the terms
    of the lease, Great Plains is to manage the Hospital "for the benefit of the community
    served by the Hospital," including "provision of charity care for the indigent and needy."
    In addition, the Hospital requested and received substantial funds from a public tax levy.
    This determination is consistent with holdings in other states, albeit in a different
    context, that government-funded hospitals serve a function commonly undertaken by
    7
    state and local governments. The appellate courts of Michigan have held that public
    hospitals are government instrumentalities. See Musulin v. University of Michigan Bd. of
    Regents, 
    214 Mich. App. 277
    , 284, 
    543 N.W.2d 337
    (1995) ("[T]he operation of a public
    hospital [is] a governmental function immune from tort liability.") (citing Hyde v. Univ.
    of Michigan Bd. of Regents, 
    426 Mich. 223
    , 245-46, 
    393 N.W.2d 847
    [1986]). The
    Oklahoma Supreme Court has held the operation of a state children's hospital is a
    "government function" providing immunity from medical malpractice suits. Estate of
    Johnson by and through Johnson v. Oklahoma Children's Memorial Hosp., 
    833 P.2d 1232
    , 1234 (Okla. 1992). See also Department of Human Resources v. Northeast Georgia
    Primary Care, Inc., 
    228 Ga. App. 130
    , 132, 
    491 S.E.2d 201
    (1997) (furnishing medical
    care and hospitalization for the indigent is a public and essential governmental function;
    hospital authority is a governmental instrumentality); Silver v. Castle Memorial Hospital,
    
    53 Haw. 475
    , 481, 
    497 P.2d 564
    (1972) (publicly funded hospital is instrumentality of the
    state); Lloyd v. City of Toledo, 
    42 Ohio App. 36
    , 37-38, 
    180 N.E. 716
    (1931)
    (maintaining and operating municipal hospital is government function, even if patients
    pay for hospital services); Pike v. Hagaman, 
    292 Va. 209
    , 217, 
    787 S.E.2d 89
    (2016)
    (provision of health services otherwise not widely available serves essential government
    function); Shaffer v. Monongalia General Hospital, 
    135 W. Va. 163
    , 
    62 S.E.2d 795
    (1950) (county hospital established pursuant to statute served government function
    notwithstanding charge of fees to patients for treatment).
    Great Plains looks to earlier cases from this court to support its contention that it is
    not a public agency. In Memorial Hospital Ass'n v. Knutson, 
    239 Kan. 663
    , 
    722 P.2d 1093
    (1986), a hospital association similar in function to Great Plains was held not to be
    subject to the Kansas Open Meetings Act (KOMA), K.S.A. 75-4317 et seq. This court
    explained that the hospital had no statutory authority to levy taxes and exercised no
    independent governmental decision-making authority. 
    Knutson, 239 Kan. at 672
    . Knutson
    and KOMA do not apply to the present case, however, because KORA specifically
    8
    includes "instrumentalities," entities not included in the scope of KOMA. Compare
    K.S.A. 2015 Supp. 45-217(f)(1); K.S.A. 2016 Supp. 75-4318(a).
    Great Plains also calls this court's attention to Carroll v. Kittle, 
    203 Kan. 841
    , 849,
    
    457 P.2d 21
    (1969), asserting that the case holds that operating a hospital is a proprietary
    rather than governmental function. This case is not relevant. Carroll did not involve a
    county hospital established under statutory terms; the case predated K.S.A. 19-4601 et
    seq. by 15 years. When enacted in 1984, K.S.A. 19-4603 established a mechanism for
    counties to "establish a hospital." The statute provides a means for the county electorate
    to create hospital boards that "may contract for the management of any hospital with any
    person, corporation, society or association upon such terms and conditions as deemed
    necessary by the board." K.S.A. 19-4611(d). Whether operating a particular hospital was
    a government function in 1969 is not relevant. Kansas statutes have subsequently
    provided for the governmental operation of county hospitals, an operation that may be
    contractually delegated to some nongovernmental entity.
    Great Plains is an instrumentality of the county. We therefore have no difficulty in
    concluding that Great Plains is a public agency under K.S.A. 2015 Supp. 45-217(f)(1).
    The analysis does not end here, however. Great Plains urges us to find within the
    statutory definition of a public agency a provision exempting it from the statute's
    requirements to provide records. The statute provides a limitation:
    "'Public agency' shall not include:
    "(A) Any entity solely by reason of payment from public funds for property,
    goods or services of such entity; (B) any municipal judge, judge of the district court,
    judge of the court of appeals or justice of the supreme court." K.S.A. 2015 Supp. 45-
    217(f)(2).
    9
    We must determine whether an instrumentality such as Great Plains is exempted
    from KORA as a result of this limitation. We turn to the plain language of the statute to
    resolve this question. Relying on the plain language selected by the legislature is the best
    and only safe rule for determining legislative intent, and such plain language takes
    priority over both judicial decisions and policies advocated by the parties. See, e.g., State
    v. Spencer Gifts, 
    304 Kan. 755
    , 761, 
    374 P.3d 680
    (2016).
    The statute plainly states that it is not the payment of public funds alone that turns
    an entity into a public agency; the entity must also have some additional governmental
    quality or function. This reading excludes from KORA requirements such contractual
    services as a rental car agency that provides occasional transportation for state employees
    or a business that stocks vending machines in state-owned buildings. KORA would
    include, however, a hospital when a county board subcontracts with a private corporation
    to operate that hospital for the express purpose of providing services to the residents of
    that county. Such a hospital is an instrumentality of the county government, which is to
    say, it is not a public agency solely because it receives payment from public funds for the
    services it provides. The limitation expressed in K.S.A. 2015 Supp. 45-217(f)(2)(A)
    therefore does not apply to Great Plains.
    We now turn to the decision of our Court of Appeals.
    The Court of Appeals elected not to focus on whether Great Plains was a public
    agency but on whether the requested information constitutes "public records": "This
    argument [about the definition of 'public agency'] may be misguided. . . . By assuming
    the role as the sole operator of the hospital on behalf of the Board, [Great Plains']
    operating records are deemed to be public 
    records." 53 Kan. App. 2d at 615
    , 621. This
    analytic framework is incorrect. KORA clearly states that it applies to public agencies. If
    Great Plains is a public agency, it must provide public records, and, as we determined
    10
    above, Great Plains is a public agency by virtue of its role as a government
    instrumentality.
    Despite affirming the district court, the Court of Appeals sua sponte remanded the
    case to the district court "for a factual determination of whether the requested documents
    are relevant to evaluating [Great Plains'] performance of its contract terms." 
    53 Kan. App. 2d
    at 621. The State challenges this decision, contending that such a remand is not
    supported by KORA.
    Because Great Plains is an instrumentality governed by KORA, the remedy
    devised by the Court of Appeals is erroneous and unnecessary. Neither party advocated
    for a remand or argued that certain records could be distinguished from other records
    based on the relevance of those records to the performance of the lease. The Court of
    Appeals appears to have devised that distinction entirely on its own, with no basis in
    Kansas statutes or caselaw.
    The Court of Appeals may have relied on Pennsylvania law, as construed in
    Allegheny Dept. of Admin. Servs. v. Parsons, 
    61 A.3d 336
    , 342 (Pa. Commw. Ct. 2013).
    There, the court analyzed whether certain records "directly related" to the performance of
    a contract for services. In the present case, our Court of Appeals came up with a similar
    rule for Kansas, determining that "public records do not include records owned by a
    private entity and which are not related to functions funded by public funds. K.S.A. 2015
    Supp. 45-217(g)(2)." 
    53 Kan. App. 2d
    at 620.
    Such a rule goes outside the language of KORA; it is the product of the Court of
    Appeals' focus on the records, not on the entity. A request under KORA is not limited to
    performance of contractual terms. The only requirement for access to records is a request
    by a party; a public agency may not require that a request contain anything more than
    11
    "the requester's name and address and the information necessary to ascertain the records
    to which requester desires access and the requester's right of access to the records."
    K.S.A. 2016 Supp. 45-220(b).
    Not all records must be disclosed under KORA; the legislature provided a narrow
    list of exceptions to records that are of a "sensitive or personal nature concerning
    individuals," records that must necessarily be kept private for the "effective and efficient
    administration of a governmental program," and records affecting "confidential
    information." K.S.A. 2016 Supp. 45-221; 45-229(a). The legislature explicitly provided
    that these exceptions are to be narrowly construed and that the policy of the state is to
    foster public access to public records. K.S.A. 2016 Supp. 45-229(a), (b), (c).
    Great Plains has never argued, either in district court or in its briefing to the Court
    of Appeals, that any of the requested documents fall within the narrow statutory
    exceptions to broad public access. The limitation on disclosure imposed by the Court of
    Appeals is not supported by Kansas statutes or by the facts presented by the parties. The
    portion of the Court of Appeals decision remanding the case to the district court for
    further determinations is therefore erroneous and is reversed.
    The decision of the Court of Appeals is affirmed in part and reversed in part. The
    decision of the district court is affirmed.
    12