State v. Great Plains of Kiowa Cnty., Inc.

• Decision Date: 24 August 2018
• Docket Number: No. 115,932,115,932
• Citation: 425 P.3d 290
• Parties: STATE of Kansas, Appellee, v. GREAT PLAINS OF KIOWA COUNTY, INC., Appellant.
• Court: Kansas Supreme Court

425 P.3d 290

STATE of Kansas, Appellee,

v.GREAT PLAINS OF KIOWA COUNTY, INC., Appellant.

No. 115,932

Supreme Court of Kansas.

Opinion filed August 24, 2018

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 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) 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.

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.

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.

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...