Yeoman v. Commonwealth of Kentucky, 97-SC-274-TG

CourtUnited States State Supreme Court (Kentucky)
Citation983 S.W.2d 459
Docket Number97-SC-274-TG
PartiesSTUART G. YEOMAN, M.D., ET AL., APPELLANTS v. COMMONWEALTH OF KENTUCKY, HEALTH POLICY BOARD, ET AL., APPELLEES
Decision Date19 November 1998

[1]
983 S.W.2d 459

[2]
STUART G. YEOMAN, M.D., ET AL., APPELLANTS
v.
COMMONWEALTH OF KENTUCKY, HEALTH POLICY BOARD, ET AL., APPELLEES
[3]
97-SC-274-TG
[4]
Supreme Court Of Kentucky
[5]
November 19, 1998
[6] Attorneys For Appellants: Kent Masterson Brown, Christopher J Shaughnessy, Danville, Kentucky. Attorneys For Appellees: Philip J Edwards, Louisville, Kentucky. Edward D. Klatte, Cabinet for Health Services, Frankfort, Kentucky. Leonard G. Rowekamp, Wolnitzek Rowekakmp, Bender & Bonar, P.S.C., Covington, Kentucky. Cathy Cravens Snell, Revenue Cabinet, Division of Legal Services, Frankfort Kentucky.
[7] The opinion of the court was delivered by: Justice Stephens Affirming
[8] OPINION OF THE COURT BY JUSTICE STEPHENS. Johnstone, J., and Special Justice Raymond Overstreet concur. Cooper, J., files a separate opinion Concurring in result only. Wintersheimer, J., Dissents and files a separate Dissenting opinion. Graves and Stumbo, JJ., join in this Dissenting opinion. Lambert, C.J., not sitting.
[9] Appellants challenge the constitutionality of House Bill ("HB") 250 (enacted April 15, 1994), which provides for wide-ranging health care reforms, including, but not limited to creation of a Health Policy Board, provider arbitration, certificate of need procedures, insurance reform, medical education and medical taxation.
[10] Appellants' challenge to HB 250 is based on the following grounds: First, the bill is special legislation passed in violation of § 59 of the Kentucky Constitution. Second, it violates the equal protection guarantees of the United States and Kentucky Constitutions. Third, HB 250 is a revenue raising measure which was created in violation of § 47 of the Kentucky Constitution, either because it originated in the Senate or because the Senate amendments to HB 250 are unrelated to revenue. Fourth, HB 250 delegates certain powers of the Governor to a third party in violation of the principle of separation of powers. Fifth, the privacy rights of the citizens of the Commonwealth are violated by the release of certain information pursuant to HB 250. Sixth, actions of certain officials violated the Open Meetings Act. Seventh, HB 250 provides for the payment of government officials by a non-governmental organization. Eighth, a provider tax, which is a part of HB 250, violates the supremacy clause of the United States Constitution. Ninth, HB 250 is not appropriately titled, in violation of § 51 of the Kentucky Constitution. We shall address each of the appellants' arguments in turn, but first we shall review the procedure and facts of this case.
[11] On November 2, 1994, appellants' brought this action in Franklin Circuit Court. Cross motions for summary judgment were filed and denied on June 29, 1995. The parties then entered into the discovery process and cross motions for summary judgment were filed again. On November 8, 1996, the trial court granted appellees' motion upholding the constitutionality of HB 250. Appellants appealed the Franklin Circuit Court's judgment to the Kentucky Court of Appeals. On March 27, 1997, the Court of Appeals recommended that this case be transferred to this Court. On April 24, 1997, this Court granted transfer of this action pursuant to CR 74.02(5). We now affirm the decision of the Franklin Circuit Court and hold that HB 250 is constitutional.
[12] During the 1993 Second Extraordinary Session of the General Assembly, the issue of health care reform was extensively debated. As a result of that debate, HB 1 was enacted. *fn1 HB 1 enacted a new health care provider tax which met federal standards in order for the Commonwealth of Kentucky to qualify for matching funds from the federal government. The constitutionality of HB 1 was challenged and subsequently upheld in Commonwealth, Revenue Cabinet v. Smith, Ky., 875 S.W.2d 873, cert. denied sub nom Yeoman v. Kentucky, 513 U.S. 1000, 115 S. Ct. 509, 130 L. Ed. 2d 417 (1994).
[13] As noted, in 1994, the Kentucky General Assembly ("General Assembly") enacted HB 250, the legislation which is the subject of this appeal. On March 3, 1994, the Kentucky House of Representatives ("House") passed HB 250 as it had been originally introduced with 21 separate sections. Later that same day, HB 250 was received by the Kentucky Senate ("Senate"). Following a review of HB 250, the Senate drafted two Senate Committee Substitute bills. The Senate ultimately passed the second Senate Committee Substitute Bill with 25 floor amendments. On March 23, 1994, the House received the Senate version of HB 250, but the House refused to concur in the amendments. The Senate was unwilling to modify its version of HB 250 and sent it back to the House for a second vote.
[14] In order to resolve the differences between the two chambers, the House and Senate leadership appointed a Conference Committee, which was unable to concur on a compromise bill. The House and Senate leadership then appointed a Free Conference Committee.
[15] The Free Conference Committee filed a report in both chambers, but only the Senate accepted it. The Senate passed the free Conference Committee version of HB 250 and on April 15, 1994, the House reconsidered the Free Conference Committee report and adopted it, thereby passing the present version of HB 250.
[16] I. ARE APPELLANTS BARRED BY THE DOCTRINE OF RES JUDICATA FROM BRINGING THE INSTANT SUIT?
[17] Before addressing appellants' arguments, we must first resolve the issue of whether appellants are precluded as res judicata by this Court's ruling in Commonwealth, Revenue Cabinet v. Smith, Ky., 875 S.W.2d 873, cert. denied sub nom Yeoman v. Kentucky, 513 U.S. 1000, 115 S. Ct. 509, 130 L. Ed. 2d 417 (1994), in which a similar health care bill was challenged and found to be constitutional from challenging HB 250. Res judicata is the Latin term for "a matter adJudged."
[18] The doctrine of res judicata is that an existing final judgment rendered upon the merits, without fraud or collusion, by a court of competent jurisdiction, is conclusive of causes of action and of facts or issues thereby litigated, as to the parties and their privies, in all other actions in the same or any other judicial tribunal of concurrent jurisdiction.
[19] 46 Am Jur 2d § 514.
[20] The rule of res judicata is an affirmative defense which operates to bar repetitious suits involving the same cause of action. The doctrine of res judicata is formed by two subparts: 1) claim preclusion and 2) issue preclusion. *fn2 Claim preclusion bars a party from re-litigating a previously adjudicated cause of action and entirely bars a new lawsuit on the same cause of action. Allen v. McCurry, 449 U.S. 90, 101 S. Ct. 411, 66 L. Ed. 2d 308 (1980); Worton v. Worton, 234 Cal. App. 3d 1638, 286 Cal. Rptr. 410 (2 Dist. 1991), rev. denied (Cal) 1992 Cal. Decision; County of Rutherford by Child Support Enforcement Agency v. Whitener, 100 N.C. App. 70, 394 S.E.2d 263 (1990); Vestal, The Constitution and Preclusion -- Res Judicata, 62 Mich. L. Rev. 33. Issue preclusion bars the parties from relitigating any issue actually litigated and finally decided in an earlier action. The issues in the former and latter actions must be identical. The key inquiry in deciding whether the lawsuits concern the same controversy is whether they both arise from the same transactional nucleus of facts. If the two suits concern the same controversy, then the previous suit is deemed to have adjudicated every matter which was or could have been brought in support of the cause of action. Worton, 234 Cal. App. 3d at 1638; Commonwealth, Dept. of Transp. v. Crawford, 121 Pa. Commw. 613, 550 A.2d 1053 (1988).
[21] For claim preclusion to bar further litigation, certain elements must be present. First, there must be identity of the parties. Newman v. Newman, Ky., 451 S.W.2d 417, 419 (1970). Second, there must be identity of the causes of action. Id. Third, the action must have been resolved on the merits. Id. The rule that issues which have been once litigated cannot be the subject matter of a later action is not only salutary, but necessary to the speedy and efficient administration of Justice.
[22] We find that appellants are not barred by claim preclusion from challenging the health care provider tax of HB 250 by this Court's previous adjudication in Smith, 875 S.W.2d at 873. While HB 250 contains certain provisions which are similar to HB 1, they are not identical bills. HB 1 only contains a provider tax and the guidelines for collecting this tax. On the other hand, HB 250 is a complex health reform bill made up of 21 subparts, only one of which was the provider tax. For claim preclusion to apply, the subject matter of the subsequent suit must be identical. Since it is clear that the challenged portions of HB 1 and HB 250 are not identical, claim preclusion does not apply in the instant case.
[23] For issue preclusion to operate as a bar to further litigation, certain elements must be found to be present. First, the issue in the second case must be the same as the issue in the first case. Restatement (Second) of Judgments § 27 (1982). Second, the issue must have been actually litigated. Id. Third, even if an issue was actually litigated in a prior action, issue preclusion will not bar subsequent litigation unless the issue was actually decided in that action. Id. Fourth, for issue preclusion to operate as a bar, the decision on the issue in the prior action must have been necessary to the court's judgment. Id.
[24] The only issue which appellants might be precluded from arguing in this case is whether the provider tax is unconstitutional under § 59 of the Kentucky Constitution and the equal protection requirements of the United States and Kentucky Constitutions. While we held that the provider tax created by HB 1 is constitutional, Smith, 875 S.W.2d at 877-78, the tax created by HB 250 is not identical. Thus issue preclusion cannot apply, because the issue we are faced with in the instant case is not identical to the
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