Withers v. University of Kentucky

939 S.W.2d 340, 1997 Ky. LEXIS 29, 1997 WL 86226

• Court: Kentucky Supreme Court
• Decided: February 27, 1997
• Docket: 96-SC-017-DG
• Status: Published

Opinions

LAMBERT, Justice.

We are confronted again with the issue of sovereign immunity, a doctrine of law created by Section 231 of the Constitution of Kentucky. For decades this Court has struggled with whether various governmental entities are entitled to the protection of sovereign immunity, and of those which are, whether statutes or conduct of the immune entity amount to an express or an implied waiver. At issue here is whether the University of Kentucky is entitled to immunity from claims of medical negligence at its medical center, and, if so, whether statutes authorizing its participation in a malpractice compensation fund and its actual participation in the fund are sufficient to constitute a waiver of immunity.

Appellants brought this claim for wrongful death against the University of Kentucky arising out of the alleged medical negligence of certain physicians. They alleged that the negligent parties were agents of the University of Kentucky and that their conduct caused the death of Emilie M. Withers. The University of Kentucky sought dismissal on grounds of sovereign immunity. The trial court granted the motion to dismiss and subsequently denied appellants’ motion to set aside the order of dismissal.¹ An appeal was taken to the Court of Appeals and that court affirmed the dismissal of ap-pellee, the University of Kentucky. The Court of Appeals squarely held that the University of Kentucky was entitled to sovereign immunity from its tortious conduct. For its decision, the court below relied extensively on Hutsell v. Sayre, 5 F.3d 996 (6th Cir. 1993), and its analysis of the state of sovereign immunity in Kentucky. We granted discretionary review and now affirm the courts below.

Appellants first contend that the University of Kentucky is not an entity which is entitled to sovereign immunity under our Constitution and laws. For this contention they rely extensively on Kentucky Center for the Arts Corp. v. Berns, Ky., 801 S.W.2d 327 (1991), and the test it recognized from Gnau v. Louisville & Jefferson Co. Metropolitan Sewer District, Ky., 346 S.W.2d 754 (1961). Bems articulated the test as follows:

This is a two-pronged test, the first consisting of the “direction and control of the central state government,” and the second consisting of being “supported by monies which are disbursed by authority of the Commissioner of Finance out of the State Treasury.”

Berns, 801 S.W.2d at 331.

The determination of whether an entity is entitled to protection by the constitutional principle of sovereign immunity is for the judiciary.

The judiciary has the ultimate power, and the duty, to apply, interpret, define, construe all words, phrases, sentences and sections of the Kentucky Constitution as necessitated by the controversies before it. It is solely the function of the judiciary to so do. This duty must be exercised even when such action serves as a check on the activities of another branch of government or when the court’s view of the constitution is contrary to that of other branches, or even that of the public.

Rose v. Council far Better Education, Inc., Ky., 790 S.W.2d 186, 209 (1989). The General Assembly has no power to extend or limit the class of entities entitled to sovereign immunity as this determination must be made from Section 231 of the Constitution. Berns, 801 S.W.2d at 329. Contrary to appellants’ contention, the University of Kentucky precisely meets the Bems test as set forth above. While we deem it unnecessary to repeat the. analysis of the statutory existence of the University of Kentucky as contained in Hutsell v. Sayre, supra, it is appropriate to quote KRS 164.100 as follows:

The University of Kentucky located at Lexington, is recognized as established and maintained. It is the institution that was founded under the land grant of 1862 by the Congress of the United States under the corporate designation and title of “Agricultural and Mechanical College of Kentucky.” The university shall be maintained by the state with such endowments, incomes, buildings and equipment as will enable it to do work such as is done in other institutions of corresponding rank, both undergraduate and postgraduate, and embracing the work of instruction as well as research.

In addition, KRS 164.125(2), provides:

The University of Kentucky shall be the principal state institution for the conduct of statewide research and statewide service programs and shall be the only institution authorized to expend state general fund appropriations on research and service programs of a statewide nature financed principally by state funds.

The language of KRS 44.073(1) establishes the University of Kentucky as an agency of the state and KRS 446.010(31) defines “state funds” or “public funds” in such a manner as to include sums paid to the University of Kentucky Medical Center for health care sciences.

Numerous other statutes contained in KRS 164 establish unmistakably that the University of Kentucky operates under the direction and control of central state government and that it is funded from the State Treasury. The immune status of the University of Kentucky was expressly recognized in Frederick v. University of Kentucky Medical Center, Ky.App., 596 S.W.2d 30 (1980), a case involving the same statutory provision here under review, and likewise recognized in the leading case, Dunlap v. University of Kentucky Student Health Services Clinic, Ky., 716 S.W.2d 219 (1986). Even appellant virtually concedes the immune status of the University of Kentucky. Thus, on the basic question of whether the University of Kentucky is entitled to sovereign immunity, we have no reluctance to answer in the affirmative.

Appellants seek to avoid the blanket of immunity by reference to Gross v. Kentucky Board of Managers, 105 Ky. 840, 49 S.W. 458 (1899), a case from the last century which holds that not every corporation created by the state is entitled to sovereign immunity. Gross was relied upon in Kentucky Center for the Arts v. Berns, Ky., 801 S.W.2d 327 (1991), in making a distinction between a governmental function and a proprietary function performed by an entity having governmental roots. Relying on the “change in performance location” example found in Berns, 801 S.W.2d at 330-31, appellants contend that in a major aspect, the University of Kentucky Medical Center is nothing more than a hospital which is in full competition with and performs the same function as private hospitals. As such, they argue that in this respect, the University should be stripped of its immunity.

The answer to this contention is simple. The operation of a hospital is essential to the teaching and research function of the medical school. Medical school accreditation standards require comprehensive education and training and without a hospital, such would be impossible. Medical students and those in allied health sciences must have access to a sufficient number of patients in a variety of settings to insure proper training in all areas of medicine.² Such is essential to the mandate of KRS 164.125(l)(c).

Moreover, and even if we were so inclined, there would be no authority for a decision of this Court whereby we refused to accord an immune entity its protection under the law. Sovereign immunity is “deeply implanted in the law of the Commonwealth through Section 231 of the Kentucky Constitution.” Kestler v. Transit Authority of Northern Kentucky, Ky., 758 S.W.2d 38 (1988). Once it has been determined that an entity is entitled to sovereign immunity, this Court has no right to merely refuse to apply it or abrogate the legal doctrine. Fryman v. Harrison, Ky., 896 S.W.2d 908 (1995); Calvert Investments, Inc. v. Louisville & Jefferson Metropolitan Sewer District, Ky., 805 S.W.2d 133 (1991).

While the decisions of Kentucky appellate courts have not at all times been entirely consistent as to which entities are entitled to immunity derived from Section 231 of the Constitution of Kentucky, Kentucky Center for the Arts v. Berns, supra, states the proper standard for such determination and we reiterate that standard here.

The line between what is a state agency and what is a municipal corporation[³] is not divided by whether the entity created by state statute is or is not a city, but whether, when viewed as a whole, the entity is carrying out a function integral to state government. We use by analogy the language in Kentucky Region Eight v. Commonwealth, Ky., 507 S.W.2d 489, 491 (1974), holding that sovereign immunity should extend only to “departments, boards or agencies that are such integral parts of state government as to come within regular patterns of administrative organization and structure.”

Id. at 332. There is no doubt that the University of Kentucky satisfies these requirements.

Upon our determination that University of Kentucky is entitled to sovereign immunity, we must next consider whether or in what manner there has been a legislative waiver of immunity. Immediately we observe that the granting of waiver is a matter exclusively legislative.

Where sovereign immunity exists by reason of the Constitution, the General Assembly may extend or limit waiver as it sees fit, but where no constitutionally protected sovereign immunity exists the General Assembly cannot by statute create it.

Berns, 801 S.W.2d at 329. See also University of Kentucky v. Guynn, Ky., 372 S.W.2d 414, 416 (1963), as follows:

As a matter of grace, such a remedy may be granted, withdrawn or restricted at the will of the legislature.

Appellants contend that KRS 164.939 et seq., the “University of Kentucky Medical Center Malpractice Insurance Act,” constitutes an express waiver of sovereign immunity. Based on these statutes, this Court held in Dunlap v. University of Kentucky Student Health Services Clinic, Ky., 716 S.W.2d 219 (1986), that legislative authority to purchase liability insurance constituted a partial waiver of sovereign immunity to the extent of available insurance coverage. Dunlap followed the Taylor v. Knox County Board of Education, 292 Ky. 767, 167 S.W.2d 700 (1942), line of cases⁴ and interpreted statutes which authorized, but did not mandate, the purchase of liability insurance to be a “partial waiver of governmental immunity for the hospital to the extent that this insurance fund has been provided for by the statute.” Dunlap, 716 S.W.2d at 222. A similar result was achieved in Green River District Health Department v. Wigginton, Ky., 764 S.W.2d 475 (1989), and Kestler v. Transit Authority of Northern Kentucky, Ky., 758 S.W.2d 38 (1988), on the basis of statutes which permitted, but did not require, the governmental entity to maintain liability insurance. The effect of these cases was to find waiver whenever the governmental entity had purchased liability insurance and to the extent of the insurance which was available.

The General Assembly was in session when our decision in Dunlap was rendered. Immediately, and without even waiting for a ruling on rehearing, the General Assembly enacted certain new statutes designed unmistakably to overrule Dunlap. This fact was recognized in Blue v. Pursell, Ky.App., 793 S.W.2d 823 (1990), in University of Louisville v. O’Bannon, Ky., 770 S.W.2d 215, 216 (1989), and in Hutsell v. Sayre, 5 F.3d 996 (6th Cir.1993). Green River v. Wigginton, supra, and Kestler v. Transit Authority of Northern Kentucky, supra, both acknowledged the recent enactment of the new statutes, but on the basis of non-retroactivity, saw no need to fully analyze their effect.

KRS 44.072 began with a declaration of legislative intent with respect to the means whereby persons negligently injured by the Commonwealth must assert their claims. It continued:

The Commonwealth thereby waives the sovereign immunity defense only in the limited situations as herein set forth. It is further the intention of the General Assembly to otherwise expressly preserve the sovereign immunity of the Commonwealth, any of its cabinets, departments, bureaus or agencies or any of its officers, agents or employees while acting in the scope of their employment by the Commonwealth or any of its cabinets, departments, bureaus or agencies and expressly waived as set forth by statute.

After having declared its intention to otherwise preserve sovereign immunity, the General Assembly enacted an express waiver pursuant to the Board of Claims Act. KRS 44.073(2), states as follows:

The Board of Claims shall have primary and exclusive jurisdiction over all negligence claims for the negligent performance of ministerial acts against the Commonwealth, any of its cabinets, departments, bureaus, or agencies, or any officers, agents or employees thereof while acting within the scope of their employment by the Commonwealth, or any of its cabinets, departments, bureaus, or agencies.

To prevent misunderstanding, if any there could have been as to its intention with respect to preservation or waiver of sovereign immunity, the General Assembly added KRS 44.073(14):

The filing of an action in court or any other forum or the purchase of liability insurance or the establishment of a fund for self-insurance by the Commonwealth, its cabinets, departments, bureaus, or agencies or its agents, officers, or employees thereof for a government related purpose or duty shall not be construed as a waiver of sovereign immunity or any other immunity or privilege thereby held.

On the basis of the statutes quoted herein-above and the general tenor of KRS 44.072 and KRS 44.073, we now believe that any construction of other statutes to result in a waiver of immunity which differs from the language of the Board of Claims Act is untenable. In various places throughout the Board of Claims Act, waiver of immunity is alluded to and in every instance an express waiver is required.

We are enjoined by KRS 446.080 to construe the statutes of this state “to promote their objects and carry out the intent of the Legislature.” We must construe all words and phrases according to the common and approved uses of language. Coots v. Allstate Ins. Co., Ky., 853 S.W.2d 895 (1993), and Gateway Construction Co. v. Wallbaum, Ky., 356 S.W.2d 247 (1962). In obedience to the foregoing, we must apply literally the language which says that a waiver of sovereign immunity shall not be construed from the purchase of liability insurance or the establishment of a fund for self-insurance. We note that where two statutes concern the same or similar subject matter, the specific shall prevail over the general. Kampschaefer v. Commonwealth, Ky.App., 746 S.W.2d 567 (1988); Land v. Newsome, Ky., 614 S.W.2d 948 (1981).

The time has come to put an end to the uncertainty which has existed in this area of the law. As stated hereinabove, a test has been developed to determine whether an entity possesses the immunity of the Commonwealth. Berns, supra. If immunity exists, it is not lost or diminished or affected in any manner by the purchase of liability insurance or the establishment of an indemnity fund, whether directed or authorized by statute or merely undertaken without authorization, notwithstanding that such may have been an unnecessary expenditure of funds. Parenthetically, we observe that heretofore, due to the uncertain application of the doctrine of sovereign immunity, failure to maintain indemnity agreements would have been imprudent. All claims against immune entities fall squarely within the purview of the Board of Claims Act where resides exclusive jurisdiction for claims against the entity. The Board of Claims Act and sovereign immunity are co-extensive. Berns, 801 S.W.2d at 331, and Guau v. Louisville & Jefferson Co. Metropolitan Sewer District, supra. It follows that a plea of sovereign immunity is an admission of Board of Claims jurisdiction.

This Court’s decision in Berns raised but did not answer a question as to the proper construction of KRS 44.073(14). We said:

The meaning of the 1986 statutory change remains undecided for another day when the statutory entity involved qualifies for sovereign immunity, thus making the question of waiver essential to the decision.

Berns, 801 S.W.2d at 332. The day for decision has now arrived. We hold that the 1986 statutory changes abrogated the rule in Dunlap and its line of decisions which found waiver of immunity based on the purchase of liability insurance whether or not pursuant to statutory authorization.

In KRS 44.072 and KRS 44.073, the General Assembly has manifested its determination to waive the immunity of the Commonwealth only narrowly and only by means of the Board of Claims Act. As such, persons having negligence claims against the Commonwealth may be heard in the Board of Claims, but not elsewhere. It should be recognized, however, that notwithstanding the provisions of the Board of Claims statutes, the General Assembly retains the power to subsequently enact other waivers as its discretion dictates.

Henceforth, in an effort to avoid the morass we have heretofore been in, we will observe a rule similar to the one found in Edelman v. Jordan, 415 U.S. 651, 673, 94 S.Ct. 1347, 1361, 39 L.Ed.2d 662, 678 (1974), as follows:

We will find waiver only where stated “by the most express language or by such overwhelming implications from the text as [will] leave no room for any other reasonable construction.” Murray v. Wilson Distilling Co., 213 U.S. 151, 171, 29 S.Ct. 458, 464-65, 53 L.Ed. 742 (1909).

We will not address appellants’ constitutional attack upon KRS 44.073 as it appears to be unpreserved by failure to include such issue on their pre-hearing statement and failure to give notice to the Attorney General as required by KRS 418.075 and Maney v. Mary Chiles Hospital, Ky., 785 S.W.2d 480 (1990). Moreover, appellants’ constitutional claims would appear to be insubstantial.

For the foregoing reasons, we affirm the courts below.

COOPER, JOHNSTONE and LAMBERT, JJ., concur. STEPHENS, C.J., concurs and files a separate concurring opinion. WINTERSHEIMER, J., dissents by separate opinion in which GRAVES and STUMBO, JJ., join.

1 . In addition to the University of Kentucky, appellants sued two or more physicians and those claims were unaffected by the dismissal of the University of Kentucky. We have firmly and repeatedly held that the immunity of the Commonwealth does not extend to its agents, servants and employees. Gould v. O’Bannon, Ky., 770 S.W.2d 220 (1989); Happy v. Erwin, Ky., 330 S.W.2d 412 (1959).

2 . Among the relevant accreditation standards are the following: Functions and Structure of a Medical School — Standards for Accreditation of Medical Education and Programs Leading to the M.D. Degree, 1995; Graduate Medical Education Directory 1995-1996; The Proposed Revision of Accreditation Standards and Guidelines for the Professional Program in Pharmacy Leading to the Doctor of Pharmacy Degree, January 15, 1996; Criteria and Guidelines for the Evaluation of Baccalaureate and Higher Degree Programs in Nursing, 1991; Accreditation Standards for Dental Education Programs—September 1995; Standards for Advanced Education Programs in General Practice Dentistry, Commission on Dental Accreditation, American Dental Association, December 1988.

3 . In Bems, the Court explained that its use of the term “municipal corporation” is intended to mean any local government entity created by the state to carry out designated functions. Id. at 332.

4 . Cases in the line are our recent decision in Board of Education of Rockcastle County v. Kirby, Ky., 926 S.W.2d 455 (1996), Green River District Health Department v. Wigginton, Ky., 764 S.W.2d 475 (1989), Kestler v. Transit Authority of Northern Kentucky, Ky., 758 S.W.2d 38 (1988), and Moores v. Fayette Co., Ky., 418 S.W.2d 412 (1967).