.005 Public accountability for funds or assets recovered by duly elected statewide constitutional officers through judgment or settlement -- Applicability of Open Records and Open Meetings Laws -- Administration and disbursement of Commonwealth judgment or settlement proceeds -- Charitable Asset Administration Board -- Limitation regarding constitutional challenge.
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48.005 Public accountability for funds or assets recovered by duly elected statewide
constitutional officers through judgment or settlement -- Applicability of Open
Records and Open Meetings Laws -- Administration and disbursement of
Commonwealth judgment or settlement proceeds -- Charitable Asset
Administration Board -- Limitation regarding constitutional challenge.
(1)
The General Assembly hereby finds and declares that:
(a) Public accountability for funds or other assets recovered in a legal action by or
on behalf of the general public, the Commonwealth, or its duly elected
statewide constitutional officers is appropriate and required, whether the
character of the assets or funds recovered is public or private;
(b) Accountability for assets or funds recovered by duly elected statewide
constitutional officers is essential to the public trust, and is even more critical
when that officer was a party to the action that resulted in the recovery by
virtue of the public office he or she holds;
(c) Public accountability demands the applicability of the Kentucky Open
Records Law, KRS 61.870 to 61.884, and the Kentucky Open Meetings Law,
KRS 61.805 to 61.850, so that the actions of individuals or agencies who are
charged with the administration of funds or other assets are conducted in full
view, and are open to public scrutiny;
(d) The General Assembly recognizes that the Attorney General of the
Commonwealth of Kentucky has filed or been a party to actions by virtue of
the public office he holds, and has recovered certain assets or funds of
approximately forty-five million dollars ($45,000,000), plus interest, for or on
behalf of the citizens of the Commonwealth in the cases of Commonwealth of
Kentucky, ex rel., Attorney General, Albert B. Chandler, III v. Anthem
Insurance Companies, Inc., Southeastern Group, Inc., Southeastern United
Medigroup, Inc., Franklin Circuit Court, Division I, Civil Action No. 97-CI-
01566, and Southeastern United Medigroup, Inc., Southeastern Group, Inc.,
and Anthem Insurance Companies, Inc., v. Commonwealth of Kentucky,
Department of Insurance, Franklin Circuit Court, Division II, Civil Action No.
97-CI-00405;
(e) The terms of the settlement of those actions referenced in subsection (1)(d) of
this section serve a public purpose and require that the proceeds of settlement
be used "to address the unmet health care needs of Kentucky citizens";
(f) In accordance with the terms of the settlement referenced in subsection (1)(d)
of this section, a foundation has been or is to be formed and appointments to
that foundation made after receiving recommendations from an advisory board
whose appointments will be made from nominees of the Attorney General;
(g) While it may be important that, in certain circumstances, funds or assets
received retain their character, identity, and purpose, it is also important that
the process by which funds are administered and the individuals named to
serve on the advisory board and the foundation in the settlement referenced in
subsection (1)(d) of this section be open to public scrutiny and be required to
make reports and be accountable to the public; and
(h) The power to appropriate funds for public purposes is solely within the
purview of the legislative branch of government, and the General Assembly,
as a steward of the budgetary process, shall take steps to assure that future
settlements are handled in a manner that assures maximum accountability to
the citizens of the Commonwealth and their duly elected legislative
representatives.
(2)
Therefore, any other provision of the common law or statutory law to the contrary
notwithstanding:
(a) The provisions of subsection (3) of this section shall apply to the settlement
referenced in subsection (1)(d) of this section, and to the advisory board,
corporation, organization, foundation, charitable trust, constructive trust,
board, commission, or entity, created by court order or otherwise, to
administer the settlement proceeds to provide for the "unmet health care needs
of Kentucky citizens"; and
(b) Except for the settlement referenced in subsection (1)(d) of this section, the
provisions of subsection (4) of this section shall apply whenever the Attorney
General or other duly elected statewide constitutional officer is a party or has
entered his appearance in a legal action on behalf of the Commonwealth of
Kentucky, including ex rel. or other type actions, and a disposition of that
action has resulted in the recovery of funds or assets to be held in trust by the
Attorney General or other duly elected statewide constitutional officer or a
person, organization, or entity created by the Attorney General or the
Commonwealth, through court action or otherwise, to administer the trust
funds or assets, for charitable, eleemosynary, benevolent, educational, or
similar public purposes;
(c) Except as otherwise provided in paragraphs (a) and (b) of this subsection, the
provisions of subsection (5) of this section shall apply when any funds or
assets of any kind or nature whatsoever, including, but not limited to, public
funds as defined in KRS 446.010 and private funds or assets are recovered by
judgment or settlement of a legal action by or on behalf of the Commonwealth
of Kentucky, including ex rel. or other type actions filed by a duly elected
statewide constitutional officer under that officer's statutory or common law
authority.
(3)
The advisory board, corporation, organization, foundation, charitable trust,
constructive trust, board, commission, or entity, created by court order or otherwise,
in accordance with the settlement outlined in subsection (1)(d) of this section, shall
be deemed a public trust, and shall:
(a) Be subject to the Kentucky Open Records Act, KRS 61.870 to 61.884, and the
Kentucky Open Meetings Act, KRS 61.805 to 61.850;
(b) Be audited on an annual basis by the Auditor of Public Accounts;
(c)
Provide any records, documents, written reports, and audits to the Governor,
Auditor of Public Accounts, and the Legislative Research Commission, as
may be requested;
(d) Provide representatives of the organization or entity to testify before any
committee of the General Assembly, when requested, concerning the work
and financial condition of the organization or entity;
(e) Encourage the Franklin Circuit Court to authorize the Governor to appoint
two (2) at-large members to the board of directors of the foundation created by
the settlement agreement; and
(f) Provide written notice of any disbursement of funds or assets to the co-chairs
of the Interim Joint Committee on Appropriations and Revenue, the secretary
of the Finance and Administration Cabinet, and the state controller at least
fourteen (14) days prior to making disbursement. Within forty-five (45) days
after receipt of the notice of disbursement of funds or assets in accordance
with this subsection, the Interim Joint Committee on Appropriations and
Revenue may hold a hearing on the disbursement. If requested by the Interim
Joint Committee on Appropriations and Revenue, members of the advisory
board, corporation, organization, foundation, charitable trust, constructive
trust, board, commission, or entity making disbursement and the person,
organization, or other entity receiving the disbursement shall appear and give
testimony concerning the proposed disbursement. Following the hearing, the
Interim Joint Committee on Appropriations and Revenue shall make findings
concerning whether or not the disbursement:
1.
Is consistent with the nature, character, and purpose for which the funds
were recovered; and
2.
Is in the best interest of the Commonwealth.
A copy of the findings shall be publicly released and mailed or otherwise
delivered to the entity or organization seeking disbursement, the secretary of
the Finance and Administration Cabinet, and the state controller.
(4)
Except for the settlement referenced in subsection (1)(d) of this section, whenever
the Attorney General or other duly elected statewide constitutional officer is a party
to or has entered his appearance in, a legal action on behalf of the Commonwealth
of Kentucky, including ex rel. or other type actions, and a disposition of that action
has resulted in the recovery of funds or assets to be held in trust by the Attorney
General or other duly elected statewide constitutional officer or by a person,
organization, or entity created by the Attorney General, or the Commonwealth,
through court action or otherwise, to administer the trust funds or assets, for
charitable, eleemosynary, benevolent, educational, or similar public purposes, those
funds shall be deposited in the State Treasury and the funds or assets administered
and disbursed by the Charitable Asset Administration Board created under this
section.
As used in this section "CAAB" means the Charitable Asset
Administration Board.
(a) The CAAB shall consist of the following members, who shall be confirmed
by the Senate under KRS 11.160, and who shall serve at the pleasure of the
duly elected statewide constitutional officer making the appointment during
that constitutional officer's term of office:
1.
Three (3) members to be appointed by the Governor;
2.
Three (3) members to be appointed by the Attorney General; and
3.
Three (3) members to be appointed by the Auditor of Public Accounts.
(b)
Each duly elected statewide constitutional officer under paragraph (a) of this
subsection shall appoint at least one (1) member who has a background in the
administration of charitable, eleemosynary, benevolent, educational, or similar
type trust assets, but shall not be currently involved in any activity that would
violate the provisions of KRS 11A.040, as they relate to the performance of
the appointee's duties on the CAAB.
(c)
All appointees to the CAAB shall comply with the provisions of the Executive
Branch Code of Ethics found in KRS Chapter 11A.
(d)
A vacancy in the membership of the CAAB shall be filled in the same manner
and under the same conditions as the initial appointment to the board.
(e)
The CAAB shall:
1.
Be a nonprofit, de jure, quasi-governmental corporation subject to the
Kentucky Open Records Law, KRS 61.870 to 61.884, and Kentucky
Open Meetings Law, KRS 61.800 to 61.850;
2.
Have any and all general corporate, trust, or other powers reasonable or
necessary to fulfill the requirements and purposes of the CAAB;
3.
Be audited on an annual basis by the Auditor of Public Accounts;
4.
Provide any documents, written reports, and audits to the Legislative
Research Commission as may be requested; and
5.
Provide representatives of the organization or entity to testify before any
committee of the Kentucky General Assembly when requested
concerning the work and financial condition of the CAAB.
(f)
The CAAB shall have full authority over the administration, control, and
disbursement of any funds recovered under this subsection. The CAAB shall
receive, analyze, administer, disburse, and preserve the identity, character, and
nature and the charitable, eleemosynary, benevolent, educational, or similar
public purpose of the funds or assets received consistent with this subsection
and the authority for administering the funds recovered as set forth in the:
1.
Articles of incorporation and bylaws of the corporation;
2.
Partnership agreement or other business association agreement;
3.
Contractual agreement;
4.
Governing documents of the public or private foundation;
5.
Charitable trust documents;
6.
Terms of the constructive trust;
7.
Orders of a state or federal court;
8.
State or federal law or regulation; or
9.
Any other governing documents necessary to properly administer the
funds recovered.
(g) The CAAB may hold public hearings, if necessary, concerning the proper
administration or disbursement of trust assets received and to be administered
under this subsection.
(h) 1.
After April 21, 2000, all charitable, eleemosynary, benevolent,
educational, or similar type trust funds or assets, to which this
subsection applies, recovered by way of judgment, settlement, or
otherwise, shall be transferred to the CAAB for administration of those
funds or assets consistent with their charitable, eleemosynary,
benevolent, educational, or similar public purpose and the provisions of
this subsection.
2.
For those legal actions settled prior to April 21, 2000, except for the
settlement outlined in subsection (1)(d) of this section to which
subsection (3) of this section shall apply, where charitable,
eleemosynary, benevolent, educational, or similar type trust funds or
assets, are recovered by way of judgment or settlement, and to which
this subsection would otherwise be applicable, the federal and state
courts where those actions are pending are encouraged to transfer any
trust funds or assets remaining after administration to the CAAB.
(5)
(a) Any other provision of the common law or statutory law to the contrary
notwithstanding, and except as otherwise provided in this section, any funds
or assets of any kind or nature whatsoever, including, but not limited to,
public funds as defined in KRS 446.010 and private funds or assets when
recovered by judgment or settlement of a legal action by or on behalf of the
Commonwealth of Kentucky, including ex rel. or other type actions filed by a
duly elected statewide constitutional officer under that officer's statutory or
common law authority shall be deemed public funds, and shall be deposited
into an account maintained by the Finance and Administration Cabinet.
(b) No funds to which this subsection applies when deposited in an account
maintained by the Finance and Administration Cabinet shall be disbursed
without a specific legislative appropriation of the deposited funds by the
General Assembly while in regular or special legislative session.
(6)
The common law, including the common law authority of any duly elected
statewide constitutional officer, is specifically abrogated to the extent it is
inconsistent with the provisions of this section.
(7)
The provisions of this section shall not apply to actions by or on behalf of the
Commonwealth or its duly elected statewide constitutional officers, if the recovery
sought and received is for specific individuals identified as parties to the action
either by individual Social Security number, other individual identifying number, or
by the individual's proper name.
(8)
Notwithstanding any statute or common law to the contrary, and except as provided
in this subsection, an elected statewide constitutional officer or any other state
official or agency shall not file or participate as a plaintiff, petitioner, party,
intervening party, attorney, or amicus curiae in any litigation challenging the
constitutionality of this section. State funds and employee time shall not be
expended by any person or agency in support of such a challenge. If the
constitutionality of this section is challenged, the Finance and Administration
Cabinet shall be the sole named respondent in that litigation, and shall consult with
the Legislative Research Commission regarding defense of that litigation.
Effective: April 21, 2000
History: Created 2000 Ky. Acts ch. 483, sec. 1, effective April 21, 2000.
2004-2006 Budget Reference. See State/Executive Branch Budget, 2005 Ky. Acts
ch. 173, pt. I, A.8.(2), at 3031; and State/Executive Branch Budget Memorandum,
2005 Ky. Acts ch. 170, at 1941 (Final Budget Memorandum, at 333).
2004-2006 Budget Reference. See State/Executive Branch Budget, 2005 Ky. Acts
ch. 173, pt. I, A.14.(5), at 3036; and State/Executive Branch Budget Memorandum,
2005 Ky. Acts ch. 170, at 1974 (Final Budget Memorandum, at 356).
2004-2006 Budget Reference. See State/Executive Branch Budget, 2005 Ky. Acts
ch. 173, pt. I, E.5.a.(1), at 3059; and State/Executive Branch Budget Memorandum,
2005 Ky. Acts ch. 170, at 2215 (Final Budget Memorandum, at 564).