[Philip Wesley Racing Against The
Gildo Santiago
As Lyon County Counselor, you request our opinion on three legal issues involving proposed agreements and contracts between Lyon County (County) and the Flint HillsCommunity Health Center, Inc. (Flint Hills, Inc.), a nonprofit corporation. We are informedthat the proposed agreements would allow Flint Hills to assume and perform all obligationsof the county relative to health related functions, but will not become effective until theproposed delegation is approved by the Kansas Department of Health and Environment(KDHE). You have provided us with copies of pertinent documents(1) and we have receivedinput from counsel for Flint Hills, Inc. and the KDHE. We have been informed that FlintHills, Inc. intends to operate an indigent health care clinic and provide services under acontract with KDHE, through assignment, and that the KDHE does not object to such anarrangement. We have also been informed that the intended agreements will require FlintHills, Inc. to comply with the Kansas Open Meetings Act (KOMA), K.S.A. 75-4317 et seq. and the Kansas Open Records Act (KORA), K.S.A. 45-215 et seq.
1. Does Lyon County have the authority to both contract directly with Flint Hills for the provision of certain health-related servicesand to assign its rights and obligations under contracts existingbetween KDHE and Lyon County to Flint Hills to perform theservices and receive payment through Lyoncounty?
The proposed arrangement would provide that county duties assumed by contract betweenLyon County and the KDHE would be contractually delegated by the County to Flint Hills. The original 2001 contract between the KDHE and Lyon County does not provide for suchsub-contracting. However, the 2003 funding agreement appears to contemplate suchdelegation in paragraph 21, at least as it relates to Title VI and LEP requirements. Assuming that the KDHE agrees to amend its contractual agreement with the County toallow such delegation to take place, the next issue becomes whether the County isauthorized to cooperate in such a delegation.
K.S.A. 19-212 authorizes each board of county commissioners to operate the affairs andbusiness of the county they serve. Specifically, K.S.A. 19-212 Eleventh provides: "Theboard of county commissioners of each county shall have the power, at any meeting: . . . To contract for the protection and promotion of the public health and welfare." Thus,assuming the necessary parties all agree, and it is not otherwise precluded by law, theCounty has the authority to contract for this purpose.
The next issue is whether the KDHE is authorized to use, or allow the County to utilize,Flint Hills, Inc. as an instrument of the county or state, for purposes of performing healthrelated services.(2) As an administrative agency created and empowered by the Legislature,the KDHE is vested with a great deal of authority in the areas of health and environment. As stated by the Kansas Supreme Court in Gumbhir v. Kansas State Board of Pharmacy,(3)"[t]he legislature may enact general provisions for regulation and grant to state agenciescertain discretion in filling in the details, provided it fixes reasonable and definitivestandards to govern the exercise of such authority." However, courts commonly requireagencies to set forth definite standards for discretionary decision-making in connection withthe decision to grant or suspend various governmental entitlement benefits.(4) Thus, in orderto protect against due process problems or allegations of unlawful delegation, we believeit is very important that any delegation of KDHE or county authority to Flint Hills, Inc. beaccompanied by sufficient and clear standards.
In general, the authority being delegated by the KDHE and Lyon County to Flint Hills, Inc.does not appear to be legislative in nature. The standards and rules for provision of healthcare, or oversight, with regard to health related issues have in general already beenestablished by state law or through the administrative regulations enacted by the KDHE.(5) The functions in question appear to be ones that involve providing services, conductinginspection and seeking enforcement. Where the standards are set, the administration ofthose standards is not a legislative function.(6) Thus, although we do not have before us allof the specific contractual agreements that may result from the intended arrangement,(7) ingeneral we believe that both the County and the Kansas Department of Health andEnvironment have sufficient authority to contractually delegate non-legislative functions toFlint Hills Community Health Center, Inc. for the purpose of carrying out statutory healthrelated duties and functions otherwise vested in those governmental entities.
"(a) The board of county commissioners of any county of thestate may levy a tax upon all taxable tangible property in such county for thepurposes authorized herein and to pay a portion of the principal and intereston bonds issued under the authority of K.S.A. 12-1774 and amendmentsthereto by cities located in the county, and the proceeds thereof shall beplaced into a separate fund designated as 'the county health fund,' whichfund is hereby created, and shall be used to defray the cost of:
This statute does not say that the tax dollars thus raised must be spent on services directlyprovided by the county. Rather, it is the ultimate use of such funds that is impacted by thistax levy authority. If the intended contracts between Flint Hills, Inc. and the County appearto be for they types of purposes set forth in this statute, the moneys raised pursuant to thisstatute may be used for any costs that assist the county in serving those purposes. Whether such expenditures are actually used for these purposes is a factual issue. However, it is our opinion that K.S.A. 65-204(a)(1) allows expenditures of funds raisedunder that statute for any purpose that will assist the county in carrying out the health lawsand regulations of the county and state, which may include paying Flint Hills, Inc. to assistwith carrying out such purposes.
75-6101 et seq. establish the Kansas Tort Claims Act (KTCA). Under K.S.A. 75-6109,"except as otherwise provided in the Kansas [tort] claims act, a governmental entity isliable, and shall indemnify its employees against damages, for injury or damageproximately caused by an act or omission of an employee while acting within the scope ofhis or her employment."(10) K.S.A. 75-6102(c) defines a governmental entity as a state ormunicipality. K.S.A. 75-6102(b) defines municipality as "any county, township, city, schooldistrict or other political or taxing subdivision of the state, or any agency, authority,institution or other instrumentality thereof."(11) The term "instrumentality" is not defined inthe KTCA.
You note that you are aware that we can only address this issue generally, because eachspecific fact situation must ultimately be examined in order to determine if the KTCAapplies to the agents or actions in question. Counsel for Flint Hills, Inc. points out that theterm "employee" is defined at K.S.A. 75-6102(d) to include "persons acting on behalf or inservice of a governmental entity in any official capacity, whether with or withoutcompensation and a charitable health care provider . . . 'employee' also includes anemployer of an indigent health care clinic." Counsel for Flint Hills, Inc. has also provided copies of correspondence between himself and the Kansas Public Employees RetirementSystem (KPERS). Based upon facts presented to it,(12) KPERS officials have concluded thatFlint Hills, Inc. will be recognized as a qualified KPERS employer and the employees ofFlint Hills, Inc. can be members of KPERS. However, we note that the criteria fordetermining KPERS coverage is not necessarily the same criteria used to determine KTCAcoverage.(13)
"'Employee' means any officer, employee, servant or memberof a board, commission, committee, division, department, branch or councilof a governmental entity, including elected or appointed officials and personsacting on behalf or in service of a governmental entity in any official capacity,whether with or without compensation and a charitable health care provider."Employee includes any steward or racing judge appointed pursuant toK.S.A. 74-8818, and amendments thereto, regardless of whether theservices of such steward or racing judge are rendered pursuant to contractas an independent contractor, but does not otherwise include anyindependent contractor under contract with a governmental entity except. . . .(14) 'Employee' also includes an employee of an indigent health care clinic.. . ."(15)
Thus, the issue becomes whether Flint Hills Inc. is an instrumentality of the county,whether employees of Flint Hills, Inc. are employees of the county or employees of anindependent contractor, or whether Flint Hills, Inc. is otherwise covered by the KTCA.
From the facts provided, it appears clear that the employees working for Flint Hills, Inc. willbe that corporation's employees, and not employees of the County. There is no specificstatutory authority establishing or recognizing the existence of Flint Hills, Inc. Rather, itwas incorporated by the Lyon County Commissioners under K.S.A. 17-6001 et seq. It willreceive funds from the County and the federal government, and expenditures of thosefunds will be made contingent upon performance of services as agreed to by those entities. The State and county government will only exercise control over Flint Hills, Inc., and itsemployees, through a series of contracts. Thus, it does not appear to us that Flint Hills,Inc. or its employees are employees or agents of the county, nor is the corporation aninstrumentality of the county or state for KTCA purposes. Rather, Flint Hills, Inc. appearsto be an independent contractor, free to perform services for entities other than the countyor state.(16)
Nevertheless, if the county maintains a high degree of supervisory control over theemployees of Flint Hills, Inc., it may be possible to maintain KCTA coverage. The totalityof the written agreements and intent of the parties will determine if a person is an employeeor independent contractor.(17)
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