RENDERED: JANUARY 22, 2021; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2019-CA-1409-MR
BRIGHTMORE HOME CARE OF KENTUCKY LLC;
JOHN FALLS; CHAD SHUMWAY; AND
TRAVIS SHUMWAY APPELLANTS
APPEAL FROM FRANKLIN CIRCUIT COURT
v. HONORABLE PHILLIP J. SHEPHERD, JUDGE
ACTION NO. 18-CI-00100
COMMONWEALTH OF KENTUCKY, CABINET
FOR HEALTH AND FAMILY SERVICES, OFFICE
OF INSPECTOR GENERAL, DIVISION OF
CERTIFICATE OF NEED; COMMONWEALTH
OF KENTUCKY, CABINET FOR HEALTH AND
FAMILY SERVICES, DIVISION OF ADMINISTRATIVE
HEARINGS, HEALTH SERVICES ADMINISTRATIVE
HEARINGS BRANCH; AND PROFESSIONAL CASE
MANAGEMENT OF KENTUCKY, LLC D/B/A
PROFESSIONAL CASE MANAGEMENT APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: GOODWINE, K. THOMPSON, AND L. THOMPSON, JUDGES.
THOMPSON, L., JUDGE: Brightmore Home Care of Kentucky LLC, John Falls,
Chad Shumway, and Travis Shumway appeal from an order of the Franklin Circuit
Court which denied a petition for writ of prohibition seeking to prohibit an
administrative law judge from the Cabinet for Health and Family Services from
issuing subpoenas to out-of-state, nonresident witnesses. Appellants argue that the
Cabinet does not have the authority to issue subpoenas to out-of-state witnesses
and compel them to testify in person during an administrative hearing in Kentucky.
We believe that the circuit court erred in denying the writ. We agree with
Appellants that the Cabinet does not have the authority to subpoena out-of-state
witnesses; therefore, we reverse and remand.
FACTS AND PROCEDURAL HISTORY
On January 25, 2017, Brightmore and Professional Case Management
of Kentucky, LLC d/b/a Professional Case Management (hereinafter referred to as
PCM) filed certificate of need (hereinafter referred to as CON) applications to
provide private duty nursing services in some of the same Western Kentucky
counties. The Cabinet scheduled a comparative administrative CON hearing to
determine which LLC would be granted the CON. In anticipation of the hearing,
PCM requested that the administrative law judge (hereinafter referred to as ALJ)
assigned to the case issue subpoenas to Mr. Falls and Messrs. Shumway. These
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gentlemen are all member/owners of Brightmore. Mr. Falls lives in Wyoming, and
Messrs. Shumway live in Utah.
On April 28, 2017, the ALJ issued the subpoenas. On May 1, 2017,
Brightmore moved to quash the subpoenas. Brightmore argued that the Cabinet
did not possess the legal authority to subpoena these individuals because they lived
out-of-state and were outside the jurisdiction of the Cabinet. On May 3, 2017,
PCM asked that the Cabinet reissue the subpoenas but serve them on Brightmore’s
registered agent in Kentucky. Once again, the ALJ approved the subpoenas and
issued them upon Brightmore’s registered agent in Kentucky.
Brightmore and PCM then briefed the issues raised in the motion to
quash. Without formally ruling on the motion, the ALJ notified the parties that it
expected Mr. Falls and Messrs. Shumway to comply with the subpoenas and
appear at the CON hearing. The ALJ further stated that if these individuals did not
appear, she would grant PCM’s request for an adverse inference against
Brightmore. Brightmore then moved the ALJ to formally rule on the motion to
quash. The ALJ eventually summarily denied Brightmore’s motion.
On February 1, 2018, Appellants sought declaratory relief, a writ of
prohibition, and permanent injunctive relief from the Franklin Circuit Court.
Again, Appellants argued that the Cabinet was acting outside the scope of its
jurisdiction by attempting to subpoena out-of-state witnesses and require them to
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testify at the hearing. Appellants also argued it would be erroneous for the ALJ to
apply an adverse inference if Mr. Falls and Messrs. Shumway did not testify. PCM
argued that the ALJ was acting within the scope of her authority. The Cabinet also
filed a brief in the circuit court and agreed with Appellants that the ALJ was
without authority to subpoena out-of-state witnesses or apply an adverse inference
against Brightmore.1
On September 5, 2019, the circuit court entered an order denying
Appellants’ petition and affirming the issuance of the subpoenas. The court held
that Kentucky’s long-arm statute, Kentucky Revised Statutes (KRS) 454.210,
authorized the ALJ to issue the subpoenas. The court also held that KRS 454.210
allowed PCM to issue the subpoenas to Brightmore’s Kentucky agent. This appeal
followed.
ANALYSIS
Appellant argues on appeal that the Cabinet and ALJ did not have the
authority to issue the subpoenas and that the Cabinet was acting outside of its
jurisdiction; therefore, the circuit court should have granted the writ of prohibition.
We agree.
1
In CON proceedings, the ALJ is the final arbiter of the issue. There is no appeal to or review
by a higher administrative authority, like the Secretary of the Cabinet for Health and Family
Services. The first appeal goes directly to the circuit court. This explains why the Cabinet filed
a brief in the circuit court which agreed with Appellants, but it was unable to stop the subpoenas
at the administrative level.
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A writ of prohibition may be granted upon a showing that
(1) the lower court is proceeding or is about to proceed
outside of its jurisdiction and there is no remedy through
an application to an intermediate court; or (2) that the
lower court is acting or is about to act erroneously,
although within its jurisdiction, and there exists no
adequate remedy by appeal or otherwise and great
injustice and irreparable injury will result if the petition is
not granted.
Hoskins v. Maricle, 150 S.W.3d 1, 10 (Ky. 2004). Here, the circuit court held that
the ALJ was acting within her jurisdiction by issuing the subpoenas because
Kentucky’s long-arm statute, KRS 454.210, allowed it. The court held that
because Mr. Falls and Messrs. Shumway are members of Brightmore and the
subpoenas were served upon Brightmore’s registered agent in Kentucky, the long-
arm statute providing for the service of process upon a registered agent, namely
KRS 454.210(3), applies. The circuit court also held that it would not be a great
injustice to require Mr. Falls and Messrs. Shumway to appear because they are
member/owners of Brightmore. Finally, the circuit court held that Appellants had
an adequate remedy by appeal, which would preclude the granting of a writ.
We believe the circuit court was incorrect in its conclusion that the
ALJ was acting within her jurisdiction. “It is fundamental that administrative
agencies are creatures of statute and must find within the statute warrant for the
exercise of any authority which they claim.” Dep’t for Nat. Resources and
Environmental Protection v. Stearns Coal & Lumber Co., 563 S.W.2d 471, 473
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(Ky. 1978) (citation omitted). Here, KRS 454.210 states that a “court may
exercise personal jurisdiction over a person” who transacts business in the
Commonwealth. KRS 454.210(2)(a) (emphasis added). Kentucky’s long-arm
statute only refers to courts and does not mention administrative bodies; therefore,
it would seem it does not apply to this case. “We must interpret statutes as written,
without adding any language to the statute[.]” Commonwealth v. Chestnut, 250
S.W.3d 655, 661 (Ky. 2008) (citation omitted). In addition, the wording of KRS
454.210 indicates it only applies to the issuance of a summons to a defendant upon
the filing of a complaint. Nothing in this statute discusses subpoenas or witnesses.
Finally, serving a subpoena on an LLC, or its agent, is not the same as serving a
subpoena on a member of that LLC. LLCs and their members are separate and
distinct entities. Turner v. Andrew, 413 S.W.3d 272, 275-76 (Ky. 2013).
Finally, PCM argues the Cabinet has jurisdiction over the witnesses
because of their ownership of Brightmore, relying on KRS 275.335(6) and
International Union of Operating Eng’rs v. Bryan, 255 S.W.2d 471, 474 (Ky.
1953). However, PCM’s argument is misplaced. As stated above, serving a
subpoena on an LLC, or its agent, is not the same as serving a subpoena on a
member of that LLC. LLCs and their members are separate and distinct entities.
Turner, 413 S.W.3d at 275-76.
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To discover the power the Cabinet has in issuing summonses, we must
look to KRS 216B.040. KRS 216B.040(3)(b) states, in pertinent part, that the
Cabinet may “[a]dminister oaths, issue subpoenas, subpoenas duces tecum, and all
necessary process in proceedings brought before or initiated by the cabinet, and the
process shall extend to all parts of the Commonwealth.” (Emphasis added.)
Another statute to consider is KRS 216B.085(1), which states that a Cabinet
hearing officer or ALJ “shall be authorized to administer oaths, issue subpoenas,
subpoenas duces tecum, and all necessary process in the proceedings.” Like KRS
216B.040, this statute allows for the issuance of subpoenas, but it does not have
any limiting language.
It is a basic rule of construction that “[w]here there is an
apparent conflict between statutes or sections thereof, it
is the duty of the court to try to harmonize the
interpretation of the law so as to give effect to both
sections or statutes if possible.” In the same vein, “[i]t is
well settled that two or more acts dealing with the same
subject matter must be construed in pari materia, and any
apparent conflict between them must be reconciled, if
possible, so as to give effect to both.”
Galloway v. Fletcher, 241 S.W.3d 819, 823 (Ky. App. 2007) (citations omitted).
In order to harmonize these two statutes, we must rely on the language
found in KRS 216B.040 that limits subpoena power to the borders of the
Commonwealth. To do otherwise would require us to hold the limiting language
meaningless. This interpretation is supported by case law which states that “[t]he
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Commonwealth has no power to subpoena witnesses over which it has no
jurisdiction.” Dillingham v. Commonwealth, 995 S.W.2d 377, 382 (Ky. 1999)
(citing Hey v. Emerson, 142 Ky. 767, 135 S.W. 294 (1911)). Here, Mr. Falls and
Messrs. Shumway are not located within the Commonwealth; therefore, the
Cabinet does not have the power to subpoena them.
Since the circuit court erred in holding that the ALJ was acting within
her jurisdiction, we must analyze this case to determine whether a writ of
prohibition is required due to the ALJ acting outside her jurisdiction. “Relief by
way of prohibition or mandamus is an extraordinary remedy and we have always
been cautious and conservative both in entertaining petitions for and in granting
such relief.” Bender v. Eaton, 343 S.W.2d 799, 800 (Ky. 1961). We believe that
this case requires the issuance of the writ of prohibition requested by Appellants.
As previously stated, the Cabinet only has powers as authorized by
statute. Stearns Coal & Lumber Co., 563 S.W.2d at 473. As discussed supra,
there is no mechanism that allows for the Cabinet to subpoena a witness who is not
within the borders of the Commonwealth. Furthermore, it is Brightmore’s
responsibility to prove to the ALJ that it should receive a CON. If Mr. Falls and
Messrs. Shumway would be the best witnesses to provide evidence but are not
utilized, any negative outcome would be the fault of Brightmore. Forcing them to
testify and then applying a negative inference when they do not testify could be
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seen as an arbitrary and unreasonable outcome in CON proceedings. In order to
obtain a CON, an applicant must meet certain requirements set forth in the
Cabinet’s State Health Plan, which is incorporated into the Kentucky
Administrative Regulations (KAR) pursuant to 900 KAR 5:020. Additional
criteria are found in KRS 216B.040(2)(a)2. If Brightmore were to meet all
requirements to receive a CON, but were still denied one because of a negative
inference, this could be seen as an arbitrary outcome.
Additionally, the Cabinet agrees with Appellants. During the circuit
court’s hearing on this issue, counsel for the Cabinet indicated that it could not
make a good-faith argument that it had subpoena powers over out-of-state
individuals based on the wording of the statutes discussed above. Counsel also
indicated the Cabinet was concerned about the use of a negative inference when it
cannot be reviewed by the Secretary of the Cabinet before a final CON decision is
made.
Finally, case law supports our decision. “[I]t would be a most inept
ruling to deny the writ, require a trial on the merits, and then on an appeal be
forced to reverse the case on the very question which is now before us.” Chamblee
v. Rose, 249 S.W.2d 775, 777 (Ky. 1952). Additionally, “[i]t has been held that the
remedy by way of appeal is not the controlling consideration where the inferior
court is without jurisdiction.” Id. As discussed above, the ALJ does not have the
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authority to force out-of-state witnesses to come to Kentucky to testify. If
Brightmore’s CON application were to be denied due to Mr. Falls and Messrs.
Shumway not testifying and the ALJ using an adverse inference, it would invite an
appeal to the circuit court and be reversed.
CONCLUSION
While the issuing of subpoenas may seem like a simple evidentiary
issue, it is not. It goes to the jurisdiction of the Cabinet and whether this Court
should allow it to exercise powers it does not have. Based on the foregoing, we
conclude that the circuit court erred in not granting Appellants’ petition for a writ
of prohibition.
Even though a writ of prohibition is an
extraordinary remedy, not to be substituted for appeal,
we hold that such a remedy is appropriate in a proper
case to prevent a lower court [or administrative agency]
from exceeding the lawful power or authority with which
it is invested or from assuming some power not
authorized by law even though the case before it may be
one over which the court [or agency] has general
jurisdiction. . . . Under such circumstances a proper,
though extraordinary, remedy is a writ of prohibition. In
these instances, the injustice being restrained is the
arrogation of . . . power.
Corns v. Transportation Cabinet, Dep’t of Highways, Commonwealth of Ky., 814
S.W.2d 574, 578 (Ky. 1991) (citation omitted). The Cabinet does not have the
authority to subpoena out-of-state witnesses; therefore, we must reverse and
remand. On remand, the circuit court shall issue the writ requested by Appellants.
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GOODWINE, JUDGE, CONCURS.
K. THOMPSON, JUDGE, CONCURS IN RESULT ONLY AND
FILES SEPARATE OPINION.
THOMPSON, K., JUDGE, CONCURRING IN RESULT ONLY: I
agree with the majority opinion that Kentucky’s long-arm statute does not permit
subpoenas to be issued against individual members of an LLC for service through
the LLC’s registered agent in Kentucky. The subpoenas for the Messrs. Shumway
and Mr. Falls which required them to appear to give testimony in Kentucky should
have been quashed as Brightmore Home Care of Kentucky, LLC, requested. It
would be inappropriate for the Commonwealth of Kentucky, Cabinet for Health
and Family Services (Cabinet) to draw an adverse inference based on the absence
of witnesses who were not properly compelled failing to appear before it.
Therefore, I agree that reversing for the circuit court to grant the writ of prohibition
is appropriate.
However, I write separately to express my opinion that the Cabinet
could have properly secured the testimony of the witnesses through deposition in
their home states. While Kentucky Revised Statutes (KRS) 216B.040(3)(b) does
not authorize compelling out-of-state witnesses to appear before the Cabinet in
Kentucky, this does not mean that the Cabinet cannot issue subpoenas which could
then provide the basis for courts in the witnesses’ home states, who have
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jurisdiction over them, to issue their own subpoenas in reliance upon Cabinet
subpoenas.
As to the Messrs. Shumway, who live in Utah, this could be done by
using the Uniform Interstate Depositions and Discovery Act (UIDDA). Uniform
Law Commission, Interstate Depositions and Discovery Act (2007),
https://www.uniformlaws.org/viewdocument/final-act-
2007?CommunityKey=181202a2-172d-46a1-8dcc-cdb495621d35 (last visited
Dec. 17, 2020).
The UIDDA allows for domestication of subpoenas so that a witness
may be deposed where the witness lives. The UIDDA provides a procedure for
out-of-state parties to come into a state and submit a foreign subpoena to the
relevant court to issue its own subpoena allowing for depositions and inspection of
documents, without having to enter an appearance in court. Our codification of the
UIDDA is in KRS 421.360.
Utah has adopted the UIDDA, and it appears in Title 78b of its
Judicial Code. Pursuant to the UIDDA, in Utah “[t]o request issuance of a
subpoena under [the UIDDA], a party must submit a foreign subpoena to a court in
the judicial district in which discovery is sought to be conducted in Utah.” Utah
Code Ann. § 78B-17-201(1)(a).
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The UIDDA definitions of a “foreign subpoena” and “subpoena[,]”
which appear in both Utah’s Code and the KRS, state that it is a document “issued
under authority of a court of record[.]” Utah Code Ann. § 78B-17-102(2), (5);
KRS 421.360(2)(b), (e). Under the section three of the UIDDA, which concerns
issuance of a subpoena, the comments state, “A ‘Court of Record’ includes anyone
who is authorized to issue a subpoena under the laws of that state, which usually
includes an attorney of record for a party in the proceeding.” Uniform Law
Commission, Interstate Depositions and Discovery Act. As the Cabinet was
permitted under KRS 216B.040(3)(b) to issue subpoenas, I believe it qualifies as a
court of record and subpoenas it issued that were valid in Kentucky could certainly
be the basis for obtaining subpoenas in Utah through the UIDDA.
As for Mr. Falls, who lives in Wyoming, a state that has not adopted
the UIDDA and is still governed under the 1920 Uniform Foreign Depositions Act
(UFDA), the Cabinet would have to proceed under that law:
Whenever any mandate, writ or commission is issued
from any court of record in any foreign jurisdiction, or
whenever upon notice or agreement it is required to take
the testimony of a witness in this state, the witness may
be compelled to appear and testify in the same manner
and by the same process as employed for taking
testimony in matters pending in the courts of this state.
Wyo. Stat. Ann. § 1-12-115. See generally Victoria Bushnell, How to Take an
Out-of-State Deposition, 14-FEB Utah B.J. 28 (2001) (explaining the different
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systems in place for taking out-of-state depositions before the adoption of the
UIDDA).
Other possible solutions to obtain needed testimony could include
negotiating for the witnesses to consent to give virtual testimony over the internet
using a platform such as Facetime, Zoom, Skype, Microsoft Teams or similar
options, the old fashioned telephonic testimony, or providing transportation and
other reasonable, necessary expenses to facilitate travel for in-person testimony in
Kentucky.
While the Cabinet could not compel the witnesses to appear before it,
the Cabinet could have properly obtained the needed information through
deposition testimony taken from the witnesses in their home states.
Accordingly, I concur.
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BRIEFS AND ORAL ARGUMENT BRIEF FOR APPELLEE
FOR APPELLANTS: PROFESSIONAL CASE
MANAGEMENT OF KENTUCKY,
Holly Turner Curry LLC:
Frankfort, Kentucky
Peter L. Thurman
Brent R. Baughman
Kyle W. Miller
Louisville, Kentucky
ORAL ARGUMENT FOR
APPELLEE PROFESSIONAL CASE
MANAGEMENT OF KENTUCKY,
LLC:
Brent R. Baughman
Peter L. Thurman
Louisville, Kentucky
NO BRIEF FILED FOR APPELLEE
CABINET FOR HEALTH AND
FAMILY SERVICES.
ORAL ARGUMENT FOR
APPELLEE CABINET FOR
HEALTH AND FAMILY SERVICES
APPELLEES:
Olivia Peterson
Frankfort, Kentucky
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