Kentucky Supreme Court upholds ruling in favor of UK in years-long whistleblower case

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The Kentucky Supreme Court upheld a ruling in favor of the University of Kentucky in a years-long whistleblower case between the university and a former surgeon who alleged financial corruption within UK HealthCare.

Dr. Paul Kearney, a former UK HealthCare employee, does not meet the state requirements for whistleblower status against UK, the Supreme Court said Thursday, consistent with past rulings in the case. The Fayette Circuit Court ruled the same in 2018.

“The primary issue before this Court is whether the trial court and the Court of Appeals correctly concluded that Dr. Kearney’s communications, as a matter of law, are not the kind of disclosures covered by the (Kentucky Whistleblower Act) and thus Dr. Kearney’s suit against the University must be dismissed,” Justice Lisabeth T. Hughes wrote. “As noted, we find summary judgment for UK was appropriate.”

The court also said that Kearney’s claims that he only faced discipline and a salary reduction from the university after making the allegations of financial corruption, are not sufficient.

The beginnings of the lawsuit go back to 2015, when UK first suspended Kearney for abusive language and behavior toward UK employees, students and patients. The UK Board of Trustees stripped him of clinical privileges, the first time in UK HealthCare’s history, but let him keep tenured faculty status.

Kearney filed a whistleblower lawsuit in 2016, alleging UK overlooked his behavior until he raised questions about financial practices at UK HealthCare and the Kentucky Medical Services Foundation, a $200 million affiliated entity which bills for all UK doctors and UK Chandler Hospital.

Kearney’s questions about financial practices were raised in January 2014, when he and College of Medicine faculty member Davy Jones found that a committee which was supposed to decide doctor pay had not met for several years.

In April, they met with the College of Medicine Dean Frederick De Beer, UK General Counsel Bill Thro, then UK HealthCare executive vice president Michael Karpf and faculty trustee John Wilson. At that meeting, Kearney told the administrators about the lack of committee meetings and said the foundation needed an audit.

Because of who Kearney reported the issues to — university employees and not authorities who have the power to remedy the allegations — he does not meet whistleblower status, the Supreme Court said.

Kearney alleged that UK stripped him of his clinical privileges after he raised concerns about the foundation. The university said those actions were taken after it learned of Kearney’s behavior while at work, which included a complaint from a patient.

“We are pleased that the Supreme Court agreed with two prior courts,” UK spokesperson Jay Blanton said. “Dr. Kearney had no basis for his claims. The university acted appropriately and followed its procedures for determining that his inappropriate conduct toward patients and colleagues justified the disciplinary action that was taken.”

Kearney could not immediately be reached for comment through his lawyer.

In 2020, Kearney’s medical license was restricted by the Kentucky Board of Medical Licensure, limiting his ability to prescribe controlled substances only immediately before, during or seven days after a major surgery on a patient. The order came after the board found that Kearney had committed violations including prescribing drugs to people without checking their history in a state monitoring system.

A 2016 investigation by the Herald-Leader found that the Kentucky Medical Services Foundation (KMSF), is run almost entirely by UK doctors and its money is used by UK HealthCare administrators when needed. In the past, UK HealthCare used the foundation’s funds to rent private airplanes for hotel executives, pay for construction of a daycare center, and fund millions of dollars in contracts with consultants and lawyers that aren’t subject to state procurement rules and don’t have to go through a bidding process.

In 2007, UK borrowed $7 million from for a lease of Good Samaritan Hospital when it came on the market, plus legal and consulting costs to close a $35 million deal to purchase the hospital. All the money was paid back.

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