Opinion ID: 483358
Heading Depth: 3
Heading Rank: 2

Heading: Judicial Recognition of Constitutionally Protected Property Interest in Bidders.

Text: 19 At the outset, we note that there is disagreement among the federal courts as to the existence of a constitutionally protected property interest by a bidder for a governmental contract or other benefit. Compare L & H Sanitation, Inc. v. Lake City Sanitation, Inc., 769 F.2d 517 (8th Cir.1985); Teleprompter of Erie, Inc. v. City of Erie, 537 F.Supp. 6 (W.D.Pa.1981); Kendrick v. City Council, 516 F.Supp. 1134 (S.D.Ga.1981) and Three Rivers Cablevision v. City of Pittsburgh, 502 F.Supp. 1118 (W.D.Pa.1980) (all recognizing the possibility that such a property interest can exist) with Coyne-Delaney Co. v. Capital Dev. Bd., 616 F.2d 341 (7th Cir.1980); Sowell's Meats & Servs., Inc. v. McSwain, 618 F.Supp. 140 (D.S.C.1985), aff'd, 788 F.2d 226 (4th Cir.1986) (per curiam) and ARA Servs., Inc. v. School Dist., 590 F.Supp. 622 (E.D.Pa.1984); City of Atlanta v. Ashland-Warner, Inc., No. C81-106A (N.D.Ga. Aug. 20, 1981) (LEXIS, Genfed Library, Dist file); J.P. Mascaro & Sons, Inc. v. Township of Bristol, 497 F.Supp. 625 (E.D.Pa.1980) and Estey Corp. v. Matzke, 431 F.Supp. 468 (N.D.Ill.1976) (all doubting the existence of such a property interest). A number of courts have held, either explicitly or implicitly, that a disappointed bidder has no constitutionally protected property interest until such time as the contract is actually awarded to him. Estey, 431 F.Supp. at 470; 1 see also Sowell's Meats, 788 F.2d at 228; ARA Services, 590 F.Supp. at 627-29; Ashland-Warner. 20 Other courts, including the district court in Three Rivers, the case on which Curtis heavily relies, have relatively recently recognized the existence of a narrow property interest in a disappointed bidder seeking a governmental contract. See, e.g., L & H Sanitation, 769 F.2d at 524; Gold Cross Ambulance v. City of Kansas City, 705 F.2d 1005, 1016-17 & n. 18 (8th Cir.1983), cert. denied, 471 U.S. 1003, 105 S.Ct. 1864, 85 L.Ed.2d 158 (1985); Douglas N. Higgins, Inc. v. Florida Keys, 565 F.Supp. 126 (S.D.Fla.1983); Hixon v. Durbin, 560 F.Supp. 654, 659-61 (E.D.Pa.1983); Teleprompter of Erie, 537 F.Supp. at 11; Kendrick, 516 F.Supp. at 1137-39. 21 In Three Rivers the plaintiff Three Rivers submitted a bid, pursuant to a Request for Proposals, for a cable television franchise for the city of Pittsburgh. A Cable Communications Ordinance adopted by the city council specified the basic contract terms and specifications to be met by prospective bidders. 502 F.Supp. at 1120. The Ordinance and the Request specified that any bid failing to comply with the requirements stated therein would be summarily rejected. At several meetings, prospective bidders were told that no amendments to bids would be permitted. The specifications themselves gave the city the right to reject all bids. Certain provisions of the city's Home Rule Charter and the City Code required that contracts of the type involved be awarded to the lowest responsible bidder. Id. at 1130. 22 After initially rejecting all four bids submitted for failing to comply with the Ordinance, the city council accepted new bids and ultimately awarded the contract to a Three Rivers' competitor. Three Rivers then filed suit, alleging that while it had complied with the applicable specifications and requirements, the successful bidder had not so complied and had been permitted the opportunity to amend its bid deficiencies. After reviewing the Request, the Ordinance, and the relevant rules and regulations constituting the existing rules and understandings, the district court concluded that in the circumstances of this case a property interest of relatively narrow dimension exists. Id. at 1131. Recognizing that mere failure to follow applicable rules or procedures does not, without more, amount to a due process violation as there can be no property interest in a procedure itself, the court found that the protected interest was in the benefit whose enjoyment is sought to be regulated by the procedure; namely the award of the contract. Id. at 1128-29 (emphasis original). [T]hat interest was the right of the lowest responsible bidder in full compliance with the specifications to be awarded the contract once the city in fact decided to make an award. Id. at 1131. 23 As the district court succinctly stated in Hixon v. Durbin, 560 F.Supp. 654 (E.D.Pa.1983), the principle which has emerged from the Three Rivers line of cases is that: 24 [w]hen state law provides that a given benefit which constitutes property or liberty ... shall be conferred upon those who take the requisite procedural steps and meet the requisite substantive standards, the right of an individual who has taken the requisite procedural steps to have his claim of entitlement to the benefit decided, not arbitrarily, but in accordance with state law, itself constitutes an interest protected by the due process clause. 25 Id. at 661. 26 The Three Rivers rationale has not met with uniform acceptance. Courts generally agree that no property interest exists in a procedure itself, without more. 2 This is so because the process due and the constitutionally protected property interest are separate and distinct elements. Three Rivers, 502 F.Supp. at 1128-29. However, the line of cases in accord with Three Rivers has been characterized as a departure from the longstanding refusal of the federal courts to recognize a due process property interest of a disappointed bidder on a state contract and represent[s] a minority viewpoint. Sowell's Meats, 618 F.Supp. at 146; see also Sowell's Meats, 788 F.2d at 228 (affirming the district court's decision, the Fourth Circuit stated: [the district court's] decision is consistent with the majority rule barring an unsuccessful bidder from bringing an action against the contracting officials). A number of courts have been careful to distinguish Three Rivers and confine it to its unique factual allegations. Douglas N. Higgins, Inc., 565 F.Supp. at 129; Kendrick, 516 F.Supp. at 1139; see also Sowell's Meats, 618 F.Supp. at 145; Kasom, 600 F.Supp. at 1559. 27 We find that, even were we to embrace the rationale of Three Rivers and similar cases and acknowledge the possibility that, in certain circumstances, a disappointed bidder for a government contract can have a constitutionally protected, albeit narrow, property interest, Curtis has failed to demonstrate that any provisions of state law or any mutually explicit understandings gave rise to such a property interest in this case. 3 C. Local or State Rules, Resolutions, and Regulations Governing Bidding. 28 As the district court stated, we must examine the specifications, county regulations, resolutions and state statutes which regulated the award of the Shawnee County ambulance bidding procedure, slip op. at 10, as well as Kansas case law and any mutually explicit understandings to determine whether Curtis had any constitutionally protected property interest. 29 All parties agree that the most directly relevant local rule is Home Rule Resolution No. 80-139, adopted by the Board on October 28, 1980, which provides in pertinent part: 30 2. All contracts involving the expenditure of monies in excess of Ten Thousand Dollars ($10,000.00), and awarded pursuant to Chapter 86, Laws of 1980, shall be awarded on the basis of competitive bids to the lowest responsible bidder, taking into consideration conformity with the specifications, terms of delivery and other conditions imposed in the solicitation for bids. 31 .... 32 11. The Board of County Commissioners, after consultation with purchasing department, may provide for the purchase of professional services and for the purchase of contracts of insurance by competitive bids when it is deemed appropriate to do so. 33 R.Vol. I at 43, 45. Paragraph two only imposes upon the Board the obligation to award contracts to the lowest responsible bidder if the contract is awarded pursuant to Chapter 86, Laws of 1980. Chapter 86, Laws of 1980 which was codified at Kan.Stat.Ann. Sec. 19-214 (1981), provides as follows: 34 (a) Except as provided in subsection (b), all contracts for the expenditure of county moneys in excess of ten thousand dollars ($10,000) shall be awarded on a public letting, to the lowest responsible bidder.... 35 (b) The provisions of subsection (a) shall not apply: (1) To the expenditure of county funds for professional services.... 36 Section 19-214 was amended in 1981 to provide as follows: 37 (a) Except as provided in subsection (b), all contracts for the expenditure of county moneys for the construction of any courthouse, jail or other county building, or the construction of any bridge in excess of $10,000, shall be awarded, on a public letting, to the lowest and best bid.... 38 (b) The provisions of subsection (a) shall not apply: (1) To the expenditure of county funds for professional services.... 39 Accordingly, Chapter 86, Laws of 1980 has been superseded by the current version of section 19-214. Resolution 80-139 was never amended to reflect that change. Nothing in the language of Resolution 80-139 indicates that the Board intended any amendments or revisions of Chapter 86, Laws of 1980 to be incorporated into the Resolution. The general rule is that: 40 [a] statute of specific reference incorporates the provisions referred to from the statute as of the time of adoption without subsequent amendments, unless the legislature has expressly or by strong implication shown its intention to incorporate subsequent amendments with the statute. In the absence of such intention subsequent amendments of the referred statute will have no effect on the reference statute. Similarly, repeal of the statute referred to will have no effect on the reference statute unless the reference statute is repealed by implication with the referred statute. 41 2A Sutherland, Statutory Construction, Sec. 51.08 (1984); see also EEOC v. Chrysler Corp., 546 F.Supp. 54 (E.D.Mich.1982); Monarch Life Ins. Co. v. Loyal Protective Life Ins. Co., 217 F.Supp. 210, 214 (S.D.N.Y.1963), rev'd on other grounds, 326 F.2d 841 (2nd Cir.1963), cert. denied, 376 U.S. 952, 84 S.Ct. 968, 11 L.Ed.2d 971 (1964); Board of County Comm'rs v. Teton County Youth Servs., Inc., 652 P.2d 400 (Wyo.1982); Ex Parte McMahan, 94 Okla.Cr. 419, 237 P.2d 462 (1951). Curtis therefore correctly argues that the version of Kan.Stat.Ann. Sec. 19-214 in effect at the time Resolution 80-139 was passed (Chapter 86, Laws of 1980) is the applicable statute for the purposes of paragraph two of Resolution 80-139. 42 That statute on its face appears to mandate that the contract for ambulance services at issue here go to the lowest responsible bidder unless such a contract is a contract for the provision of professional services and exempted from the application of Chapter 86, Laws of 1980 by subsection (b). 4 For the following reasons, we hold that such a contract is a contract for the provision of professional services and exempt from the coverage of Chapter 86, Laws of 1980, as incorporated in Resolution 80-139. 5 43 D. Ambulance Services as Professional Services. 44 As the district court found, the bid specifications require the operator of the ambulance service awarded the contract to employ emergency personnel or attendants qualified as emergency medical technicians (EMTs) or mobile intensive care technicians (MICTs) to minister to the needs of persons requiring emergency medical services. These occupations require specialized medical training which the district court correctly concluded places them in the professional services category. 45 Neither state statute nor judicial decision in Kansas has addressed the precise question raised here. However, [t]he definition of 'professional service' most commonly employed stems from Marx v. Hartford Accident & Indem. Co., [183 Neb. 12, 157 N.W.2d 870 (1968) ]. Bank of California v. Opie, 663 F.2d 977, 981 (9th Cir.1981). In Marx, the case relied on by the district court, the Nebraska Supreme Court defined professional services as follows: 46 Something more than an action flowing from mere employment or vocation is essential. The act or service must be such as exacts the use or application of special learning or attainments of some kind. The term professional in the context used in the policy provision means something more than mere proficiency in the performance of a task and implies intellectual skill as contrasted with that used in an occupation for production or sale of commodities. A professional act or service is one arising out of a vocation, calling, occupation, or employment involving specialized knowledge, labor, or skill, and the labor or skill involved is predominantly mental or intellectual, rather than physical or manual....  In determining whether a particular act is of a professional nature or a professional service we must look not to the title or character of the party performing the act, but to the act itself. 47 157 N.W.2d at 871-72; see also City of Omaha v. Hellmuth, Obata and Kassabaum, Inc., 767 F.2d 457, 459 (8th Cir.1985); Horn v. Burns & Roe, 536 F.2d 251, 255 (8th Cir.1976); American Fellowship Mutual, Ins. Co. v. Insurance Co. of N. Am., 90 Mich.App. 633, 282 N.W.2d 425 (1979); Multnomah County v. Oregon Auto. Ins. Co., 256 Or. 24, 470 P.2d 147 (1970). Thus, as the district court noted, the term professional services is directed to the acts of those engaged in occupations applying specialized knowledge and intellectual skills to the performance of their duties. Horn, 536 F.2d at 255. 48 In addition, we agree with the New Jersey Supreme Court in Autotote Ltd. v. New Jersey Sports & Exposition Auth., 85 N.J. 363, 427 A.2d 55 (1981), when it stated, it is clear that the term 'professional services' is no longer limited to the traditional professions such as law and medicine.... If the law is to keep pace with scientific developments in business and commerce, it must adapt statutory provisions ... to the realities of the day. Id. 427 A.2d at 59 (citations omitted). The court in Autotote concluded that a contract for the installation and servicing of a totalisator system, described by the court as involving a complex computer network designed to tabulate and categorize the bets made on every horse in each race, involved the provision of services of such a technical and scientific nature as to constitute 'professional services' within the statutory exception to the requirement of public bidding. Id., 427 A.2d at 56 n. 1, 59; 6 see also American Totalisator Co. v. Western Regional Off-Track Betting Corp., 44 A.D.2d 750, 396 N.Y.S.2d 301 (1974); Waste Management, Inc. v. Wisconsin Solid Waste Recycling Auth., 84 Wis.2d 462, 267 N.W.2d 659 (1978). Similarly, the definition of professional services must keep pace with developments within the medical field. 49 With the general pronouncements of Marx, Horn, and Autotote in mind, we turn to a consideration of the statutes cited by Curtis as well as those regulating the qualifications of EMTs and MICTs to determine whether such occupations require sufficient specialized knowledge and intellectual skills or are of such a technical nature to be deemed professional services within the intent of section 19-214. 50 Curtis correctly argues that EMTs and MICTs are not among those occupations listed in the Kansas professional corporations statute, Kan.Stat.Ann. Sec. 17-2707(b) (1981), which lists a number of professional services that may incorporate as professional corporations. 7 Even if the list in section 17-2707(b) were read as all inclusive, it applies only to incorporation and makes no reference to Kan.Stat.Ann. Sec. 19-214. 51 As additional support for its argument that ambulance services are not professional services, Curtis cites Kan.Stat.Ann. Secs. 19-261, 19-262, 65-2802, 65-2837, 654301, 65-4306, 65-4314, 40-3401 and 40-3402. None of these statutes directly address the question at issue, but Curtis argues they suggest that ambulance services are not professional services. We disagree. 52 Sections 65-2802 and 65-2837 are portions of the Kansas Healing Arts Act, Kan.Stat.Ann. 65-2801 to -2890 (1985), which regulates those engaged in the practice of the healing arts, defined in section 65-2802 as including: 53 any system, treatment, operation, diagnosis, prescription, or practice for the ascertainment, cure, relief, palliation, adjustment, or correction of any human disease, ailment, deformity, or injury, and includes specifically but not by way of limitation the practice of medicine and surgery; the practice of osteopathic medicine and surgery; and the practice of chiropractic. 54 Section 65-2837 discusses professional conduct, detailing professional incompetency, unprofessional conduct, and false advertising. EMTs and MICTs are not specifically included in the Healing Arts Act, nor are they specifically excluded by section 65-2872, which lists a number of professions deemed not to be engaged in the practice of the healing arts. Among those listed in section 65-2872 are psychologists, dentists, optomotrists, nurses, podiatrists, and pharmacists. Each excluded profession obviously involves professional services and each is regulated under a separate article of Chapter 65. While EMTs and MICT's are not expressly excluded as a form of the healing arts by section 65-2872, they are impliedly removed from the purview of the Healing Arts Act by subsection (g) which refers to [p]ersons whose professional services are performed under the supervision or by order of or referral from a practitioner who is licensed under this act. (emphasis added). MICTs and EMTs are statutorily authorized to perform certain medical procedures only upon establishing voice contact with, and under the supervision of, a person licensed to practice medicine. See Kan.Stat.Ann. Sec. 65-4306a (1985). 8 Thus, contrary to Curtis' argument, section 65-2872 suggests that emergency medical services performed by a MICT or EMT under the direction of a licensed physician may also be professional services. 55 In addition, Emergency medical services are accorded separate treatment in Chapter 65 as are the professions listed in section 65-2872. Article 43 is devoted solely to Emergency medical services and defines that term to include the following services: 56 65-4301. Definitions. As used in this act: (a) Emergency medical service means a service which provides for the effective and coordinated delivery of such emergency care as may be required by an emergency, including transportation of individuals by ground or air ambulances and the performance of authorized emergency care by a person licensed to practice medicine and surgery, a licensed professional nurse, a registered physician's assistant, a crash injury management technician, an emergency medical technician, emergency medical technician-intermediate or a mobile intensive care technician. 57 Kan.Stat.Ann. Sec. 65-4301(a) (1985) (emphasis added). Curtis argues that Article 43 does not refer to anyone less than a registered professional nurse (K.S.A. 65-4306) as a professional. Brief of Appellant at 10. We cannot conclude from that fact that those who perform emergency medical services cannot perform professional services within the meaning of the bidding statutes. 9 58 Curtis similarly cites Kan.Stat.Ann. 19-262, which specifies that [n]o operator with which the board of county commissioners has a contract as provided in K.S.A. 19-261 ... shall use the operation of ambulances as advertising or promotion for any other business venture of the operator. Section 19-261 authorizes the county to enter into contracts for the provision of ambulance services. Curtis argues the any other language is superfluous unless the ambulance operation is indeed a business venture. Brief of Appellant at 13. We think Curtis places too much reliance on that language and we doubt that business venture is necessarily inconsistent with the provision of professional services. We find section 19-262 does not clearly indicate that ambulance services are not professional services. 59 Curtis finally directs our attention to sections 40-3401 and 40-3402, which are portions of Article 34 concerning Health Care Provider Insurance. Curtis argues that since the definition of health care provider in section 40-3401(f) does not specifically include EMTs or MICTs, they are not required to maintain professional liability insurance pursuant to section 40-3402. As with Curtis' other statutory arguments, we do not find that the failure to explicitly require EMTs or MICTs to maintain professional liability insurance indicates that they do not perform professional services for the purpose of the bidding statutes. 60 In sum, we are not persuaded that the various statutory provisions cited by Curtis, alone or in combination, clearly indicate that EMTs and MICTs cannot be deemed to perform professional services for the purposes of subsection (b) of Chapter 86, Laws of 1980. By contrast, the general discussion of professional service found in Horn, Marx, Autotote, and other cases convinces us that ambulance services fall within that category. Certification to become an EMT or MICT requires neither an advanced degree nor the successful completion of a licensing exam. However, certification for an EMT requires 81 hours of training in advanced emergency care treatment and certification for an MICT requires 200 hours of training. The training must be approved by the University of Kansas Medical School. The services these occupations are required to perform combine the ability to make split-second decisions in life-threatening situations with the performance of precise lifesaving skills. The specialized training, knowledge, and skills required of EMTs and MICTs place them within the definition of professional services found in Horn, Marx and Autotote. In so holding, we note that at least one other court has reached a similar conclusion. Amherst Columbia Ambulance Serv., Ltd. v. Gross, 80 A.D.2d 719, 437 N.Y.S.2d 137 (1981) ([T]he furnishing of ambulance services is one requiring special skill or training excepting it from the general competitive bidding requirement.) 61 Curtis' other arguments on the professional services issue do not persuade us to the contrary. It argues that the district court erred in making its decision without an evidentiary hearing on the nature of the services performed by EMTs and MICTs; that, as the contract between Medevac and the County permitted assignment of Medevac's rights and duties under the contract with the County's prior approval, the contract could not have contemplated the provision of professional services; that the contract really amounted to the grant of a franchise, which cannot involve professional services; and that the contract at issue cannot have been for professional services as it was between the County and an ambulance service operator, not EMTs and MICTs. These arguments merit little consideration. 62 The district court had sufficient information before it concerning the nature of Curtis' business to determine whether an ambulance service performs professional services within the meaning of subsection (b) of Chapter 86, Laws of 1980. 10 Curtis' own cases cited in support of its assignment argument simply state the general rule that rights arising out of contracts involving personal services, special confidence and the like are not assignable by one party without the consent of the other party thereto. Alldritt v. Kansas Centennial Global Exposition, Inc., 189 Kan. 649, 371 P.2d 181, 187 (1962) (emphasis added). Even assuming Medevac's services would fall within the category of personal services or special confidence, the contract between Medevac and the County did nothing other than permit such assignment with the County's prior permission. Curtis offers no authority for its franchise argument and we reject it. Finally, Curtis' allegation that because the contract for the provision of ambulance services was between the County and an ambulance operator, not EMTs or MICTs, it cannot be a contract for professional services within the meaning of the subsection (b) exemption is easily dismissed. Clearly, the basic purpose of the contract for the provision of ambulance services was to obtain the services of the EMTs and MICTs. The legal form or the particular business arrangement by which such services are provided is of no import. 63 As an entity which provides professional services, Curtis is exempted from the application of Chapter 86, Laws of 1980 and, therefore, from the application of paragraph two of Resolution 80-139. 11 Paragraph eleven is of no greater assistance to Curtis. It simply provides that the County may enter into a contract for professional services by competitive bidding. It imposes no requirement that the contract go to the lowest responsible bidder. As we have already indicated, we are unwilling to find that Curtis acquired a property interest simply because the Board decided to award the contract pursuant to a competitive bidding procedure. 12 Neither paragraph two nor paragraph eleven of Resolution 80-139 mandates that the contract at issue here go to the lowest responsible bidder. 64 Curtis directs us to no other provision of Resolution 80-139 nor any other applicable Kansas resolution, rule, statute or judicial authority which imposes such an obligation. 13 Similarly, no mutually explicit understandings exist between the Board and Curtis which give rise to any property interest. 14 Curtis' argument that the contract at issue was in effect the award of a franchise, a recognized form of property, is similarly unavailing unless Curtis had a legitimate claim of entitlement to it. In short, Curtis, unlike the plaintiff in Three Rivers and other similar cases, is unable to demonstrate the existence of applicable local or state rules which sufficiently circumscribe the Board's authority to award the contract in dispute such that Curtis had anything other than a mere unilateral expectation of receiving the ambulance contract. 65 Consequently, we do not need to examine the question of Curtis' alleged conformity to the specifications, Medevac's alleged nonconformity, or the alleged arbitrariness of the Board in selecting Medevac. We are satisfied the district court correctly found that Curtis failed to state a claim for relief for violation of due process under the facts alleged.