Opinion ID: 1678629
Heading Depth: 1
Heading Rank: 1

Heading: are appellants barred by the doctrine of res judicata from bringing the instant suit?

Text: Before addressing appellants' arguments, we must first resolve the issue of whether appellants are precluded as res judicata by this Court's ruling in Commonwealth, Revenue Cabinet v. Smith, Ky., 875 S.W.2d 873, cert. denied sub nom Yeoman v. Kentucky, 513 U.S. 1000, 115 S.Ct. 509, 130 L.Ed.2d 417 (1994), in which a similar health care bill was challenged and found to be constitutional, from challenging HB 250. Res judicata is the Latin term for a matter adjudged. The doctrine of res judicata is that an existing final judgment rendered upon the merits, without fraud or collusion, by a court of competent jurisdiction, is conclusive of causes of action and of facts or issues thereby litigated, as to the parties and their privies, in all other actions in the same or any other judicial tribunal of concurrent jurisdiction. 46 AmJur 2d § 514. The rule of res judicata is an affirmative defense which operates to bar repetitious suits involving the same cause of action. The doctrine of res judicata is formed by two subparts: 1) claim preclusion and 2) issue preclusion. [2] Claim preclusion bars a party from re-litigating a previously adjudicated cause of action and entirely bars a new lawsuit on the same cause of action. Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980); Worton v. Worton, 234 Cal.App. 3d 1638, 286 Cal.Rptr. 410 (2 Dist.1991), rev. denied (Cal) 1992 LEXIS 472; County of Rutherford by Child Support Enforcement Agency v. Whitener, 100 N.C.App. 70, 394 S.E.2d 263 (1990); Vestal, The Constitution and PreclusionRes Judicata, 62 Mich.L.Rev. 33. Issue preclusion bars the parties from relitigating any issue actually litigated and finally decided in an earlier action. The issues in the former and latter actions must be identical. The key inquiry in deciding whether the lawsuits concern the same controversy is whether they both arise from the same transactional nucleus of facts. If the two suits concern the same controversy, then the previous suit is deemed to have adjudicated every matter which was or could have been brought in support of the cause of action. Worton, 234 Cal.App.3d at 1638, 286 Cal.Rptr. 410; Commonwealth, Dept. of Transp. v. Crawford, 121 Pa.Cmwlth. 613, 550 A.2d 1053 (1988). For claim preclusion to bar further litigation, certain elements must be present. First, there must be identity of the parties. Newman v. Newman, Ky., 451 S.W.2d 417, 419 (1970). Second, there must be identity of the causes of action. Id. Third, the action must have been resolved on the merits. Id. The rule that issues which have been once litigated cannot be the subject matter of a later action is not only salutary, but necessary to the speedy and efficient administration of justice. We find that appellants are not barred by claim preclusion from challenging the health care provider tax of HB 250 by this Court's previous adjudication in Smith, 875 S.W.2d at 873. While HB 250 contains certain provisions which are similar to HB 1, they are not identical bills. HB 1 only contains a provider tax and the guidelines for collecting this tax. On the other hand, HB 250 is a complex health reform bill made up of 21 subparts, only one of which was the provider tax. For claim preclusion to apply, the subject matter of the subsequent suit must be identical. Since it is clear that the challenged portions of HB 1 and HB 250 are not identical, claim preclusion does not apply in the instant case. For issue preclusion to operate as a bar to further litigation, certain elements must be found to be present. First, the issue in the second case must be the same as the issue in the first case. Restatement (Second) of Judgments § 27 (1982). Second, the issue must have been actually litigated Id. Third, even if an issue was actually litigated in a prior action, issue preclusion will not bar subsequent litigation unless the issue was actually decided in that action. Id. Fourth, for issue preclusion to operate as a bar, the decision on the issue in the prior action must have been necessary to the court's judgment. Id. The only issue which appellants might be precluded from arguing in this case is whether the provider tax is unconstitutional under § 59 of the Kentucky Constitution and the equal protection requirements of the United States and Kentucky Constitutions. While we held that the provider tax created by HB 1 is constitutional, Smith, 875 S.W.2d at 877-78, the tax created by HB 250 is not identical. Thus issue preclusion cannot apply, because the issue we are faced with in the instant case is not identical to the one in the previous case. While the provider tax in HB 1 prohibits the health care provider from passing the tax onto the consumer, the provider tax in HB 250 does not. The provider tax in HB 1 permits the Secretary for the Cabinet for Human Resources to add additional classes of health care providers to the list of those already subject to the tax. The provider tax in HB 250 does not. While defendants characterize these as minor differences, in the arena of issue preclusion, such differences are sufficient to avoid issue preclusion and to permit a second trial on the merits. This is a close case, but we feel that given the magnitude of the constitutional issues involved, we should err on the side of caution by resolving the issue on the merits. Since we find the first of the four requirements for issue preclusion is not met, we find it unnecessary to address the three remaining elements. Accordingly, we shall now address the many challenges to HB 250 on the merits.