“Due vs. Never-Due” Refunds:
The Kentucky Supreme Court Re-draws the Sovereign-Immunity Line
Commonwealth of Kentucky, Department of Revenue v. Long (2025)

Introduction

The consolidated decision in Commonwealth of Kentucky, Department of Revenue v. Amelia Long, et al., handed down on 14 August 2025, is the most significant sovereign-immunity opinion from the Supreme Court of Kentucky since Beshear v. Haydon Bridge Co. (2013). At its core, the Court was asked a deceptively simple question: when the Department of Revenue (DOR) seizes money from individuals to satisfy alleged debts for medical services (University of Kentucky Hospital) or educational services (UK, Morehead State, KCTCS), and those monies end up in the State Treasury, can the payors sue the Commonwealth for a refund? The answer now depends on a bright-line principle announced by the Court:

Sovereign immunity does bar refund claims for money that was legally due to the Commonwealth, even if collected in an unauthorized manner; but it does not bar refund claims for money that was never due to the state at all.

The Court affirmed class certification, declared prospective medical-debt claims moot after a 2022 statutory amendment, and remanded for factual findings on what portion of each plaintiff’s payment was “due” versus “never due.” In doing so, the Court set a durable framework—coined here the Due / Never-Due Dichotomy—that will govern refund litigation against Kentucky for years to come.

Summary of the Judgment

• Procedural Posture. Five interlocutory appeals were consolidated from two Franklin Circuit Court cases: the “Medical Case” (medical debts owed to UK) and the “Education Case” (tuition and fee debts owed to UK, Morehead, and KCTCS). The lower court had ruled that the Collection Statutes (KRS 45.237-.241) did not authorize the DOR to collect these debts and denied all defendants sovereign immunity. The Court of Appeals partially reversed (immunity for any monetary relief).
• Issues before the Supreme Court. (1) Scope of interlocutory review;
  (2) Mootness of prospective medical-debt declarations after KRS 131.130(11);
  (3) Whether sovereign/governmental immunity bars claims for:
  • purely declaratory relief,
  • refunds of money collected, and
  • constitutional takings damages.
• Holdings.
  1. Appellate courts may consider immunity in an interlocutory class-certification appeal because immunity is a “threshold question.” Failure to file a timely separate immunity appeal does not forfeit the defense.
  2. Statutory amendment banning future medical-debt collection renders prospective medical-debt declarations moot, but retrospective relief is still live.
  3. Sovereign immunity:
     • Does not bar purely declaratory judgments.
     • Does bar refunds of funds that were actually due to the state.
     • Does not bar refunds of funds never due to the state.
  4. Sections 13 and 242 of the Kentucky Constitution waive immunity for takings claims.
  5. Statutes invoked by plaintiffs (KRS 45.111, 131.565, 131.570) do not waive immunity for “due” funds.
  6. Case remanded to segregate due vs. never-due payments and to dismiss only the barred portion.

Analysis

A. Precedents Cited and Their Influence

1. Ross v. Gross, 300 Ky. 337 (1945)
   • Allowed recovery of fees wrongfully withheld by the Commonwealth because the money “never vested” in the state.
   • Provided historical anchor for the Court’s holding that immunity does not block recovery of “never-due” money.
2. Beshear v. Haydon Bridge Co., 416 S.W.3d 280 (Ky. 2013)
   • Barred injunction compelling the Commonwealth to return assessments that were lawfully owed.
   • The Court distinguished Haydon Bridge (money due) from Ross (money never due), creating the new dichotomy.
3. Withers v. University of Kentucky, 939 S.W.2d 340 (Ky. 1997)
   • Reaffirmed that only the General Assembly can waive immunity and that statutory insurance/indemnity is not a waiver.
   • Used to reject plaintiffs' reliance on KRS 131.565 indemnity language.
4. Breathitt County Bd. of Educ. v. Prater, 292 S.W.3d 883 (Ky. 2009)
   • Recognized immediate appealability of immunity denials; cited to justify Court of Appeals’ jurisdiction.
5. Hensley v. Haynes Trucking, LLC, 549 S.W.3d 430 (Ky. 2018) & Sexton v. CHFS, 566 S.W.3d 185 (Ky. 2018)
   • Emphasized narrow scope of interlocutory appeals but allowed threshold “power to act” questions. Guided the procedural ruling that immunity could be revisited during the class-certification appeal.

B. The Court’s Legal Reasoning

1. Jurisdictional Gatekeeping. Sovereign immunity is not merely a defense; it is “an indisputable limitation on the power of the judiciary.” Therefore, any appellate panel addressing class certification must first ask whether the trial court had power to certify the class at all. This justified the Court of Appeals’ foray into immunity despite the defendants’ late notice.
2. Rule-making vs. Constitutional Immunity. Although RAP 3(A)(1) sets a 30-day window, the majority held that constitutional immunity cannot be forfeited by procedural default unless the legislature expressly says so; courts must always respect it. (Two justices dissented, insisting on strict jurisdictional compliance.)
3. Mootness Doctrine. The General Assembly’s 2022 amendment to KRS 131.130(11) barred DOR from collecting consumer medical debt prospectively; therefore, plaintiffs’ forward-looking declarations became academic. Retrospective illegality remained justiciable.
4. The “Due / Never-Due” Dichotomy. • If a debt was legally owed (e.g., tuition actually earned or hospital charges undisputed), the money became “state money” once paid—even if DOR used an impermissible statute to collect it. Courts cannot order its return (barred by immunity).
   • If the debtor did not legally owe the principal, interest, fees, or penalties, those funds “never vested” in the Treasury; refund suits may proceed.
   • Trial court must separate the two categories through factual findings (e.g., what part was unlawful fees vs. legitimate principal).
5. Takings Clause. Sections 13 and 242 are self-executing waivers; hence the state cannot invoke immunity to avoid paying “just compensation” if its collection actions amounted to a taking.

C. Practical and Doctrinal Impact

1. Refund Litigation Landscape.
   • Creates a clear analytical test that will shape future tax, licensing-fee, and regulatory refund suits.
   • Plaintiffs must now plead and prove that money was “never due” to bypass immunity—heightening the factual granularity required in complaints and discovery.
2. State-Agency Collection Practices.
   • Executive agencies must vet debts before referral to DOR or risk having associated fees (and maybe principal) judicially clawed back.
   • Expect stricter administrative processes to “liquidate” debts: notice, hearing rights, and—if necessary—court judgments.
3. Interlocutory Appeal Procedure.
   • The majority’s expansive view means immunity can be resurrected later in an interlocutory posture. The concurring/dissenting opinions urge the Court to impose a stricter 30-day limit in the future—setting the stage for rule amendments or further cases.
4. Separation-of-Powers Jurisprudence.
   • Reinforces that courts cannot direct the Legislature’s purse strings regarding “state-owned” money.
   • Simultaneously recognizes the judiciary’s duty to police executive over-collection when property was never state-owned.
5. Class-Action Viability against the Commonwealth.
   • Pure declaratory classes remain viable.
   • Monetary classes must now bifurcate “due” and “never-due” sub-groups, complicating common-question predominance analyses.

Complex Concepts Simplified

Sovereign vs. Governmental Immunity

Technically, the state enjoys “sovereign immunity,” while state agencies and their officials have “governmental immunity.” When the agency is performing a governmental function, the protections are identical. The Court used the umbrella term “sovereign immunity” for convenience.

“Liquidated Debt” under KRS 45.241

Not the same as a contractual “liquidated damages” clause. Here it means a debt that is final, certain, and no longer contestable because every administrative or judicial avenue has been exhausted and a sum-certain has been certified.

Declaratory vs. Monetary Relief

A declaration simply states what the law is or whether past conduct was lawful, without ordering payment. Monetary relief (like a refund) draws on the state treasury and is therefore scrutinized under immunity doctrines.

Mootness

Courts decide only live controversies. If the legislature later changes the law so the challenged conduct cannot continue, forward-looking claims are “moot.” Past harms may still be litigated.

Takings Clause Waiver

State immunity yields to constitutional mandates: when the government “takes” private property for public use, it must pay fair compensation, and it can be sued for it.

Conclusion

Long v. Commonwealth crystallises Kentucky’s sovereign-immunity law around a simple but potent axis—whether the funds sought to be recovered were ever legally owed to the state. By harmonising Ross and Haydon Bridge, the Court offered lower tribunals a workable blueprint for disentangling lawful revenue from wrongful enrichment. The judgment also signals to executive agencies that statutory short-cuts for debt collection will be scrutinised, and procedural safeguards must be honoured. Finally, the vigorous concurrences and dissents preview a coming debate over the timeliness of immunity appeals—a debate likely to reach the rule-making docket or re-emerge in future cases. For lawyers litigating against the Commonwealth, the opinion re-opens the courthouse doors where funds were never due, while firmly bolting them where the obligation was real. That equilibrium, the Court insists, is what both the Constitution and the public purse require.