The “Ross–Haydon Distinction” Reaffirmed:
Kentucky’s High Court Limits Sovereign Immunity to State Funds
But Allows Restitution of Money Never Actually Owed

1. Introduction

On 14 August 2025 the Supreme Court of Kentucky delivered a deeply anticipated opinion in Kentucky Community & Technical College System v. Sayre Lawrence and consolidated appeals (the “Medical Case” and the “Education Case”). Although the merits of the plaintiffs’ underlying challenges to debt-collection practices are still pending in Franklin Circuit Court, the Supreme Court used this interlocutory vehicle to settle three broad questions:

1. When and how sovereign (governmental) immunity may bar claims for monetary relief against state entities;
2. Whether appellate courts may examine immunity questions inside other interlocutory appeals (here, a class-certification appeal); and
3. What effect a 2022 statutory amendment—barring the Department of Revenue from collecting consumer medical debt—has on the plaintiffs’ requests for declaratory judgments.

Because tens of thousands of Kentuckians and more than US $100 million in alleged debt ride on the distinction between “money due the state” and money “never due the state,” the Court’s articulation of the so-called “Ross–Haydon Distinction” now stands as the governing precedent on monetary remedies against the Commonwealth.

2. Summary of the Judgment

• Declaratory relief: Not barred by sovereign immunity.
• Refund claims – two categories:
  • Refund of money never due to the state → permitted.
  • Refund of money that was due to the state, even if collected unlawfully → barred by sovereign immunity.
• Takings theory: Constitutional takings claims always lie against the state; immunity is waived by Ky. Const. §§ 13 & 242.
• Class certification appeal: The Court of Appeals acted within its authority to revisit immunity because jurisdictional questions may be addressed whenever they surface.
• Mootness (Medical Case): Prospective declarations are moot after KRS 131.130(11) (2022) outlawed future medical-debt collection; retrospective declarations remain live.
• Disposition: Opinion affirming in part, reversing in part, remanding. Trial court must now segregate “due” versus “never due” funds and dismiss or retain claims accordingly.

3. Analysis

A. Precedents Cited and Their Influence

1. Ross v. Gross, 300 Ky. 337 (1945) – Allowed a court to order refund of fees never owed to the state; Section 230 did not block the remedy.
2. Beshear v. Haydon Bridge Co., 416 S.W.3d 280 (Ky. 2013) (“Haydon Bridge II”) – Injunction ordering transfer of state money back to a special fund violated sovereign immunity.
3. University of Kentucky v. Moore, 599 S.W.3d 798 (Ky. 2019) – Clarified that UK sits in the Executive Branch and that purely declaratory claims bypass immunity.
4. Breathitt Cty. Bd. of Educ. v. Prater, 292 S.W.3d 883 (Ky. 2009) – Denial of immunity is immediately appealable.
5. Hensley v. Haynes Trucking, 549 S.W.3d 430 (Ky. 2018) and Sexton, 566 S.W.3d 185 (Ky. 2018) – Scope of interlocutory review.

The Court stitches Ross and Haydon Bridge together, holding that a judicial order directing a refund of funds never vested in the Treasury does not offend Section 230, whereas orders targeting funds that became the state’s money do. This reconciliation—dubbed here the “Ross–Haydon Distinction”—forms the new doctrinal rule.

B. The Court’s Legal Reasoning

1. Threshold jurisdiction in interlocutory appeals. Because immunity goes to the court’s power ab initio, an appellate court may (and sometimes must) inspect immunity even when the notice of appeal concerns another issue.
2. Mootness of prospective relief. Statutory change cured the future injury for medical debtors; retrospective illegality, however, remains a live controversy.
3. Sovereign immunity framework.
   • Source: Common law buttressed by Ky. Const. §§ 230 & 231.
   • Waiver: Only the General Assembly can waive, and only by “express language or overwhelming implication.”
   • Application:
     • Funds never due → the Commonwealth never acquired a lawful property interest; Ross allows refund.
     • Funds due (e.g., undisputed tuition) → once paid into Treasury they are public money; Haydon Bridge bars judicial reorder absent legislative appropriation.
4. Statutes asserted as waivers. KRS 45.111, 131.565 & 131.570 waive immunity only as to over-collections or wrongful tax offsets; they do not open the door to refunds of “due” funds.

C. Impact of the Judgment

• Debt-collection practice: State universities and agencies must carefully segregate principal debt versus statutory add-ons (fees, interest), because only the former may enjoy sovereign protection after collection.
• Litigation strategy: Plaintiffs will now plead in the alternative—explicitly alleging that money was “never due” to survive immunity challenges.
• Appropriations & settlement negotiations: The General Assembly may face pressure to create refund mechanisms for unlawfully collected but bona fide state debts so courts are not asked to cross the constitutional line.
• Appellate procedure: Interlocutory appeals rooted in class certification, injunctions, or arbitration may legitimately encompass latent immunity questions—a doctrinal expansion of Hensley and Sexton.
• Takings jurisprudence: Confirms that Sections 13 & 242 supersede immunity, preserving direct constitutional actions for compensation.

4. Complex Concepts Simplified

5. Conclusion

The Supreme Court’s opinion threads a careful constitutional needle: it protects the public fisc from judicial intrusion where the money truly belongs to the Commonwealth, yet refuses to cloak the state with an unqualified right to retain funds it was never owed. Future plaintiffs challenging state collections will bear the burden of showing why the money was never due, but once they do, the courtroom door is open. Conversely, state agencies must now ensure their statutory footing before pressing the formidable machinery of the Department of Revenue into service.

In short, Sayre Lawrence rebalances the scales—vindicating both the principle of sovereign immunity and the bedrock democratic value that no government may keep what is not rightfully its own.