Dental Benefit Providers, Inc. and United Healthcare of Pennsylvania, Inc. d/b/a United Healthcare Community Plan and HealthAmerica Pennsylvania, Inc., d/b/a CoventryCares, Petitioners
James Eiseman, Jr. and the Public Interest Law Center of Philadelphia, Respondents; Aetna Better Health Inc., Health Partners of Philadelphia, Inc., Keystone Mercy Health Plan, and DentaQuest, LLC, Petitioners
James Eiseman, Jr., and the Public Interest Law Center of Philadelphia, Respondents; Department of Public Welfare, Petitioner
James Eiseman, Jr., and the Public Interest Law Center of Philadelphia, Respondents
Argued October 9, 2013.
Appealed from No. AP 2012-2017. State Agency: Office of Open Records.
Karl S. Myers, Philadelphia, for petitioners Health America Pennsylvania, Inc., United Healthcare Community Plan, Coventry Cares, Dental Benefit Providers, Inc. and United Healthcare of Pennsylvania, Inc.
James Eiseman, Jr. and Benjamin D. Geffen, Philadelphia, for respondents James Eiseman, Jr. and The Public Interest Law Center of Philadelphia.
Christopher H. Casey Philadelphia, for intervenors Health Partners of Philadelphia, Inc., Keystone Mercy Health Plan, Aetna Better Health Inc and DentaQuest, LLC.
BEFORE: HONORABLE DAN PELLEGRINI, President Judge, HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE P. KEVIN BROBSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge.
PATRICIA A. McCULLOUGH, Judge.
These consolidated Right-to-Know Law (RTKL) petitions for review implicate multiple issues regarding third-party records. The Office of Open Records (OOR) ordered disclosure of the rates managed care organizations (MCOs) paid to subcontractors, and the rates subcontractors paid to providers of dental services under the Department of Public Welfare's (DPW) administration of the Medicaid program in Southeast Pennsylvania. Although DPW is a party to contracts with the five MCOs that serve Southeast Pennsylvania, DPW does not directly contract with the subcontractors or dental providers whose rates are at issue.
On behalf of third parties, DPW argued the rates are exempt under the Pennsylvania Uniform Trade Secrets Act, 12 Pa. C.S. § § 5301-5308, (Trade Secrets Act), federal regulations, and RTKL exceptions, including Section 708(b)(11) of the RTKL, 65 P.S. § 67.708(b)(11), which protects confidential proprietary information and trade secrets from disclosure. DPW also asserted as a defense to disclosure a Department of Health (DOH) regulation applicable
to " reimbursement information," 28 Pa. Code § 9.604. The third parties submitted evidence as parties with a direct interest. OOR reasoned the exemptions did not apply because the records evidence disbursements of public funds, and this Court previously held that such information is accessible under the prior Right-to-Know Law, repealed by the current RTKL (Prior Law). Upon review, we reverse.
Pursuant to the RTKL, James Eiseman, Jr. of The Public Interest Law Center of Philadelphia (Requester) requested the following records from DPW, for the period of July 1, 2008 to June 30, 2012:
contracts, rate schedules and correspondence in DPW's possession, custody, or control that: (a) sets forth the amount for any one or more dental procedure codes that any Medicaid HMO and/or Medicaid Dental Subcontractor pays or has paid to dentists (and/or other providers of dental services) for the provision of dental services to Medicaid recipients in Southeastern Pennsylvania, or (b) otherwise establishes the rate of payment by which any Medicaid HMO and/or Medicaid Dental Subcontractor compensates or has compensated dentists (and/or other providers of dental services) for the provision of dental services to Medicaid recipients in Southeastern Pennsylvania.
Reproduced Record (R.R.) at 21a. Essentially, Requester sought rate information paid by Medicaid MCOs or Medicaid dental subcontractors to dental providers. The response would show how much of the money DPW pays to Medicaid MCOs is later paid to subcontractors and providers.
DPW denied the request based on the objections of third parties whose information was targeted for disclosure. DPW notified the five MCOs: United Healthcare of Pennsylvania, Inc. d/b/a, United Healthcare Community Plan (United); Health America Pennsylvania, Inc., d/b/a/ CoventryCares (Coventry); Aetna Better Health, Inc., (Aetna); Health Partners of Philadelphia (Health Partners); Keystone Mercy Health Plan (Keystone); and, two subcontractors of the MCOs, Dental Benefit Providers, Inc. (DBP), and, DentaQuest, LLC (DentaQuest) (collectively, Subcontractors). The MCOs and Subcontractors advised DPW the records are exempt on the following grounds: the Trade Secrets Act; Section 708(b)(11) of the RTKL (confidential proprietary information and trade secrets exception); DOH regulation 28 Pa. Code § 9.604; and, other state and/or federal regulations and/or statutes. Requester appealed to OOR.
Each of the seven third parties in interest asked to participate in the proceedings. Collectively, DBP, United and Coventry comprise the " DBP Group" and Aetna, Health Partners, Keystone and DentaQuest comprise the " Aetna Group."
The DPB Group and the Aetna Group submitted position statements, accompanied by affidavits of the providers and MCOs. Requester also submitted a position statement, without affidavits. OOR did not hold a hearing.
Based on the written submissions, OOR issued a final determination granting the appeal and ordering disclosure. Eiseman v. Dep't of Pub. Welfare, OOR Dkt. No. AP-2012-2017 (Pa. OOR, filed May 8, 2013). OOR concluded none of the cited exemptions applied. With regard to the Trade Secrets Act, OOR relied upon its decision in Eiseman v. Department of Public Welfare, OOR Dkt. No. AP 2011-1098 (Pa. OOR, filed Sept. 17, 2012) (Eiseman I (OOR)). OOR held the Trade Secrets Act does not create a basis for withholding records apart from the trade secrets exception in Section 708(b)(11) of the RTKL. OOR relied on Lukes v. Department of Public Welfare, 976 A.2d 609 (Pa. Cmwlth. 2009), to conclude a threat of competition cannot suffice to support an exemption. OOR also held the parties failed to establish substantial harm because the rates paid to providers vary based on multiple factors. The DOH regulation did not protect the records, OOR held, because that law applied to agencies other than DPW.
Regarding possession of the records containing the rates, OOR interpreted Section 506(d) of the RTKL (access to third-party records) broadly to reach rates paid by Subcontractors to providers. Recognizing DPW had no contractual relationship with Subcontractors, OOR nevertheless held the records related to a government function the MCOs performed on behalf of DPW.
By ordering disclosure, OOR required DPW to obtain records in possession of contractors and subcontractors. Specifically, OOR held the Requester was not only entitled to records containing rates the MCOs pay to Subcontractors and dentists (MCO Rates), but he was also entitled to records containing rates paid by Subcontractors to providers (Provider Rates). OOR explained the Provider Rates are contemplated by the DPW agreements.
The MCOs and Subcontractors, as direct interest participants, and DPW appealed to this Court in separate actions. These consolidated appeals challenge the same final determination and assert the records are not accessible through the RTKL. The appeals further assert the MCO Rates and the Provider Rates are exempt as confidential proprietary information.
The DBP Group argues OOR erred when it concluded the Provider Rates (Subcontractors-> Providers) are accessible under Section 506(d) of the RTKL, 65 P.S. § 67.506(d) (access to third-party records), when DPW has no contractual relationship with Subcontractors. The DBP Group asserts the MCOs and Subcontractors established the Provider Rates are confidential proprietary information that is not accessible.
The Aetna Group argues OOR erred in holding the records of Subcontractors, which do not have a contract with DPW, are subject to disclosure under Section 506(d) of the RTKL (access to third-party records). The Aetna Group asserts the
evidence established the trade secret/confidential proprietary information exception in Section 708(b)(11) of the RTKL applies because Requester did not refute the extensive submissions regarding the protected nature of the information. In addition, the Aetna Group contends OOR erred in holding that neither the Trade Secrets Act, nor the DOH regulations protect the records at issue.
DPW does not take a position regarding the substantive exemptions, and it incorporated by reference the arguments of the DBP and Aetna Groups. DPW advised it " does not have a dog in this fight." Pet'r DPW's Br. at 7.
Requester counters that this Court's decision in Lukes compels disclosure, and its rationale should be applied under the current RTKL. Requester asserts the Provider Rates are paid with public funds that flowed from DPW to MCOs, to Subcontractors, and, ultimately to providers. Requester submits the rates are in DPW's constructive possession, or, alternatively, are accessible under Section 506(d) of the RTKL (access to third-party records). Requester further contends that none of the petitioners met their respective burdens of proving applicable exemptions. Requester also asks this Court to hold the rates are " financial records," regardless of trade secret status.
The RTKL contains a presumption of openness as to any records in an agency's possession. Bowling v. Office of Open Records,
__ Pa. __, 75 A.3d 453 (2013). Under the RTKL, records in possession of a Commonwealth agency are presumed to be public unless they are: (1) exempted by Section 708 of the RTKL; (2) protected by a privilege; or (3) exempted " under any other Federal or State law or regulation or judicial order or decree." Section 305 of the RTKL, 65 P.S. § 67.305. For a question of law under the RTKL, our scope of review is plenary. Dep't of Corr. v. Office of Open Records, 18 A.3d 429 (Pa. Cmwlth. 2011). As to factual disputes, this Court may exercise functions of a fact-finder, and has the discretion to rely upon the record created below or to create its own. Bowling.
DPW is a Commonwealth agency as defined by the RTKL. Section 102 of the RTKL, 65 P.S. § 67.102. A Commonwealth agency bears the burden of proving a record is exempt from disclosure. Dep't of Transp. v. Office of Open Records (Aris), 7 A.3d 329 (Pa. Cmwlth. 2010); see also Jones v. Office of Open Records, 993 A.2d 339 (Pa. Cmwlth. 2010) (Board of Probation and Parole bore burden to prove regulatory exemption).
In this case, the parties dispute whether the Provider Rates (Subcontractors-> Providers) are within DPW's actual possession. Notably, DPW disclaims possession of the Provider Rates that appear in contracts between Subcontractors and individual dentists or other providers. Therefore, as an initial matter, we must consider whether the Provider Rates should be analyzed under Section 901 of the RTKL, 65 P.S. § 67.901 (agency shall make good faith effort to determine whether it has possession, custody or control of record) as records " of" DPW, or whether the records are those of a third party, which are only accessible under the current RTKL through Section 506(d) of the RTKL, 65 P.S. § 67.506(d).
A. Section 901 and Agency Possession
As a first step in evaluating a request, an agency must discern whether requested records are within its possession, custody or control, such that it may be obligated to disclose them. The RTKL defines " records" in pertinent part as follows:
Information, regardless of physical form or characteristics, that documents a
transaction or activity of an agency and that is created, received or retained pursuant to law or in connection with a transaction, ...