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Highmark Inc. v. Voltz

Commonwealth Court of Pennsylvania

June 2, 2017

Highmark Inc., Petitioner
v.
Christopher L. Voltz, Esq., Respondent

          Argued: March 8, 2017

          BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge, HONORABLE MICHAEL H. WOJCIK, Judge, HONORABLE JULIA K. HEARTHWAY, Judge, HONORABLE JOSEPH M. COSGROVE, Judge.

          OPINION

          ROBERT SIMPSON, Judge.

         Highmark, Inc. (Highmark) petitions for review of a final determination issued by the Office of Open Records (OOR) granting the request of Christopher L. Voltz, Esquire (Requester) pursuant to the Right-to-Know Law (RTKL), [1] and directing the Insurance Department (Department) to release provider reimbursement rate information Highmark submitted. Highmark argues the information is protected by another state law, and it is confidential proprietary information under Section 708(b)(11) of the RTKL, 65 P.S. §67.708(b)(11). Highmark contends it presented sufficient evidence to support nondisclosure. Additionally, Highmark asserts OOR violated its due process rights, and on that basis, it asks this Court to accept supplemental evidence. Because OOR erred as a matter of law, we reverse.

         I. Background

         On March 11, 2016, Requester submitted a request seeking:

(1) All documents submitted by Highmark to the [Department] regarding reimbursement adjustments for physical therapy, allergy testing and venipuncture services, including, without limitation, correspondence filings and competitor and market performance data related to Highmark's Special Bulletin dated July 22, 2015, wherein Highmark states that Highmark has filed with, and has now received approval from, the [Department] to implement Premier Blue Shield and Keystone Health Plan West (KHPW) reimbursement adjustments;
(2) [a]ll documents submitted by Highmark to [the Department], including, without limitation, correspondence, filings and competitor and market performance data, relating to Highmark's Special Bulletin dated February 15, 2016 (revised February 17, 2016)[, ] concerning Highmark's adjustment to its provider fee schedule to implement new fees for its [KHPW] and Premier Blue Shield ACA individual (direct-pay) products; and,
(3) [a]ll documents evidencing the [Department's] approval, disapproval or other response to Highmark's above-described submissions to the [Department] ….

         Reproduced Record (R.R.) at 10a (Request).

         The Department denied the Request, stating the records were confidential proprietary information or trade secrets of Highmark under Section 708(b)(11) of the RTKL, 65 P.S. §67.708(b)(11). The Department noted that Highmark "objected to the release of such records." R.R. at 19a.

         Requester appealed to OOR, requesting in camera review. In addition to the Request and response, Requester submitted emails between the Department and the Pennsylvania Physical Therapy Association (PTA). OOR invited the parties to supplement the record and directed the Department to notify third parties, (i.e., Highmark), of their ability to participate in the appeal.

         Highmark filed a brief asserting the records were protected confidential proprietary information under Section 708(b)(11) of the RTKL, 65 P.S. §67.708(b)(11). In addition, Highmark asserted Section 309 of the Accident and Health Filing Reform Act (Reform Act), [2] 40 P.S. §3801.309, and Section 6329 of the Professional Health Services Plan Corporations Act (HPCA), 40 Pa. C.S. §6329, exempted rate information submitted to the Department. Highmark also submitted an affidavit of its Director of Regulatory Affairs (Highmark Affidavit) attesting the records were part of a provider reimbursement filing with the Department, marked confidential. The Department submitted no evidence, deferring to Highmark.

         Requester submitted a letter brief and an affidavit of the PTA attorney who corresponded with Department counsel (PTA Affidavit). Therein, the attorney confirmed the Department advised PTA that Highmark's submissions were not voluntary, but were required by Section 6329 of the HPCA. PTA Affidavit, ¶9. Highmark submitted a reply brief responding to Requester's legal arguments.

         Neither the parties nor Highmark requested a hearing. OOR denied Requester's request for in camera review.

         Ultimately, OOR determined Highmark did not meet its burden to prove an exemption under the RTKL or other state law. Voltz v. Ins. Dep't & Highmark, Inc., OOR Dkt. AP 2016-0773 (filed July 5, 2016) (Final Determination). OOR reasoned the Reform Act did not exempt the rates at issue because only "[p]ayment rates and fees requested by the [D]epartment shall be given confidential treatment." 40 P.S. §3801.309(c) (emphasis added). OOR found no evidence that the Department "requested" the payment rate or fee information, so the provision did not apply. OOR rejected Highmark's argument that rate information must be filed with the Department under Section 6329 of the HPCA, emphasizing the partial repeal of Section 6329(a) "insofar as [it] provides for the approval of rates and contracts." Section 5101 of the Reform Act, 40 P.S. §3801.5101 (emphasis added). Because Highmark did not submit the rate information pursuant to the Department's explicit request, OOR determined the Reform Act did not protect it.

         OOR also reasoned the requested records did not qualify as financial records because they did not relate to an agency disbursement. In addition, OOR found the Highmark Affidavit insufficient evidence to prove the rate information was confidential proprietary information or trade secrets under Section 708(b)(11) of the RTKL. Accordingly, OOR directed disclosure of the records.

         Highmark filed a petition for review.[3] The Department did not participate. After briefing and argument, the matter is ready for disposition.

         II. Discussion

         On appeal, [4] Highmark contends OOR erred in holding: (1) the rate information was not protected from disclosure under the insurance statutes; and, (2) in holding Section 708(b)(11) of the RTKL did not protect the rate information. It argues the Highmark Affidavit substantiated that the exemptions applied, and OOR erred in deeming the evidence insufficient.

         Highmark also challenges the adequacy of the proceedings, claiming OOR violated its due process rights by directing disclosure without a hearing. Additionally, Highmark asks this Court to grant its application to supplement the record.

         Requester counters that Highmark did not meet its burden to prove the asserted exemptions. He argues the Highmark Affidavit was insufficient proof of any competitive harm, so OOR properly ruled in his favor. He maintains the Reform Act does not exempt the requested information because the Department did not request the rates here, which is a precondition to their protection. He also asserts the partial repeal of Section 6329(a) of the HPCA amounted to a total repeal because that part pertained to approval, and approval was no longer required.

         A. RTKL Framework

         Section 305 of the RTKL provides that records in possession of a Commonwealth agency like the Department are presumed "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." 65 P.S. §67.305 (emphasis added). State statutes that designate public or nonpublic nature supersede the RTKL. Section 306 of the RTKL, 65 P.S. §67.306; Dep't of Labor & Indus. v. Heltzel, 90 A.3d 823 (Pa. Cmwlth. 2014) (en banc).

         This Court recognizes a third party's interest in protecting its records in an agency's possession that may not be waived by the agency. Dep't of Educ. v. Bagwell, 131 A.3d 638 (Pa. Cmwlth. 2016) (Bagwell (2016)); Dep't of Conserv. & Natural Res. v. Vitali (Pa. Cmwlth., No 1013 C.D. 2014, filed July 7, 2015) (unreported) (remanding to allow third party to prove exemption before factfinder). Indeed, a direct interest party who submitted the records at issue to an agency may be in the best position to establish their protected nature. Bagwell (2016).

         The party asserting an exemption bears the burden of proving the exemption applies. See, e.g., Global Tel*Link Corp. v. Wright, 147 A.3d 978 (Pa. Cmwlth. 2016) (party with confidential proprietary interest in financial submission appealed, and established RTKL exception applied); Dep't of Corr. v. Maulsby 121 A.3d 585 (Pa. Cmwlth. 2015) (remanding to OOR to allow third party to participate and challenge release of confidential proprietary information); see also Allegheny Cnty. Dep't of Admin. Servs. v. Parsons, 61 A.3d 336, 342 (Pa. Cmwlth. 2013) (third-party contractors wear "shoes of [an] agency for purposes of the burden of proof when the contractor performs a governmental function …."). Under Section 708(a)(1), a party bears the burden of proving any RTKL exception applies "by a preponderance of the evidence." 65 P.S. §67.708(a)(1).

         B. Due Process - Supplementing the Record

         Before reaching the merits, we consider Highmark's due process claim. This Court construes the RTKL to afford due process to third parties, including the ability to submit evidence and assert exemptions at the appeals officer level. Maulsby; W. Chester Univ. v. Schackner (Bravo), 124 A.3d 382 (Pa. Cmwlth. 2015). When a RTKL request seeks confidential proprietary information that a third party submitted to an agency, we recognize that third party's right to due process before disclosure. See, e.g., Office of the Governor v. Bari, 20 A.3d 634 (Pa. Cmwlth. 2011) (remanding for hearing so third party may prove exception).

         In the RTKL context, a right to due process does not entail a right to a hearing. Giurintano v. Dep't of Gen. Servs., 20 A.3d 613 (Pa. Cmwlth. 2011). The essential elements for due process before an OOR appeals officer are notice and an opportunity to be heard. Wishnefsky v. Dep't of Corr., 144 A.3d 290 (Pa. Cmwlth. 2016). An appeals officer has discretion in developing the record to allow meaningful appellate review. Dep't of Educ. v. Bagwell, 114 A.3d 1113 (Pa. Cmwlth. 2015) (Bagwell (2015)). To develop the record, an appeals officer may undertake in camera review or request submissions as to material facts. Id.; Office of Open Records v. Center Twp., 95 A.3d 354 (Pa. Cmwlth. 2014) (en banc).

         Generally, this Court declines to serve as factfinder, a "role … best reserved for unique occasions" like maximizing efficiency. Heltzel, 90 A.3d at 834. Where OOR's "record contains no information on [records'] nature and content, " we may supplement the record. Pa. State Police v. Grove, 119 A.3d 1102, 1105-06 ...


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