Arkansas Department of Finance & Administration v. Pharmacy Associates, Inc.

970 S.W.2d 217, 333 Ark. 451, 1998 Ark. LEXIS 373
CourtSupreme Court of Arkansas
DecidedJune 4, 1998
Docket97-1293
StatusPublished
Cited by34 cases

This text of 970 S.W.2d 217 (Arkansas Department of Finance & Administration v. Pharmacy Associates, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arkansas Department of Finance & Administration v. Pharmacy Associates, Inc., 970 S.W.2d 217, 333 Ark. 451, 1998 Ark. LEXIS 373 (Ark. 1998).

Opinion

Ray Thornton, Justice.

The question in this case is whether a state agency can claim the competitive-advantage exception under the Arkansas Freedom of Information Act (the FOIA) on behalf of the person who supplied the information. Appellants are the Arkansas Department of Finance and Administration (DF&A) and Merck-Medco Managed Care, Inc. (Medco). The appehee Pharmacy Associates, Inc. sought disclosure of Medco’s successful bid proposal from DF&A. When DF&A delivered the documents with certain proprietary information deleted, Pharmacy Associates filed suit under the FOIA to obtain disclosure of the deleted material. The trial court found that this information fell within the competitive-advantage exception as to Medco, but that the exception did not apply when the documents were “owned” by the State or when the State did not have a “proprietary interest” in the information. The trial court’s decision is reversed and the case is dismissed.

DF&A, through its State Employee and Public School Personnel Board, issued a request for proposal (RFP) for a pharmacy-benefit manager to manage the State Employee and Public School Health Coverage Program. The manager provides a network of pharmacies where State employees and public school personnel can have their prescriptions filled for a negotiated discount price. Seven pharmacy-benefit managers responded to the RFP with bid proposals, including Medco and Pharmacy Associates. The proposals contained financial and other information projecting the degree of savings that the plan would produce, reflecting data analyses and strategies. Each bidder marked certain information proprietary, except Pharmacy Associates.

DF&A awarded the contract to Medco, and incorporated Medco’s proposal into the contract by reference. Pharmacy Associates, ranked last among the seven bidders, then requested a copy of the contract, including Medco’s proposal. When DF&A received the request, it turned to Medco to justify the confidentiality of the items that Medco had marked as proprietary. DF&A reviewed Medco’s response and determined that certain information in the proposal was not disclosable as it fell within the competitive-advantage exception. DF&A then delivered a copy of Medco’s proposal to Pharmacy Associates with the proprietary information deleted.

Pharmacy Associates sued under the FOIA to obtain the deleted material. Specifically, Pharmacy Associates requested Medco’s data regarding expected formulary rebates; the cost-effectiveness rationale; administrative fees; performance, savings, and service guarantees and penalties; total annual savings; and pharmacy network analyses. After hearing testimony and reviewing the documents in camera, the trial court issued a letter opinion that later became the judgment. In that opinion, the court found that the competitive-advantage exception applies to the information that Medco and DF&A sought to protect. Nevertheless, the court ordered DF&A to release the documents to Pharmacy Associates, ruling that the exception does not apply when the State owns the documents or does not have a proprietary-interest in the information. The appellants appeal this ruling.

To determine whether the General Assembly intended to preclude the State from asserting the competitive-advantage exception for confidential bid information contained in a state contract, we observe the FOIA’s policy considerations and our rules for construing it. Under the FOIA, a person can inspect and obtain copies of all “public records,” unless the law provides otherwise. Ark. Code Ann. § 25-19-105(a) (Supp. 1997). The term “public records” is defined to include all records maintained in public offices or by public employees that contain information about the performance or lack of performance of official functions. Ark. Code Ann. § 25-19-103(1) (Repl. 1996). The General Assembly states its specific intent to exempt eleven categories of information from disclosure in subsection 25-19-105(b). In subsection 25-19-105(b)(9)(A), the General Assembly exempts “files which, if disclosed, would give advantage to competitors or bidders[.]”

We liberally construe the FOIA to accomplish its broad and laudable purpose that public business be performed in an open and public manner. Arkansas Dep’t of Health v. Westark Christian Action Council, 322 Ark. 440, 443, 910 S.W.2d 199, 201 (1995). In conjunction with this rule of construction, we narrowly construe exceptions to the FOIA to counterbalance the self-protective instincts of the government bureaucracy. Id. A statutory provision for nondisclosure must be specific. Id.; § 25-19-105(a). Less than clear or ambiguous exemptions will be interpreted in a manner favoring disclosure. Westark Christian Action Council, 322 Ark. at 443, 910 S.W.2d at 201. At the same time, we will balance the interests between disclosure and nondisclosure using a common sense approach. See National Park Medical Ctr., Inc. v. Arkansas Dep’t of Human Serv’s., 322 Ark. 595, 911 S.W.2d 250 (1995); Sebastian County Chapter of the American Red Cross v. Weatherford, 311 Ark. 656, 846 S.W.2d 641 (1993).

In the present case, the trial court erred in its interpretation of the FOIA and the competitive-advantage exception for the following reasons. First, by its terms, the FOIA is only invoked when a public record is sought. By definition, a public record is one that a government unit (or any other agency wholly or partially supported by, or expending, public funds) keeps in the discharge of its duties. § 25-19-103(1); Black’s Law Dictionary 1231 (6th ed. 1990). Pharmacy Associates would have no cognizable claim for Medco’s proposal under the FOIA if the proposal were not kept by the State. See Legislative Joint Auditing Comm. v. Woosley, 291 Ark. 89, 91, 722 S.W.2d 581, 582 (1987) (stating that for a record to be subject to the FOIA and available to the public, it must be possessed by an entity covered by the act, fall within the act’s definition of public record, and not be exempted by the act or other statutes).

Second, if we accept the court’s view that the documents are subject to disclosure because they are owned by the State, then subsection 25-19-105(b), listing the exceptions to the disclosure rule, becomes meaningless and superfluous, contrary to the rules of statutory interpretation. See, e.g., Locke v. Cook, 245 Ark. 787, 793, 434 S.W.2d 598, 601 (1968) (stating that the statute should be construed so that no word is left void, superfluous, or insignificant; and meaning and effect must be given to every word in the statute if possible).

Third, the court’s interpretation is contrary to the plain and unambiguous language of the competitive-advantage exception provision. That section does not include a further limitation providing that documents owned by the state are not included in the exception. See § 25-19-105(b)(9)(A).

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970 S.W.2d 217, 333 Ark. 451, 1998 Ark. LEXIS 373, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arkansas-department-of-finance-administration-v-pharmacy-associates-ark-1998.