Matter of Blue v. New York State Dept. of Fin. Servs.

2024 NY Slip Op 31224(U)

• Court: New York Supreme Court, New York County
• Decided: April 10, 2024
• Status: Unpublished

Opinion

Matter of Blue v New York State Dept. of Fin. Servs. 2024 NY Slip Op 31224(U) April 10, 2024 Supreme Court, New York County Docket Number: Index No. 150526/2023 Judge: Denise M. Dominguez Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 150526/2023 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 04/10/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. DENISE M DOMINGUEZ PART 35M Ju.Itice ---------------------------------------------------------------------------------X INDEX NO. l 50526/2023 IN THE MATTER OF THE APPLICATION OF REVEREND MARK BLUE, INDIVIDUALLY, AND AS PRESIIJENT OF MOTION SEQ. NO. _ ___;_00.:....:l=----~ TIIE BUFFALO HRANCII OF THE NATIONAL ASSOCIATJON FOR THE ADVANCEMENT OF COLORED PEOPLE (NAACP),

Petitioner, DECISION + ORDER ON - V - MOTION NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES, ADRIENNE A. HARRIS, SUPERINTENDENT,

Respondents

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The following e-filed documents, listed by NYSCEF document number (Motion 00 I) 9, 13, 18, l 9, 20, 21, 22, 23, 24,25, 26,27,28, 29 were read on this motion to/for JUDGMENT - DECLARATORY

For the reasons that follow, the Petition pursuant to CPLR Article 78, challenging

Respondents, NEV/ YORK STATE DEPARTMENT OF FINANCIAL SERVICES (DFS) and

ADRIENNE A. HARRIS, SUPERINTENDENT's denial of the Petitioner's Freedom of

Information Law ("FOIL") request is hereby denied and this proceeding is dismissed and the cross-

motion by Respondents to dismiss the Petition is denied as moot.

The within Petition, seeks to compel Respondents to provide all documents and records

submitted to DFS (in accordance with Insurance Law §1506) related to the June 2020 application

by Highmark Health and Highmark Inc. (Highmark) for authorization to affiliate with HealthNow

New York, Inc., as requested in Petitioner's November 22, 2021 FOIL request.

Respondents' cross-motion seeks ihe dismissal of the Petition pursuant to CPLR §7804(1)

and §321 l(a)(2), for failure to state a claim, as Insurance Law §1504(e) is as a statutory exemption 150526/2023 IIM/0 OF THE APPLICATION OF REVEREND MARK BLUE, ET AL. vs. NEW YORK Page 1 of 7 STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL. Motion No. 001

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to FOIL disclosure of materials that the Petitioner requested and due to trade secret and personal

privacy exemptions.

Background

Approximately in June of 2020, HealthNow New York, a New York not-for-profit

insurance company, sought DFS's approval to affiliate with Highmark Inc., a Pennsylvania not-

for-profit insurance company, triggering Insurance Law §1506. In connection with the application

for approval, various materials and information were submitted to DFS in accordance with

Insurance Law §1506.

Petitioner served a FOIL request on Respondents dated November 22, 2021. Therein

Petitioner sought "all documents and records submitted to and reviewed by the Department in

connection with its approval and ongoing examination of the so called 'Affiliation' between

HealthNow New York and Highmark Health." Although the FOIL request identified some of the

specific information requested, the request was specifically not limited to the identified items. Yet,

the FOIL request is exceedingly broad in nature as it seeks without limitation, any and all records

and documents connected to the affiliation application between HealthNow NY and Highmark.

Following the submission of the FOIL request, Intervenor-Respondents Highmark Western

and Northeastern New York Inc., Highmark Inc., and Highmark Health (Highmark) submitted a

letter of necessity to DFS, dated July 5, 2022, requesting exemption of all information requested

from Petitioner's FOIL request pursuant to Public Officers Law §87(2), other than that information

that was previously made public. Therein, 1lighmark advised DFS that the requested materials

were proprietary in nature and could be used in a manner that would cause substantial competitive

injury to I lighmark.

DfS then issued a denial of Petitioner's fOIL request, by letter dated .July 11, 2022.

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Therein, DFS specifically noted that the requested information was exempt from FOIL disclosure

pursuant to Public Officers Law §87(2) and pursuant to Insurance Law§ 1504(a).

Petitioner then appealed the denial, and by letter dated September 22, 2022, DFS denied

the appeal. Therein, DFS again relies upon Public Officers Law §87(2)(d) and Public Officers Law

§87(2)(a) and Insurance Law §1504(a) as exemptions for the basis to deny the FOIL request. DFS

notes that in making its determination, it requested a statement of necessity from Highmark and

relied upon such statement in forming its conclusion. Specifically, DFS concluded that the

biographical affidavits were exempt per the personal privacy exemption as such records contained

employment history, addresses, phone numbers, and other personal and private infonnation. DFS

also concluded that the requested records were exempt as trade secret/competitive injury as the

public disclosure of financial status and business operations ofHighmark would provide any of its

competitors and unfair advantage, as they could rely upon Highmark's strategics and plans in order

to formulate their business structure. In essence, the competitors would be able to capitalize upon

Highmark's resources and development without expending their own resources.

Petition

It has long been held that judicial review pursuant to CPLR §7803 is limited to whether

there was a rational basis for the administrative agency's detennination, whether the determination

was arbitrary and capricious or whether there was an abuse of discretion. (See Pell v. Bd. of Ea. of

Union Free Sch. Dist. No. 1 of Towns ofScarsdale & Mamaroneck, Westchester Cnty., 34 N. Y.2d

222 [1974]; Gilman v ;v_ Y. State Div. of Ilous. & Community Renewal, 99 N.Y.2d 144 f2002l).

However, "[ w]hen reviewing the denial of a FOIL request, a court must apply a far different rule.

It is to presume that all records of a public agency arc open to public inspection and copying, and

must require the agency to bear the burden of showing that the records fall squarely within an

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exemption to disclosure" (New York Comm. for Occupational Safety & Ilea/th v. Bloomberg, 72

A.D.3d 15 3, 15 8 I.1st Dept 201 OJ citations omitted).

Here, Respondents and Intervenor-Respondent Highmark Western And Northeastern New

York Inc. ("Intervenor-Respondent") assert Petitioner's FOIL request is exempt from disclosure

pursuant to Public O1Ii.cer's Law §87(2)(a) (by statute via Insurance Law §1504) Public Officer's

Lmv §87(2)(6) (invasion of personal privacy) and §87(2){d) (trade secrets). This Court agrees.

Article 15 of the Insurance Law controls applications for affiliation approval. Insurance

Law § 1506 provides that "[tlhe superintendent shall disapprove such acquisition if he

determines ... that such action is reasonably necessary to protect the interests of the people of this

state .... " In making such assessment, the superintendent must evaluate, in part, the financial

condition of the acquiring person, the source or funds or assets for the acquisition, whether the

acquisition may lessen competition in any line of commerce in insurance or create a monopoly and

whether the acquisition may by hazardous or prejudicial to policy holders and shareholders

(Insurance Law § 1506[b ][l-7]).

Intervenor-Respondent Highmark submits evidence via an A1Ii.davit by President Michael

Edbauer ("Edbauer Aff. ") establishing that personal, confidential and/or trade secret information

\Vas submitted for consideration to DFS, the agency charged with the duty to acquire and consider

substantial personal, financial and confidential materials and information in evaluating whether to

approve any such application. Therein, it is alleged that Highmark applied to DFS to affiliate with

HealthNow New York in accordance with Insurance Law § 1506(b) and with the understanding

that the information and materials submitted v,iould be kept confidential as per Insurance Law

§ 1504. Additionally, Highmark deemed the biographical affidavits submitted with the application

personal and private as such affidavits contained with personal information for some of the officers

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and board members (as requi red by 11 YCRR §80-1.6 item 2). Addi tional exhibits submitted

with the application were also confidential as they contained details deemed trade secret and which

would cause competitive injury if disclosed. Specifically, that the operational plans submitted

detailed specific advantages Highmark held over its competitors in the competitive health

insurance marketplace, which were not know to anyone outside of Highmark, and were only shared

with DFS as required with the application per Insurance Law §1506(6).

Insurance Law§ l 504(a) provides that "le]very controlled insurer shall file with the superintendent such reports or material as the superintendent may direct for the purpose of disclosing information concerning the operations of persons within the holding company system that may materially affect the operations, management or financial condition of the insurer."

Insurance Law§ 1504(c)(l) provides that " [t]he contents of each report and filing made pursuant to this article and any information obtained in connection therewith shall be confidential and proprietary and shall not be subject to subpoena or discovery or admissible in evidence in any private civil action, and the superintendent shall not make the same public without the prior written consent of the controlled insurer to which it pertains unless the superintendent, after notice and an opportunity to be heard, shall determine that the interests of policyholders, shareholders or the public will be served by the publication thereof. In any action or proceeding by the superintendent against the person examined or any other person within the same holding company system a report of such examination published by the superintendent shall be admissible as evidence of the facts stated therein.

Insurance Law § 1504( c )(2) provides that either the superintendent nor any person vvho received a report or fili ng made pursuant to this article and any information obtained in connection therewith, through examination or otherwise, while acting under the authority of the superintendent or with whom such report, filing, or information are shared pursuant to this chapter, shall be permitted or required to testify in any private civil action concerning the report, filing , or information.

Here, Petitioner sought "all documents and records submitted to and reviewed by the

Department in connection with its approval and ongoing examination ... " of the affiliation

application. Yet the documents and records submitted for the application are protected by

Insurance Law § 1504 and are not to be disclosed to the public unless upon prior written consent

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of the insurer, or if there is a determination by the superintendent that the disclosure of the

submissions \Vas necessary in the interests of the policy holders, shareholders or the public. Upon

review, consent was specifically denied by Highrnark and the superintendent did not initiate a

hearing and determine that publication was warranted. Accordingly, based upon the exceedingly

broad FOIL request, asking for all documents and records related to the affiliation application, and

as all submissions by the insurer arc protected from pub Ii c disc! o sure by Insurance Law § 15 04,

the denial of Petitioner's FOIL request was appropriate.

As made clear by the parties' respective submissions and as discussed when this matter

was conferenced with the Court, there is not substantial precedent concerning this issue. However,

Insurance Law § 15 04 has been held to apply to insurance providers and has been held to protect

the confidential filings submitted by such carriers pursuant to Article 15 of the Insurance Law (see

e.g. McFerrin-Clancy v. Ins. Dep't r~f'State, 25 Misc. 3d 1223(A), 906 N.Y.S.2d 773 [Sup. Ct.

New York County 2009j; cf Consol. Edison Co. qf,Vew York v. Ins. Dep't of State ofN.Y., 140

Misc. 2d 969,978,532 N.Y.S.2d 186 [Sup. Ct. New York County 19881).

Petitioner's argument that Article 15 of the Insurance Law docs not control because there

was no "affiliation" but a "merger" is unavailing or persuasive as Petitioner does not rely on any

caselaw or any legal authority. .Equally unavailing is Petitioner's argument that the requested

materials are not "reports" so they are not protected under Insurance Law § 1504. Again, Petitioner

does not rely upon any legal authority for this argument. furthcnnorc, the statue specifically states

that the "content of each report and filing ... and any information obtained in connection therewith

therewith shall be confidential and proprietary .... ''

Accordingly, as Respondents and Intervcnor~Respondent have demonstrated that the

documents and materials submitted as per Insurance Law § 1506 during the affiliation application

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are exempt from disclosure pursuant to Public Officer's Law §87(2)(a) and Insurance Law § 1504,

the denial of the FOIL request was appropriate.

Moreover, pursuant to the Edbauer Aff., (NYSCEF Doc. 27) the Respondents and

Intervenor-Respondent have demonstrated valid concerns over the public disclosure of "all

documents and records" as such require the disclosure of personal information, contained in the

biographical affidavits, which may be exempt from public disclosure per Public Officer's Law

§87(2)(b). It is also clear that there are valid concerns over trade secret and/or proprietary

information that would result in a competitive injury to Highrnark, which may be exempt as per

Public Officer's Law §87(2)(d). However, as this Court has found that the affiliation application is

exempt as per Public Officer's I.aw §87(2)(a) and Insurance Law §1504, this Court does not

specifically reach a conclusion as to the applicability of Public Officer's Law §87(2)(6) or (d).

Accordingly, for the reasons above, this Court finds that DfS's findings were proper and

that Respondents have met their burden in showing that Petitioner's broad FOIL request is exempt

from disclosure (New York Comm. fr.,r Occupational Safety & Health, 72 A.D.3d 153).

Therefore it is hereby

ORDERED that the Petition is denied and the proceeding is dismissed; and it is further

ORDERED that Respondent's cross-motion is denied as moot; and it is further

ORDERED that counsel for Petitioner within 20 days from this entry of this Order shall

serve a copy of this order with notice of entry upon all parties and upon the Clerk of the Court.

4/10/2024 DATE I I DOMINGUEZ, J.S.C.

~ CHECK ONE: CASE OISPOSEO NON-FINAL DISPOSI __

GRANTED 0 OENIEO GRANTEO IN PART □ OTHER APPLICATION: SETTLE OROER SUBMIT OROER

CHECK IF APPROPRIATE: INCLUOES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

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