#30018-a-MES 2023 S.D. 4
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
****
JASON SCHUPP, Appellant,
v.
SOUTH DAKOTA DEPARTMENT OF LABOR AND REGULATION, DIVISION OF INSURANCE, Appellees.
APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES COUNTY, SOUTH DAKOTA
THE HONORABLE CHRISTINA L. KLINGER Judge
JASON M. SCHUPP Frederick, Maryland Pro Se Appellant.
FRANK A. MARNELL LISA M. HARMON of South Dakota Department of Labor and Regulation Pierre, South Dakota Attorneys for appellee.
CONSIDERED ON BRIEFS OCTOBER 3, 2022 OPINION FILED 01/11/23 #30018
SALTER, Justice
[¶1.] Jason Schupp requested information from the South Dakota
Department of Labor and Regulation Division of Insurance (DOI) relating to captive
insurance companies domiciled in South Dakota. The DOI denied the request,
stating that the information was confidential and not subject to public disclosure.
At Schupp’s request, the Office of Hearing Examiners (OHE) reviewed the DOI’s
decision and agreed that the request for information should be denied. Schupp
appealed to the circuit court which affirmed the decision of the OHE, and he now
appeals to this Court. We affirm.
Factual and Procedural Background
[¶2.] In March 2021, the DOI received a request for records relating to
captive insurance companies in South Dakota from Jason Schupp. 1 In particular,
he requested “a copy of licensing or authorization records for captive insurance
companies domiciled in the State of South Dakota.” 2 In a later communication with
1. The underlying purpose for which Schupp requested the records is not developed in the record. His submissions throughout the administrative and court proceedings in this case express a skeptical view of captive insurance companies, and his email address suggests he may be affiliated with a consumer advocacy group. In any event, Schupp has not challenged the accuracy of the DOI’s description of him as a member of the general public.
2. The formation and regulation of captive insurance companies is regulated by SDCL chapter 58-46 which defines a “captive insurance company” in self- evident terms as “any insurance company licensed under chapter 58-46[.]” SDCL 58-46-1(3). The DOI’s explanation in its appellate brief is more helpful and describes captive insurance companies as “privately-held insurance enterprises designed to provide insurance coverage to its private owners and affiliates.” However, “[a] captive insurance company may not insure . . . [a]ny life or health risk . . . or [a]ny personal lines property casualty risk.” SDCL 58-46-23.2. Specific types of captive insurers described in SDCL 58-46-1 (continued . . .) -1- #30018
the DOI, Schupp wrote, “In practical terms, I am looking for the names and
addresses of the 15 captives.” 3
[¶3.] The DOI denied Schupp’s request under the view that the information
he sought was not available for public inspection under South Dakota law.
Specifically, the DOI cited SDCL 58-46-31 which relates to the application process
for seeking authority to operate as a captive insurer. The statute prohibits public
disclosure of materials that are designated by a captive insurer applicant, materials
generated by the DOI’s Director of Insurance, and certain information about the
applicant, including “any information required to be reported or filed with the
director.” 4
[¶4.] Schupp requested that the OHE review the DOI’s denial, arguing that
the requested information was within the purview of South Dakota’s open records
laws. See SDCL 1-27-38 (“If a public record officer denies a written request in
whole or in part, . . . a requestor may . . . file a written notice of review with the
Office of Hearing Examiners. . . .”). Ultimately, the OHE disagreed with Schupp
and accepted the DOI’s view, concluding that the “denial of records was pursuant to
________________________ (. . . continued) include a group captive insurance company, a pure captive insurance company, a special purpose captive insurance company, a sponsored captive insurance company, and a trust captive insurance company.
3. Schupp learned the identity of one captive insurance company by locating an organizational document on the DOI’s public request portal. Counsel for the DOI indicated that the information was erroneously made public.
4. The DOI initially cited a number of other statutes to support its decision to deny Schupp’s request, many of which dealt with the DOI’s regulatory and investigative functions and were not directly applicable to Schupp’s request for the names and addresses of the captive insurance companies.
-2- #30018
state statute as the records denied were not public records and are not subject to
disclosure.”
[¶5.] Schupp appealed the OHE’s administrative ruling to the circuit court
maintaining his position that the DOI was required to disclose the requested
information under South Dakota’s open records laws. The court affirmed the OHE
decision, holding:
The OHE did not err in concluding that the documents requested by Schupp are confidential pursuant to SDCL 58-46- 31 and exempt from disclosure. The names and addresses of captive insurance companies are required to be filed with the Division in a company’s license application. Such information constitutes “any information required to be reported or filed with the director” and therefore is confidential. As this information is confidential, it cannot be disclosed to Schupp, a member of the general public.
[¶6.] Schupp appeals, raising the single legal question of whether the
licenses or certificates of authority for captive insurers are exempt from South
Dakota’s public records laws.
Standard of Review
[¶7.] This appeal is governed by South Dakota’s Administrative Procedures
Act, set out in chapter 1-26. Anderson v. S. Dakota Ret. Sys., 2019 S.D. 11, ¶ 10,
924 N.W.2d 146, 148. The text of “SDCL 1-26-36 delineates the standard for a
circuit court’s review of an administrative agency’s decision, and ‘[t]he same rules
apply on appeal to this Court.’” Id. ¶ 10, 924 N.W.2d at 148–49 (quoting Lagler v.
Menard, Inc., 2018 S.D. 53, ¶ 22, 915 N.W.2d 707, 715.). This appeal raises no
factual questions, but rather, a legal question which is reviewed de novo. Dakota
-3- #30018
Trailer Mfg., Inc. v. United Fire & Cas. Co., 2015 S.D. 55, ¶ 11, 866 N.W.2d 545,
548.
Analysis and Decision
[¶8.] Whether SDCL 58-46-31, 5 or any other statute, exempts the
information Schupp seeks from public disclosure implicates our familiar principles
of statutory interpretation:
5.
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#30018-a-MES 2023 S.D. 4
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
****
JASON SCHUPP, Appellant,
v.
SOUTH DAKOTA DEPARTMENT OF LABOR AND REGULATION, DIVISION OF INSURANCE, Appellees.
APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES COUNTY, SOUTH DAKOTA
THE HONORABLE CHRISTINA L. KLINGER Judge
JASON M. SCHUPP Frederick, Maryland Pro Se Appellant.
FRANK A. MARNELL LISA M. HARMON of South Dakota Department of Labor and Regulation Pierre, South Dakota Attorneys for appellee.
CONSIDERED ON BRIEFS OCTOBER 3, 2022 OPINION FILED 01/11/23 #30018
SALTER, Justice
[¶1.] Jason Schupp requested information from the South Dakota
Department of Labor and Regulation Division of Insurance (DOI) relating to captive
insurance companies domiciled in South Dakota. The DOI denied the request,
stating that the information was confidential and not subject to public disclosure.
At Schupp’s request, the Office of Hearing Examiners (OHE) reviewed the DOI’s
decision and agreed that the request for information should be denied. Schupp
appealed to the circuit court which affirmed the decision of the OHE, and he now
appeals to this Court. We affirm.
Factual and Procedural Background
[¶2.] In March 2021, the DOI received a request for records relating to
captive insurance companies in South Dakota from Jason Schupp. 1 In particular,
he requested “a copy of licensing or authorization records for captive insurance
companies domiciled in the State of South Dakota.” 2 In a later communication with
1. The underlying purpose for which Schupp requested the records is not developed in the record. His submissions throughout the administrative and court proceedings in this case express a skeptical view of captive insurance companies, and his email address suggests he may be affiliated with a consumer advocacy group. In any event, Schupp has not challenged the accuracy of the DOI’s description of him as a member of the general public.
2. The formation and regulation of captive insurance companies is regulated by SDCL chapter 58-46 which defines a “captive insurance company” in self- evident terms as “any insurance company licensed under chapter 58-46[.]” SDCL 58-46-1(3). The DOI’s explanation in its appellate brief is more helpful and describes captive insurance companies as “privately-held insurance enterprises designed to provide insurance coverage to its private owners and affiliates.” However, “[a] captive insurance company may not insure . . . [a]ny life or health risk . . . or [a]ny personal lines property casualty risk.” SDCL 58-46-23.2. Specific types of captive insurers described in SDCL 58-46-1 (continued . . .) -1- #30018
the DOI, Schupp wrote, “In practical terms, I am looking for the names and
addresses of the 15 captives.” 3
[¶3.] The DOI denied Schupp’s request under the view that the information
he sought was not available for public inspection under South Dakota law.
Specifically, the DOI cited SDCL 58-46-31 which relates to the application process
for seeking authority to operate as a captive insurer. The statute prohibits public
disclosure of materials that are designated by a captive insurer applicant, materials
generated by the DOI’s Director of Insurance, and certain information about the
applicant, including “any information required to be reported or filed with the
director.” 4
[¶4.] Schupp requested that the OHE review the DOI’s denial, arguing that
the requested information was within the purview of South Dakota’s open records
laws. See SDCL 1-27-38 (“If a public record officer denies a written request in
whole or in part, . . . a requestor may . . . file a written notice of review with the
Office of Hearing Examiners. . . .”). Ultimately, the OHE disagreed with Schupp
and accepted the DOI’s view, concluding that the “denial of records was pursuant to
________________________ (. . . continued) include a group captive insurance company, a pure captive insurance company, a special purpose captive insurance company, a sponsored captive insurance company, and a trust captive insurance company.
3. Schupp learned the identity of one captive insurance company by locating an organizational document on the DOI’s public request portal. Counsel for the DOI indicated that the information was erroneously made public.
4. The DOI initially cited a number of other statutes to support its decision to deny Schupp’s request, many of which dealt with the DOI’s regulatory and investigative functions and were not directly applicable to Schupp’s request for the names and addresses of the captive insurance companies.
-2- #30018
state statute as the records denied were not public records and are not subject to
disclosure.”
[¶5.] Schupp appealed the OHE’s administrative ruling to the circuit court
maintaining his position that the DOI was required to disclose the requested
information under South Dakota’s open records laws. The court affirmed the OHE
decision, holding:
The OHE did not err in concluding that the documents requested by Schupp are confidential pursuant to SDCL 58-46- 31 and exempt from disclosure. The names and addresses of captive insurance companies are required to be filed with the Division in a company’s license application. Such information constitutes “any information required to be reported or filed with the director” and therefore is confidential. As this information is confidential, it cannot be disclosed to Schupp, a member of the general public.
[¶6.] Schupp appeals, raising the single legal question of whether the
licenses or certificates of authority for captive insurers are exempt from South
Dakota’s public records laws.
Standard of Review
[¶7.] This appeal is governed by South Dakota’s Administrative Procedures
Act, set out in chapter 1-26. Anderson v. S. Dakota Ret. Sys., 2019 S.D. 11, ¶ 10,
924 N.W.2d 146, 148. The text of “SDCL 1-26-36 delineates the standard for a
circuit court’s review of an administrative agency’s decision, and ‘[t]he same rules
apply on appeal to this Court.’” Id. ¶ 10, 924 N.W.2d at 148–49 (quoting Lagler v.
Menard, Inc., 2018 S.D. 53, ¶ 22, 915 N.W.2d 707, 715.). This appeal raises no
factual questions, but rather, a legal question which is reviewed de novo. Dakota
-3- #30018
Trailer Mfg., Inc. v. United Fire & Cas. Co., 2015 S.D. 55, ¶ 11, 866 N.W.2d 545,
548.
Analysis and Decision
[¶8.] Whether SDCL 58-46-31, 5 or any other statute, exempts the
information Schupp seeks from public disclosure implicates our familiar principles
of statutory interpretation:
5. The text of SDCL 58-46-31 provides:
The director shall prescribe the form for making an application and any application submitted shall contain such information as required. The applicant may, with approval of the director, designate confidential information.
All information the director generates in making an investigation or examination of a captive insurance company is confidential. All confidential information is the property of the division but shall be furnished to the captive insurance company for its confidential use. Under no circumstances may a captive insurance company disclose a report or any supporting documentation to anyone, other than directors and officers of the captive insurance company or anyone acting in a fiduciary capacity for the captive insurance company, without written permission from the director.
. . . Disclosure of confidential information shall be made only to formal regulatory bodies which clearly have a need for the confidential information. Prior to dissemination of any confidential information, the director shall require a written agreement not to reveal the confidential information by the party receiving the confidential information. In no event may the director disclose confidential information to the general public, any competitor, or any potential competitor of a captive insurance company, or its parents or affiliates.
...
For the purposes of this chapter, confidential information includes the names of stockholders, membership interest (continued . . .) -4- #30018
Resolving an issue of statutory interpretation necessarily begins with an analysis of the statute’s text. When the language in a statute is clear, certain, and unambiguous, there is no reason for construction, and this Court’s only function is to declare the meaning of the statute as clearly expressed.
Matter of Appeal by Implicated Individual, 2021 S.D. 61, ¶ 16, 966 N.W.2d 578, 583
(cleaned up).
[¶9.] Unless “otherwise expressly provided by statute,” all persons are “fully
empowered and authorized to examine” South Dakota’s public records. SDCL 1-27-
1. Within the DOI, the Director of Insurance is statutorily required to make records
of official “transactions, examinations, investigations, and proceedings . . . open to
public inspection, except as otherwise provided” in SDCL Title 58. SDCL 58-2-26.
[¶10.] The provisions of SDCL 58-46-31 represent such an exception to public
disclosure. As indicated above, the statute relates to applications to the DOI by
prospective captive insurance companies seeking a certificate of authority. In
general terms, SDCL 58-46-31 provides that information designated by an applicant
is confidential, as is information generated by the DOI as a part of its assessment of
the application. Also confidential under the statute are “the names of stockholders,
membership interest holders, or owners, ownership information, capital
contributions, addresses, business affiliations, state and director findings through
any examination or inquiry of any kind, and any information required to be reported
or filed with the director.” SDCL 58-46-31 (emphasis added).
________________________ (. . . continued) holders, or owners, ownership information, capital contributions, addresses, business affiliations, state and director findings through any examination or inquiry of any kind, and any information required to be reported or filed with the director. . . .
-5- #30018
[¶11.] The text of SDCL 58-46-31 sharply restricts, and in some cases
prohibits altogether, the disclosure of confidential information relating to captive
insurance companies. Generally, confidential information may be shared between
the captive insurer applicant and the DOI and may, in some limited circumstances,
be disclosed to “formal regulatory bodies which clearly have a need for the
confidential information.” SDCL 58-46-31. However, disclosure of the confidential
information is categorically prohibited “to the general public.” Id.
[¶12.] The circuit court and the OHE determined that certificates of authority
for captive insurance companies may not be disclosed because the information they
contain, especially the names and addresses Schupp seeks, are “required to be
reported or filed with the director.” SDCL 58-46-31. We agree.
[¶13.] Critical to our analysis is the fact that SDCL 58-46-31 requires the
DOI’s director to “prescribe the form for making an application” to do business as a
captive insurance company, thereby identifying the information that must be
provided to the DOI. The statute further provides that “any application submitted
shall contain such information as required.” SDCL 58-46-31.
[¶14.] The application form developed and published by the DOI director,
quite predictably, requires the name and address of the applicant seeking authority
to operate as a captive insurance company. Under an elementary reading of SDCL
58-46-31’s plain and unambiguous terms, an applicant’s name and address must be
filed with the DOI and are confidential. Consequently, disclosure of the names and
addresses contained in a certificate of authority, to a member of the public, like
Schupp, is prohibited.
-6- #30018
[¶15.] Schupp dismisses this reasoning, which was adopted by both the OHE
and the circuit court, as “very tortured.” But we cannot agree with Schupp. If
anything, the analysis seems straightforward and uncomplicated—if the
information is required by the DOI’s application for captive insurance companies,
its disclosure is prohibited.
[¶16.] Schupp also attempts to isolate the DOI-issued “certificate of
authority” as a discrete document not, itself, otherwise included within the
statutory prohibition upon disclosure. But the distinction he suggests is
unsustainable. The provisions of SDCL 58-46-31 apply to information and content,
not to particular documents. Consequently, if, as it appears here, the only
information sought from the certificates of authority for captive insurers is
confidential, this would serve as a basis to withhold disclosure to a member of the
general public.
[¶17.] Perhaps Schupp’s most colorable argument for disclosure is that SDCL
58-46-31 cannot mean what it appears to say because determining that everything
in the application is confidential would eliminate the necessity for an applicant to
designate information as confidential, as permitted under the statute. Though he
does not use the term, Schupp seems to be invoking a canon of statutory
construction that we have recognized — the rule against surplusage. See Hollman
v. S. Dakota Dep’t of Soc. Servs., 2015 S.D. 21, ¶ 9, 862 N.W.2d 856, 859 (“We
presume the Legislature does not insert surplusage into its enactments. Also, this
court will not construe a statute in a way that renders parts to be . . . surplusage.”
(quoting Nielson v. AT&T Corp., 1999 S.D. 99, ¶ 16, 597 N.W.2d 434, 439)).
-7- #30018
[¶18.] But we are not at all certain that the premise upon which this
argument relies is sound because it presumes that all information furnished to the
DOI by a captive insurance company is required to be reported or filed. Simply put,
nothing in the parties’ submissions establishes that this is the case. It may well be
that applicants or licensed captive insurance companies may have occasion to
submit items to the DOI from time to time that are neither “required to be reported
or filed” in the strict sense. In those circumstances, there is no surplusage or
irrelevancy under our interpretation of SDCL 58-46-31.
[¶19.] Regardless, the canons of statutory construction are not, themselves,
principles of law, but rather serve to assist courts in divining legislative intent
when confronted with ambiguous text. See Chickasaw Nation v. United States, 534
U.S. 84, 94, 122 S. Ct. 528, 535, 151 L. Ed. 2d 474 (2001) (noting that canons of
statutory construction “are not mandatory rules” of law, but are simply “designed to
help judges determine the Legislature’s intent as embodied in particular statutory
language”). As indicated, we do not view the provisions of SDCL 58-46-31 at issue
here to be ambiguous, and Schupp has not argued otherwise. Our course, then, is
certain; we must “simply read the text and apply it.” Implicated Individual, 2021
S.D. 61, ¶ 28, 966 N.W.2d at 586.
[¶20.] We note further that the Legislature’s apparent intent as evidenced by
the text of SDCL 58-46-31 is to provide broad protection against public disclosure of
information relating to captive insurance companies. This area of legislative
emphasis is not unique to captive insurance companies. Statutory provisions
restricting disclosure of confidential information filed by applicants seeking
-8- #30018
authority from the South Dakota Division of Banking to operate as trust companies
are virtually identical. See SDCL 51A-6A-2 (defining confidential information to
include, among other things, “any information required to be reported or filed with
the director or the commission”); SDCL 51A-6A-4 (“The director shall prescribe the
form for making an application and any application submitted shall contain such
information as required.”); SDCL 51A-6A-39 (“In no event may the director disclose
confidential information to the general public, any competitor, or any potential
competitor of a trust company.”).
[¶21.] Under these circumstances, it seems eminently plausible that the
Legislature acted purposefully to allow separate means by which information
submitted by captive insurance companies could become confidential—a method of
designating specific information and a self-executing process. For instance, a
captive insurance company applicant responding to a general question about its
business plan may include a high degree of detail about not only its anticipated
business but also concerning the business of its affiliates. Rather than operate on
the faith that the entirety of the response will automatically be considered
confidential, the applicant may elect to designate certain information as
confidential to ensure it remains protected from public disclosure.
[¶22.] Though not determinative of the legal question we confront here, the
DOI offers that the justification for prohibiting disclosure lies with the fact that
captive insurance companies lack the authority to provide insurance for members of
the public and, instead, only insure the parochial risks of the entities with which
they are related. Schupp’s submissions appear to disagree with the DOI’s
-9- #30018
assessment of the potential risks captive insurers present to the public, but we need
not resolve this policy dispute. Instead, we must focus on the text of SDCL 58-46-31
which we conclude does not permit disclosure of the information Schupp seeks to
members of the public.
[¶23.] We affirm.
[¶24.] JENSEN, Chief Justice, and KERN, DEVANEY, and MYREN,
Justices, concur.
-10-