William Mark Scott v. Indiana Finance Authority, Union Hospital, Inc. (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: July 30, 2019
• Docket: 18A-MI-2446
• Status: Published

Opinion

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), FILED this Memorandum Decision shall not be Jul 30 2019, 6:09 am

regarded as precedent or cited before any CLERK court except for the purpose of establishing Indiana Supreme Court Court of Appeals and Tax Court the defense of res judicata, collateral estoppel, or the law of the case.

APPELLANT PRO SE ATTORNEYS FOR APPELLEE William Mark Scott Rebecca J. Seamands Washington, DC Derek R. Molter Audrey K. Howard Indianapolis, Indiana

Andrew P. Seiwert Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

William Mark Scott, July 30, 2019 Appellant-Plaintiff, Court of Appeals Case No. 18A-MI-2446 v. Appeal from the Marion Superior Court Indiana Finance Authority, The Honorable James A. Joven, Appellee-Defendant, Judge Trial Court Cause No. Union Hospital, Inc., 49D13-1710-MI-39345

Intervenor

Altice, Judge.

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 1 of 11 Case Summary

[1] William Mark Scott appeals from the trial court’s grant of summary judgment

in favor of the Indiana Finance Authority (IFA) and Union Hospital, Inc. (the

Hospital) on Scott’s complaint seeking to gain access, pursuant to Indiana’s

Access to Public Records Act (APRA), Ind. Code § 5-14-3-1, et seq, to records in

possession of IFA.

[2] We affirm.

Facts & Procedural History

[3] IFA is a public agency subject to APRA. The purpose of IFA is to facilitate

financing for health facilities and health facility property. Ind. Code § 5-1.2-7-1.

One available financing method is the issuance of tax-exempt bonds for the

benefit of health-care providers for several statutorily authorized purposes. I.C.

§ 5-1.2-7-7.

[4] In 1993, the Hospital, a private, nonprofit corporation, requested the issuance

of tax-exempt hospital revenue bonds (the 1993 Bonds) 1 and ultimately used the

proceeds from the issuance of such to undertake certain capital improvements

and to refinance some outstanding indebtedness. In February 2004, the

Hospital entered into a total-return swap arrangement with a financial

1 IFA is the statutory successor to the Indiana Health Facility Financing Authority, which was the State agency that issued the 1993 Bonds.

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 2 of 11 institution by which the Hospital purchased the 1993 Bonds from existing bond

holders and then sold the 1993 Bonds to the financial institution. According to

the Hospital, the swap transaction “was an investment vehicle that [it] entered

into in order to reduce its interest rate exposure with respect to the 1993

Bonds.” Appellant’s Appendix Vol. 2 at 140. The IFA was not a party to the

swap transaction.

[5] On or about February 14, 2013, the IFA received an Information Document

Request (IDR) from the Internal Revenue Service (the IRS) indicating that the

IRS was conducting an examination of the 1993 Bonds to determine

compliance with federal tax laws and requesting certain information and

documentation regarding the 1993 Bonds. IFA forwarded the request to the

Hospital, which, with the assistance of counsel, prepared a response to the

initial IDR. Over the course of the next three years, the Hospital and the IRS

exchanged correspondence and the Hospital provided the IRS with necessary

information and documentation. IFA did not provide any of the information

that was incorporated into the Hospital’s responses to the IRS’s IDRs. The

Hospital acknowledged the swap transaction in its audited financial statements,

which are publicly available, but did not disclose details or documents related to

such. The IRS concluded its examination in April 2016.

[6] On June 10, 2015, while the IRS examination was ongoing, Scott submitted an

APRA request to IFA for:

All correspondence and agreements received, created, sent or executed relating to an examination by the U.S. Internal

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 3 of 11 Revenue Service of the tax-exempt status of the $43,960,000 Indiana Health Facility Financing Authority, Hospital Revenue Bonds, Series 1993 (Union Hospital).

Id. at 26. IFA denied Scott’s request, explaining that the records requested were

exempt from public access under APRA. Scott filed a formal complaint with

the Indiana Public Access Counselor (the PAC) concerning IFA’s denial of his

public records request.

[7] On September 4, 2015, the PAC issued an advisory opinion concluding that

IFA did not violate APRA in refusing to allow Scott access to the requested

records. The PAC found that the records requested by Scott were exempt from

APRA because such records were required to be kept confidential by federal

law and because they contained confidential financial information. See Ind.

Code § 5-14-3-4(a)(3), (5).

[8] Nearly two years later, on August 4, 2017, Scott submitted “a new written

request for public records” to IFA, requesting copies of “records with respect to

the $43,960,000 Indiana Health Facility Financing Authority, Hospital

Revenue Bonds, Series 1993 (Union Hospital) . . . and any potential

reissuance of such Bonds.” Appellant’s Brief at 9; Appellant’s Appendix Vol. 2 at 29

(emphasis in original). Scott specifically identified:

• The Indenture of Trust and any supplements or addendums;

• The Loan Agreement(s)

• All tax certificates, tax agreements, and tax opinions; and

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 4 of 11 • All Forms 8038, 8038-T and 8038-R filed with the [IRS].

Appellant’s Appendix Vol. 2 at 29. With regard to the IRS’s examination of “the

[1993] Bonds (or any reissued Bonds),” Scott requested:

• All communications in any form (electronic or otherwise, including emails) sent to the [IRS] by or on behalf of [IFA];

• All communications in any form (electronic or otherwise, including emails) received by or on behalf of [IFA] from the [IRS], including any and all “Information Document Requests”;

• All communications (electronic or otherwise, including emails) sent or received by [IFA] to any other person with respect to such examination; and

• All agreements entered into with the [IRS].

Id. IFA provided four documents pertaining to issuance of the 1993 Bonds but

would not disclose records relating to the IRS examination of the 1993 Bonds,

specifically, the following:

(a) Information Document Requests (“IDRs”) issued by the IRS as part of its examination of the 1993 Bonds;

(b) Correspondence and attachment providing information responsive to the IDRs to the IRS as part of the IRS examination of the 1993 Bonds, including information regarding the total return swap arrangement entered by [the Hospital];

(c) Correspondence to and from the IRS regarding the resolution of the IRS examination of the 1993 Bonds; and

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 5 of 11 (d) IRS forms filed with the IRS.

Id. at 185. IFA explained that such documents were excepted from disclosure

under APRA, specifically, I.C. § 5-14-3-4(a)(3) and (a)(5). IFA found its

response “wholly consistent” with the PAC’s response to Scott’s 2015

complaint, in which Scott requested “substantially the same information” as he

was currently requesting. Id. at 33. Scott did not file a complaint or otherwise

seek another advisory opinion from the PAC.

[9] On October 19, 2017, Scott filed his complaint in the trial court alleging that

IFA improperly withheld public records arising out of the IRS examination of

the 1993 Bonds. On January 2, 2018, the Hospital intervened in the

proceeding. Scott filed a motion for summary judgment on March 8, 2018. A

week later, IFA and the Hospital filed a joint motion for summary judgment

along with supporting affidavits from Wayne Hutson, Executive Vice President

and Chief Financial Officer of the Hospital, and Cynthia Herron, Program and

Office Manager for IFA.

[10] The trial court held a hearing on the competing summary judgment motions on

June 25, 2018. On September 13, 2018, the trial court entered an order granting

IFA’s and the Hospital’s joint motion for summary judgment and denying

Scott’s motion for summary judgment. Scott now appeals. Additional

information will be provided as necessary.

Discussion & Decision

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 6 of 11 [11] Summary judgment is proper if the evidence shows that there is no issue of

material fact and the moving party is entitled to judgment as a matter of law.

Ind. Trial Rule 56(C); Lake Cent. Sch. Corp. v. Hawk Dev. Corp., 793 N.E.2d 1080,

1083 (Ind. Ct. App. 2003), trans. denied. Where, as here, the relevant facts are

not in dispute and the interpretation of a statute is at issue, such statutory

interpretation presents a pure question of law for which summary judgment

disposition is particularly appropriate. See Lake Cent. Sch. Corp., 793 N.E.2d at

1084.

[12] When a public agency denies access to public records based on an APRA

disclosure exemption, the party whose request has been denied may file an

action in the trial court for de novo review. I.C. § 5-14-3-9(e), (f). The public

agency bears the burden of proof to sustain its denial. Id. The public agency

meets its burden of proof by showing that the undisclosed records fall within an

exception listed under I.C. § 5-14-3-4 and by establishing the content of those

records with adequate specificity beyond merely relying on a conclusory

statement or affidavit. I.C. § 5-14-3-9(f), (g). If the undisclosed records fall

within a mandatory exception listed under I.C. § 5-14-3-4(a), as a matter of law

the records shall not be disclosed.

[13] Public policy underlying APRA is that “all persons are entitled to full and

complete information regarding the affairs of government and the official acts

of those who represent them as public officials and employees.” I.C. § 5-14-3-1.

To that end, our legislature declared that APRA shall be “liberally construed”

to implement this policy. Id. Notwithstanding, we have recognized that

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 7 of 11 “[l]iberal construction does not mean that expressed exceptions specified by the

legislature are to be contravened.” Robinson v. Indiana Univ., 659 N.E.2d 153,

156 (Ind. Ct. App. 1995) (quoting Heltzel v. Thomas, 516 N.E.2d 103, 106 (Ind.

Ct. App. 1987), trans. denied), trans. denied. Indeed, the public’s right of access

to public records is subject to well-recognized exceptions under APRA. One

exception is for “[c]onfidential financial information obtained, upon request,

from a person.” I.C. § 5-14-3-4(a)(5). 2

[14] Here, Scott seeks documents relating to an IRS examination of 1993 Bonds

that, ten years later, were part of a total-return swap transaction between the

Hospital and a separate financial institution. In accordance with APRA, IFA

provided Scott with the public records pertaining to issuance of the 1993 Bonds.

IFA, however, denied Scott’s request for the records and documents relating to

the Hospital’s subsequent swap transaction. IFA and the Hospital maintain

that such records contain confidential financial information of the Hospital that

came into the possession of IFA only as a result of the IRS’s requests during its

examination. We agree.

[15] First, as was noted above, the swap transaction was between the Hospital, a

private entity, and a financial institution, neither of which are subject to APRA.

IFA was not involved in this transaction. Second, in an affidavit submitted in

2 This exception “does not include information that is filed with or received by a public agency pursuant to state statute.” I.C. § 5-14-3-4(5). Here, IFA gained access to the requested documents through an IRS examination and the exchange of information related thereto, not pursuant to any state statute.

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 8 of 11 support of IFA’s and the Hospital’s motion for summary judgment, Hutson, the

Hospital’s Executive Vice President and CFO, stated under penalty of perjury

that the undisclosed documents Scott requested relate to the swap transaction

and contain confidential financial information of the Hospital. Hutson

described the records as containing the “specific details and/or documentation

regarding the Swap transaction” that would “provide both its competitors and

the marketplace an inside look at [the Hospital]’s financial strategy, as well [as]

the specific financial details of a significant financial transaction.” Appellant’s

Appendix Vol. 2 at 140. Hutson further asserted that “at all relevant times, [the

Hospital] maintained the confidentiality of the information contained within

the Documents at Issue” and that such documents were provided to IFA only

for purposes of responding to the IDRs. Id. The Hospital did not otherwise

consent to disclosure of the information contained therein. Finally, both

Hutson and Herron asserted that IFA did not provide any of the documents

included in the responses to the IDRs. Essentially, IFA served as a pass-

through entity with regard to the exchange of documents and information

between the IRS and the Hospital during the IRS’s examination.

[16] Based on the undisputed, designated evidence, we conclude that the documents

relating to the swap transaction contain confidential financial information

belonging to the Hospital. 3 The Hospital provided these documents to IFA in

3 Scott, relying on a Seventh Circuit decision from 1984, argues that the requested documents cannot be deemed confidential because IFA and the Hospital failed to establish that disclosure of such would impose substantial competitive harm. See Gen. Elec. Co. v. U.S. Nuclear Regulatory Comm’n, 750 F.2d 1394, 1398 (7th

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 9 of 11 response to the IRS’s request for information. As such, the documents are not

properly the subject of a records request under APRA. See I.C. § 5-14-3-4(a)(5).

[17] Scott also argues that there is no evidence that “all” of the requested documents

related to the swap transaction. Appellant’s Brief at 28 (emphasis in original). In

so arguing, he suggests that IFA and the Hospital were required to provide a

records log detailing the content of each of its responses to the IDRs. APRA,

however, does not require a records log that provides the detail Scott is seeking.

[18] An agency meets its burden through de novo judicial review “by establishing

the content of the record with adequate specificity and not by relying on a

conclusory statement or affidavit.” I.C. § 5-14-3-9(f). Scott specifically

requested documents “[w]ith respect to the examination of the [1993] Bonds (or

any reissued Bonds) by the [IRS].” Appellant’s Appendix at 29. In denying his

request, IFA identified categories of documents, including correspondence to

and from the IRS and attachments responsive to the IDRs concerning the swap

transaction. We conclude that IFA sufficiently established the content of the

records it was withholding from Scott.

Cir. 1984) (adopting a narrow interpretation of what constitutes confidential information as used in 5 U.S.C. § 552(a)(4) of the federal Freedom of Information Act so as to require a showing of “substantial competitive harm” to establish information as confidential). The U.S. Supreme Court, however, recently rejected the “substantial competitive harm” standard adopted for purposes of applying 5 U.S.C. §552(a)(4), finding it inconsistent with the statutory language. Food Mktg. Inst. v. Argus Leader Media, 139 S.Ct. 2356, 2365-66 (2019). In any event, Indiana has never adopted the “substantial competitive harm” requirement for establishing the confidentiality of information under APRA.

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 10 of 11 [19] Because Scott did not “substantially prevail[],” his request for reimbursement of

expenses is denied. See I.C. § 5-14-3-9(i)(1) (providing that “a court shall award

reasonable attorney’s fees, court costs, and other reasonable expenses of

litigation to the prevailing party if . . . the plaintiff substantially prevails”).

[20] Judgment affirmed.

Kirsch, J. and Vaidik, C.J., concur.

Court of Appeals of Indiana | Memorandum Decision 18A-MI-2446 | July 30, 2019 Page 11 of 11