### 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.NYSCEF DOC. NO. 30 INDEX NO. 150526/2023 RECEIVED NYSCEF: 04/10/2024

PRESENT: 

### SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY HON. DENISE M DOMINGUEZ PART Ju.Itice 35M

---------------------------------------------------------------------------------X INDEX NO. l50526/2023

IN THE MATTER OF THE APPLICATION OF REVEREND MARK BLUE, INDIVIDUALLY, AND AS PRESIIJENT OF TIIE BUFFALO HRANCII OF THE NATIONAL ASSOCIATJON FORTHE ADVANCEMENT OF COLORED PEOPLE (NAACP), Petitioner,

- V - NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES, ADRIENNE A. HARRIS, SUPERINTENDENT, Respondents MOTION SEQ. NO.
__ __;_00.:....:l=----~

DECISION 

### +ORDER ON MOTION

------------------------ -------------------------------------- --------------------X The following e-filed documents, listed by NYSCEF document number (Motion 00I) 9, 13, 18, l9, 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 InformationLaw("FOIL")requestis herebydenied andthisproceedingis dismissedand the crossmotion 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'sNovember 22, 2021 FOIL request. Respondents' cross-motion seeks ihe dismissal ofthe 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

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### to FOIL disclosure ofmaterials 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 notfor-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 ofthe specific informationrequested,the requestwas specifically notlimitedto 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. Followingthe submissionoftheFOILrequest, Intervenor-Respondents HighmarkWestern and Northeastern New York Inc., Highmark Inc., and Highmark Health (Highmark) submitted a letter ofnecessity to DFS, dated July 5, 2022, requesting exemption ofall information requested from Petitioner'sFOIL requestpursuantto Public Officers Law §87(2), otherthanthatinformation that was previously made public. Therein, 1 

### lighmark advised DFS that the requested materials
were proprietary innature and couldbe used ina mannerthat would cause substantial competitive injury to Ilighmark. 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 reliesupon 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 ofnecessity from Highmark and relied upon such statement in forming its conclusion. Specifically, DFS concluded that the biographical affidavits were exemptperthe personal privacy exemption as such records contained employment history, addresses, phone numbers, and otherpersonal and private infonnation. DFS also concluded that the requested records were exempt as trade secret/competitive injury as the public disclosure offinancial status andbusiness operations ofHighmarkwouldprovide any ofits competitorsandunfair advantage, as they couldrelyuponHighmark's strategicsandplans inorder 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 thatjudicial review pursuant to 

### CPLR §7803 is limited to whether therewas a rational basis for the administrative agency's detennination, whetherthedetermination
was arbitrary and capricious or whether there was an abuse ofdiscretion. (See Pellv. 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 ofa FOIL request, a court must apply a far different rule. It is to presumethat all records ofa public agency arc opento 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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### [* 3]NYSCEF DOC. NO. 30 INDEX NO. 150526/2023 RECEIVED NYSCEF: 04/10/2024


### exemption to disclosure" (New York Comm.for Occupational Safety & Ilea/th v. Bloomberg, 72 A.D.3d 153, 158 I.1st Dept 201

## OJ citations omitted). Here, Respondents and Intervenor-Respondent Highmark Western And NortheasternNew 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 ofpersonal privacy) and §87(2){d) (trade secrets). This Court agrees. Article 15 ofthe 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 ofthe people ofthis state...." In making such assessment, the superintendent must evaluate, in part, the financial condition ofthe acquiring person, the source 

# orfunds or assets for the acquisition, whether the acquisition may lessencompetition in any line ofcommercein insuranceor create amonopoly 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 thatHighmark 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 andprivateas suchaffidavitscontainedwithpersonal informationfor some oftheofficers

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and board members (as required by 11 YCRR §80-1.6 item 2). Additional exhibits submitted withthe application were also confidential asthey containeddetails deemed trade secret and which would cause competitive in jury if disclosed. Specifically, that the operational plans submitted detailed specific advantages Highmark held over its competitors in the competitive health insurance marketplace,which werenotknowto anyoneoutsideofHighmark, and wereonlyshared with DFS as required with the application per Insurance Law §1506(6). Insurance Law§l504(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 ofthe 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 ofthe 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 orthe public will be served by the publicationthereof. In any action or proceeding by the superintendent against the person examined or any other person within the same holding company system a report ofsuch examination published by the superintendent shall be admissible as evidence ofthe facts stated therein
. Insurance Law 

### §1504(c)(2) provides that

either the superintendent nor any person vvho received a report or filing made pursuant to this article and any information obtained in connection therewith, through examination or otherwise, while acting under the authority ofthe superintendent or with whom such report, filing, or information are shared pursuant to this chapter, shall be permitted orrequired 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 ofthe policy holders, shareholders orthe 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 FOILrequest, asking for all documents andrecords related to the affiliation application, and
as all submissions by the insurer arc protected from pub

### Iic disc!osure by Insurance Law §

### 1504, the denial ofPetitioner's FOIL request was appropriate. 

### As made clear 

### by the parties' respective submissions and as discussed when this matter
was conferencedwiththe Court, there is not substantial precedent concerning this issue. However, Insurance 

### Law 

### §1504 has been held to apply to insurance providers and 

### has been held to protect theconfidential filings submitted by such carrierspursuantto Article 15 ofthe 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 ofthe Insurance Law docs not control because there
was no "affiliation" but a "merger" is unavailing or persuasive as Petitioner does notrely on any caselaw or any legal authority. .Equally unavailing is Petitioner's argument that the requested materials are not "reports" so they arenot protectedunder Insurance Law §1504. Again, Petitioner does notrely upon any legal authority for this argument. furthcnnorc, the statue specifically states thatthe "contentofeach 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 ofthe 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 ofpersonal 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 ofPublic 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 mettheirburden in showing that Petitioner'sbroad FOIL request is exempt from disclosure (New York Comm.fr.,r OccupationalSafety 

### & 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 ofthis Order shall
serve a copy ofthis order with notice ofentry upon all parties and upon the Clerk ofthe Court.

4/10/2024

DATE CHECK ONE:
APPLICATION: CHECK IF APPROPRIATE: CASE OISPOSEO GRANTED 

# 0 OENIEO SETTLE OROER INCLUOES TRANSFER/REASSIGN 

# I I DOMINGUEZ, J.S.C.

# ~ NON-FINAL DISPOSI
__ GRANTEO IN PART**□** OTHER SUBMIT OROER FIDUCIARYAPPOINTMENT**□** REFERENCE
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