No. 86-429 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

JOSEPH M. BELTH, as an individual 

and as Editor of the Insurance Forum, 

Plaintiff/Petitioner and Respondent, 

-vsANDREA BENNETT, State Auditor and 

Commissioner of Insurance of the 

State of Montana, 

Defendant/Respondent and Appellant. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis & Clark, 

The Honorable Gordon Bennett, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Robert Throssell argued, State Auditor's Office, Helena, 

Montana 

For Respondent: 

Jonathan Mot1 argued, Helena, Montana 

For Amicus Curiae: 

Paul Van Tricht, Legal Affairs, Dept. of Revenue, 

Helena, Montana 

Charles E. Erdmann, National Association of Insurance 

Commissioners, Helena, Montana and Sandra L. Gilfillan, 

Kansas City, Missouri 

Submitted : February 19, 1987 

Decided: July 2, 1987 

Filed: JUL 2- 

Clerk 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Andrea Bennett, the State Auditor and Commissioner of 

Insurance for the State of Montana, appeals a Lewis and Clark 

County District Court order directing her to provide 

respondent Joseph Belth with access to data and analyses in 

appellant's possession which relate to insurance companies. 

The issues on appeal are: 

(1) whether a corporation, as well as a natural 

person, can assert the right to privacy exception in Section 

9, Article I1 of the Montana Constitution (the "Right to 

Know" ) ; 

(2) whether a governmental agency can assert another's 

Section 9, Article I1 privacy interest; 

(3) whether public disclosure of the information would 

deny due process to insurance companies; 

(4) whether the District Court erred in declaring 

S 33-1-412(5), MCA, unconstitutional. Reversed and remanded. 

Appellant is a member of the National Association of 

Insurance Commissioners (NAIC). The NAIC developed the 

Insurance Regulatory Information System (IRIS) to assist in 

the regulation of insurance companies throughout the nation. 

The NAIC issues IRIS reports to its members to assist them in 

reviewing the financial affairs of insurance companies. The 

reports cover two "phases"; (1) a statistical phase of 

calculations derived from data supplied by the insurance 

companies' annual financial statements, and (2) an analytical 

phase which analyzes the information in the statistical 

phase. Appellant receives these reports on a regular basis. 

Appellant and amicus NAIC argue that Montana will not be 

allowed to participate in the IRIS system if appellant has to 

divulge the IRIS reports. The record shows that the NAIC 
publishes explanatory material stating that IRIS reports 

produced under the two phases are confidential and are 

furnished to the state insurance departments for regulatory 

use only. 

Respondent Belth is an Indiana resident and the editor 

of a monthly publication entitled Insurance Forum. In March 

1985, he sought access to the IRIS reports in appellant's 

possession. Appellant initially indicated that respondent 

would be allowed access to the information. Subsequently, 

appellant refused to allow access to respondent. 

In August 1985, respondent filed a complaint in the 

Lewis and Clark County District Court seeking a declaratory 

judgment that would direct appellant to provide him with 

access to the IRIS information. Respondent relied 

principally upon Article 11, Section 9 of the Montana 

Constitution (vulgarly called the "Right to Know") as the 

basis for his complaint. That section provides: 

No person shall be deprived of the right 

to examine documents or to observe the 

deliberations of all public bodies or 

agencies of state government and its 

subdivisions, except in cases in which 

the demand of individual privacy clearly 

exceeds the merits of public disclosure. 

In August 1985, the appellant filed her answer 

asserting, (1) that § 33-1-412(5), MCA, gave her the right to 

withhold the information; (2) that release of the 

information could cause unwarranted injury to the insurance 

companies which were the subjects of the IRIS reports; (3) 

that the IRIS reports contain matters of individual privacy 

and are protected from access; and (4) that the IRIS reports 

contain investigative information which is not a matter of 

public record. Section 33-1-412(5), MCA, provides: 

The commissioner may withhold from public 

inspection any examination or 
investigation report for so long as he 

deems such withholding to be necessary 

for the protection of the person examined 

against unwarranted injury or to be in 

the public interest. 

In February 1986, the respondent Belth moved for 

summary judgment. In August 1986, the District Court entered 

judgment for respondent and ordered appellant to provide 

respondent with access to all IRIS documents in the 

possession of appellant. The court issued a memorandum 

explaining its decision and finding that, (1) a corporation 

(such as the insurance companies analyzed in the IRIS 

reports) could not assert the right to privacy exception to 

Article 11, Section 9; (2) that no public official, by reason 

of his or her office or employment, could claim a right of 

privacy on behalf of an individual; (3) that " [t] here is a 

constitutional presumption that all documents of every kind 

in the hands of public officials are amenable to inspection, 

regardless of legislation, special exceptions being made to 

accommodate the exercise of constitutional police power and 

other competing constitutional interests, such as due 

process;" (4) $ 33-1-412 (5), MCA, (the statute which 

appellant relied upon in denying access to respondent) is 

clearly in conflict with the constitutional "Right to Know" 

(Section 9 of Article 11) because it establishes an area of 

secrecy without any showing that there is a privacy interest 

involved, much less a privacy interest clearly exceeding the 

merits of public disclosure; (5) $ 33-1-412(5), MCA, is 

therefore unconstitutional on its face and unquestionably 

unconstitutional as applied. This appeal followed. 

The first issue is whether a corporation, as well as a 

natural person, can assert the right to privacy exception to 

the constitutional "Right to Know." This Court has already 

ruled on that question. In Mt. States, Etc. v. Dept. of Pub. 
Serv. Reg. (Mont. 1981), 634 P.2d 181, 38 St.Rep. 1479, we 

held that a corporation could assert the right to privacy 

exception. 

[TI he demands of individual privacy of a 

corporation as well as of a person might 

clearly exceed the merits of public 

disclosure, and thus come within the 

exception of the right to know provision. 

Mt. States, Etc., 634 P.2d at 188. Therefore, the District 

Court incorrectly held that a corporation could not assert 

the privacy exception to the "Right to Know." 

The next issue is whether a governmental agency can 

assert the privacy interest of another. In Montana Human 

Rights Div. v. City of Billings (Mont. 1982), 649 P.2d 1283, 

30 St.Rep. 1504, we allowed the City of Billings to assert 

the privacy interests of its employees. The City had argued 

that if it disclosed personal information about employees 

without their consent or a court order directing it to do so, 

it could be sued for revealing the information. We agreed 

that "potential economic injury is sufficient to establish 

standing." Montana Human Rights Division, 649 P.2d at 1288. 

We hold that that same rule allows the appellant to assert 

the privacy rights of the insurance companies which are the 

subject of the IRIS information. There is a possibility that 

the insurance companies could sue the State for appellant's 

release of injurious information. 

The next issue we address is whether the District Court 

erred in declaring $ 33-1-412(5), MCA, unconstitutional on 

its face and as applied in this case. We disagree that the 

statute is unconstitutional on its face. Section 

33-1-412 (5), MCA, allows appellant to withhold certain 

reports from public inspection where such withholding is 

"necessary for the protection of the person examined against 
unwarranted injury or [is] in the public interest. " We note 

that, 

[i]t is the duty of the courts to uphold 

the constitutionality of legislative 

enactments if such can be accomplished by 

reasonable construction. 

North Central Services, Inc. v. Hafdahl (Mont. 1981), 625 

P.2d 56, 58, 38 St.Rep. 372, 374. Moreover, "[tlhe general 

rule is that whenever there are differing possible 

interpretations of statute, a constitutional interpretation 

is favored over one that is not." Department of State Lands 

v. Pettibone (Mont. 1985), 702 P.2d 948, 956, 42 St.Rep. 869, 

878. 

To effect a constitutional interpretation, we hold that 

the S 33-1-412(5), MCA, exception to public inspection is 

identical to, and coextensive with, the right to privacy 

exception to the "Right to Know." In other words, appellant 

can only invoke the statutory exception when, in the words of 

Article 11, Section 9, "the demand of individual privacy 

clearly exceeds the merits of public disclosure." We find 

that the statutory language is simply an alternative 

expression of the constitutional privacy exception. We 

believe that this is a reasonable construction of the statute 

and it fulfills our duty to uphold the constitutionality of 

legislative enactments. The District Court stated that 

S 33-1-412 (5), MCA, was unconstitutional "as establishing an 

area of secrecy without any showing, legislatively or 

otherwise, that there is a privacy interest involved at all, 

much less a privacy interest that clearly exceeds the merits 

of public disclosure." We disagree. The statute does not 

establish an area of secrecy. The statute does authorize 

appellant to make the initial decision, in line with the 
constitutional language, whether the privacy rights outweigh 

the need for public disclosure. 

We also disagree with the lower court's ruling that the 

statute was unconstitutional as applied in this case. The 

court gave no reasoning behind this assertion nor did the 

court perform the balancing test between the merits of 

privacy and disclosure. Apparently, the court found the 

statute unconstitutional as applied because the application 

allowed corporations a privacy exception to the "Right to 

Know" and the court had ruled that corporations could have no 

such exception. As we ruled above, corporations can assert 

the privacy exception. Therefore, the court's ruling is in 

error, as we will develop further in this opinion. 

Given the state of the record in this case, we find 

that this Court is in a proper position to balance the 

demands of the insurance companies1 privacy rights against 

the merits of public disclosure under the "Right to Know" 

provision. We believe that this is an instance when this 

Court "should exercise its undoubted authority to take the 

initiative in disposing of litigation as expeditiously as 

possible . . . " Sun River Cattle Co. v. Miner's Bank of 

Montana (1974), 164 Mont. 479, 481, 525 P.2d 19, 20; quoting 

State ex rel. La France Copper Co. v. District Court (1909), 

40 Mont. 206, 211, 105 P. 721, 723. As a preliminary step, 

we apply the two-part test this Court has established for 

determining whether there exists a constitutionally protected 

privacy interest. That test is "whether the person involved 

had a subjective or actual expectation of privacy and whether 

society is willing to recognize that expectation as 

reasonable." Missoulian v. Board of Regents of Higher Educ. 

(Mont. 1984), 675 P.2d 962, 967, 41 St.Rep. 110, 116. We 

find that the insurance companies did have a subjective or 

actual expectation of privacy in the IRIS reports. As noted 
previously, NAIC explanatory material states that IRIS 

reports are confidential and are furnished to the states for 

regulatory use only. We also find that those expectations of 

privacy are reasonable. This Court has agreed that, 

[tlime, place and status are factors in 

the reasonableness determination. But 

the determination should include 

consideration of - all relevant 

circumstances, including the nature of 

the information sought. (Emphasis in 

original.) 

Missoulian, 675 P.2d at 968. Here, the NAIC warns of the 

possibility of inaccuracy in the IRIS reports. In this 

regard, NAIC explanatory material provides the following 

caveats: 

Two limitations of IRIS are the 

nonparticipation of some companies, and 

the keying of the analytical phase to a 

mechanical process that has some 

uncontrollable elements. The mechanical 

process is dependent on the accuracy and 

standardization of the annual statements 

filed by the insurers. The ratios cannot 

identify a misstatement of financial 

condition or, in certain situations, a 

statement not prepared in the proper 

format. Also, there exists the 

possibility of data processing errors. 

IRIS has been reasonably effective 

in distinguishing between troubled and 

sound companies. As previously stated, 

however, the statistical ratios are not 

in themselves determinative. They are 

subject to individual company 

circumstances. From previous sections of 

this chapter, the following caveats 

emerge : 

1. No state can rely on IRIS as its only 

form of surveillance. 

2. Important decisions--such as 

licensing--are not based on IRIS without 
further analysis or examination of the 

company concerned. 

3. Valid interpretation of ratio data 

depends to a considerable extent on the 

judgement of financial examiners. A 

company may be outside the usual range 

because of unusual accounting methods, or 

matters that have been corrected, or 

other circumstances. 

5. The criteria for determining usual 

range values, and the usefulness of such 

ratios, . . . may not be valid for future 

experience in different economic periods. 

For this reason, the components of the 

ratios are reviewed annually and updated 

as necessary. 

The nature of this information increases the insurance 

companies' expectations of privacy. Given the NAIC assurance 

of confidentiality and the admitted possibility of inaccurate 

information, we hold that the insurance companies' 

expectations of privacy are reasonable. Therefore, there is 

a constitutionally protected privacy interest in the IRIS 

reports. 

Finally, we reach the dispositive issue, the balancing 

test between privacy and disclosure. The demands of 

individual privacy are established by the affidavit of James 

Borchardt, the chief examiner of the State Insurance 

Department. His affidavit statestin part, 

3. That the information contained in the 

IRIS reports constitute a preliminary 

evaluation of the financial condition of 

the insurance company being reported on . 

4. That prior to taking any type of 

regulatory action against an insurance 

company a full and complete financial 

examination is necessary. That the IRIS 
documents in and of themselves do not 

adequately provide an accurate picture of 

the company's financial condition. That 

to afford a company an opportunity to 

fully explain its financial condition it 

is necessary for a qualified examiner or 

examiners to review the books and records 

of the company in total. 

5. That the IRIS tests while initially 

pointing out potential problem companies 

are not dispositive of the issue of 

financial condition. That there exists a 

real possibility that a company 

identified by the IRIS tests as being 

outside the statistical limits is 

financially sound. To release the -- IRIS 

information withour an adeauate 

examination potentially jeopardizesa the 

company's business reputation. (Emphasis 

added. ) 

We find that the privacy interest at stake is a substantial 

one. Parenthetically, we note that Borchardt's affidavit 

supports our conclusion that the insurance companies' 

expectations of privacy are reasonable. 

Respondent argues that there is a substantial benefit 

in disclosing the IRIS reports. Respondent's affidavit 

indicates the reports are useful in identifying companies 

experiencing financial difficulties or with imminent 

problems. We agree that there would be some public benefit 

to disclosure. We do not find that that benefit would 

outweigh the demands of individual privacy. The benefits of 

disclosure are diminished by the availability of similar 

final, relatively non-subjective examinations made by the 

State. Montana's regulatory scheme for insurance companies 

includes the following provisions. Section 33-1-401, MCA, 

provides that the insurance commissioner "shall examine the 

affairs, transactions, accounts, records, and assets of each 

authorized" domestic insurer at least once every three years 
and of other authorized insurers as he deems advisable. The 

commissioner may accept another state's examination in lieu 

of making her own. Section 33-1-412, MCA, provides that the 

commissioner shall make a report of each examination and that 

such reports "shall comprise only facts appearing from the 

books, papers, records, or documents" or ascertained from 

sworn testimony. That section also states (1) that the 

entity examined shall receive a copy of the report, (2) for 

the possibility of a hearing on the report, and (3) for 

modifying the report as the commissioner deems proper. 

Section 33-1-412(5), MCA, also provides that the commissioner 

can withhold such reports, as we held above, in accordance 

with the constitutional "Right to Know" provision. Under S 

33-2-701, MCA, every authorized insurer must file an annual 

financial statement with the commissioner. Section 33-1-312, 

MCA, provides in part: 

(1) The commissioner shall enter in 

permanent form records of his official 

transactions, examinations, 

investigations, and proceedings and keep 

such records in his office. Such records 

and insurance filings in his office shall 

be open to the public inspection except 

as otherwise provided in this code with 

respect to particular records or filings. 

Finally, S 33-2-721, MCA, requires each product liability 

insurer to file an annual, detailed busines report, including 

information on premiums collected, earned premiums, incurred 

losses, loss reserves, etc. Those reports are available to 

the public for a reasonable fee. Section 33-2-722, MCA. The 

IRIS reports differ from the above described State 

examinations in their preliminary, subjective nature. It is 

this preliminary, subjective quality which particularly 

intrudes upon the privacy interest at stake. 
Given the availability of other comparable information 

and the preliminary, subjective nature of the IRIS reports, 

we hold that the demands of individual privacy outweigh the 

merits of public disclosure. Thus, the appellant may 

properly deny respondent Belth access to the IRIS reports. A 

further result is that, contrary to the District Court order, 

§ 33-1-412(5), MCA, is constitutional as applied in this case 

to deny access to respondent. 

Reversed and remanded for entry of judgment in 

accordance with this opinion. 

PC 6 ustice \ 

We Concur: ,--+ 

/ Chief Justice /Y 

Justices 
Mr. Justice William E. Hunt, Sr., dissenting: 

I agree with the dissent of Justice Sheehy. 

Judge Bennett should be affirmed and the citizen's right to 

know should be upheld. 

The majority finds many devils lurking in the future 

that will take advantage of our foolishness if our balancing 

act comes down on the side of the insurance buyer and our 

right to know. For example the majority is concerned that 

the state might be sued if the commissioner releases 

injurious information about an insurance company. There is 

another side to that coin. As long as we are going to 

speculate, then in my view, to allow a company flying 

distress signals observable only to the commissioner but 

hidden from potential customers presents far more interesting 

possibilities for future litigation than the release of 

information furnished by the industry. 

As Justice Sheehy says in his dissent, "It approaches 

inanity to hold that Montana insureds shall not be allowed to 

know which troubled companies are doing business in Montana 

or that they are troubled companies." 

A company in trouble or showing signs of trouble would 

certainly want privacy, but the realistic expectation is 

something else. In balancing the right to privacy of a 

relatively sophisticated insurance company doing business in 

Montana with the rights of generally less informed 

consumer-citizens who seek to purchase insurance, I would 

hold that the expectation of the citizen to know about the 

company clearly outweighs the need of a state agency to 

warehouse information in secrecy and deny citizens the right 

to be informed. / 

The District Court should be 
Mr. Justice John C. Sheehy, dissenting: 

I dissent. The majority opinion goes far beyond the 

right of Joseph M. Belth from Indiana to gain access to IRIS 

reports. The majority in effect have told Montana citizens 

that they have no right to examine certain information in 

IRIS reports on hand in the office of the State Auditor and 

Insurance Commissioner about insurance companies with which 

Montanans do business. For that reason alone the majority 

opinion is inexcuseable and indefensible. 

The majority opinion defies Article 11, Section 9, 

Montana State Constitution (1972) which states: 

L-- Ri ht to know. No person shall be deprived of the 

right to examine documents or to observe the 

deliberations of all public bodies or agencies of 

state government and its subdivisions, except in 

cases in which the demand of individual privacy 

clearly exceeds the merits of public disclosure. 

The question which we should be deciding in this case, 

and which is decided adversely by the foregoing majority 

opinion, is whether Montanans have a right to know that an 

insurance company doing business in this state has been 

identified as a "troubled company" by IRIS, and that such 

"troubled company" is being licensed or continues to be 

licensed by the state auditor. If the "right to know" 

provision of the state Constitution means anything, it means 

that this specific information should be available to Montana 

insureds and to any organization or entities that would 

funnel such information to Montana insureds. 

In discussing this issue, I take as given that a 

corporation as well as a natural person can assert the right 

to privacy under the exception to the constitutional right to 

know because we said so in Mountain States Telephone and 
Telegraph Co. v. Department of Public Service ~egulation 

(Mont. 1981), 634 P.2d 181, 38 St.Rep. 1479. I also accept 

as given what the District Court found, that S 33-1-412(5), 

MCA, if otherwise valid, applies as well to investigation 

reports as to examination reports which are specifically 

covered under that section. 

Unexplained and undiscussed by the majority is how 

public domain information, open to anyone, becomes private 

when it is run through a computer. Also unexplained and 

undiscussed by the majority is why or how Montanans should be 

precluded from information which would tell them how 

insurance companies licensed in this state stack up when 

compared with other insurance companies in the same business. 

We are informed how the IRIS system works by the brief 

of amicus NAIC [National Association of Insurance 

Commissioners]. Its brief states: 

Once a year the NAIC disseminates statistical 

reports to each state insurance department. The 

reports set forth a usual range of ratio results 

based on previous studies. IRIS ratios are run on 

certain items taken from the annual statements such 

as surplus or premium and are compared to the usual 

range. -- If the results - of - the testing produce 

values outside -- of the normal range, this indicates 

--- a need for further examination. T~~NAIC then 

prepares a list which highlights those companies 

reflecting values outside the normal range. At 

this point, insurance regulators take this 

information and combine it with their own internal 

methods of analyzing solvency. Internally, a 

department's examiner will conduct a detailed 

analysis of all of the information which has been 

submitted. 

- The ratios discussed above are published -- and are 

available -- to the Respondent. The ratio results are -- 

actually compiled from annual statements, which 

statements -- are also available -- to the Respondent. 

The results are not produced from any secret source 

of material which state open records acts are 

designed to reveal. The ratio results, however, 
are confidential work product of the NAIC and are 

shared with its member regulators solely on the 

basis that the results are not to be divulged to 

the public. 

The analytical phase of the IRIS employs a team of 

examiners and financial analysts to review the 

ratio results. Companies selected for review are 

those which were designated with four or more 

ratios outside of the normal range, in addition to 

the companies targeted as requiring attention in 

the ~revious vear. The overall 

The majority opinion has erected a wall between 

Montanans and the information that regulators have determined 

some companies "appear to require immediate regulatory 

attention." Such companies have been given an unwarranted 

right to privacy by the majority. 

No types of corporations are so affected with the public 

interest as are financial institutions, which include 

insurance companies. It is because of this public interest 

that such corporations are so highly regulated by both state 

and federal authorities. Insurance companies, however, are 

not subject to federal regulation. Even though insurance 

companies are part of interstate commerce, United States v. 

South-Eastern Underwriters Association (1944) , 322 U. S. 533, 

64 S.Ct. 1162, 88 L.Ed. 1440, the Congress delegated to the 

states the duty of regulating insurance companies under the 

McCarran-Ferguson Act. 15 U.S.C. 5s 1011 through 1015. The 

principal regulators in each state have formed the National 

Association of Insurance Commissioners, with two ends in 

mind, one, to provide effective regulation of insurance 

companies, and at the same time to make the regulation as 

little onerous as possible. We are told that IRIS was 

established in 1971 for the property and casualty industry as 
an aid to state regulators of companies engaged in such 

industry. 

Because insurance companies are affected with the public 

interest, and because their activities are broadly regulated, 

the expectation of privacy of an insurance company does not 

begin to rise to the level of a mining company or retail 

store chain. 

From the viewpoint of regulation, three kinds of 

insurance companies may be authorized to do business in this 

state: (1) domestic insurers, that is those domiciled or 

having their home office in this state; (2) foreign 

insurers, that is companies domiciled or having their home 

office outside of Montana but in one of the United States or 

its territories; and (3) alien insurers, that is insurance 

companies domiciled in a foreign country and represented in 

the United States by a manager (or in the case of Canada, an 

officer of the Canadian corporation). See SS 33-2-111 and 

33-2-215, MCA. 

An insurance company, whether domestic, foreign, or 

alien, desiring to do insurance business in this state must 

obtain a certificate of authority from the commissioner who 

in this state is the state auditor. Section 33-2-101, MCA. 

Each authorized insurer may be examined as to its affairs, 

transactions, accounts, records and assets as often as the 

state auditor deems advisable but domestic insurers must be 

examined not less frequently than every three years. Section 

33-1-401, MCA. All the other states have like provisions 

requiring examinations. Obviously if the separate examiners 

from the 50 states descended willy-nilly on insurance 

companies authorized to transact business in the respective 

states, the company business would be disrupted and the cost 

would be burdensome. To avoid this problem, the NAIC 

supervises examinations in an orderly manner in which the 
states participate on a regional basis and the examination 

results are made available to all the states in which the 

insurer is authorized. The examinations, as far as Montana 

is concerned, are at the expense of the insurer. Section 

33-1-413, MCA. 

The IRIS system conducted by the NAIC applies, as we 

have said, to the property and casualty business. The ratios 

which are used in IRIS are published, and are open to the 

public. 

Each authorized insurer is required to file with the 

state auditor annually a statement of its financial 

condition, transactions and affairs as of the December 31 

preceding. Section 33-2-701, MCA. Those statutory 

provisions which make the investigation and examination 

reports confidential do not apply to annual statements. 

Section 33-1-412 (5), MCA. The material contained in the 

annual statement is open to the public. 

Thus the basic information used by IRIS is public 

information. IRIS utilizes published ratios and applies 

those ratios to filed annual statements, to achieve results 

which IRIS now considers confidential. It is nonsense to 

hold that there is an expectation of privacy in the results 

so derived from public information. It approaches inanity to 

hold that Montana insureds shall not be allowed to know which 

troubled companies are doing business in Montana or that they 

are troubled companies. Such companies should have the least 

possible expectation of privacy. 

The problem presented in this case has two phases which 

should be closely examined, 1) , whether NAIC, by itself, can 

impose confidentiality so as to overrule our constitutional 

right to know and 2), whether the state auditor, under S 

33-1-412(5), MCA, may- withhold from public inspection an 
investigation report obtained with tax monies, which report 

she uses in the regulation of insurers. 

It should be clear that our constitutional provision for 

right-to-know does not depend on a classification of 

confidentiality by the NAIC. In San Gabriel Tribune v. 

Superior Court (Cal. App. 1983), 192 ~al. Rptr. 415, it was 

held that assurances of confidentiality by the city to a 

disposal company that the data would remain private was not 

sufficient to convert what was a public record into a private 

record. If we countenance such assertion of confidentiality, 

the right to know provision will soon become worthless. 

As to the second phase, District Judge Gordon Bennett 

concentrated on whether 33-1-412(5), MCA, was 

constitutional so as to empower the state auditor to withhold 

the information. The District Judge found that S 

33-1-412(5), was unconstitutional facially and as applied. 

His determination ought to be sustained by us. 

The opening paragraph of District Judge Bennett's 

discussion on right-to-know is worth repeating: 

An extraordinary theme ran through the proposal and 

consideration of three entirely novel sections of 

the 1972 Constitution. They were the "right of 

participation" Section (8), sometimes called the 

"open meeting" section; the "right to know" Section 

(9), and the "right to privacy" Section (10) all 

found in the "declaration of rights" Article 11. 

The theme was that except as it may be limited by 

the right of the individual to personal privacy, 

there is to be in Montana a broad-based, pervasive 

and absolute right of citizens to know what is 

going on in their government and a right to 

participate in government untrammeled by the 

government itself. 

As District Judge Bennett indicated, in determining 

right to know, the three sections of Article 11, Sections 8, 

9, and 10 must be read together. Section 10 provides for a 

right of individual privacy (which we have determined applies 
to corporations) which shall not be infringed without the 

showing of a compelling state interest. Section 9 gives all 

persons a right to examine documents and to observe the 

deliberations of all public bodies or agencies of state 

government except where the demands of individual privacy 

clearly exceed the merits of public disclosure. Section 8 

requires governmental agencies to afford a reasonable 

opportunity for citizens' participation in the operation of 

agencies prior -- to the final decision "as may be provided by 

law. " It should be clear because the insurers are so 

affected with a public interest, because the affairs of their 

insureds are so dependent on insurers, and because property 

and casualty losses may affect third parties that there is a 

compelling state interest which overrides any right of 

individual privacy of an insurer to open up information that 

an insurance company doing business in this state is 

"troubled." The state auditor and the NAIC contend that 

divulging such information may result in "a run on the 

company" but it may be more important to the insured to make 

that run before the company is found insolvent or its 

certificate of authority is jerked. Section 8 obviously 

intends that governmental agencies open up such information 

prior to the final decision of the regulators. 

In the light of the three sections of Article 11, 

District Judge Bennett determined that B 33-1-412(5) was 

facially unconstitutional and invalid as applied. That 

particular statute was adopted in 1959, before the adoption 

of the state constitutional provisions in the convention of 

1972. This is the first case in which the provisions of S 

33-1-412(5) have been examined in the light of those 

constitutional provisions. District Judge Bennett made an 

extensive review of the proceedings of the constitutional 

convention, and from it determined that an act of the 
legislature which in effect performs the balancing function 

between the right to know and the right of individual privacy 

was not within the grant of the convention. He found it to 

be the prerogative of the courts, and not the legislature to 

define "parameters and incidents of the rights guaranteed by 

Sections 9 and 10. l1 He therefore held that while government 

agencies may be authorized by appropriate legislation to 

perform initially the balancing act between the right to know 

and the right to privacy "it is the exclusive function of the 

state's courts to make final determination as to which right 

is dominant in any given case." 

With a proper regard therefore to what the 

constitutional convention intended in adopting Sections 8, 9, 

and 10 of Article 11, we should examine the reasons 

postulated by the NAIC and the state auditor for 

confidentiality in this case. What are those reasons? 

First it is contended that insolvency of the insurer 

could result in a "run on the company" instigated by 

misinterpretation of IRIS data by those not trained to 

interpret the test results. That claim is pretty 

far-fetched. If insureds cancel their property and casualty 

policies, their premium refunds would be calculated on the 

short rate basis which would be adequately covered by the 

companies unearned premium reserves. Section 33-2-512, MCA. 

Secondly we are told that those responsible for IRIS 

data collection fear they may be potentially liable for 

errors in reporting. If the IRIS data is that unreliable, 

perhaps the state auditor ought not to use the information in 

any event. 

Third, we are told that if the Montana Insurance 

Department is required to disclose IRIS results, it will not 

be able thereafter to participate in the IRIS system which, 

it is contended, would have a devastating effect on the 
Department's ability to monitor the solvency of its domestic 

as well as foreign companies. Montana has few if any 

domestic property and casualty insurers, and we doubt if the 

state auditor would be long in finding out, if it should 

occur, that a domestic insurer was in fact a "troubled 

company" under IRIS determinations. Other states would be 

monitoring foreign companies. 

Finally, we are told that IRIS information is important 

to the state auditor in determining whether to authorize a 

foreign insurance company to do business in Montana. Again, 

astute questioning by the state auditor of an applicant for a 

certificate of authority would quickly determine its IRIS 

standing. 

None of these contended reasons for withholding 

information contained in IRIS by the state auditor overweigh 

the right of our citizens to participate in the debate before 

their governmental bodies before the final decision, and to 

have access to information which is in the hands of public 

officials. Therefore I would sustain the District Court.