No. 86-429

IN THE SUPREME COURT OF THE STATE OF MONTANA

1987

JOSEPHM. BELTH, as an individual and as Editor of the Insurance Forum, Plaintiff/Petitioner and Respondent,-vsANDREA BENNETT,StateAuditor and Commissioner of Insuranceof the State ofMontana, 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,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant:
Robert Throssell argued,State Auditor's Office,Helena, Montana

ForRespondent:
JonathanMot1 argued,Helena,Montana

ForAmicus Curiae:

PaulVan Tricht,LegalAffairs,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: July2, 1987 Filed:

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ClerkMr. Justice L. C. Gulbrandson delivered the Opinion of the Court.

Andrea Bennett, the State Auditor and Commissioner of Insurance forthe StateofMontana, 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 issuesonappeal 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 governmentalagency canassert another's Section 9,Article I1privacy interest; (3) whetherpublic disclosureof 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. TheNAIC issues IRIS reports to itsmembers 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 regularbasis. Appellant and amicus NAIC argue that Montana will not be allowed toparticipate in the IRIS system ifappellanthas to divulge the IRIS reports. The record shows that the NAICpublishes 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 InsuranceForum. InMarch 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 allowaccess 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 forhis complaint. That sectionprovides: 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 individualprivacy clearly exceeds the merits of public disclosure.

In August 1985, the appellant filed her answer asserting, (1)that § 33-1-412(5), MCA,gaveher 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 commissionermay withhold from public inspection any examination orinvestigation 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)thatnopublic 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 ofpublic officials are amenable to inspection, regardless of legislation, special exceptions being made to accommodate the exercise of constitutionalpolice 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 aprivacy 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 unconstitutionalas applied. This appeal followed. The first issue iswhether 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 thatquestion. InMt. 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. [TIhe demands of individualprivacy of a corporation aswell as of a person might clearly exceed the merits of public disclosure, and thus come within the exceptionof the right toknowprovision.

Mt. States,Etc., 634 P.2d at 188. Therefore, the District Court incorrectly held that a corporation could not assert theprivacy exception to the "RighttoKnow." 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 interestsof its employees. The City had argued that if it disclosed personal information about employees without their consentor a courtorderdirecting it todo so, it could be sued for revealing the information. We agreed that "potential economic injury is sufficient to establish standing." Montana Human RightsDivision, 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 subjectof the IRIS information. There is apossibility that the insurance companies could sue the State for appellant's release of injurious information. Thenext issuewe address iswhether the DistrictCourt 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 againstunwarranted injury or [is] in thepublic interest.

### " We note that, [i]t is the duty of the courts to uphold the constitutionality of legislative enactments if suchcanbe accomplishedby 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 isnot." Department of State Lands

v. Pettibone (Mont. 1985), 702P.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 otherwords, appellant

can only invoke the statutory exceptionwhen, in thewords 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 constructionof the statute and it fulfills our duty to uphold the constitutionalityof 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 theconstitutional language, whether the privacy rights outweigh the need forpublic 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 courthad ruled that corporationscould have no such exception. As we ruled above, corporations can assert the privacy exception. Therefore, the court's ruling is in
error,aswewill 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 companies1privacy 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),164Mont. 479, 481, 525 P.2d 19, 20; quoting State ex rel. La FranceCopper 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 existsa constitutionally protected privacy interest. That test is "whether the person involved had a subjectiveor actual expectationofprivacy andwhether 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 ofprivacy in the IRIS reports. As notedpreviously, NAIC explanatory material states that IRIS reports are confidential and are furnished to the states for regulatory use only. We also find that those expectationsof privacy are reasonable. ThisCourthas 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 filedby 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 sectionsof this chapter, the following caveats emerge: 1. No state canrely on IRISas its only formof surveillance.
2. Important decisions--such as licensing--are not based on IRIS withoutfurther 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 ofunusual 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 notbe valid for future experience in different economicperiods. For this reason, the components of the ratios are reviewed annually and updated asnecessary. The nature of this information increases the insurance companies' expectationsofprivacy. Given theNAIC assurance of confidentialityand 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 statestinpart, 3. That the information contained in the IRIS reports constitute a preliminary evaluation of the financial condition of the insurancecompanybeing reported on

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4. That prior to taking any type of regulatory action against an insurance company a full and complete financial examination is necessary. That the IRISdocuments in and of themselves do not adequatelyprovide 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 reviewthe 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 financialcondition. That there existsa 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 jeopardizesathe 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' expectationsof 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 individualprivacy. 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 yearsand of other authorized insurersas 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 shallmake a reportof each examinationand 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 insurermust file an annual financial statement with the commissioner. Section 33-1-312, MCA,provides inpart: (1) The commissioner shall enter in permanent form records of his official transactions, examinations, investigations, and proceedings and keep such records inhis office. Such records and insurance filings inhis office shall be open to the public inspection except as otherwise provided in this code with respect toparticular recordsor filings. Finally, S 33-2-721, MCA, requires each product liability insurer to file an annual,detailedbusines report,including information on premiums collected, earned premiums, incurred losses, loss reserves, etc. Those reports are available to thepublic fora reasonable fee. Section 33-2-722,MCA. The IRIS reports differ from the above described State examinations in their preliminary, subjectivenature. It is this preliminary, subjective quality which particularly intrudes upon theprivacy 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 individualprivacy outweigh the merits of public disclosure. Thus, the appellant may properly deny respondent Belth access to the IRISreports. A further result is that,contrary to theDistrict Court order, § 33-1-412(5), MCA, is constitutionalas applied in this case todeny access to respondent. Reversed and remanded for entry of judgment in accordancewith thisopinion. 

# PC

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ustice 

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We Concur: ,--+


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JusticesMr. Justice William E. Hunt,Sr., dissenting:

Iagreewith thedissent ofJustice Sheehy. Judge Bennett should be affirmed and the citizen's right to know shouldbe upheld. The majority finds many devils lurking in the future thatwill take advantage of our foolishness if ourbalancing 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 frompotential customers presents farmore interesting possibilities for future litigation than the release of information furnishedby the industry. As Justice Sheehy says in his dissent, "It approaches inanity tohold that Montana insureds shallnot 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. / TheDistrict Court shouldbeMr. JusticeJohn C. Sheehy,dissenting:

I dissent. The majority opinion goes far beyond the right of JosephM. 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 inexcuseableand indefensible. The majority opinion defies Article 11, Section 9, Montana StateConstitution (1972)which states: Ri ht to know. No person shallbe deprived of the 

### L-- 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 Constitutionmeans anything, itmeans that this specific information should be available toMontana insureds and to any organization or entities that would funnel such informationtoMontana insureds. In discussing this issue, I take as given that a corporation as well as a natural person can assert the right toprivacy under the exception to the constitutionalright to know because we said so in Mountain States Telephone andTelegraph 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 undiscussedby themajority iswhy orhowMontanans 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 samebusiness. 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 surplusorpremium 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 informationwhich has been submitted.
The ratios discussed above are published and are 

## - -- available to theRespondent. The ratio results are 

## -- 

## -- actually compiled from annual statements, which statements 

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

### -- The results are notproduced 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 thepublic.
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 regulatorshave determined some companies "appear to require immediate regulatory attention." Such companies have been given an unwarranted right toprivacy by themajority. No typesof corporationsare soaffected with thepublic interest as are financial institutions, which include insurance companies. It is because of this public interest that such corporations are sohighly 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-FergusonAct. 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 theproperty and casualty industryasan aid to state regulators of companies engaged in such industry. Because insurance companies are affected with thepublic interest,andbecause theiractivities arebroadly 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 companiesmay 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 ofMontana 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 amanager (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 commissionerwho 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 examinednot less frequently than every threeyears. 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 businesswould be disrupted and the cost would be burdensome. To avoid this problem, the NAIC supervises examinations in an orderly manner in which thestates 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 theproperty and casualtybusiness. 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 isopen to thepublic. 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 frompublic information. It approaches inanity to hold thatMontana insureds shallnotbe allowed to knowwhich troubled companies are doing business inMontana or that they

are troubled companies. Such companies should have the least possible expectationofprivacy. 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 aninvestigation report obtained with tax monies, which report sheuses in the regulationof insurers. It should be clearthat 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, itwas held that assurances of confidentiality by the city to a disposal company that the data would remain private was not sufficient to convertwhatwas apublic record intoaprivate record. If we countenance such assertionof confidentiality, the right toknowprovision will soon becomeworthless. As to the second phase, District Judge Gordon Bennett concentrated on whether 33-1-412(5), MCA, was constitutional so as to empower the stateauditor towithhold the information. The District Judge found that S 33-1-412(5), was unconstitutional facially and as applied. His determination ought tobe sustainedby us. The opening paragraph of District Judge Bennett's discussion onright-to-know is worth repeating: An extraordinary theme ran through theproposal and consideration of three entirely novel sections of the 1972 Constitution. They were the "right of participation" Section (8), sometimes called the "openmeeting" section;the "right toknow" Section (9), and the "right to privacy" Section (10) all found in the "declaration of rights" Article 11. The theme was that except as itmay be limited by the right of the individual to personal privacy, there is to be inMontana 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 sectionsofArticle 11, Sections 8, 9,and 10 must be read together. Section 10 provides for a rightof individualprivacy (whichwe have determined appliesto 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 "asmay be provided by 

### -- law.

### " It should be clear because the insurers are so affectedwith apublic interest, because the affairs of their insureds are so dependent on insurers, and because property and casualty lossesmay affect third parties that there is a compelling state interest which overrides any right of individualprivacy 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 itmay be more importantto the insured tomake 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 finaldecision 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 thelegislature which in effect performs the balancing function between the right toknowand 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 legislatureto define "parametersand incidents of the rights guaranteed by Sections 9 and 10.l1 He thereforeheld that while government agencies may be authorized by appropriate legislation to perform initially the balancingactbetween the right toknow and the right to privacy "itis the exclusive functionof the state's courts to make final determinationas towhich right isdominant in any given case." With a proper regard therefore to what the constitutional convention intended inadopting 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 oughtnot touse the informationin any event. Third, we are told that if the Montana Insurance Department is required to disclose IRIS results, itwill not be able thereafter to participate in the IRIS systemwhich, it is contended, would have a devastating effect on theDepartment's ability to monitor the solvency of its domestic

as well as foreign companies. Montana has few if any domestic property and casualty insurers,andwe 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 foreigncompanies. 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 inMontana. Again, astute questioningby the state auditor of an applicant fora certificate of authority would quickly determine its IRIS standing. None of these contended reasons for withholding information contained in IRISby the state auditor overweigh the right of our citizenstoparticipate in thedebatebefore 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.