Court Opinion

ID: 9960250
Source: CourtListenerOpinion
Date Created: 2024-04-15 20:07:36.614476+00
Date Added: 2024-06-11T08:19:19.263707
License: Public Domain

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

                                    SUPREME COURT OF THE STATE OF NEW YORK
                                              NEW YORK COUNTY
            PRESENT:             HON. DENISE M DOMINGUEZ                                             PART                                  35M
                                                                                          Ju.Itice
            ---------------------------------------------------------------------------------X       INDEX NO.              l 50526/2023
             IN THE MATTER OF THE APPLICATION OF REVEREND
             MARK BLUE, INDIVIDUALLY, AND AS PRESIIJENT OF                                           MOTION SEQ. NO. _ ___;_00.:....:l=----~
             TIIE BUFFALO HRANCII OF THE NATIONAL
             ASSOCIATJON FOR THE ADVANCEMENT OF COLORED
             PEOPLE (NAACP),

                                                       Petitioner,
                                                                                                        DECISION + ORDER ON
                                                  - V -                                                       MOTION
             NEW YORK STATE DEPARTMENT OF FINANCIAL
             SERVICES, ADRIENNE A. HARRIS, SUPERINTENDENT,

                                                       Respondents

            ------------------------ ---- ---------------------------------- --------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 00 I) 9, 13, 18, l 9, 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

           Information Law ("FOIL") request is hereby denied and this proceeding is dismissed and the cross-

           motion 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's November 22, 2021 FOIL request.

                      Respondents' cross-motion seeks ihe dismissal of the 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
             150526/2023 IIM/0 OF THE APPLICATION OF REVEREND MARK BLUE, ET AL. vs. NEW YORK                                 Page 1 of 7
             STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
             Motion No. 001

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

           to FOIL disclosure of materials 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 not-

           for-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 of the

           specific information requested, the request was specifically not limited to 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.

                   Following the submission of the FOIL request, Intervenor-Respondents Highmark Western

           and Northeastern New York Inc., Highmark Inc., and Highmark Health (Highmark) submitted a

            letter of necessity to DFS, dated July 5, 2022, requesting exemption of all information requested

           from Petitioner's FOIL request pursuant to Public Officers Law §87(2), other than that information

           that was previously made public. Therein, 1lighmark advised DFS that the requested materials

            were proprietary in nature and could be used in a manner that would cause substantial competitive

           injury to I lighmark.

                   DfS then issued a denial of Petitioner's fOIL request, by letter dated .July 11, 2022.

             150526/2023 IIM/0 OF THE APPLICATION OF REVEREND MARK BLUE, ET AL. vs. NEW YORK       Page 2 of 7
             STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
             Motion No, 001

                                                           2 of 7
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  NYSCEF DOC. NO. 30                                                                           RECEIVED NYSCEF: 04/10/2024

           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 relies upon 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 of necessity from Highmark and

            relied upon such statement in forming its conclusion. Specifically, DFS concluded that the

            biographical affidavits were exempt per the personal privacy exemption as such records contained

           employment history, addresses, phone numbers, and other personal and private infonnation. DFS

            also concluded that the requested records were exempt as trade secret/competitive injury as the

            public disclosure of financial status and business operations ofHighmark would provide any of its

            competitors and unfair advantage, as they could rely upon Highmark's strategics and plans in order

            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 that judicial review pursuant to CPLR §7803 is limited to whether

            there was a rational basis for the administrative agency's detennination, whether the determination

            was arbitrary and capricious or whether there was an abuse of discretion. (See Pell v. 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 of a FOIL request, a court must apply a far different rule.

            It is to presume that all records of a public agency arc open to public inspection and copying, and

            must require the agency to bear the burden of showing that the records fall squarely within an

             15052612023 I/MIO OF THE APPLICATION OF REVEREND MARK BLUE, ET Al. vs. NEW YORK         Page 3 of7
             STATE DEPARTMENT OF FINANCIAL SERVICES, ET Al.
             Motion No. 001

                                                           3 of 7
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  NYSCEF DOC. NO. 30                                                                         RECEIVED NYSCEF: 04/10/2024

           exemption to disclosure" (New York Comm. for Occupational Safety & Ilea/th v. Bloomberg, 72

           A.D.3d 15 3, 15 8 I.1st Dept 201 OJ citations omitted).

                  Here, Respondents and Intervenor-Respondent Highmark Western And Northeastern New

           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 of personal privacy) and §87(2){d) (trade secrets). This Court agrees.

                  Article 15 of the 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 of the people of this

           state .... " In making such assessment, the superintendent must evaluate, in part, the financial

           condition of the acquiring person, the source or funds or assets for the acquisition, whether the

           acquisition may lessen competition in any line of commerce in insurance or create a monopoly 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 that Highmark 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 and private as such affidavits contained with personal information for some of the officers

            150526/2023 I/MIO OF THE APPLICATION OF REVEREND MARK BLUE, ET AL vs. NEW YORK         Page 4 of 7
            STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
            Motion No. 001

                                                           4 of 7
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  NYSCEF DOC. NO. 30                                                                          RECEIVED NYSCEF: 04/10/2024

           and board members (as requi red by 11       YCRR §80-1.6 item 2). Addi tional exhibits submitted

           with the application were also confidential as they contained details deemed trade secret and which

           would cause competitive injury if disclosed. Specifically, that the operational plans submitted

           detailed specific advantages Highmark held over its competitors in the competitive health

           insurance marketplace, which were not know to anyone outside of Highmark, and were only shared

           with DFS as required with the application per Insurance Law §1506(6).

                  Insurance Law§ l 504(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 of the 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 of the 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 or the public will be served by the publication thereof. In any
              action or proceeding by the superintendent against the person examined or any other
              person within the same holding company system a report of such examination published
              by the superintendent shall be admissible as evidence of the facts stated therein.

                     Insurance Law § 1504( c )(2) provides that
                       either the superintendent nor any person vvho received a report or fili ng made
              pursuant to this article and any information obtained in connection therewith, through
              examination or otherwise, while acting under the authority of the superintendent or with
              whom such report, filing, or information are shared pursuant to this chapter, shall be
              permitted or required 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

            150526/2023 IIM/O OF THE APPLICATION OF REVEREND MARK BLUE, ET AL. vs. NEW YORK         Page 5 of 7
            STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
            Motion No. 001

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

           of the insurer, or if there is a determination by the superintendent that the disclosure of the

           submissions \Vas necessary in the interests of the policy holders, shareholders or the 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 FOIL request, asking for all documents and records related to the affiliation application, and

           as all submissions by the insurer arc protected from pub Ii c disc! o sure by Insurance Law § 15 04,

           the denial of Petitioner's FOIL request was appropriate.

                   As made clear by the parties' respective submissions and as discussed when this matter

           was conferenced with the Court, there is not substantial precedent concerning this issue. However,

           Insurance Law § 15 04 has been held to apply to insurance providers and has been held to protect

           the confidential filings submitted by such carriers pursuant to Article 15 of the 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 of the Insurance Law docs not control because there

           was no "affiliation" but a "merger" is unavailing or persuasive as Petitioner does not rely on any

           caselaw or any legal authority. .Equally unavailing is Petitioner's argument that the requested

           materials are not "reports" so they are not protected under Insurance Law § 1504. Again, Petitioner

           does not rely upon any legal authority for this argument. furthcnnorc, the statue specifically states

           that the "content of each 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

            150526/2023 IIM/O 0 F THE APP LICA TIO N OF REVEREND MARK BLUE, ET Al. vs. NEW YORK         Page 6 of 7
            STATE DEPARTMENT OF FINANCIAL SERVICES, ET Al.
            Motion No. 001

[* 6]                                                       6 of 7
                                                                                                          INDEX NO. 150526/2023
  NYSCEF DOC. NO. 30                                                                             RECEIVED NYSCEF: 04/10/2024

           are exempt from disclosure pursuant to Public Officer's Law §87(2)(a) and Insurance Law § 1504,

           the denial of the 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 of personal 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 of Public 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 met their burden in showing that Petitioner's broad FOIL request is exempt

           from disclosure (New York Comm. fr.,r Occupational Safety & 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 of this Order shall

           serve a copy of this order with notice of entry upon all parties and upon the Clerk of the Court.

                   4/10/2024
                     DATE
                                                                           I        I        DOMINGUEZ, J.S.C.

                                                                       ~
            CHECK ONE:                   CASE OISPOSEO                     NON-FINAL DISPOSI        __

                                         GRANTED         0    OENIEO       GRANTEO IN PART               □ OTHER
            APPLICATION:                 SETTLE OROER                      SUBMIT OROER

            CHECK IF APPROPRIATE:        INCLUOES TRANSFER/REASSIGN        FIDUCIARY APPOINTMENT         □ REFERENCE

            150526/2023 1/MIO OF THE A PPLICA Tl ON OF REVEREND MARK BLUE, ET AL. vs. NEW YORK            Page 7 of 7
            STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
            Motion No. 001

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