Court Opinion

ID: 4421140
Source: CourtListenerOpinion
Date Created: 2019-07-30 15:04:01.419534+00
Date Added: 2024-06-11T14:52:51.886840
License: Public Domain

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

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

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

                                                          Andrew P. Seiwert
                                                          Indianapolis, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

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

Intervenor

Altice, Judge.

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

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

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

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

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

      possession of IFA.

[2]   We affirm.

                                         Facts & Procedural History

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

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

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

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

      § 5-1.2-7-7.

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

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

      proceeds from the issuance of such to undertake certain capital improvements

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

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

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

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

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

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

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

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

      swap transaction.

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

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

      IRS was conducting an examination of the 1993 Bonds to determine

      compliance with federal tax laws and requesting certain information and

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

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

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

      exchanged correspondence and the Hospital provided the IRS with necessary

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

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

      Hospital acknowledged the swap transaction in its audited financial statements,

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

      such. The IRS concluded its examination in April 2016.

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

      APRA request to IFA for:

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

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

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

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

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

      public records request.

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

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

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

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

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

      Code § 5-14-3-4(a)(3), (5).

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

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

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

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

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

      (emphasis in original). Scott specifically identified:

                  • The Indenture of Trust and any supplements or
                    addendums;

                  • The Loan Agreement(s)

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

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

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

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

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

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

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

            • All agreements entered into with the [IRS].

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

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

specifically, the following:

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

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

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

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

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

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

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

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

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

       seek another advisory opinion from the PAC.

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

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

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

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

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

       along with supporting affidavits from Wayne Hutson, Executive Vice President

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

       Office Manager for IFA.

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

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

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

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

       information will be provided as necessary.

                                            Discussion & Decision

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

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

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

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

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

       interpretation presents a pure question of law for which summary judgment

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

       1084.

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

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

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

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

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

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

       records with adequate specificity beyond merely relying on a conclusory

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

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

       the records shall not be disclosed.

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

       complete information regarding the affairs of government and the official acts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

       that such records contain confidential financial information of the Hospital that

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

       examination. We agree.

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

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

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

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

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

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

       that the undisclosed documents Scott requested relate to the swap transaction

       and contain confidential financial information of the Hospital. Hutson

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

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

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

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

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

       Hospital] maintained the confidentiality of the information contained within

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

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

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

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

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

       through entity with regard to the exchange of documents and information

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

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

       relating to the swap transaction contain confidential financial information

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

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

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

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

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

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

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

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

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

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

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

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

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

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

       request, IFA identified categories of documents, including correspondence to

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

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

       records it was withholding from Scott.

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

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

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

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

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

[20]   Judgment affirmed.

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

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