Request By:
[NO REQUESTBY IN ORIGINAL]
Opinion
Opinion By: Albert B. Chandler III, Attorney General; James M. Ringo, Assistant Attorney General
Open Records Decision
The issue presented in this appeal is whether the Department of Insurance violated the Open Records Act in its denial of Mark Hebert's February 22, 2000 request to inspect records concerning the Department's 1999 on-site review of 14 managed care plans as part of its patient protection review process. Specifically, Mr. Hebert requested to inspect the following records:
HMO Patient Protection Review. Please include the names of the companies, their ratings and staff analysis.
By letter dated February 25, 2000, Char K. Hummel, Counsel, responding to Mr. Hebert's request on behalf of the Department, advised:
The Department of Insurance is in receipt of your recent open records request for the Patient Protection Review concerning the Department's on-site review of fourteen managed care plans in 1999. Pursuant to your request, we enclose a copy of the December 1999 report entitled, "1999 Patient Protection On-Site Reviews" prepared by the Department of Insurance. We also enclose a listing of the fourteen managed care plans that were reviewed.
There are 28 files that must be reviewed in order to comply with your request. The material is voluminous and the Department is still in the process of review.
We believe privileged documents may be commingled with non privileged documents. Therefore, the Department's further response to your request will be delayed pursuant to 61.872 until such time as the Department is able to complete its review. We anticipate we will be able to complete the review process by March 10, 2000.
After twice extending the time to complete its review of the 28 files, the Department, on April 12, 2000, responded to Mr. Hebert by providing him with a copy of the Department's privilege log for each of the 28 files. Each privilege log identified the name of the insurance company reviewed, described the records in each file which the Department claimed was privileged from disclosure, and set forth the statutory basis under the Open Records Act which authorized the nondisclosure of the described records.
Mr. Hebert was provided two documents pertaining to the Department's on-site review of the managed care plans. However, these documents did not identify any of the insurance companies by name. They identified each company by number only and reflected the rating and scores given by the Department to each numbered company. The Department denied Mr. Hebert's request to match up the names of the companies with the scores each received from the reviewers. It is from this denial that Mr. Hebert submitted the instant appeal.
As authorized by KRS 61.880(2), Gale Pearce, General Counsel, on behalf of the Department, provided this office with a response to the issues raised in the appeal. In her response, Ms. Pearce stated, in relevant part:
Based on the Department's review, the Department objected to production of the documents on the following grounds:
After receipt of Ms. Pearce's letter, this office requested additional information from the Department. By letter, we made the following request:
Pursuant to KRS 61.880(2) and 40 KAR 1:030, Section 3, and in order to facilitate our review of the issues raised in this appeal, we request additional information from the Department. Specifically, we asked the following questions:
1. In numbered paragraphs (1) and (2) of its response to the letter of appeal, the Department indicated that the records Mr. Hebert requested were exempt from disclosure under authority of KRS 304.2-270, as it related to the "report of examination of a domestic insurer, " and KRS 304.2-260, as it related to "any examination report of a non-domestic insurer, " at the discretion of the Commissioner of Insurance. Was the Department's 1999 on-site review of 14 managed care plans in its patient protection review process conducted under the Commissioner of Insurance's general authority, as provided by KRS 304.2-210, or was it conducted under authority of a specific statute relating to managed care plans and the patient protection process?
2. In numbered paragraph (3) of the response, the Department indicated that it had yet to issue a final order in the patient protection review process. What final action is contemplated in the process and will a final report be issued setting forth the results of the Department's review of the 14 insurers managed care plans?
Responding to this request, Ms. Pearce supplied the following information:
As we previously discussed on the phone, there is no specific statute relating to the examination of managed care plans and the patient protection process. The examination was conducted pursuant to KRS 304.2-210.
The Department does intend to issue a final order for each insurer. The Department issued a report of the findings of the respective examinations to the insurers and requested each insurer to submit their responses as well as a corrective action plan. The Department then reviewed each insurer's corrective action plan then requested changes. Currently, the Department has received all but one carrier's amended corrective action plan. We anticipate that the Department will issue an order for each examined insurers upon receipt of the final amended corrective action plan. The Department does not intend to distribute a report other than the summary report that has been prepared and distributed to the General Assembly and to Mr. Hebert. Of course, the Orders will be a public document.
We are asked to determine whether the Department's responses constituted a violation of the Open Records Act. For the reasons that follow, we conclude that the actions of the agency were not in violation of the Act.
Pursuant to KRS 304.2-210(1), the Commissioner of Insurance is required to examine each insurer to determine its financial condition, its ability to fulfill its obligations, the manner in which it fulfills its obligations, the nature of its operations, and its compliance with law. The Department indicated that it was pursuant to this statute that the on-site inspection of the 14 insurers and their managed care plans was conducted. Thus, we review the Department's action as relating to KRS 304.2 examination reports.
In denying Mr. Hebert's request, the Department cited KRS 304.2-270 as authority for withholding the examination reports of the domestic insurers, except those portions of the report showing the insurer's financial condition, and KRS 304.2-260(4) as authority for withholding the examination reports of the non-domestic insurers, under the general discretion of the Commissioner
KRS 304.2-270 provides:
The report of examination of a domestic insurer, although filed in the department as provided in KRS 304.2-260 shall nevertheless not be for public inspection except as to those portions of the report showing the insurer's current financial condition. The comments and recommendations of the examiner(s) shall be deemed confidential information and shall not be available for public inspection, except that the commissioner may in his discretion disclose the content of an examination report, preliminary examination report, or results, or any matter relating to an examination report, to the Department of Insurance of any other state or country, or to law enforcement officials of this or any other state, or to an agency of this or any other state or the federal government at any time, if the agency or office receiving the report or matters relating to the report agrees in writing to hold it confidential and in a manner consistent with this section and KRS 304.2-260.
KRS 304.2-260(4) provides:
Upon entry of the commissioner's order, the examination report, with such modifications, if any, thereof as the commissioner deems proper, shall be filed in the department for public inspection, except that the commissioner may withhold from public inspection any examination 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 and except the commissioner shall withhold from public inspection any examination report of a domestic insurer as provided in KRS 304.2-270.
Under KRS 304.2-270, the Commissioner is required to keep the records of his examination report of domestic insurers confidential, except as to those portions of the report showing the insurer's current financial condition. KRS 61.878(1)(l) authorizes the withholding of:
Public records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly.
We conclude that the Department properly relied upon KRS 304.2-270 in withholding the records of the examination report of domestic insurers, as such is required by the statute.
Under KRS 304.2-260(4), the Commissioner has the discretion of withholding the records of his examination report of a non-domestic insurer from public inspection for so long as he deems is necessary to protect the insurer from unwarranted interest or is in the public interest. In its responses, the Department explained that the Commissioner had withheld the records of the companies that were not domestic, as it would be inherently unfair to allow the public to review the reports of certain managed care plans when other managed care plans were exempt from scrutiny and that withholding information regarding the non-domestic insurers was necessary because it would create an unfair marketing advantage for the domestic insurers at the non-domestic insurers' expense. Under these circumstances, we conclude that Department's reliance upon KRS 304.2-270 and KRS 304.2-260(4) did not constitute a violation of the Open Records Act. Absent a clear abuse of discretion, we are not inclined to substitute our judgment for that of the Commissioner of Insurance, in interpreting and implementing KRS 304.2-270 and KRS 304.2-260(4).
Because we conclude the foregoing is dispositive of the instant appeal, we need not address other bases relied upon by the Department in withholding the requested records. However, we do note that the Department indicated, in its response to this office's request for more information, that it intended to issue a final order for each examined insurer upon receipt of the final amended corrected action plan from each insurer. As of the date of the Department's response, this process was not yet completed. The Department stated the final Orders as to each insurer would be a public document, subject to public inspection. Release of the final Order for each examined insurer should provide information to Mr. Hebert and the public as to how each insurer and its managed care plans are performing.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.