Opinion
Opinion By: Jack Conway, Attorney General; James M. Herrick, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Cabinet for Health and Family Services ("Cabinet") violated the Open Records Act in the disposition of C. Dean Furman's February 16, 2009, request for copies of the clinical criteria known as "InterQual." For the reasons that follow, we find that the Cabinet's actions were consistent with the applicable law.
Mr. Furman's request for records stated as follows:
Pursuant to the Open Records Act, I would like to request the following records from the Cabinet for Health and Family Services, Department for Medicaid Services on behalf of my client, Nilsen & Furman Properties, LLC:
-Any and all clinical criteria known as Interqual, 1 referenced in 907 KAR 3:130, Section 1
We would prefer and are willing to accept electronic format copies of such records. Alternatively, with advance notice, we are willing to pay reasonable expenses for the copies.
On the same day, Neville Wise, Director of the Division of Administration and Financial Management, notified Mr. Furman in writing that the records were not currently available. Three days later, however, Mr. Wise gave the following substantive response to Mr. Furman:
This correspondence is to provide a response to the open records request dated and received by DMS February 16, 2009, in which you requested copies of any and all Clinical Criteria known as Interqual, referenced in 907 KAR 3:130, Section 1. Unfortunately, this request must be denied. The Department for Medicaid Services purchased Interqual from McKesson Health Solutions. Pursuant to KRS 61.878(1)(k), copyright laws (17 USC § 101) and signed agreements, DMS is prohibited from releasing copies of Interqual.
Mr. Furman was then given directions for how to purchase InterQual from the copyright holder, McKesson Health Solutions ("McKesson").
In this appeal initiated on March 6, 2009, Mr. Furman contends that the Cabinet should be required to produce the records or, alternatively, that this office should declare the Cabinet's administrative regulation, 907 KAR 3:130, invalid. As he explains, this regulation
governs the standards that the Cabinet applies in determining whether a medical provider's services are medically necessary and clinically appropriate and, therefore, reimbursable under the Kentucky Medicaid program. ? Unfortunately, the Regulation does not contain the actual standards that Medicaid will use to judge reimbursement requests. Instead, Medicaid incorporates a private standard called "Interqual" that can be purchased from a private company, McKesson Health Solutions. ?
The Cabinet is apparently using Interqual to determine if medical professionals and hospitals should be reimbursed for services they provide to Kentucky's Medicaid beneficiaries. Despite using public funds for Medicaid, there is no publically available information in the Regulation to know what Medicaid finds to be clinically appropriate.
After contesting the Cabinet's invocation of federal copyright law and KRS 61.878(1)(k), Mr. Furman argues that "[a]ny decision by the Cabinet about Medicaid reimbursement based on private standards, that are only available by purchasing the standards from a private company, is arbitrary and capricious." In a supplemental letter, he indicates that the lowest price quoted to him by McKesson for a copy of InterQual is $ 16,000.00.
The Cabinet's reply, submitted on March 30, 2009, by Assistant Counsel Anne E. Burnham, is supplemented by material obtained from McKesson and provides some background information on the nature of InterQual and the Cabinet's purchase and use of it. Ms. Burnham states, in part, as follows:
In order for certain procedures, services, treatments, etc. to be paid for by Medicaid, the service must be determined to be medically necessary 2 for the individual patient. Medicaid has entered into a contract with Electronic Data Systems Corporation (hereinafter "EDS") to review requests for services, treatments, etc. Pursuant to 907 KAR 3:130, EDS is required to utilize the "nationally-recognized clinical criteria known as Interqual" which was developed by McKesson Health Solutions. ?
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[T]itle 17 of the United States Code governs copyright law and precludes the Cabinet from disclosing Interqual to Mr. Furman. Section 117 deals with computer programs and copying thereof, and prohibits copies of copyrighted programs from being made for the use requested by Mr. Furman. Since Interqual is copyright protected, only McKesson Health Solutions, the holder of the copyright, has the authority to make copies of Interqual. ?
While the Cabinet, through its contractor, EDS, has a license to utilize Interqual, the Cabinet is not authorized to copy and provide Interqual to anyone making a request for it.
Included with the response is a lengthy affidavit from a representative of McKesson, Tammie Phillips, Vice President of InterQual Product and Services. Ms. Phillips states in part:
InterQual criteria is a clinical care management decision support tool, consisting of three basic elements. The first element consists of information distilled from the medical literature surrounding the universe of medical conditions most typically presented by patients in the United States, Canada and the United Kingdom. The second element is a set of unique rules which organize the clinical information to create an appropriateness of care decision based on critically appraised evidence reported in the medical literature or, where literature is lacking, expert clinical opinion and standards of care. The combination of the first and second elements constitutes a "criteria set." The third element is a criteria set-specific review methodology used to apply the InterQual criteria to individual patients' cases in a consistent and objective manner. Most licensees use an electronic format of InterQual, which consists of object code into which the InterQual criteria, rules and review methodology are embedded.
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The first element of InterQual is clinical data regarding medical conditions. This data includes symptoms, descriptions of conditions, commentary, supporting notes, and citations to authoritative and critically appraised literature. ? InterQual's clinical data is the result of an evolution over 30 years of comprehensive review of medical literature, shaping the content with the rules and evolving the review methodologies over time. ? The InterQual clinical data has been written, peer reviewed, edited, revised, and updated annually. As such, the data is original content and is not merely a replication of information published elsewhere. It represents a synthesis of critically appraised medical literature, medical society guidelines, expert clinical consultant opinion and standards of care to create the most objective decision support content.
?
McKesson combines its clinical information distilled from the review of medical literature through unique rules to develop the criteria for the medical conditions addressed in its clinical database. ? Where the medical literature lacks evidence on a topic or issue, McKesson's national panel of practicing and academic clinical consultants provide input into the criteria based on their experience in the particular field. McKesson Health Solutions staff then determine a consensus of expert opinions drawn from geographically disperse experts using a modified Delphi process. 3 ? The criteria and rules contained in InterQual are original works of clinicians employed or subcontracted by McKesson. These recommendations for determining appropriateness of care have been peer reviewed, edited, revised, and updated over the past 30 years. As such, the criteria rules in InterQual are original content and do not merely replicate information published elsewhere.
Ms. Phillips mentions that InterQual is available in book format but is mostly used through an electronic interface. She goes on to describe several forms of InterQual software, each of which "is a unique computer program developed by McKesson for use by its InterQual licensees, " and states that "McKesson holds all rights to the object and source codes of all of the InterQual software. " Additionally, she relates that McKesson "has invested tens of thousands of dollars in elevating the skills sets of its employee clinicians to assure a quality, evidence[-]based work product" and takes strict measures to assure the confidentiality of InterQual.
With regard to McKesson's relationship with the Cabinet, Ms. Phillips states that "[t]he Cabinet is an authorized licensee of InterQual" and lists the InterQual software that has been licensed to it. "As an InterQual licensee, the Cabinet has paid for the right to access and use InterQual in its internal business operations." On the other hand, "[l]icensees are not permitted to rent, lease, distribute or provide the InterQual software or content to any third party without written consent of McKesson" and are prohibited from copying the software.
We note that the entity actually possessing and using InterQual on behalf of the Cabinet is the Cabinet's contractor, EDS. The fact that EDS is a private contractor does not affect our analysis under the Open Records Act. The copy of InterQual held by EDS is presumptively a public record under KRS 61.870(2) because it is possessed and used by EDS at the instance of the Cabinet under their contractual relationship. 08-ORD-253.
The Cabinet's regulation, 907 KAR 3:130, provides in pertinent part as follows:
Section 1. Definitions. (1) "Clinically appropriate" means appropriate pursuant to the nationally-recognized clinical criteria known as Interqual developed by McKesson Health Solutions:
(a) For which the department has contracted; and
(b) Which is available for purchase from McKesson Health Solutions by:
1. Visiting http://www.interqual.com/IQSite/about/contact-us.aspx;
2. Calling 1-800-522-6780; or
3. Submitting a written request to McKesson Health Solutions, 275 Grove Street Suite 1-110, Newton, MA 02466-2273.
?
Section 3. Criteria to Establish Clinical Appropriateness. (1) The [D]epartment [for Medicaid Services] shall utilize criteria to determine if a given Medicaid service or benefit is clinically appropriate.
(2) The criteria referenced in subsection (1) of this section shall be the nationally-recognized clinical criteria that meets the definition established in Section 1(1) of this administrative regulation.
Section 4. Medical Director Role in Service Denials. (1) If a request for a service is denied for failing to meet medical necessity or clinical appropriateness criteria, the department's medical director shall have the authority to reverse or approve the denial.
(2) The letter of denial shall include the specific clinical reason that the service was denied including any appropriate Interqual or other criteria.
It is evident from the regulation that the Cabinet explicitly does not make InterQual available for public inspection and copying, other than by purchasing a copy from McKesson. 4
Copyright protection of InterQual
KRS 61.878(1)(k) exempts from public inspection "public records the disclosure of which is prohibited by federal law or regulation. " The federal Copyright Act of 1976, 17 U.S.C. §§ 101 et seq., is thus incorporated into this exemption to the extent that that Act may operate to prohibit the Cabinet's disclosure of InterQual.
Mr. Furman argues that InterQual is not copyrightable under 17 U.S.C. § 102(b) because it is an "idea, procedure, process, [or] system" rather than an "original work of authorship." On this subject, we observe that InterQual's copyright-protected status was specifically recognized by a federal district court in 1993, albeit in an unreported and subsequently vacated order.
InterQual, Inc. v. Parkside Health Mgt. Corp., 1993 WL 13565986 (N.D.Ill. Aug. 5, 1993) (vacated on reconsideration Sept. 9, 1993). We further note that a computer program, defined by 17 U.S.C. § 101 as "a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result," can be copyrighted. 5
Lexmark Int'l, Inc. v. Static Control Components, Inc., 387 F.3d 522, 533 (6th Cir. 2004); see also
Wall Data Inc. v. Los Angeles County Sheriff's Dept., 447 F.3d 769, 776 (9th Cir. 2006). Additionally, the Copyright Act provides that "compilations" can be subject to copyright. 17 U.S.C. § 103. To the extent that InterQual resembles either a computer program or a compilation, those provisions apply by analogy. In addition, the Phillips affidavit establishes that InterQual is substantially an original work of authorship, not a mere compilation, and in that respect clearly copyrightable.
Finally, there is the fact that the Commonwealth of Kentucky purchased InterQual subject to an agreement recognizing the existence of copyright protection. Given all of the above factors, we have no grounds on which to gainsay that agreement, and therefore we conclude that InterQual is protected by federal copyright law.
Exclusivity of McKesson's rights
17 U.S.C. § 106 lists several exclusive rights possessed by the owner of a copyright, among which are the rights:
(1) to reproduce the copyrighted work in copies [and]
(3) to distribute copies ? of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending[.]
Any of the exclusive rights of a copyright owner may be separately held or transferred. 17 U.S.C. § 201(d)(2). The question here is whether McKesson has transferred to the Cabinet or EDS any right to distribute copies of InterQual. For this reason we have confidentially obtained from the Cabinet, pursuant to KRS 61.880(2), a copy of the license agreement between McKesson and EDS, and we conclude from that agreement that McKesson has unambiguously reserved to itself the right to distribute copies of the InterQual software and documentation.
Therefore, as long as InterQual retains its copyright, the Open Records Act cannot require the Cabinet to provide copies to the public in a manner inconsistent with federal law. OAG 86-2; 99-ORD-88. A further issue, however, arises from the fact that InterQual, a copyrighted work, has been adopted by the Cabinet in an administrative regulation as the official state criteria for making Medicaid clinical-appropriateness determinations.
Effect of Cabinet's adoption of InterQual criteria
As a general matter, the law itself (which may be embodied in statutes, regulations, ordinances, or court opinions) is considered to be in the public domain and not copyrightable.
Veeck v. Southern Building Code Congress Intl., Inc., 293 F.3d 791 (5th Cir. 2002), cert. denied, 539 U.S. 969 (2003). The federal courts have been divided on the related issue of whether a copyrighted work loses its copyright protection when it is adopted as state law.
In Veeck, the Fifth Circuit held that a privately drafted model code became public domain when it was adopted as law by a municipality. On the other hand, the Second Circuit has held that a state's reference in a statute or regulation to a copyrighted work as a legal standard for valuation of used cars did not strip the work of its copyright.
CCC Information Services, Inc. v. Maclean Hunter Market Reports, Inc., 44 F.3d 61 (2nd Cir. 1994). Moreover, the Ninth Circuit found that the American Medical Association did not lose its copyright in the Physician's Current Procedural Terminology ("CPT"), a coding system for identifying medical procedures, when the federal Health Care Financing Administration adopted regulations requiring all applicants for Medicaid reimbursement to use the
CPT. Practice Mgt. Information Corp. v. American Medical Ass'n, 121 F.3d 516 (9th Cir. 1997), cert. denied, 522 U.S. 933 (1997); amended, 133 F.3d 1140 (9th Cir. 1998); cert. denied, 524 U.S. 952 (1998); rehearing denied, 525 U.S. 923 (1998).
This office has opined on a similar issue and reached the same result as the Second and Ninth Circuits. In OAG 79-487, the Attorney General considered the copyright status of a privately published building code that had been adopted by the Kentucky Board of Housing, Buildings and Construction as part of the Kentucky Building Code. At issue was whether the Board could authorize the Banks-Baldwin Law Publishing Company (not the copyright owner) to print the copyrighted code material. We declared it "doubtful that the Commonwealth's adoption of the BOCA 6 Code has placed that code in the public domain and thus stripped it of the protection it has under the Federal Copyright Law although it would be subject to the 'fair use' provisions." OAG 79-487, p. 3. In keeping with that opinion, we find that McKesson's rights in its copyrighted work were not vitiated by the Cabinet's adopting InterQual as a standard for making determinations of clinical appropriateness.
Fair use
"Fair use" is a defense against a claim of copyright infringement. 17 U.S.C. § 107. There is no present controversy over alleged infringement of McKesson's rights in InterQual in connection with Mr. Furman's open records request. Mr. Furman, however, maintains that if he obtained a copy of InterQual his use of the materials "to criticize, comment and/or perform research" could be characterized as "fair use" and therefore copyright law should not preclude his receiving a copy from the Cabinet.
A person's "use" of a copyrighted work is separate and distinct from how he acquires a copy of the work in the first place. See, e.g.,
Nunez v. Caribbean Intern. News Corp., 235 F.3d 18 (1st Cir. 2000) (unlawful acquisition of the work considered to be a factor weighing against a finding of fair use) . 7 In this instance, the fact that Mr. Furman may intend to make "fair use" of InterQual once he obtains a copy does not give the Cabinet any right to distribute copies to him. This right is still held exclusively by McKesson. Any infringement issue would arise immediately from the Cabinet's "use" of InterQual in distributing unauthorized copies, rather than from Mr. Furman's subsequent use of his copy.
17 U.S.C. § 107 identifies the following factors to be used in making a determination of fair use:
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The Cabinet's affidavit from Tammie Phillips represents that for a government entity to distribute copies of InterQual would have a drastic effect on the market value of McKesson's copyrighted work. Ms. Phillips avers in part:
The InterQual product line generates tens of millions of dollars in revenue for McKesson each year. ? InterQual's economic value to McKesson results from the fact that it is not available in the public domain. Were InterQual released to the public, no organization would pay McKesson to license InterQual. ? InterQual cannot be easily or readily recreated or duplicated, by lawful means, by others in the market. The intitial investment of time and money required to create a similar product would be prohibitive, as evidenced by the few competitors in the marketplace. Public release of InterQual would destroy McKesson's competitive advantage with respect to software development and clinical content development. ? Absent license fees, McKesson could not update InterQual or continue to support InterQual in the market. Absent license fees, the existence of InterQual would be jeopardized.
Since Ms. Phillips' statements have not been contested, we presume that her representations accurately describe the effect that public disclosure of InterQual would have on market conditions. Given further the fact that InterQual is a commercial work, 8 that the Cabinet's providing a copy of Interqual to Mr. Furman would merely substitute for his purchasing it from McKesson, 9 and that this would constitute a use of the entire copyrighted work, we believe the Cabinet could reasonably believe that fulfilling his request would not constitute fair use and would therefore be an infringement.
This office is not in a position to make a definitive judgment about "fair use" in the context of the present appeal and with the limited record before us. In light of the information presented, however, it is our view that the Cabinet has adequately met its burden of proof for applying the KRS 61.878(1)(k) exemption.
Alleged invalidity of 907 KRS 3:130
Mr. Furman further contends that 907 KAR 3:130 should be declared invalid for a variety of reasons. Most of these reasons are concerned with the regulation's alleged failure to comply with various provisions of KRS Chapter 13A. These we can address merely by observing that the Administrative Regulation Review Subcommittee was apparently satisfied with the Cabinet's statutory compliance, and moreover that the noncompliance of a state regulation with KRS Chapter 13A would not affect whether InterQual is protected by copyright. 10 Also, we note that non-Open Records issues are not within the purview of an appeal under KRS 61.880. 99-ORD-121.
Another reason urged by Mr. Furman for us to declare the Cabinet's regulation invalid is that "[a]ny decision by the Cabinet about Medicaid reimbursement based on private standards, that are only available by purchasing the standards from a private company, is arbitrary and capricious." In addition to the fact that the copyright issue is unaltered by this argument, we point out that the regulation provides for a party affected by a Medicaid denial to be given a copy of any applicable InterQual criteria as part of the "specific clinical reason that the service was denied." 907 KAR 3:130, Section 4(2). As Tammie Phillips states in her affidavit, McKesson's license agreement allows for this narrow exception to the prohibition on copying. Accordingly, it is incorrect to assert that the Cabinet bases particular decisions on standards that are unavailable to those affected by them. For all of these reasons, we decline to find the Cabinet's regulation invalid.
Trade secrets
The Cabinet, in its response to Mr. Furman's appeal and particularly in the supporting material from McKesson, also represents that InterQual contains trade secrets. 11 Since we regard KRS 61.878(1)(k) as dispositive of this appeal, we do not deem it necessary to consider the merits of the trade-secret argument.
Conclusion
Due to the copyright restrictions on the InterQual materials, we find that the Cabinet properly relied upon KRS 61.878(1)(k) and 17 U.S.C. §§ 101 et seq. in denying Mr. Furman a copy of the software and documentation.
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 proceedings.
Distributed to:
C. Dean Furman, Esq.Anne E. Burnham, Esq.Gloria Lee, Esq.
Footnotes
Footnotes
1 References to the InterQual product vary as to whether the letter "Q" is capitalized. Since "InterQual" is the spelling used by the product's manufacturer, it is generally used here, although references in quoted material retain their original spelling.
2 Although both parties to this appeal describe InterQual as providing standards for "medical necessity," our reading of 907 KAR 3:130 indicates that InterQual is used only for determinations of "clinical appropriateness. "
3 The "Delphi process" is a method for "gather[ing] data anonymously from experts without needing to bring the experts together," in order "to obtain a convergence of opinion without confrontation." Bogdan Dziurzynski, FDA Regulatory Review and Appeal Processes: A Delphi Inquiry, 51 Food & Drug L.J. 143, 146 (1996).
4 Since Mr. Furman made no request to conduct an on-site inspection of the InterQual materials, we do not address whether he would have been entitled to do so.
5 17 U.S.C. § 117 places certain limitations on the scope of the exclusive rights in computer programs, which do not apply here.
6 Building Officials and Code Administrators International, Inc.
7 We have recognized the same principle under the Open Records Act inasmuch as a requester's intended use of a document, in general, has no bearing on whether that document is exempt from public inspection. See 03-ORD-126, p. 6.
8 17 U.S.C. § 107(2) is concerned with whether a work is commercial in nature, representing "substantial investment of time and labor ? in anticipation of a financial return." MCA, Inc. v. Wilson, 677 F.2d 180, 182 (2nd Cir. 1981).
9 If the allegedly infringing use is not "transformative," but "simply supplants the original work, " it is less likely to be considered fair use. Wall Data Inc., supra, 447 F.3d at 778.
10 At most, such noncompliance would mean the Cabinet was prohibited from using InterQual, which is a separate issue from whether it must provide copies of InterQual.
11 The "trade secrets" exemption under KRS 61.878(1)(c) was not initially asserted by the Cabinet in responding to Mr. Furman's request, nor is it the Cabinet's principal argument on appeal.