The opinion
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
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
Op 30001(U), are republished from various New York
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publication.
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
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STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
Motion No. 001
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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.
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STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
Motion No, 001
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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
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STATE DEPARTMENT OF FINANCIAL SERVICES, ET Al.
Motion No. 001
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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
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STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
Motion No. 001
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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
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STATE DEPARTMENT OF FINANCIAL SERVICES, ET AL.
Motion No. 001
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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
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STATE DEPARTMENT OF FINANCIAL SERVICES, ET Al.
Motion No. 001
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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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