TO BE PUBLISHED
July 12, 1996
In re: Gil Lawson/Department of Insurance
OPEN RECORDS DECISION
This matter comes to the Attorney General on appeal from the Department of Insurance's denial of Courier-Journal staff writer Gil Lawson's July 2, 1996, request to inspect all 1996 rate filings by health insurers for rates intended to take effect this month. On July 3, 1996, George Nichols III, Commissioner of the Department of Insurance, responded to Mr. Lawson's request. Relying on KRS 61.878(1)(i) and (j), which exclude from the mandatory disclosure provisions of the Open Records Act preliminary drafts, notes, and correspondence with private individuals, as well as preliminary recommendations and preliminary memoranda in which opinions are expressed or policies formulated, Commissioner Nichols observed:
As the Department is still reviewing these rates and as no final action has been taken by the Department on the filings, the rate filings are not subject to disclosure under the Open Records Act.
This appeal followed.
In response to this office's notification of receipt of open records appeal, issued on July 9, 1996, the Department of Insurance submitted a supplemental response. The Department reaffirmed its earlier position that the rate filings are exempt per KRS 61.878(1)(i), noting that they are subject to amendment or withdrawal until the Department takes final action approving or disapproving them.
The Department also advanced two new arguments in support of nondisclosure.
Invoking KRS 61.878(1)(h), which excludes [r]ecords of law enforcement agencies or agencies involved in administrative adjudication that were compiled in the process of detecting and investigating statutory or regulatory violations if the disclosure of the information would harm the agency by revealing the identity of informants not otherwise known or by premature release of information to be used in a prospective law enforcement action or administrative adjudication, the Department maintained that the disputed records satisfy each of these criteria. The Department reasoned:
The information contained in these rate filings is compiled by the Department of Insurance in order to investigate the legality of proposed rate increases by health insurers. Detecting and investigation [sic] statutory or regulatory violations is an integral part of this process.
Finally, the information collected is to be used in a prospective administrative adjudication. Senate Bill 343 requires public hearings to be held regarding health insurance rate increases in excess of the medical consumer price index plus 3%. Many of the rate filings requested fall into this category. The Commissioner of Insurance may also hold a public hearing to administratively adjudicate the legality of any health insurance rate increase, regarding other criteria set forth in Senate Bill 343. There is a strong possibility that each of the documents in question would actually be used in an [sic] public administrative hearing. Premature release of this information would prejudice the Department of Insurance's ability to effectively represent the public interest at the hearing.
Accordingly, the Department asserted, the rate filings are exempt per KRS 61.878(1)(h).
Finally, it was the Department's position that Mr. Lawson's request places an unreasonable burden on it. In support of this position, the Department noted that over 100 rate filings have been submitted, consisting of approximately 50 pages each. Continuing, the Department observed:
Tremendous amounts of time and effort would have to expended [sic] in order to review, prepare and copy each of these documents for Mr. Lawson. This time demand is especially burdensome in light of the time constraints imposed by Senate Bill 343's public hearing requirements. The great volume of rate filings combined with the short deadlines imposed by Senate Bill 343 has created very tight schedules for investigation and review of these filings. Requiring Department of Insurance personnel to interrupt these schedules to comply with such a large Open Records Request is unfairly burdensome and highly detrimental to the health insurance rate review process.
This is especially true in light of the fact that these same rate filings may be available from other source [sic] in the very near future. Once the public hearing is convened, the rate filing would become a part of the hearing record and therefore within the discretion of the hearing officer to release. Additionally, these same rate filings are being provided to the Office of the Attorney General Division of Health Rate Interventions as required by Senate Bill 343 and, in the discretion of the Attorney General, may be released to the public from that source.
For these additional reasons, along with the reasons articulated in its original denial, the Department of Insurance denied Mr. Lawson's request.
We are asked to determine if the Department of Insurance properly denied Mr. Lawson's request to inspect all 1996 rate filings by health insurers for rates intended to take effect this month. For the reasons set forth below, and upon the authorities cited, we conclude that the Department improperly denied Mr. Lawson's request, and that it is obligated to release the requested records for inspection.
We begin with the last of the three arguments the Department makes. KRS 61.872(6) provides:
If the application places an unreasonable burden in producing public records or if the custodian has reason to believe that repeated requests are intended to disrupt other essential functions of the public agency, the official custodian may refuse to permit inspection of the public records or mail copies thereof. However, refusal under this section shall be sustained by clear and convincing evidence.
This provision is intended to afford relief to public agencies where there is a pattern of harassing records requests aimed at disrupting essential agency functions, or, alternatively, where a single records request is such that production of those records would place an unreasonable burden on the agency. To prevent agencies from exploiting this provision as a means of circumventing the requirements of the Open Records Act, the legislature has provided that refusal under this section be sustained by clear and convincing evidence, prompting this office to observe:
Every request to inspect a public record causes some inconvenience to the staff of the public agency. No doubt some state, county and local agencies have found it necessary to employ additional staff since the enactment of the Open Records Law in order to comply with the provisions of the law
. . . . We believe it is the legislative intent that public employees exercise patience and long-suffering in making public records available for public inspection.
OAG 77-151, p. 3. We have also recognized, however, that:
State agencies and employees are the servants of the people as stated in the Preamble to the Open Records Act, but they are the servants of all the people and not only of persons who may make extreme and unreasonable demands on their time.
OAG 76-375, p. 4. In determining whether an open records request is unreasonably burdensome, and thus warrants invocation of KRS 61.872(6), we must weigh two competing interests: that of the public in securing access to agency records, and that of an agency in effectively executing its public function.
In the instant appeal, the Department of Insurance has not shown, by clear and convincing evidence, that Mr. Lawson's request is unreasonably burdensome. Although the Department states that his request implicates as many as 5000 pages of documents, and that [t]remendous amounts of time would have to be expended in order to review, prepare and copy each of these documents, we note Mr. Lawson has not requested copies of, and the Department is not required to review, the rate filings. In his July 2 request, Mr. Lawson asked to inspect the rate filings. KRS 61.872(3) establishes two methods by which a requester may gain access to public records, the first of which is personal inspection [d]uring the regular office hours of the public agency[.] The Department may discharge its duty under the Open Records Act by simply opening its records to Mr. Lawson, and allowing him to expend his own time and efforts extracting the information in which he has an interest. KRS 61.872(3)(a). Although Mr. Lawson may wish to assert his ancillary right to obtain copies of those records once he has inspected them, we are not persuaded that providing copies of 5000 documents is, in and of itself, unreasonably burdensome. KRS 61.874(1).
In OAG 90-112, at page 5, this office recognized that [d]etermining when an application places an unreasonable burden upon a public agency . . . is at best difficult. Although the Department has specifically described the number of documents implicated by Mr. Lawson's request, it has offered no proof relative to the difficulty in accessing the records, or the problems associated with redacting exempt information from the records, assuming for the sake of argument that the records contain exempt information. Moreover, the Department is not relieved of its obligations under the Open Records Act simply because the same records can be obtained from an alternate source. We therefore conclude that the Department improperly relied on KRS 61.872(6).
With respect to the argument that the rate filings qualify for exclusion under KRS 61.878(1)(h), we find that the Department's reliance is misplaced, and suggests a liberal construction of the exemption which is not warranted by its express terms. KRS 61.878(1)(h) provides, in part, that the following public records may be excluded from public inspection:
Records of law enforcement agencies or agencies involved in administrative adjudication that were compiled in the process of detecting and investigating statutory or regulatory violations if the disclosure of the information would harm the agency by revealing the identity of informants not otherwise known or by premature release of information to be used in a prospective law enforcement action or administrative adjudication. Unless exempted by other provisions of KRS 61.870 to 61.884, public records exempted under this provision shall be open after enforcement action is completed or a decision is made to take no action.
. . . The exemptions provided by this subsection shall not be used by the custodian of the records to delay or impede the exercise of rights granted by KRS 61.870 to 61.884[.]
Consistent with the principle that free and open examination of public records is in the public interest, this exemption, like each of the 11 other exemptions, must be strictly construed to afford the broadest possible public access. KRS 61.871. The exemption is unique, however, in specifically providing that it shall not be used by the custodian of the records to delay or impede the exercise of rights granted by KRS 61.870 to 61.884. Unless the disputed documents fall squarely within the parameters of the exemption, they cannot be withheld. In our view, they do not.
Although the Department may arguably be characterized as an agency involved in administrative adjudication, we cannot agree that it is engaged in the process of investigating statutory or regulatory violations, or that premature disclosure of the rate findings will compromise that adjudication. The goal of the public hearings provided for by Senate Bill 343, as we understand it, is to set reasonable health insurance rates, not to ferret out statutory or regulatory violations. As the Department's own statutes clearly recognize, the public's interest will be served, and not disserved, by public awareness of rate and form filings, supplementary rate information, and supporting information. KRS 304.2-150(3)(a)(1); KRS 304.13-081(1). We therefore reject the Department's argument that the rate filings are exempt per KRS 61.878(1)(h).
We also reject the Department's argument that the rate filings are excluded from the mandatory disclosure provisions of the Open Records Act by operation of KRS 61.878(1)(i), relating to [p]reliminary drafts, notes, [and] correspondence with private individuals. . . . Although these filings are predecisional, until approved or disapproved by the Department of Insurance, and thus might otherwise be treated as exempt per KRS 61.878(1)(i), KRS 304.2-150(3)(a)(1) categorically states that rate and form filings and information filed in support thereof shall be open. Whatever the merits of its arguments under KRS 61.872 to 61.884, the Department is bound by the mandatory disclosure provisions of its own statutes. KRS 304.2-150(3) provides, in relevant part:
Unless otherwise provided by law, records of the department shall be open to the extent provided by the Kentucky Open Records Act, KRS 61.872 to 61.884:
(a) The following records shall be open:
1. Rate and form filings and information filed in support thereof;
2. Other records as provided by law; and
3. All information filed by the department with the National Association of Insurance Commissioners, which that association makes available;
(b) The following records shall be closed:
1. All information received in confidence from the National Association of Insurance Commissioners, including, but not limited to, information from the insurance regulator information system. However, records described in this paragraph may be used by the commissioner in enforcement prosecutions and proceedings for disciplinary action, and may be disclosed to other law enforcement authorities; and
2. Other records as provided by law[.]
The justaposition of a general rule of disclosure consistent with the Open Records Act relative to department records and a specific rule directing disclosure relative to rate and form filings leads to an inescapable conclusion: The legislature has determined that the public interest is best served by full and frank disclosure of rate filings. Had the legislature intended that such filings only be open upon approval, it could have so provided.
KRS 304.13-081(1) lends additional support to our position. That statute provides:
Filings open to inspection All rates, supplementary rate information, and supporting information filed under KRS 304.13-011 to 304.13-161 shall be open to public inspection at any reasonable time. Copies may be obtained by any person on request and on payment of a charge specified in subtitle 4 of this chapter.
Supplementary rate information is defined as:
[A]ny manual or plan of rates, classification, rating schedule, minimum premium, policy fee, rating rule, and any other similar information needed to determine the applicable rate in effect or to be in effect.
KRS 304.13-011(2). Supporting information is defined as:
[T]he experience and judgment of the filer and the experience of data of other insurers or organizations relied on by the filer, the interpretation of any statistical data relied on by the filer, descriptions of methods used in making the rates, and any other similar information required to be filed by the commissioner.
KRS 304.13-011(3). Operating in tandem, KRS 304.2-150(3) and KRS 304.13-081(1) leave little doubt that the Department of Insurance, whatever its past practices were, is obligated to disclose the 1996 rate filings which Mr. Lawson requested.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court. Pursuant to KRS 61.880(3), the Attorney General shall be notified of any action in circuit court, but shall not be named as a party in that action or in any subsequent proceedings.
A. B. CHANDLER III
AMYE L. BENSENHAVER
ASSISTANT ATTORNEY GENERAL
George Nichols III
Department of Insurance
P. O. Box 517
Frankfort KY 40602-0517
614-B Shelby Street
Frankfort KY 40601
Frank L. Dempsey
Department of Insurance
P. O. Box 517
Frankfort KY 40602-0517