Matter of Newman v Dinallo

[*1] Matter of Newman v Dinallo 2009 NY Slip Op 50422(U) [22 Misc 3d 1134(A)] Decided on February 10, 2009 Supreme Court, Nassau County Lally, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 10, 2009
Supreme Court, Nassau County

In the Matter of an Article 78 Proceeding Leon Newman, LORRAINE NEWMAN, MARTIN GAVRIN, CLAIRE GAVRIN, PAULINE NAGER, Plaintiff(s),

against

Eric R. Dinallo, SUPERINTENDENT, INSURANCE DEPARTMENT OF THE STATE OF NEW YORK, Defendant(s).



18360/08



George Nager, Esq.

Attorney for Plaintiff

231 Mineola Boulevard

Mineola, NY 11501

Andrew M. Cuomo, Attorney General

Attorney for Defendant

200 Old Country Road, No.460

Mineola, NY 11501

Ute W. Lally, J.

Motion by petitioners for a judgment pursuant to CPLR Article 78 for a Writ of Mandamus ordering respondents Eric Dinallo and the Insurance Department of the State of New York to "answer" their Freedom of Information requests pursuant to Public Officers Law made on July 25, 2008 and August 1, 2008 to the Health Bureau of the New York State Department of Insurance is denied and the petition is dismissed. Additional motion by petitioners for an order disqualifying the Attorney General from representing the respondents based upon a conflict of interest is denied.

This is a proceeding under CPLR article 78 and the Freedom of Information Law (Public Officers Law article 6) in which petitioners seek "a judgment ordering respondents to provide responses and copies of documents relating to the requests posed to them in requests dated July 25, 2008 and August 1, 2008" (Petition ¶1). [*2]

Petitioners are insureds under long term care policies issued by GE Capital Life Assurance Company of New York, now known as Genworth Life Insurance Company of New York. By notice dated June 29, 2008 Genworth advised petitioners that the Department of Insurance approved a 12% increase in premiums on their long term care policies. Petitioners thereafter sought information concerning approval of the increase through multiple communications.

By letter dated August 25, 2008 counsel for petitioners wrote complaining of purported inadequacies of a response received from Earl S. Klayman, the Supervising Actuary of the Health Bureau of the Department of Insurance. The letter, designated FOIL Request No. 2008-001538, was denied on 9/12/08, stating "[y]our request is overbroad and vague, and does not meet the reasonably described' requirement of Public Officers Law § 89(3)." The denial advises that the request may be revised and resubmitted or the denial may be appealed to the Office of General Counsel within thirty days.

Respondents assert that petitioners failed to appeal or resubmit. In order to preserve their right to judicial review, petitioners were " required to exhaust . . . administrative remedies by filing an administrative appeal within 30 days" (McGriff v. Bratton, 293 AD2d 401; Public Officers Law § 89 [4] [a], [b]). Having failed to exhaust, petitioners are precluded from seeking judicial relief on request # 2008-001538 (see Jamison v. Tesler, 300 AD2d 194).

A second line of inquiry began with a letter from counsel for petitioners dated July 25, 2008 posing interrogatory type questions. A formal Foil request dated August 1, 2008, with a cover letter dated August 4, was thereafter presented to the Records Department of the Department of Insurance (# 2008-001413- NYC). The request again posed interrogatory type questions concerning not only the manner of consideration and evidence supporting a rate increase, but also the history of the transactions between GE and Genworth regarding the name change or purported purchase. For example, the questions included the following:

6. Was the sale by GE to Genworth of its long term care policies, inclusive of continuation of the stated obligations of GE to its insureds, or were there any reservations

9. Under the terms of sale by GE to Genworth, can you tell me whether it was all cash or whether it was a leveraged buy out, and if so, the terms of such leverage.

21. Finally, since the initial premiums were made on the basis of criteria submitted by GE in 1998, what . . . difference or change in any of the criteria was submitted for consideration by Genworth to the actuary or panel.

The petition avers that no response has been forthcoming.

The respondents' return indicates that respondents provided a response on September 5, 2008 which indicated that although the request seeks answers to numerous questions, it was being treated as a document request under the Freedom of Information Law (FOIL). The [*3]response noted that only government records in physical form are subject to production under FOIL, and that there were no records responsive to certain requests (Qs 8,12,13,16-20). The Insurance Department produced those records that were in existence and responsive to the remainder of requests (Qs 1-7,9-11,14), except for those exempt from production under Public Officers Law § 87(2)(d) (Q21).

Petitioner appealed and by letter dated 9/29/08 the appeal was denied by Martha Lees Deputy Chief Counsel of the Insurance Department.

The Freedom of Information Law "expresses this State's strong commitment to open government and public accountability and imposes a broad standard of disclosure upon the State and its agencies" (Capital Newspapers Div. of Hearst Corp. v. Burns, 67 NY2d 562, 565-566). Enacted in furtherance of the public's "vested and inherent right to know," FOIL provides a means for citizens to obtain information concerning functioning of government thus providing the electorate with sufficient information to expose, inter-alia, "waste, negligence and abuse on the part of government officers" (Capital Newspapers Div. of Hearst Corp. v. Burns, supra). Its purpose to support "open government and public accountability" imposes a broad duty on government "to make its records available to the public" (Matter of Gould v. New York City Police Dept., 89 NY2d 267, 274). All government records are "presumptively open for public inspection and copying" unless they are exempt under Public Officers Law § 87 (2)" (Matter of Gould v. New York City Police Dept., supra at pp 274-275). Notwithstanding the foregoing "an agency has no duty to create documents that are not in existence" and has no duty to respond to items resembling interrogatories that "request information in response to a question rather than a specific document on file" (Brown v. New York City Police Dept., 264 AD2d 558, 559, 562).

Although petitioners' questions were not in proper form, respondents provided documents that were relevant to the questions posed. Respondents properly refused to produce any record responsive to requests such as that seeking a "brief outline" of resumes on file, as respondents are not obligated to create documents in response to a FOIL request (Public Officers Law § 89[3][a]). Moreover, with respect to records the Department was "unable to locate" it properly certified that "it does not have possession" of the requested records (Rattley v. New York City Police Dept., 96 NY2d 873, 875). No particular form of certification is required (Rattley v. New York City Police Dept., supra).

Respondents did not respond to Question 21 which states "Finally, since the initial premiums were made on the basis of criteria submitted by GE in 1998, what if any difference or change in any of the criteria was submitted for consideration by Genworth to the actuary or panel". Respondents contend that documents responsive to this question constitute trade secrets not subject to disclosure.

Public Officers Law § 87 (2) (d) states that the Department "may deny access to records or portions thereof that . . . are trade secrets or are submitted . . . by a commercial enterprise . . . and which if disclosed would cause substantial injury to the competitive position of the subject [*4]enterprise" (Markowitz v. Serio, 11 NY3d 43, 50).

Respondents aver that the withheld documents "constituted material containing proprietary information that included, among other things, incident rates (i.e., the possibility of having a claim in the future); continuance (i.e., the possibility that a claimant will continue a claim); severity of claims; interest discount; voluntary lapse assumptions (i.e., the percentage of population whose policies lapse); mortality assumptions; underwriting discounts; assumed expense levels; and the distribution of policyholders by age, sex and benefit options." Respondents aver that such information was "developed by Genworth at is own expense, is kept confidential by Genworth, is not made publicly available, and is of substantial commercial value to Genworth's competitors."

Such information, comprising the variables that factor into pricing premiums, constitute trade secrets and need not be disclosed (see, Belth v. Insurance Dept., 95 Misc 2d 18 [Supreme Court New York County]). "[C]osts, particularly when they depend not upon the purchase of open market commodities or the use of easily obtainable labor rates, but upon statistical assumptions; upon income derived from various investment and many other factors, may well be a trade secret" (Belth v. Insurance Dept., supra; see also Insurance Department, General Counsel Opinion April 1, 1994, 1994 WL 16305835). Accordingly, the denial of petitioners' appeal is upheld.

Petitioners' request for attorneys fees is denied. The Public Officers Law permits an award of attorneys fees only when the petitioner has "substantially prevailed" and "i. the agency had no reasonable basis for denying access; or ii. the agency failed to respond to a request or appeal within the statutory time" (Public Officers Law § 89[4][c]) . Petitioner has not prevailed on any issue and the agency's conduct was legal, proper and timely.

Petitioners have also submitted a motion to have the Attorney General disqualified from representing respondents on the grounds of a conflict of interest. Petitioners advance facile, unsupported and speculative allegations of vague wrongdoing on the part of the Insurance Department. With no factual support whatsoever petitioners insist that the Attorney General must prosecute the Insurance Department and cannot both defend the Insurance Department here and prosecute it for wrongdoing. Petitioners present no evidence after having received the FOIL disclosure to which they are entitled, and do not address any common conflict of interest, for example one based upon "a prior attorney-client relationship" where the "former and current representations are both adverse and substantially related" (Matter of Niagara Mohawk Power Corp. v. Town of Tonawanda Assessor, 236 AD2d 783, 783). There is no authority to support petitioners' claim that disqualification is proper based upon a speculative future relationship. Indeed bald allegations of agency wrongdoing cannot preclude the Attorney General's Office from performing its statutory duties (see, Public Officers Law § 17 [ Defense and indemnification of state officers and employees]).

This constitutes the decision and order of the court. [*5]

Settle judgment on notice.

Dated: ______________ ________________________________

J.S.C.