Wexford Health Sources, Inc. v. PA DOC & v. Maulsby ( 2021 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Wexford Health Sources, Inc., :
:
Petitioner :
:
v. : No. 818 C.D. 2019
: Submitted: November 27, 2019
Pennsylvania Department of :
Corrections and Vernon Maulsby, :
:
Respondents :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge1
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE WOJCIK FILED: January 6, 2021
Wexford Health Sources, Inc. (Wexford) petitions for review of a
Final Determination of the Pennsylvania Office of Open Records (OOR), which
granted in part, and denied in part, the appeal of Vernon Maulsby (Requester) on
remand pursuant to Department of Corrections v. Maulsby, 121 A.3d 585 (Pa.
Cmwlth. 2015). We affirm.
Requester, an inmate at the State Correctional Institution at
Graterford, submitted a request to the Pennsylvania Department of Corrections
1
The decision in this case was reached prior to January 4, 2021, when Judge Brobson
became President Judge.
(Department) pursuant to the Right-to-Know Law (RTKL),2 seeking an unredacted
copy of a contract between the Department and Wexford. The Department
partially denied the request, providing a redacted copy of the contract and citing
exemptions to further disclosure as provided in the RTKL, including an exemption
for confidential proprietary information and trade secrets under Section
708(b)(11).3 Requester appealed to OOR, arguing that it had previously ordered
2
Act of February 14, 2008, P.L. 6, 65 P.S. §§67.101-67.3104.
3
65 P.S. §67.708(b)(11). Section 708(b)(11) states:
(b) Exceptions.—Except as provided in subsections (c) and (d),
the following are exempt from access by a requester under this act:
***
(11) A record that constitutes or reveals a trade secret or
confidential proprietary information.
In turn, Section 102 of the RTKL defines “trade secret” as:
Information, including a formula, drawing, pattern, compilation,
including a customer list, program, device, method, technique or
process that:
(1) derives independent economic value, actual or potential, from
not being generally known to and not being readily ascertainable
by proper means by other persons who can obtain economic value
from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
The term includes data processing software obtained by an agency
under a licensing agreement prohibiting disclosure.
65 P.S. §67.102.
Finally, Section 102 also defines “confidential proprietary information” as:
(Footnote continued on next page…)
2
the Department to disclose an unredacted copy of the requested contract in another
case. See Gerber v. Pennsylvania Department of Corrections, (OOR Dkt. AP
2014-0186, filed March 10, 2014) 2014 PA O.O.R.D. LEXIS 1487, (Gerber).
OOR granted Requester’s appeal on the basis that the Department was collaterally
estopped from asserting any exemptions to disclosure because of the unappealed
OOR order in Gerber.
On appeal, this Court upheld OOR’s holding that the Department was
collaterally estopped from raising exemptions to disclosure, Maulsby, 121 A.3d at
589, but noted that Wexford was not offered timely notice of the OOR appeal, nor
provided with an opportunity to protect its trade secrets or confidential proprietary
information. See id. at 590 (“[T]his Court has consistently recognized the serious
due process concerns implicated by this lack of notice, particularly where the
confidential information of a private entity is at stake.”).4
(continued…)
Commercial or financial information received by an agency:
(1) which is privileged or confidential; and
(2) the disclosure of which would cause substantial harm to the
competitive position of the person that submitted the information.
Id.4
Specifically, we noted the following relevant procedural history of the case:
The OOR denied a request for reconsideration by the
Department and the Department thereafter filed a petition for
review with this Court. Wexford subsequently filed an application
for leave to intervene with this Court alleging that the Department
never notified it of the OOR appeal. Wexford alleged that the
Department first notified it of this matter on June 27, 2014, seven
(Footnote continued on next page…)
3
As a result, this Court concluded:
There is no dispute that the Department failed to notify
Wexford as directed in [an OOR May 21, 2014 letter.5]
Thus, Wexford never had notice or an opportunity to be
heard before the OOR rendered a final determination in
this case. In accordance with our prior case law,
Wexford should be afforded an opportunity to challenge
the release of any purported confidential proprietary
information. The General Assembly specifically chose to
protect this type of information in [S]ection 708(b)(11) of
the RTKL. [G]ranting access to the requested record
would eviscerate the protection that was expressly
provided by the General Assembly.
Accordingly, the final determination of the OOR is
vacated, and the matter is remanded to the OOR for
further proceedings consistent with this opinion.
(continued…)
days after the OOR’s final determination was issued, at which time
Wexford requested the opportunity to participate in any further
proceedings before the OOR and to present substantive evidence in
the context of reconsideration. By order dated August 25, 2014,
we granted Wexford’s application for leave to intervene.
Maulsby, 121 A.3d at 588.
5
Section 1101(c)(1) of the RTKL states:
A person other than the agency or requester with a direct interest in
the record subject to an appeal under this section may, within 15
days following receipt of actual knowledge of the appeal but no
later than the date the appeals officer issues an order, file a written
request to provide information or to appear before the appeals
officer or to file information in support of the requester’s or
agency’s position.
65 P.S. §67.1101(c)(1).
4
Id. at 593 (citation omitted).
On remand, Wexford identified five categories of the requested
records that it claimed were exempt from disclosure: (1) Electronic Medical
Records software; (2) confidential policies and procedures; (3) a medical services
implementation plan; (4) customer/subcontractor information; and (5) financial
information relating to its ability to perform the contract. See Reproduced Record
(R.R.) at 393a-405a. Wexford submitted a position statement supported by the
affidavit of Nickolas Little (Little Aff.), Wexford’s Vice President of Strategic
Contracting and Compliance, to support its claimed exemptions. See id. at 410a-
418a.6
6
Wexford alleged the following regarding the purported exemption from disclosure of
the requested financial information:
Numerous information and/or pages of the Wexford
Contract were redacted to remove financial information regarding
[Wexford] and [Wexford’s] subcontractors. . . . Section 708(b)(26)
of the RTKL exempts from disclosure financial information
submitted by a bidder in response to a request for proposal to
demonstrate its economic capability. 65 P.S. §67.708(b)(26);
Procurement Handbook, Part I, Chapter 50. [Wexford] submitted
its financial information only to demonstrate its economic
capacity, and that of its subcontractor, to provide healthcare
services for the Department. Little Aff., ¶29.
This financial information also qualifies as confidential
proprietary information pursuant to RTKL Section 708(b)(11)
because it includes financial information which, if known by
competitors, would cause substantial harm to [Wexford’s] market
position. Little Aff., ¶30. Access to the company-wide financial
information is limited to fewer than 8 individuals within the
company, some with only limited access.
R.R. at 404a-405a. See also Section 708(b)(26) of the RTKL, 65 P.S. §67.708(b)(26) (“[T]he
following are exempt from access by a requester under this act: . . . [F]inancial information of a
(Footnote continued on next page…)
5
On June 6, 2019, OOR issued a Final Determination granting in part,
and denying in part, Wexford’s appeal. See R.R. at 421a-428a. OOR granted
Wexford’s appeal with respect to the first four categories of the requested Wexford
records, finding that they are exempt from disclosure pursuant to Section
708(b)(11) of the RTKL. See id. at 424a-427a.
However, OOR denied Wexford’s appeal with respect to the requested
financial information stating, in relevant part:
Wexford redacted certain financial information
from the Wexford contract. In his affidavit, Mr. Little
attests that this information is limited to fewer than 8
company employees and is not generally known to the
public. Mr. Little further attests that this information was
only provided to the Department to demonstrate
Wexford’s capability to perform, and that disclosure of
this information to the public “would result in substantial
harm to Wexford[.]” While Mr. Little’s affidavit
sufficiently details the efforts undertaken to keep this
information confidential, Mr. Little’s affidavit provides
no detail as to how disclosure of this information would
be of value to Wexford’s competitors. Accordingly,
Wexford has failed to meet its burden of proof that this
financial information is either “confidential proprietary
information,” or a “trade secret.”1
***
1
Wexford also argues that this financial information is
exempt from disclosure under Section 708(b)(26) of the
RTKL, which exempts from disclosure financial
information submitted with a bid to demonstrate a
bidder’s capability to perform under the proposed
(continued…)
bidder or offeror requested in an invitation for bid or request for proposals to demonstrate the
bidder’s or offeror’s economic capability[.]”).
6
contract. 65 P.S. §67.708(b)(26). This matter is before
the OOR on remand to consider whether the redacted
information is exempt from disclosure pursuant to 65
P.S. §67.708(b)(11). Where a case is remanded for a
specific and limited purpose, issues not encompassed
with the remand order may not be considered on remand.
See Levy v. Senate of [Pennsylvania, 94 A.3d 436, 442
(Pa. Cmwlth. 2014)] (not considering issues under the
RTKL not within the scope of a remand order). A
remand does not permit a litigant a “proverbial second
bite at the apple.” Id. Therefore, the OOR cannot
consider Wexford’s new defense to redacting this
information.
R.R. at 427a (citation omitted). Wexford then filed the instant petition for our
review of OOR’s Final Determination.7
On appeal,8 Wexford argues that OOR erred in refusing to consider
whether the financial information is exempt from disclosure under Section
708(b)(26) of the RTKL, and in determining that Wexford did not sustain its
burden of proving that the financial information is exempt from disclosure as
confidential proprietary information under Section 708(b)(11). We do not agree.
With respect to the former claim, we note that Wexford’s Application
for Leave to Intervene in the Maulsby appeal alleged the following, in relevant
part:
14. The Wexford Contract contains highly
confidential and proprietary information, which is and
must be protected from disclosure pursuant to the
7
This Court’s review of OOR’s Final Determination is de novo and our scope of review
is plenary. Bowling v. Office of Open Records, 75 A.3d 453, 467 (Pa. 2013).
8
By October 9, 2019 letter, the Department informed this Court that it would not be
filing a brief in this case. By November 22, 2019 order, this Court precluded Requester from
filing a brief or participating in this matter based on his failure to comply with our prior order
directing the filing of a brief.
7
RTKL’s exemption provisions, including the specific
exemption for confidential and proprietary information,
65 P.S. §67.708(b)(11).
Application for Leave to Intervene (No. 1222 C.D. 2014, filed July 21, 2014) ¶14.
Moreover, in the appellate brief that Wexford filed as Intervenor, Wexford only
argued the applicability of the exemption contained in Section 708(b)(11) of the
RTKL, and did not assert that the requested financial information is exempt from
disclosure under Section 708(b)(26) as well. See Intervenor’s Brief (No. 1222
C.D. 2014, filed November 3, 2014) at 5-6, 10, 12-17.9 This is precisely why this
Court issued the limited remand order in Maulsby directing that “Wexford should
be afforded an opportunity to challenge the release of any purported confidential
proprietary information” because “[t]he General Assembly specifically chose to
protect this type of information in section 708(b)(11) of the RTKL.” Id. at 593.
This Court has recently observed:
Pa. R.A.P. 2591(a) states, in pertinent part: “On
remand of the record the . . . government unit below shall
proceed in accordance with the judgment or other order
of the appellate court[.]” See also Section 706 of the
Judicial Code, 42 Pa. C.S. §706 (“An appellate court may
affirm [or] vacate . . . any order brought before it for
review, and may remand the matter and . . . require the
entry of such appropriate order . . . as may be just under
the circumstances.”).
9
It is appropriate for this Court to take judicial notice of Wexford’s filings in this Court
in the Maulsby appeal. See, e.g., Pa. R.E. 201(b)(2) (“The court may judicially notice a fact that
is not subject to reasonable dispute because it . . . can be accurately and readily determined from
sources whose accuracy cannot reasonably be questioned.”); Lozado v. Workers’ Compensation
Appeal Board (Dependable Concrete Work), 123 A.3d 365, 374 n. 10 (Pa. Cmwlth. 2015) (“The
trial court orders were not included in the certified record. However, ‘it is well settled that this
Court may take judicial notice of pleadings and judgments in other proceedings where
appropriate.’ Lycoming County v. Pennsylvania Labor Relations Board, 943 A.2d 333, 335 n. 8
(Pa. Cmwlth. 2007).”).
8
As this Court has explained:
“[I]t has long been the law in Pennsylvania that
following remand, a lower court is permitted to
proceed only in accordance with the remand
order.” Commonwealth v. Sepulveda, [144 A.3d
1270, 1280 n.19 (Pa. 2016)]. In [Levy], which the
Supreme Court cited with approval in Sepulveda,
this Court explained: “Where a case is remanded
for a specific and limited purpose, ‘issues not
encompassed within the remand order’ may not be
decided on remand. A remand does not permit a
litigant a ‘proverbial second bite at the apple.’”
[Id.] at 442 (quoting In re Indep. Sch. Dist.
Consisting of the Borough of Wheatland, 912 A.2d
903, 908 (Pa. Cmwlth. 2006)).
Marshall v. Commonwealth, 197 A.3d 294, 306 (Pa.
Cmwlth. 2018), aff’d, 214 A.3d 1239 (Pa. 2019).
Accordingly, we will not consider any issues that have
been raised that are beyond the confines of our remand
order herein.
Marshall v. Pennsylvania Board of Probation and Parole (Pa. Cmwlth., No. 1115
C.D. 2019, filed October 8, 2020), slip op. at 9-10.10 Likewise, in this case, OOR
did not err in refusing to consider any additional exemption under the RTKL that
Wexford did not assert in any manner in its Application for Leave to Intervene or
in its Intervenor’s Brief that it filed in the Maulsby appeal prior to the issuance of
this Court’s limited remand order in that matter.11
10
See Section 414(a) of this Court’s Internal Operating Procedures, 210 Pa. Code
§69.414(a) (“Parties may . . . cite an unreported panel decision of this Court issued after January
15, 2008, for its persuasive value, but not as binding precedent.”).
11
See also Levy, 94 A.3d at 442 (citations omitted), wherein this Court stated:
Where a case is remanded for a specific and limited
purpose, “issues not encompassed within the remand order” may
(Footnote continued on next page…)
9
Finally, Wexford claims that OOR erred in determining that it did not
sustain its burden of proof with respect to the claimed exemption of the financial
records under Section 708(b)(11) of the RTKL. However, as this Court has noted:
Under the RTKL, an agency bears the burden of
proving, by a preponderance of the evidence, that a
record is protected from disclosure under one of the
enumerated exemptions or contains privileged material.
Section 708(a)(1) of the RTKL, 65 P.S. § 67.708(a)(1);
McGowan v. Pennsylvania Department of Environmental
Protection, 103 A.3d 374, 380 (Pa. Cmwlth. 2014).[12] A
preponderance of the evidence is a finding “that the
existence of a contested fact is more probable than its
nonexistence.” Pennsylvania State Troopers Association
v. Scolforo, 18 A.3d 435, 439 (Pa. Cmwlth. 2011)
(internal quotation marks omitted).
An agency may present sufficient evidence by the
submission of affidavits. McGowan, 103 A.3d at 381.
Affidavits are the means through which a
governmental agency . . . justifies nondisclosure of
the requested documents under each exemption
upon which it relied . . . . The affidavits must be
detailed, nonconclusory, and submitted in good
faith. . . . Absent evidence of bad faith, the veracity
(continued…)
not be decided on remand. A remand does not permit a litigant a
“proverbial second bite at the apple.”
Here, the Supreme Court remanded “for consideration of
the additional reasons for denial raised by the Senate to the Senate
Appeal’s Officer.” As mentioned above, this new challenge was
not submitted to the Senate Appeals Officer. Thus, it is beyond the
scope of our Supreme Court’s remand order.
12
See also Highmark Inc. v. Voltz, 163 A.3d 485, 490 (Pa. Cmwlth. 2017) (“The party
asserting an exemption bears the burden of proving the exemption applies.”) (citations omitted).
10
of an agency’s submissions explaining reasons for
nondisclosure should not be questioned.
McGowan, 103 A.3d at 381 (quoting Office of the
Governor v. Scolforo, 65 A.3d 1095, 1103 (Pa. Cmwlth.
2013) (citation omitted)). However, conclusory
affidavits, standing alone, will not satisfy an agency’s
burden of proof under the RTKL. Id. Moreover, the
affidavit must be specific enough to permit OOR or a
reviewing court to ascertain whether the claimed
exemption applies to the records. McGowan, 103 A.3d at
381.
UnitedHealthcare of Pennsylvania, Inc. v. Pennsylvania Department of Human
Services, 187 A.3d 1046, 1059 (Pa. Cmwlth. 2018).
Moreover, this Court has observed:
Section 102 of the RTKL defines “confidential
proprietary information” as follows:
Commercial or financial information received by
an agency:
(1) which is privileged or confidential; and
(2) the disclosure of which would cause substantial
harm to the competitive position of the person that
submitted the information.
65 P.S. §67.102. In determining whether certain
information is “confidential,” the OOR must consider
“the efforts the parties undertook to maintain . . .
secrecy.” “In determining whether disclosure of
confidential information will cause ‘substantial harm to
the competitive position’ of the person from whom the
information was obtained, an entity needs to show: (1)
actual competition in the relevant market; and, (2) a
likelihood of substantial injury if the information were
released.” “Competitive harm analysis ‘is limited to
harm flowing from the affirmative use of proprietary
information by competitors.’”
11
Crouthamel v. Department of Transportation, 207 A.3d 432, 440-41 (Pa. Cmwlth.
2019) (citation omitted).
In this case, the Little Affidavit that Wexford offered in support of the
exemption under Section 708(b)(11) of the RTKL states:
29. [Wexford] submitted the financial
information in question only to demonstrate its and its
subcontractor’s economic capability to perform
healthcare services for the Department.
30. This financial information is not generally
known to the public, and would result in substantial harm
to Wexford if disseminated.
31. Access to the financial statement
information is limited to fewer than 8 individuals within
the company, some with only limited access.
R.R. at 418a.
Such a conclusory affidavit, which merely parrots the statutory
language of the confidential proprietary information exemption without specific
detail as to how the exemption applies to the requested financial records is patently
insufficient to prove that the records at issue are exempt from disclosure.13 Indeed,
13
See, e.g., Scolforo, 65 A.3d at 1104, wherein we stated:
The Affidavit contains no further specifics. It is, therefore, without
more, not sufficient to prove that the records are exempt [as
internal, predecisional deliberations under Section 708(b)(10)(i) of
the RTKL, 65 P.S. §67.708(b)(10)(i)]. While the Affidavit tracks
the language of the exception it presupposes, rather than proves
with sufficient detail, that the redacted Calendar entries are
reflective of internal deliberations and, therefore, exempt from
disclosure. It is not enough to include in the Affidavit a list of
subjects to which internal deliberations may have related. The
Affidavit must be specific enough to permit the OOR or this Court
to ascertain how disclosure of the entries would reflect the internal
deliberations on those subjects. Because this Affidavit is not
(Footnote continued on next page…)
12
as OOR correctly explained, “While Mr. Little’s [A]ffidavit sufficiently details the
efforts undertaken to keep this information confidential, Mr. Little’s affidavit
provides no detail as to how disclosure of this information would be of value to
Wexford’s competitors.” R.R. at 427a. Moreover, the Affidavit utterly fails to
address the “actual competition in the relevant market,” and the “likelihood of
substantial injury if the information were released” via the “‘harm flowing from
the affirmative use of proprietary information by competitors.’” Crouthamel, 207
A.3d at 441. As a result, OOR did not err in concluding that Wexford failed to
sustain its burden of proof in this regard.
Accordingly, OOR’s Final Determination is affirmed.
MICHAEL H. WOJCIK, Judge
(continued…)
detailed, but rather conclusory, Manchester [v. Drug Enforcement
Admin., 823 F. Supp. 1259, 1265 (E.D. Pa. 1993), aff’d, 40 F.3d
1240 (3d Cir. 1994)], it is not sufficient, standing alone, to prove
that the Calendar entries are exempt from disclosure.
13
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Wexford Health Sources, Inc., :
:
Petitioner :
:
v. : No. 818 C.D. 2019
:
Pennsylvania Department of :
Corrections and Vernon Maulsby, :
:
Respondents :
ORDER
AND NOW, this 6th day of January, 2021, the Final Determination of
the Office of Open Records, dated June 6, 2019, is AFFIRMED.
__________________________________
MICHAEL H. WOJCIK, Judge