Schupp v. Ohio Dept. of Ins.

[Cite as Schupp v. Ohio Dept. of Ins., 2021-Ohio-4179.]
JASON M. SCHUPP Case No. 2021-00199PQ
Requester Special Master Jeff Clark
v. REPORT AND RECOMMENDATION
OHIO DEPARTMENT OF INSURANCE
Respondent
{¶1} Ohio’s Public Records Act, R.C. 149.43, provides that upon request, a public
office “shall make copies of the requested public record available to the requester at
cost and within a reasonable period of time.” R.C. 149.43(B)(1). The Act is construed
liberally in favor of broad access, and any doubt is resolved in favor of disclosure of
public records. State ex rel. Cordell v. Paden, 156 Ohio St.3d 394, 2019-Ohio-1216, 128
N.E.3d 179, ¶ 7. This action is filed under R.C. 2743.75, which provides an expeditious
and economical procedure to enforce alleged violations of R.C. 149.43(B).
{¶2} On March 26, 2021, requester Jason Schupp made a public records request
to respondent Ohio Department of Insurance (ODI) for “licensing or authorization
documentation with regard to active Ohio-domiciled captive insurance companies on file
with the Ohio Department of Insurance.” (Complaint at 1-2; Response at 2.) On
March 29, 2021, ODI denied the request, stating: “we are unable to generate/provide
this information as captive insurance companies are confidential and not subject to
public record pursuant to 3964.03(H) of the Ohio Revised Code.” (Id. at 2.) On April 9,
2021, Schupp responded to the denial by clarifying: “I am looking for a list of the names
and ideally addresses of the captives licensed by the Department. Are the names really
confidential?” (Id.) ODI did not respond. On April 14, 2021, Schupp filed this action
pursuant to R.C. 2743.75 alleging denial of access to public records in violation of
R.C. 149.43(B). On June 7, 2021, ODI provided Schupp with copies of six Captive
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Licenses issued to captive insurance companies, with the company names redacted.
(Response at 2-3, Exh. A.) On July 27, 2021, ODI filed a combined response to the
complaint and motion to dismiss (Response). On August 17, 2021, Schupp filed a reply
waiving his remaining claims except to contest the redaction of the insurance
companies’ names from the Captive Licenses. (Reply at 1, fn. 1.) On August 24, 2021
ODI submitted unredacted copies of the six Captive Licenses under seal and filed a
privilege log and affidavit in support (Sur-reply).
Burdens of Proof
{¶3} The requester in an enforcement action under R.C. 2743.75 bears an overall
burden to establish a public records violation by clear and convincing evidence. Hurt v.
Liberty Twp., 2017-Ohio-7820, 97 N.E.3d 1153, ¶ 27-30 (5th Dist.). The requester bears
a burden of production “to plead and prove facts showing that the requester sought an
identifiable public record pursuant to R.C. 149.43(B)(1) and that the public office or
records custodian did not make the record available.” Welsh-Huggins v. Jefferson Cty.
Prosecutor's Office, 163 Ohio St. 3d 337, 2020-Ohio-5371, 170 N.E.3d 768, ¶ 33. ODI
does not dispute that Schupp has met this burden of production but asserts that it
properly withheld captive insurance company names from the Captive Licenses on the
basis of public records exemptions found in R.C. 3964.03(H) and/or R.C. 3964.08.1
{¶4} “If the public office * * * refuses to release the requested record on the basis
of a statutory exemption, its ‘burden of production’ in the R.C. 2743.75 proceeding is to
plead and prove facts establishing that the requested record falls squarely within the
exemption.” Welsh-Huggins at ¶ 35. Exemptions (interchangeably referred to as
“exceptions”) must be strictly construed against the public office. State ex rel. Rogers v.
Dept. of Rehab. & Corr., 155 Ohio St.3d 545, 2018-Ohio-5111, 122 N.E.3d 1208, ¶ 7.
1 Although ODI’s March 29, 2021 denial of the request was based only on R.C. 3964.03(H), R.C.
149.43(B)(3) provides that “[the initial] explanation shall not preclude the public office * * * from relying
upon additional reasons or legal authority in defending an action commenced under division (C) of this
section.” The court may therefore consider additional exemptions raised in ODI’s response pleading.
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Any doubt should be resolved in favor of disclosure of public records. State ex rel.
James v. Ohio State Univ., 70 Ohio St.3d 168, 169, 637 N.E.2d 911 (1994).
Motion to Dismiss
{¶5} In construing a motion to dismiss pursuant to Civ.R. 12(B)(6), the court must
presume that all factual allegations of the complaint are true and make all reasonable
inferences in favor of the non-moving party. Mitchell v. Lawson Milk Co., 40 Ohio St.3d
190, 192, 532 N.E.2d 753 (1988). Then, before the court may dismiss the complaint, it
must appear beyond doubt that plaintiff can prove no set of facts entitling him to
recovery. O’Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242, 245, 327
N.E.2d 753 (1975).
{¶6} On consideration of the motion to dismiss, the special master finds that
applicability of the claimed exceptions to the requested records is not conclusively
shown on the face of the complaint and attachments. Moreover, as the matter is now
fully briefed the arguments to dismiss are subsumed in the arguments to deny the claim
on the merits. It is therefore recommended that the motion to dismiss be denied.
Exceptions Claimed
{¶7} A captive insurance company (“CIC”) is a company that insures only the
risks of its parent or affiliated companies. R.C. 3964.01(B). A CIC cannot operate in
Ohio unless it obtains a captive insurance license from ODI, maintains its principal place
of business in Ohio, and meets other requirements listed in R.C. 3964.03(B). As of
March 26, 2021, ODI had licenses on file for six CICs. (Response at 2-3; Sur-reply,
Baird Aff. at ¶ 3.)
{¶8} Unlike the other insurance companies that it regulates, ODI claims it must
keep the business names of CICs unknown and unknowable to the public. ODI redacted
the corporate names from Captive Licenses it provided during mediation, and argues
that CICs are anonymous, effectively secret insurance companies. ODI bases its
withholding of CIC names on R.C. 3964.03(H), which states:
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Except as otherwise provided in this division, documents and information
submitted by a captive insurance company pursuant to this section are not
subject to section 149.43 of the Revised Code, and are confidential, and
may not be disclosed by the superintendent or any employee of the
department of insurance without the written consent of the company.
To fall squarely under this public records exception, ODI must prove that a document or
information 1) was submitted “by a captive insurance company,” and 2) was submitted
“pursuant to [R.C. 3964.03].”
1) Documents and Information Submitted by Other Sources
{¶9} Documents and information “submitted by a captive insurance company”
means only what was presented by a CIC to ODI. Chapter 3964 anticipates ODI’s
receipt of documents and information pursuant to R.C. 3964.03 from other sources as
well, e.g., outside information obtained by the superintendent pursuant to R.C.
3964.03(F)(1) through (6) regarding a CIC applicant’s character, reputation, financial
standing, business qualifications of officers and directors, etc.; and records of services
provided by legal, financial, and examination contractors hired by the superintendent
pursuant to R.C. 3964.03(I)(1). These and any other third-party records would
necessarily include the name of the CIC applicant to which they pertain.
{¶10} Documents and information in records received by ODI from entities other
than the CIC would not fall squarely under R.C. 3964.03(H). Nor would documents that
ODI itself creates concerning CICs. Accordingly, ODI has disclosed most of the text of
the Captive Licenses it has issued (Response, Exh. A), implicitly recognizing that they
are not “documents * * * submitted by” CICs. ODI argues only that the business name is
strictly confidential information that must be redacted from the otherwise public license:
The company name is information submitted by the captive insurance
company to ODI pursuant to R.C. 3964.03. But for the company
submitting its name to ODI as information necessary to process its request
for a license to do the business of captive insurance in this state in
accordance with R.C. 3964.03, ODI would not have such information.
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(Sur-Reply, Baird Aff. at ¶ 4, Privilege Log re: each license.) However, R.C. 3964.03(H)
by its terms does not apply if the same information was also received from other
sources. ODI does not specifically deny receipt of CIC business names from other
sources, asserting only the above “but-for” argument as to its initial receipt of the
company name.
2) Documents and Information of Applicants Prior to Licensing
{¶11} R.C. 3964.03(H) applies only to information submitted “by a captive
insurance company.” R.C. 3964.03(I)(1)2 refers to an aspiring CIC as an “applicant”
when paying the fee for processing its application for a license and paying the cost of
ODI retention of legal, financial, and examination services from outside the department.
The statute switches to “captive insurance company” when referring to the entity paying
license renewal fees. ODI assumes that R.C. 3964.03(H) applies to any information
submitted by an applicant for CIC licensure. However, “an assumption does not rise to
the level of clear and convincing proof necessary to apply an exception to the Public
Records Act.” (Citation omitted.) State ex rel. Summers v. Fox, Slip Opinion No. 2020-
Ohio-5585, ¶ 33.
{¶12} The question of when an entity is a CIC for purposes of R.C. 3964.03(H) is
arguably made ambiguous by other language in the statute, e.g., “A captive insurance
company seeking a license to be a captive insurance company in this state shall file an
application * * *.” (Emphasis added.) R.C. 3964.03(D). It is difficult to reconcile “captive
insurance company” as the label for a CIC applicant unless only existing CICs from
other states or countries may apply for an Ohio license. A Captive License is required
before an entity may operate in Ohio as a CIC:
2 “Each applicant for a license to do the business of a captive insurance company in this state
shall pay to the superintendent a nonrefundable fee of five hundred dollars for processing its application
for a license. The superintendent is authorized to retain legal, financial, and examination services from
outside the department, at the expense of the applicant. Each captive insurance company shall annually
pay a license renewal fee of five hundred dollars.”
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(B) A captive insurance company shall not operate in this state unless * * *
(1) The captive insurance company obtains from the superintendent a
license to do the business of captive insurance in this state.
Yet Chapter 3964 also anticipates that “new” CICs may be “formed” under other
provisions of the chapter.3
{¶13} “[If] the exemption upon which the public office relies is not obviously
apparent and manifest just from the content of the record itself, factual evidence to
establish the application of that exemption is necessary.” Welsh-Huggins v. Jefferson
Cty. Prosecutor's Office, 163 Ohio St. 3d 337, 2020-Ohio-5371, 170 N.E.3d 768, ¶ 35.
ODI provides no evidence or argument that initial business names were submitted by
“captive insurance companies” as opposed to applicants lacking that formal status. As
in any other business or profession, an applicant’s corporate description does not confer
the status of licensure or authority to operate. The special master finds that a
corporation is not “a captive insurance company” within the meaning of R.C. 3964.03(H)
until it is licensed to operate as such. ODI thus fails to meet its burden to prove that the
business names on the Captive Licenses fall squarely under R.C. 3964.03(H).
Voluntary Disclosure of Company Identities
{¶14} ODI attests to six licenses issued to captive insurance companies in Ohio.
(Response at 3.) Three of these licenses contain National Association of Insurance
Companies (NAIC) numbers. (Response, Exh. A. p. 1-3.) ODI’s web site provides links
to the NAIC, which hosts a Listing of Companies Summary with company name, state,
and NAIC number.4 A search of the Summary for the NAIC numbers disclosed by ODI
produces the business names of the three associated Ohio CICs.
See R.C. 3964.01(B), R.C. 3964.17(A)(2)(a), and R.C. 3964.1710
3
https://content.naic.org/sites/default/files/publication-loc-zu-listing-companies-summary.pdf
4
(Accessed Sept. 20, 2021)
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{¶15} A fourth Ohio CIC business name was publicly disclosed by ODI in a 2015
industry media article titled Ohio announces first captive insurance company.5 The then-
director of ODI and the CIC together disclosed the CIC’s name, the name of its
president, the name of its parent company, the parent’s vice-president, and the nature
of the parent’s insured risks. This demonstrates that at the time Chapter 3964.03(H)
was enacted6 ODI did not interpret the statute to forbid disclosure of CIC names.
{¶16} Most or all Ohio CICs are also listed in public aggregators of captive
insurance companies.7 The above disclosures implicitly waive ODI’s claim of
comprehensive confidentiality for the names of licensed Ohio CICs.
Records Clothed With The Public Records Cloak
{¶17} An entity aspiring to be a CIC must first form an Ohio corporation, R.C.
3964.03(A), by filing articles of incorporation with the Ohio secretary of state. R.C.
1701.04(A). The entity must then submit a certified copy of the articles of incorporation
with its CIC application. R.C. 3964.03(D)(1). The contents of Ohio articles of
incorporation filed and recorded in the office of the secretary of state are expressly
public. R.C. 1701.08(B).8
{¶18} A certified public document of one public office, used to establish the
credential it documents (incorporation in compliance with R.C. Chapter 1701) for
qualification of the same entity for licensure by a second public office, retains its pre-
existing status as a public record of the first office. Records once established as public
cannot be made confidential merely by placing them in a different location. State ex rel.
Cincinnati Enquirer v. Hamilton Cty., 75 Ohio St.3d 374, 378, 662 N.E.2d 334 (1996) (9-
1-1 call recordings are public when made and are not susceptible to an otherwise
5 https://www.captiveinternational.com/news/ohio-announces-first-captive-insurance-company-
1272 (Accessed Sept. 22, 2021)
6 HB 117, 130th GA, eff. Sept. 17, 2014. The original text has not been amended since.
7 E.g., https://www.bizapedia.com/search.aspx.
8 “All persons shall have the opportunity of acquiring knowledge of the contents of the articles and
other certificates filed and recorded in the office of the secretary of state * * *.” R.C. 1701.08(B).
Case No. 2021-00199PQ -8- REPORT AND RECOMMENDATION
applicable general exception when later aggregated by law enforcement investigators,
prosecutors, or grand juries.) “Once clothed with the public records cloak, the records
cannot be defrocked of their status.” Id. Accord State ex rel. Dispatch Printing Co. v.
Morrow Cty. Prosecutor’s Office, 105 Ohio St.3d 172, 2005-Ohio-685, 824 N.E.2d 64,
¶ 9-14; State ex rel. Dillery v. Icsman, 92 Ohio St.3d 312, 316, 750 N.E.2d 156 (2001).
See also 1996 Ohio Op. Atty. Gen. No. 034 (where county recorder receives and
publicly records instruments in accordance with statutory directives, social security
numbers included in the records are not subject to the general exemption that would
otherwise apply). This would not apply to documents submitted by a CIC that are not
public record at their source. However, public articles of incorporation and items of
information within them may not be cloaked with secrecy when submitted to ODI in
connection with further licensure.
The Business Names Are Designed to Identify Ohio CICs
{¶19} The General Assembly requires that each CIC include the relatively
uncommon adjective “captive” as part of its business name.9 The active Ohio
corporations registered with the Ohio Secretary of State that have “captive” in their
names must therefore include all Ohio CIC’s.10 CICs in the subcategory of Protected
Cell Captive Insurance Companies are required to include the even more distinctive
label “protected cell captive” or the abbreviation “PCC” in their name. R.C. 3964.17(J).11
The mandated branding of CICs as “captives” within their business names is fully
9 “No captive insurance company shall adopt a name that is the same, deceptively similar, or
likely to be confused with, or mistaken for, any other existing business name registered in this state. The
name under which a captive insurance company engages in business must contain the word ‘captive.’”
R.C. 3964.04.
10 https://businesssearch.ohiosos.gov/ (Accessed Sept. 28, 2021.)
11 Although there are two active Ohio companies in the SOS corporate listing with “protected cell
captive” as part of their business names, neither company appears among the ODI CIC licenses filed
under seal. Conversely, the company that ODI announced as the state’s first CIC, identified in the article
as a protected cell captive, does not include those words in its business name. See
https://www.captiveinternational.com/news/ohio-announces-first-captive-insurance-company-1272
(Accessed Sept. 22, 2021) and https://businesssearch.ohiosos.gov/ (Accessed Sept. 22, 2021).
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consistent with ODI’s public announcement of the name of the first CIC in 2015 and with
ODI’s voluntary disclosure of three CIC-identifying NAIC numbers.
{¶20} Ohio public records law generally disfavors withholding information that is
already known or accessible to the public. See State ex rel. Vindicator v. Wolff, 132
Ohio St.3d 481, 2012-Ohio-3328, 974 N.E.2d 89, ¶ 36 (In light of previous releases of
case records, and internet access to the same and similar information, a sealing order
“would do little, if anything, to protect the privacy of the defendants”); State ex rel.
Besser v. Ohio State Univ., 89 Ohio St.3d 396, 403, 732 N.E.2d 373 (2000) (information
readily ascertainable from other sources is not “trade secret”); State ex rel. Jenkins v.
Cleveland, 82 Ohio App.3d 770, 785, 613 N.E.2d 652 (8th Dist.1992) (some of the
information that would allegedly endanger life or physical safety “is available through
other public records”).
R.C. 3964.08
{¶21} ODI asserts a second statutory exception, R.C. 3964.08, which provides in
pertinent part:
(A) Captive insurance companies shall be examined, evaluated, and
monitored pursuant to section 3901.07 of the Revised Code.
(B) All examination reports, preliminary examination reports or results,
working papers, recorded information, documents and copies thereof
produced by, obtained by, or disclosed to the superintendent or any other
person in the course of an examination made under this section are
confidential and are not subject to subpoena and may not be made public
by the superintendent or an employee or agent of the superintendent
without the written consent of the company, except to the extent provided
in this section.
(Emphasis added.) R.C. 3901.07 provides, in pertinent part:
(B)(1) Before issuing any license to do the business of insurance in this
state, the superintendent of insurance, or a person appointed by him, may
examine the financial affairs of any insurer.
(2) The superintendent, or any person appointed by him, may examine, as
often as he considers it desirable, the affairs of any insurer and of any
Case No. 2021-00199PQ -10- REPORT AND RECOMMENDATION
person as to any matter relevant to the financial affairs of the insurer or to
the examination.
(3) The superintendent, or any person appointed by him, shall examine
each domestic insurer at least once every three years as to its condition,
fulfillment of its contractual obligations, and compliance with applicable
laws, provided that he may defer making the examination for a longer
period not to exceed five years.
The examination, evaluation, and monitoring made under R.C. 3901.08 occurs
subsequent to the filing of an application for CIC licensure. The restrictions on
disclosure contained in R.C. 3964.08(B) therefore do not apply to applications and their
attachments.12 As with R.C. 3964.03(H), this statute is limited by its express terms and
does not encompass all information received or kept by ODI as to the business names
of CICs or applicants.
ODI Financial Records
{¶22} Schupp notes that Ohio Constitution Art. XV Miscellaneous, § 03 Receipts
and Expenditures requires that “An accurate and detailed statement of the receipts and
expenditures of the public money, the several amounts paid, to whom, and on what
account, shall, from time to time, be published, as shall be prescribed by law.” ODI
financial records presumably documents each CIC’s $500 initial and renewal license
processing fees, R.C. 3964.03(I), and the annual fees based on its premiums, R.C.
3964.13. Chapter 3964 does not expressly prohibit release of the names of CICs
contained in ODI financial records. ODI cites no statutory provision to redact the names
of CICs from other agency financial records of these duties, such as the Ohio treasurer.
No Exemption Expressly Makes CIC Identities Confidential
{¶23} The General Assembly knows how to comprehensively prohibit disclosure
of business or personal names or identifying information. See, e.g., R.C.
149.43(A)(1)(aa) (names of municipal utility customers); R.C. 149.43(A)(1)(gg) (name of
12 Another post-application confidentiality provision appears in R.C. 3964.193.
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juvenile in school vehicle traffic accident record); R.C. 149.43(A)(2)(a) (name of
uncharged suspect, and witnesses to whom confidentiality reasonably promised); R.C.
149.43(A)(8)(d) and (f) (name of beneficiaries, spouses, and children of designated
public service workers); R.C. 2949.221 (information or records that identify an entity
participating in designated activities related to drugs used for lethal injections). In
contrast, the exceptions referenced in this case are limited by their specific terms and
do not expressly extend to all business name information that that ODI otherwise keeps.
{¶24} “The Public Records Act serves a laudable purpose by ensuring that
government functions are not conducted behind a shroud of secrecy.” State ex rel.
ESPN, Inc. v. Ohio State Univ., 132 Ohio St.3d 212, 2012-Ohio-2690, 970 N.E.2d 939,
¶ 40. ODI initially receives the names of CIC applicants from at least two sources – the
application form filled out by the company applying for CIC licensure, and the certified
articles of incorporation that the applicant attaches to the application. Reading the
above-cited statutes in pari materia, it appears that ODI is required to keep post-
application information and documents confidential, but not cloak in secrecy the
otherwise public identities of companies that have applied for CIC licensure. Even were
the statutory language ambiguous and in need of interpretation, the special master finds
that prohibiting identification of these corporate insurance licensees would be an
unreasonable and absurd result. “We must * * * construe statutes to avoid unreasonable
or absurd results.” State ex rel. Cincinnati Post v. Cincinnati, 76 Ohio St.3d 540, 543,
668 N.E.2d 903 (1996); R.C. 1.47(C).
{¶25} It is not apparent from the record that information and documents
submitted by CICs are the sole source of their business names. Nor does ODI show
that the General Assembly has prohibited the disclosure of all information as to the
identity of licensed captive insurance companies. The record demonstrates that ODI
has voluntarily disclosed the identities of a majority of the licensed CICs, and that the
business names of all CICs are publicly available in their articles of incorporation at the
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Ohio Secretary of State’s Office and elsewhere. The special master concludes that ODI
has not met its burden to prove that the claimed exemptions prohibit disclosure of CIC
business names in the Captive Licenses authorizing their operation in this state.
Conclusion
{¶26} Upon consideration of the pleadings, affidavit, and attachments, the special
master recommends the court order respondent to disclose copies of the six Captive
Licenses with the business names of the licensees unredacted. It is recommended that
costs be assessed to respondent.
{¶27} Pursuant to R.C. 2743.75(F)(2), either party may file a written objection
with the clerk of the Court of Claims of Ohio within seven (7) business days after
receiving this report and recommendation. Any objection shall be specific and state with
particularity all grounds for the objection. A party shall not assign as error on appeal the
court’s adoption of any factual findings or legal conclusions in this report and
recommendation unless a timely objection was filed thereto. R.C. 2743.75(G)(1).
JEFF CLARK
Special Master
Filed October 4, 2021
Sent to S.C. Reporter 11/29/21