G. Hancock v. Magellan Behavioral Health of PA Inc.

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Garrett Hancock :
Optum Inc. :
:
v. : No. 846 C.D. 2022
: Argued: June 5, 2023
Magellan Behavioral Health :
of Pennsylvania Inc., :
Appellant :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
PRESIDENT JUDGE COHN JUBELIRER FILED: August 15, 2023
Magellan Behavioral Health of Pennsylvania Inc. (Magellan) appeals from the
Order entered in the Court of Common Pleas of Montgomery County (common
pleas) on July 6, 2022, granting Optum Inc.’s (Optum) and Garrett Hancock’s
(Hancock) (collectively, Requesters) Petition for Review of the Office of Open
Records (OOR) Final Determination issued on July 16, 2021. After a competitive
bidding process, Montgomery County (County) and Magellan, a Pennsylvania
Managed Care Organization (MCO), entered in March 2021, into what was
ultimately titled an Amended and Restated Agreement (the Agreement) and which
had been dated January 1, 2021. The Agreement sets forth the terms under which
Magellan will provide and deliver services to County under the HealthChoices
Behavioral Health Program (HealthChoices Program) implemented by the
Pennsylvania Department of Human Services (DHS) for Medical Assistance
(Medicaid) recipients. Requesters tendered a Right-to-Know Law (RTKL)1 request
seeking copies of the current and original contract along with all amendments and/or
revisions. County and Magellan argued that the Agreement contained confidential
proprietary and/or trade secret information which is protected from disclosure under
Section 708(b)(11) of the RTKL and/or under the Uniform Trade Secrets Act
(UTSA), 12 Pa.C.S. §§ 5301-5308. The OOR agreed and ordered County to provide
Requesters a redacted version of the Agreement. Requesters filed an appeal with
common pleas arguing that the provisions of the Agreement, and the Agreement
itself, constitute financial records as defined by Section 102 of the RTKL, 65 P.S. §
67.102, which must be disclosed to Requesters without redaction pursuant to Section
708(c) of the RTKL, 65 P.S. § 67.708(c). Following its review of the unredacted
Agreement in camera, common pleas determined that Requesters were entitled to
disclosure of the entire Agreement, as none of the redactions permitted by the OOR
qualified for exemption. Following a careful review of the entire record, including
the unredacted Agreement, we affirm.
I. BACKGROUND
Under the terms and conditions of the Agreement, Magellan serves as
County’s Behavioral Health MCO responsible for providing and delivering services
to County under the HealthChoices Program implemented by DHS for Medicaid
recipients. (Common pleas’ July 6, 2022, Memorandum and Order (July Opinion),
Finding of Fact (FOF) ¶ 1.) Optum provides managed care services, which makes
it a competitor, or a potential competitor, of Magellan. (Id. ¶ 2.) Hancock is one of
Optum’s employees. (Id. ¶ 3.)
1
Act of February 14, 2008, P.L. 6, 65 P.S. §§ 67.101-67.3104.
2
On March 16, 2021, Hancock submitted a written request to County for a copy
of the Agreement. (Id. ¶ 4.) After invoking the 30-day extension period set forth in
Section 902 of the RTKL, 65 P.S. § 67.902,2 County partially denied the request on
April 16, 2021, to the extent it believed that the requested information would require
disclosure of Magellan’s trade secrets and/or confidential proprietary information
protected under Section 708(b)(11) of the RTKL.3 (FOF ¶ 5.) As a result of its
determination, County provided Hancock with a redacted copy of the Agreement.
(Id.)
A. Proceedings before the OOR
On April 30, 2021, Hancock filed an appeal with the OOR, and the OOR
permitted Magellan to participate therein as a direct interest participant. 4 (Id. ¶¶ 6-
7.) The parties submitted documents and presented legal briefs to the OOR in
support of their respective positions. (Id. ¶ 8.) Among Magellan’s submissions was
a nine-page affidavit of James P. Leonard, Magellan’s Chief Executive Officer
(Leonard Affidavit). (Id.) As part of his responsibility for managing Magellan’s
2
Section 902 allows a governmental agency, upon notice to the requester, to extend the
amount of time to respond to a request under certain circumstances, including when the request
requires redaction. 65 P.S. § 67.902.
3
Section 708(b)(11) provides that certain information, including confidential proprietary
information and trade secrets, is exempt from disclosure under the RTKL. 65 P.S. § 67.708(b)(11).
4
Pursuant to Section 1101(c)(1) of the RTKL:
[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 . . . 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).
3
overall operations in the HealthChoices Program, Leonard regularly deals with
confidential proprietary information and trade secrets, and he was personally
involved in the preparation of the Agreement. (Leonard Affidavit ¶¶ 3-4, 8,
Reproduced Record (R.R.) at 848a-49a.) Leonard included a table wherein he
indicated the section/page number of the Agreement on which the redacted
information may be found, generally described the redacted information, and stated
that each item was exempted from disclosure under Section 708(b)(11) of the RTKL
and under the UTSA as it had been “developed by Magellan, in consultation with []
County.” (Leonard Affidavit ¶¶ 21-22, R.R. at 851a-52a.) Leonard contended that
the redacted material involved “[c]onfidential components of [Magellan’s] pricing
formula, process and strategy” and/or “[c]onfidential pricing information and pricing
method, process and strategy.” (FOF ¶ 8 (quoting Leonard Affidavit ¶ 21, R.R. at
851a-52a).) Specifically, the Leonard Affidavit provided that the redacted
information reflects:
(a) Confidential insurance information that is unique to Magellan’s
overall pricing formula and strategy;
(b) Components of Magellan’s confidential pricing information and
formula(s);
(c) Confidential proprietary business information and trade secrets
which was the end result of Magellan’s business strategy and
methodology; and
(d) Confidential business information and data [which] is not
publicly known or known to Magellan’s competitors.
(Leonard Affidavit ¶ 23, R.R. at 852a-53a.) The Leonard Affidavit also detailed the
steps Magellan generally takes to ensure certain information is kept confidential,
including: designating such information as confidential at the time it submitted its
4
proposal to County; submitting a redacted proposal to County and relying on the
confidential nature of County’s review; allowing access to only certain individuals
on a “need-to-know only basis” within Magellan; requiring employees of Magellan
to attend training sessions annually regarding the treatment of confidential
information and/or trade secrets and sign a statement of confidentiality to prohibit
the disclosure of the same; and maintaining a code of conduct to safeguard sensitive
information. (Leonard Affidavit ¶ 29, R.R. at 854a-55a.) Magellan’s HealthChoices
Program agreements with numerous counties are among those addressed by
Magellan’s confidentiality policies. (Leonard Affidavit ¶ 30, R.R. at 855a.)
Leonard also prepared a five-page Supplemental Affidavit (Supplemental
Leonard Affidavit) in response to the OOR’s request for additional information
explaining why the redacted information should remain exempt from disclosure.
(FOF ¶ 8.) Therein, Leonard incorporated the attestations he had made in his
Affidavit and clarified the harm Magellan would suffer from disclosure as follows:
6. Here, Magellan’s Proposal includes a number of specific pricing
and other components that were presented and arranged in such a way
in its Proposal and subsequently negotiated in the Agreement that
Magellan considers confidential and proprietary in nature.
7. For example, once a specific pricing component or element was
selected for inclusion in Magellan’s Proposal, Magellan then decided
how best to utilize the selected component not only in its Proposal, but
in subsequent negotiations with the County now set forth in the
Agreement.
8. The utilization and amount of each component that goes into
Magellan’s proposals and negotiation of pricing and cost structures is
not generally known to Magellan’s competitors.
9. If a competitor of Magellan, such as Optum, were to gain access
to the components utilized by Magellan in creating its confidential
proprietary and/or trade secret pricing strategy/formula, it could utilize
5
this information to replicate Magellan’s confidential pricing formula
and structure which would, in turn, cause substantial harm to
Magellan’s competitive position.
10. If, for example, Magellan’s competitors were to discover that
Magellan offered a certain new product or staffing model as part of its
overall confidential pricing strategy, they could then choose to include
similar products or staffing model(s) within their proposals in an effort
to undercut and substantially harm the competitive advantage of
Magellan.
11. Moreover, if a competitor were to gain access to the entire list of
components used in Magellan’s confidential pricing formula, such a
competitor could utilize this information to create a separate future
proposal substantially similar to Magellan’s and substantially harm
Magellan’s competitive position in the market.
12. The information redacted from the Agreement and at issue in this
appeal includes these confidential components or elements as well as
specific numeric amounts that were included in Magellan’s Proposal
submitted to [] County and incorporated into the Agreement following
negotiations with [] County.
13. In particular, the information redacted from page vi of the
Agreement (Appendices) constitutes the individual components and
structure of Magellan’s pricing formula that Magellan used to win []
County’s competitive process.
14. The information redacted from page 4 (Section 1.3) of the
Agreement constitutes a critical component of Magellan’s pricing
structure and formula that Magellan used to win [] County’s
competitive process.
15. The information redacted from page 5 (Section 2.1.J) of the
Agreement constitutes a critical component of Magellan’s pricing
structure and formula that Magellan used to win [] County’s
competitive process.
16. The information redacted from page 9 (Section 2.3) includes the
numeric percentage of the “Medical Cost Threshold” that is part of
Magellan’s confidential pricing strategy and formula.
6
17. The information redacted from page 10 (Section 2.3) includes the
dollar amount of the “Risk Attachment Point” that is part of Magellan’s
confidential pricing strategy and formula.
18. The information redacted from page 14 (Section 3.2.A) includes
the numeric percentage of the level of functionality of the computer
network supporting the MIS that is part of Magellan’s confidential
pricing strategy and formula.
19. The information redacted from page 16 (Section 3.2.G) includes
the number of days following a request by [] County by which
electronic data transfers will be completed that is part of Magellan’s
confidential pricing strategy and formula.
20. The information redacted from page 28 (Section 8.1.A.2 (a-d))
includes that numeric percentages of “Net Department Payments”
which are appropriated for each respective service/function that is part
of Magellan’s confidential pricing strategy and formula.
21. The information redacted from page 28 (Section 8.1.A.3)
includes the number of days following receipt of the “Net Department
Payments” by which Magellan agrees to payment by [] County that is
part of Magellan’s confidential pricing strategy and formula.
22. The information redacted from page 39 (Section 8.1.B.9.1.d)
includes the percentage of the “Medical Cost Threshold” that is part of
Magellan’s confidential pricing strategy and formula.
23. The information redacted from page 39 (Section 8.1.B.9.1.d(1))
includes the dollar amount of the “Risk Attachment Point” that is part
of Magellan’s confidential pricing strategy and formula.
24. The information redacted from page 44 (Section 8.4) constitutes
the components of Magellan’s pricing structure and formula that
Magellan submitted to win [] County’s competitive process.
25. The information redacted from page 72 (Section 18.1.A) includes
the dollar amount of the fine which may be utilized as a sanction that is
part of Magellan’s confidential pricing strategy and formula.
(Supplemental Leonard Affidavit ¶¶ 6-25, R.R. at 884a-87a.)
7
On July 16, 2021, the OOR issued its Final Determination granting in part and
denying in part Magellan’s appeal. The OOR did not order Magellan to present an
unredacted copy of the Agreement for in camera review, but stated it “had the benefit
of being able to review the redacted copy of the responsive record.” (OOR Final
Determination (Final Determination) at 11, R.R. at 25a.) Relying on Leonard’s
affidavits as sufficient evidentiary support, the OOR found Magellan had proven the
Agreement “is commercial or financial, as required to be confidential proprietary
information.” (Final Determination at 10, R.R. at 24a.) Although it upheld the
majority of County’s redactions to the Agreement, the OOR found Magellan had
failed to prove that some redactions were necessary to protect confidential
proprietary or trade secret information. The OOR directed County to provide
Hancock a copy of the Agreement removing the redactions including: the title of
appendices on page vi of the Agreement; the names of the title of appendices from
within the Agreement following the “Appendices” page or references to those titles,
page, and appendix numbers; references to Magellan’s parent company; and the
contents of Appendix 4 of the Agreement. (Final Determination at 11-12, R.R. at
25a-26a.) The OOR also noted that in its May 21, 2021 position statement, Magellan
stated it would not pursue an argument that Appendix 4 and its contents are exempt
under Section 708(b)(11) and, therefore, that information would be provided to
Hancock without redactions. (Id.) The OOR further determined “the remainder of
the redactions are proper as the exempt information is considered confidential
proprietary information and/or trade secrets[] that are not considered financial
records as defined under Section 708(c) of the RTKL.” (Final Determination at 12,
R.R. at 26a.) The OOR ordered County to provide all responsive records as directed
in its Order within 30 days. (Id.)
8
B. Proceedings Before Common Pleas
Requesters filed a Petition for Review with common pleas on August 13,
2021. Magellan filed a Petition to Intervene, which was granted on October 15,
2021. The parties submitted briefs to common pleas, and on May 18, 2022, common
pleas held oral argument. In its order of May 19, 2022, common pleas directed
County to submit a complete, unredacted copy of the Agreement to the court for in
camera review.5 Magellan did not challenge common pleas’ May 19, 2022 Order,
and County complied.
Following its review of the entire record, including the complete Agreement
in camera, common pleas issued a Memorandum and Order on July 6, 2022, in
which it made Findings of Fact and Conclusions of Law (COL). Common pleas
characterized the material that the OOR had determined to be proper redactions
under Section 708(c) of the RTKL as follows:
12. As noted above, [common pleas] has reviewed in camera the
unredacted version of the Agreement, including Appendices, submitted
by the County. That review discloses that the redactions that the OOR
allowed to stand consist of:
a. provisions stating the terms of payments to be made by []
County to Magellan, based on funding received by [] County
from DHS, and fines for non-compliance by Magellan
(“Payment Provisions”);
b. provisions stating the metrics or standards for services to
be provided by Magellan;
c. provisions for protection of [] County from insolvency or
nonperformance by Magellan, including but not limited to
provisions relating to the letter of credit and performance bond
5
The Pennsylvania Supreme Court has stated that a court reviewing a determination of the
OOR has the discretion to order the production of the disputed record for in camera review.
McKelvey v. Pa. Dep’t of Health, 255 A.3d 385, 412-13 (Pa. 2021).
9
to be posted by Magellan, cash reserves to be maintained by
Magellan, and other protections;
d. provisions in the event of an acquisition of Magellan or its
parent; and
e. provisions stating the terms of a covenant not to compete.
(FOF ¶ 12.)
Common pleas concluded the sole basis upon which the OOR had permitted
County to redact the Agreement, and the only basis upon which County and
Magellan relied in opposing Requesters’ Petition for Review, was the exemption for
a trade secret or confidential proprietary information under Section 708(b)(11).
(July Opinion, COL ¶ 9.) However, under Section 708(c) of the RTKL, common
pleas concluded the exemption under Section 708(b)(11) does not apply to financial
records. (Id. ¶ 10.) Common pleas held the redacted Payment Provisions are part
of a contract dealing with County’s receipt or disbursement of funds and, therefore,
constitute a financial record. (Id. ¶ 13.) Accordingly, pursuant to Section 708(c),
these provisions are not exempt from disclosure under Section 708(b)(11), and it
was not necessary to determine if, in the absence of Section 708(c), these Payment
Provisions may qualify as a trade secret or confidential proprietary information. (Id.)
Citing the aforementioned statutory law and the Pennsylvania Supreme Court’s
decision in Department of Public Welfare v. Eiseman, 125 A.3d 19, 32 (Pa. 2015),
common pleas ultimately concluded that the claimed trade secrets were not exempt
from disclosure pursuant to Section 708(c) of the RTKL and were not independently
exempted from disclosure under the UTSA. (COL ¶ 12.) Accordingly, common
pleas held that none of the redactions the OOR had permitted qualify for exemption
under Section 708(b). (Id. ¶ 15.) Common pleas reasoned that
10
[t]he remaining redacted provisions . . . do not constitute trade secrets
or confidential proprietary information under the definitions set forth in
[S]ection 102 [of the RTKL, 65 P.S. § 67.102]. The contents of these
provisions do not derive “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 their disclosure would
not “cause substantial harm to the competitive position of the person
that submitted the information.” [Id.]
(COL ¶ 14.) In its Order, common pleas reversed the OOR’s Final Determination
and directed County to provide Requesters with a complete and unredacted copy of
the Agreement within 30 days.
On August 5, 2022, Magellan filed a timely notice of appeal, along with a
Motion to Stay Enforcement of the Court’s Order with common pleas. Also on that
date, common pleas filed an order directing Magellan to file a Concise Statement of
Errors Complained of on Appeal (Statement) pursuant to Pennsylvania Rule of
Appellate Procedure 1925(b), Pa.R.A.P. 1925(b). Common pleas granted Magellan
a stay pending this Court’s final determination of Magellan’s appeal on August 26,
2022. That same day, Magellan filed its Statement, and common pleas filed its
Opinion Pursuant to Rule 1925(a) of the Pennsylvania Rules of Appellate Procedure
(1925(a) Op.) on October 4, 2022. Therein, common pleas detailed how certain
redacted provisions of the Agreement pertain to County’s receipt and/or payment of
funds. Common pleas explained this material constitutes financial records that are
not exempted from disclosure under the exemptions for trade secrets or confidential
proprietary information; thus, regardless of whether they qualify as trade secrets or
confidential proprietary information, they must be disclosed. (1925(a) Op. at 7-11
(referencing Secs. 2.3, 8.1.A.2, 8.1.A.3, 8.1.B.8.a(1), 8.1.B.9.1.a(2), 8.1.B.9.1.d,
8.1.B.9.1.d(2)(i), 8.6, 8.7, and 18.1.A, and Appendices 5, 6, and 11of the Agreement
(the Payment Provisions)) (citing Section 708(b)(11) and 708(c) of the RTKL, and
11
Eiseman).) Specifically, common pleas expounded upon its previous factual
findings and legal conclusions set forth in its July Opinion and explained that many
of the contractual provisions that the OOR had permitted County to redact dealt
directly with County’s “receipt or disbursement of funds” as follows:
• Sec. 2.3: In the definition of “Medical Cost Threshold,” a percentage
figure is redacted. In the definition of “Risk Attachment Point” a dollar
amount is redacted. These defined terms are used in later provisions
that set forth the amount of payments that [] County is to make to
Magellan for its services. (E.g, [S]ecs. 8.l.A.1, 8.1.B.9.1.d(2)(i).) The
definitions therefore deal with the disbursement of funds by [] County.
• Sec. 8.1.A.2: Section 8.1.A is titled “Provider [i.e., Magellan,]
Payments; Capitation Payments.” The various subdivisions of this
section set forth a complex formula for calculating payments to be
made by [] County to Magellan for its services. Under [S]ection
8.1.A.1, “[] County shall transfer to [Magellan] on a monthly basis a
portion of the Net Department Payments [defined in [S]ection 2.3 to
mean all DHS capitation payments to [] County less certain
adjustments] equivalent to the Medical Cost Threshold for the payment
of all Medical Costs [as also defined in section 2.3].” Section 8.1.A.2
provides that the Net Department Payments received by [] County from
DHS “shall be allocated between Medical Costs, Non-Benefit Load
Costs, and other costs identified herein as follows[.]” Subdivisions
8.1.A.2.a through d then set forth the percentage of Net Department
Payments to be allocated to Medical Costs, Magellan's
administration, [] County’s administrative costs, and an Incentive
Pool. Each of the percentage figures in Subdivisions a through d is
redacted. These percentage figures directly relate to the receipt and
disbursement of funds by [] County.
• Sec. 8.1.A.3: This section provides that [] County “shall make the
payment referred to in Section 8.1.A.2.a [Medical Costs, etc.] and
8.1.A.2.b [Magellan’s administration]” within a specified number of
days from [] County’s receipt of the Net Department Payments. The
number of days is redacted, even though it deals with the receipt and
disbursement of funds by [] County.
• Sec. 8.1.B.8.a(l): Section 8.1.B.8 requires Magellan to post a Letter
of Credit with [] County, upon which the County may draw in the event
12
of the “bankruptcy, insolvency, rehabilitation or liquidation” of
Magellan. The required amount of the Letter of Credit is redacted,
even though the provision deals with the receipt of funds by [] County.
• Sec. 8.1.B.9.1.a(2): Section 8.1.B.9, titled “Insolvency Protection,”
requires Magellan to post a Performance Bond, similar to the Letter of
Credit in that [] County may draw upon it in the event of the
“insolvency, bankruptcy, rehabilitation or liquidation” of Magellan.
Like the Letter of Credit provision, the amount of the Performance
Bond is redacted, even though it deals with the receipt of funds by the
County.
• Sec. 8.1.B.9.1.d: This provision reiterates the percentage of Net
Department Payments that constitutes the Medical Costs payable
to Magellan, as previously set forth in section 8.I.A.2.a. . . . The
percentage figure is redacted.
• Sec. 8.1.B.9.l.d(2)(i): Section 8.1.B.9.l.d(2) states the formula for
paying Medical Costs that exceed the Medical Costs Threshold. Under
subdivision (i), for Medical Costs up to the Risk Attachment Point, []
County shall make payment from its Risk and Contingency Fund up
to a specified dollar limit. The amount of the limit is redacted. This
amount addresses directly the payment of funds by [] County.
• Sec. 8.6: This section addresses how funds from DHS under its Pay
for Performance (P4P) Programs shall be divided between
Magellan and the County. Section 8.6.A provides for the percentage
division of funds under the P4P Program that is part of DHS’s
Integrated Care Plan Program. Section 8.6.B provides for the
percentage division of funds under the P4P Program for behavioral
health performance measures. In both provisions, the percentage
figures are redacted, even though they deal directly with the receipt
and payment of funds by [] County.
• Sec. 8.7: This section provides for the circumstances under which
an acquisition of Magellan would trigger the right of [] County to
renegotiate “the financial terms contained in Section 8.” The
section was redacted in its entirety. The section deals with “financial
terms” of the Agreement, including the terms providing for the receipt
and payment of funds by [] County.
• Sec. 18.1.A: Section 18.1 provides for sanctions on Magellan for its
noncompliance with any requirements under the Agreement. Section
13
18.1.A provides for fines of up to a specified dollar amount per day.
The dollar amount is redacted, even though it deals with the receipt
and payment of funds by [] County.
• Appendices 5 and 6: These appendices set forth the required forms of
Letter of Credit and Performance Bond required under [S]ections
8.1.B.8 and 8.1.B.9 . . . . They were withheld in their entirety. The
appendices deal with the receipt of funds by [] County to the same
extent as the sections of the Agreement to which they correspond.[]
• Appendix 11: This appendix is a copy of a Guaranty by a third
party (related to Magellan) of the performance and payment of all
obligations of Magellan under the Agreement, including Magellan’s
payment obligations. It thus deals with the receipt and payment of
funds by [] County. The appendix was withheld in its entirety.
(1925(a) Op. at 7-10 (footnote omitted) (emphasis added).)
Common pleas further found the remaining redactions that the OOR had
permitted were improper because neither of Leonard’s affidavits nor other record
evidence established they constitute trade secrets or confidential proprietary
information as defined in Section 102 of the RTKL. (Id. at 12-13 (referencing Secs.
3.2.A, and 3.2.G, and Appendices 2, 7, and 8-9).) Common pleas described these
redactions as follows:
• Sec. 3.2.A: This section addresses the management information
system to be operated by Magellan. It includes a representation and
warranty by Magellan that its computer network will comply with
functionality requirements for a specified percentage of the “Scheduled
Uptime.” The percentage is redacted.
• Sec. 3.2.G: This section requires Magellan to provide the County with
an electronic transfer of all data necessary to monitor the Agreement,
within a specified number of business days from a request by [] County.
The number of days is redacted.
• Appendix 2: This appendix incorporates Program Standards and
Requirements [(PSR)] issued by DHS. It was withheld in its entirety.[]
14
• Appendix 7: This appendix is a letter from DHS to [] County
approving solvency requirements for the HealthChoices Behavioral
Health Program. It contains no financial information and no other
details on how the requirements have been met. The appendix was
withheld in its entirety.
• Appendices 8 and 9: These appendices are copies of insurance
policies maintained by Magellan. Although they set forth the monetary
limits of coverage, they do not disclose any sensitive information
regarding Magellan. The appendices were withheld in their entirety.
(Id. at 12-13 (footnote omitted).)
Common pleas concluded:
[T]he very nature of the redacted information – the percentage of time
that Magellan’s computer network is required to be functional, the time
within which Magellan must comply with a County request for an
electronic data transfer, [PSR] issued by DHS, a conclusory approval
by DHS of solvency requirements, and copies of policies issued by
third-party insurance companies – is wholly unrelated to any need to
protect Magellan from competitive harm resulting from their
disclosure. It is difficult to see, and [ ] Leonard does not explain, how
the disclosure of this information would give a competitive edge to
Optum or any other service provider in seeking a future contract with
the County when it puts out the HealthChoices Behavioral Health
Program services for rebid in the future. Such information is thus very
different from the pricing and compensation information and similar
financial terms discussed above – information that might well be useful
to a competitor, but which nevertheless, must be disclosed as “financial
records” under [S]ection 708(c).
(1925(a) Op. at 13 (emphasis in original).)6
6
Common pleas stated that a bill is pending before the Pennsylvania Senate that would,
inter alia, amend the RTKL by adding trade secrets and confidential proprietary information under
Section 708(b)(11) to the list of exemptions from mandatory disclosure of financial records under
Section 708(c). (1925(a)) Op. at 11 n.8 (citing S.B. 492, sec. 7, 206th Gen. Assemb. (Pa. 2022).)
15
II. ISSUES
On appeal, Magellan presents the following four issues for review:
(1) whether common pleas erroneously and summarily categorized redactions within
the Agreement as “financial records” in violation of Section 102 of the RTKL;
(2) whether as a result of its error common pleas improperly applied Section 708(c)
of the RTKL to deny Magellan the ability to protect its confidential proprietary
and/or trade secret information pursuant to the exemption set forth in Section
708(b)(11) of the RTKL; (3) whether common pleas’ Order violates Sections 306
and 3101.1 of the RTKL, 65 P.S. §§ 67.306, 67.3101.1, because its application and
interpretation of Section 708(c) of the RTKL conflicts with the UTSA; and
(4) whether common pleas’ Order constitutes an abuse of discretion and a violation
of Section 708(b)(11) where it summarily concluded that certain redactions do not
constitute confidential proprietary and/or trade secret information that is exempt
from disclosure. (Magellan’s Brief (Br.) at 5.)
III. DISCUSSION
When reviewing a trial court’s order in a RTKL matter, this Court determines
whether the trial court’s findings of fact are supported by substantial evidence or
whether it committed an error of law or an abuse of discretion in reaching its
decision. Butler Area Sch. Dist. v. Pennsylvanians for Union Reform, 172 A.3d
1173, 1178 n.7 (Pa. Cmwlth. 2017). “The scope of review for a question of law
under the [RTKL] is plenary.” SWB Yankees LLC v. Wintermantel, 999 A.2d 672,
674 n.2 (Pa. Cmwlth. 2010) aff’d, 45 A.3d 1029 (Pa. 2012) (citation omitted). The
objective of the RTKL is to empower citizens by affording them the access to
information concerning governmental activities. McGowan v. Pa. Dep’t of Env’t
Prot., 103 A.3d 374, 380 (Pa. Cmwlth. 2014) (citation omitted). This Court must
16
“liberally construe the RTKL to effectuate its purpose of promoting ‘access to
official government information in order to prohibit secrets, scrutinize actions of
public officials, and make public officials accountable for their actions.’” Levy v.
Senate of Pa., 65 A.3d 361, 381 (Pa. 2013) (quoting Allegheny Cnty. Dep’t of Admin.
Servs. v. A Second Chance, Inc., 13 A.3d 1025, 1034 (Pa. Cmwlth. 2011)).
Consistent with the RTKL’s remedial nature and goal of promoting government
transparency, the exemptions to disclosure of public records must be construed
narrowly. Pa. Dep’t of Educ. v. Bagwell, 114 A.3d 1113, 1122 (Pa. Cmwlth. 2015).
With the foregoing in mind, we turn to the merits of the parties’ arguments.
A. Whether common pleas erred in categorizing redactions within the
Agreement as “financial records” in violation of Section 102 of the
RTKL
1. Parties’ Arguments
Magellan first argues common pleas’ Order should be reversed because it
incorrectly categorized certain individual redactions within the Agreement as
financial records, in violation of the plain statutory language of Section 102 of the
RTKL and the facts of the case. (Magellan’s Br. at 19.) For example, common pleas
characterized redacted information to be “Payment Provisions” that constituted a
financial record without concomitantly finding the entire Agreement itself to be a
financial record. (Id. at 22-23.) While Magellan does not dispute that the Agreement
is a “record” for purposes of the RTKL, it claims the individual redactions to the
Agreement do not constitute an account, voucher, or contract and, thus, cannot
constitute a financial record under the RTKL, as common pleas held. (Id. at 25-26.)
Magellan stresses that the Agreement does not include the amount of public monies
County is to disburse to Magellan, which is the “entire purpose” of a financial record.
(Id. at 26.) Moreover, common pleas’ characterization of specific redacted
17
information contained within the larger Agreement as financial records, or Payment
Provisions without defining those specific provisions, violates the plain language of
Section 708(c). (Id. at 26-27.) Because Section 708(c) permits an agency to redact
limited information from a financial record, but only related to certain 708(b)
exemptions, to separately categorize information redacted from a larger document
itself as a financial record renders Section 708(c) inoperable, which would be an
absurd result. (Id. at 23.)
According to Magellan, even if the Agreement is deemed to constitute a
financial record, information protected from disclosure under a Section 708(b)
exemption does not lose its protection simply because it later becomes part of a
contract. Magellan initially submitted the now-redacted information as part of its
Proposal to County. At that time, Magellan believed the confidential, proprietary
pricing and trade secret information and formulas it had generated would be more
advantageous to County than the pricing models and formulas Magellan’s
competitors might present. When County selected Magellan to provide
HealthChoices Program services to Medicaid recipients in County, the confidential
proprietary information was then incorporated into the negotiated Agreement, but
this fact does not mean that the information loses its exempt status. (Id. at 28, 31-
32 citing Global Tel*Link Corp. v. Wright, 147 A.3d 978 (Pa. Cmwlth. 2016) (GTL),
and UnitedHealthcare of Pa., Inc. v. Baron, 171 A.3d 943 (Pa. Cmwlth. 2017).)
Requesters respond that Magellan’s argument is premised upon a mistaken
view that if an entire document cannot be produced as a financial record, then none
of it can be. (Requesters’ Br. at 14.) To the contrary, Requesters argue the plain
language of the RTKL does not require an entire agreement to be deemed a financial
record, and to the extent an otherwise public document or record is a hybrid of
18
exempt and non-exempt information, the RTKL provides for partial redactions. (Id.
at 14-15.) However, under the definition of financial records as interpreted in
Eiseman, common pleas correctly determined that the Payment Provisions at issue
herein are financial records. (Id. at 10-11.) Requesters reason that the Agreement
is a contract for managed-care services between Magellan and County, and a
contract for services, or a contract dealing with the “disbursement of funds by an
agency,” constitutes a financial record under Section 102. (Id. at 11 (quoting 65 P.S.
§ 67.102).) As common pleas discussed, each of the redacted Payment Provisions
contains information dealing with the agency’s disbursement of public funds, and
therefore, qualifies as financial records under Eiseman. (Id. at 13.) Even though the
Agreement is not labeled a contract, when read in its entirety, it is plainly a financial
record. The redacted portions are part of a description of rates and dollar amounts
to be paid to Magellan, a government contractor, making it a record dealing with a
government agency’s, County, disbursement of public funds as part of its
responsibility to afford access to healthcare services in furtherance of the public
interest. (Id. at 16-19 (citing Eiseman, 125 A.3d at 33).) Requesters further argue
that GTL and Baron are distinguishable.7
In its Reply Brief, Magellan asserts Requesters’ reading of Eiseman would
require that “any record bearing the slightest relation to an agency’s purchase or
receipt of funds or goods must be considered a ‘financial record.’” (Magellan’s
Reply Br. at 4.) Although Magellan agrees that partial redactions to an otherwise
public document are appropriate under the RTKL, it reiterates the Agreement itself
is not a financial record. The express terms of Section 708(c) require that a
“financial record” be defined as the entire record, not individual redactions, and any
7
In its letter filed with this Court on March 6, 2023, County indicated it did not intend to
file a brief and would not otherwise be participating in this appeal.
19
other interpretation of the statute renders that section nonsensical. (Id. at 6-7.) A
“record” that does not contain the amount of funds to be paid to a service provider
cannot also be a “financial record.” (Id. at 12.)
2. Analysis
There is no dispute that the Agreement, and the provisions at issue, are
“records” under the RTKL. Section 102 of the RTKL broadly defines a “[r]ecord”
as:
Information, regardless of physical form or characteristics, that
documents a transaction or activity of an agency and that is created,
received or retained pursuant to law or in connection with a transaction,
business or activity of the agency. The term includes a document,
paper, letter, map, book, tape, photograph, film or sound recording,
information stored or maintained electronically and a data-processed or
image-processed document.
65 P.S. § 67.102. However, the term “[f]inancial record” is defined separately as:
Any of the following:
(1) Any account, voucher or contract dealing with:
(i) the receipt or disbursement of funds by an agency; or
(ii) an agency’s acquisition, use or disposal of services,
supplies, materials, equipment or property.
(2) The salary or other payments or expenses paid to any officer or
employee of an agency, including the name and title of the officer
or employee.
(3) A financial audit report. The term does not include work papers
underlying an audit.
Id. (emphasis added).
20
The RTKL provides for certain exemptions to the general rule that public
records are subject to access. 65 P.S. § 67.708(b). Specifically, as relevant here,
Section 708(b)(11) of the RTKL 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.
65 P.S. § 67.708(b)(11)(emphasis added). Section 708(c), thereafter, provides:
(c) Financial records.--The exceptions set forth in subsection (b) shall
not apply to financial records, except that an agency may redact that
portion of a financial record protected under subsection (b)(1), (2), (3),
(4), (5), (6), (16) or (17). An agency shall not disclose the identity of
an individual performing an undercover or covert law enforcement
activity.
65 P.S. § 67.708(c)(emphasis added).
Thus, while records that would disclose a trade secret or confidential
proprietary information are generally exempted from public access, 65 P.S.
§ 67.708(b)(11), “if those records may be categorized as ‘financial records,’ they are
nonetheless subject to full disclosure (and may not be redacted), regardless of
whether they would reveal [those trade secrets or confidential proprietary
information], unless otherwise provided by law,” City of Harrisburg v. Prince, 219
A.3d 602, 606 (Pa. 2019) (emphasis added). For this reason, the question as to
“whether a given public record is a financial record is potentially outcome
determinative in terms of the public’s ability to access and inspect it.” Id.21
With respect to establishing exemptions, the RTKL provides that “[t]he
burden of proving that a record of a Commonwealth agency or local agency is
exempt from public access shall be on the Commonwealth agency or local agency
receiving a request by a preponderance of the evidence.” 65 P.S. § 67.708(a)(1);
Allegheny Cnty. Dep’t of Admin. Servs. v. Parsons, 61 A.3d 336, 342 (Pa. Cmwlth.
2013). “The RTKL does not allow an agency to delegate its disclosure duty or
burden of proof to third parties. Furthermore, it is presumed that Commonwealth
agencies will act in good faith in discharging their statutory duties under the RTKL.”
McKelvey v. Pa. Dep’t of Health, 255 A.3d 385, 401 (Pa. 2021) (citing Off. of
Governor v. Donahue, 98 A.3d 1223, 1239 (Pa. 2014)). The agency may meet this
burden of proof through a sworn affidavit. GTL, 147 A.3d at 980.
Magellan argues that common pleas abused its discretion in finding the
Payment Provisions grouped together but “standing alone” comprised an
independent financial record without analyzing whether the Agreement, in toto, is a
financial record. Magellan reasons that the Agreement cannot be deemed a financial
record because it does not enumerate the full amount County remits to Magellan.
(Magellan’s Br. at 21-26.) However, Magellan’s arguments mischaracterize
common pleas’ determination. Common pleas did not find that the redacted
Payment Provisions and related appendices comprised a negotiated contract separate
and apart from the Agreement, but rather, determined that the Payment Provisions,
which appear in the Agreement reached between Magellan and County, were
“provisions of a ‘contract dealing with . . . the receipt or disbursement of funds’ by
[] County and therefore constitute a ‘financial record.’” (July Opinion, COL ¶ 13.)
Moreover, even if we were to view the Payment Provisions in isolation, following
our own in camera review, we would find they are not protected under the Section
22
708(b)(11) exemption for the reasons the trial court set forth as they deal with
County’s receipt and disbursement of funds. (1925(a) Op. at 7-10.) Following its
in camera review of the unredacted Agreement, common pleas reasoned the redacted
segments of the Payment Provisions dealt with the County’s receipt and
disbursement of funds as per the terms of the Agreement. Common pleas further
found the remaining redactions did not qualify as trade secrets or confidential
proprietary information and, thus, were not exempt from disclosure under Section
708(b)(11) and stated that some of the redactions did not even pertain to Magellan.
(July Opinion, COL ¶ 14.) Common pleas detailed how each of the redactions
encompassed in the Payment Provisions pertained to exchanges of monies between
Magellan and County regarding amounts of payments, potential bonuses and fines,
required credit, and bond documents. (1925(a) Op. at 7-11.) Common pleas then
expressed that neither of Leonard’s affidavits nor other record evidence submitted
to the OOR evinced how the remaining redactions could be considered trade secrets
or confidential proprietary information. (Id. at 12-13.)
Although common pleas considered the nature of the redacted provisions
without specifically finding whether the Agreement as a whole is a financial record,
Requesters argue such an analysis was not necessary because the Agreement is a
financial record subject to Section 708(c). Applying the term “financial record” as
it was interpreted in Eiseman, we agree that the Agreement falls under the definition
of a financial record as it is a contract dealing with the receipt or disbursement of
funds.
The Pennsylvania Supreme Court first considered the definition of a
“financial record” following the passage of the RTKL in Eiseman. Therein, the
disputed issue before the Supreme Court was whether documents in the possession
23
of the Department of Public Welfare (DPW), which reflected rates paid to dental
subcontractors by private MCOs pursuant to contracts into which DPW had entered
with the MCOs to provide dental services to Medicaid recipients, constituted
contracts dealing with the disbursement of funds by an agency. Eiseman, 125 A.3d
at 29-30. Referencing its prior decision in North Hills News Record v. Town of
McCandless, 722 A.2d 1037, 1039 (Pa. 1999), which held the terms “accounts,
vouchers or contracts” included records that “‘bear a sufficient connection’ to such
fiscally-related categories,’” the Supreme Court in Eiseman determined that a record
may deal with the disbursement of funds by an agency even where it does not
directly show a disbursement by that agency. Eiseman, 125 A.3d at 30. As such,
the Supreme Court held that records reflecting the rates paid by the MCOs to the
subcontractors were “financial records” as that term is defined in the RTKL because
they were “dealing with” contracts that disbursed public monies for essential
healthcare services from DPW to the service providers. Id. at 31-32.
More recently, in Prince, the Supreme Court stated that the “account, voucher
or contract” category must be construed broadly under the current iteration of the
RTKL so as
to effectuate expanded access to information about the activities of
government. See [Sections 1921 and 1922 of the Statutory
Construction Act of 1972 (SCA),] 1 Pa.C.S. §§ 1921, 1922. Thus, we
need not settle on a single definition of “account.” Rather, we conclude,
as we did in [Pennsylvania State University v. State Employees’
Retirement Board, 935 A.2d 530 (Pa. 2007)], that the term has multiple
acceptable definitions, including “a list or enumeration of financial
transactions” and a “record of debit and credit entries, as well as
monetary receipts and disbursements.” Id. [at 535.]
Moreover, consistent with our cases, to satisfy the statutory definition
of financial record, the [record at issue] need only bear a close
connection to an account.
24
Prince, 219 A.3d at 615-16.
Although Magellan argues to the contrary, from the intentions of the parties
as expressed in the preamble to the Agreement, it is evident that the Agreement
satisfies the requirement that a financial record is a “contract dealing with . . . the
receipt or disbursement of funds by an agency”, 65 P.S. § 67.102:
WHEREAS, COUNTY and [MAGELLAN], as COUNTY’s
Behavioral Health [MCO] entered into an Agreement, effective January
1, 2016, as Amended by Amendments No. 1 through No. 4, effective
January 1, 2020 (collectively, the “COUNTY-[MAGELLAN]
Agreement”), whereby [Magellan] provides and delivers services to the
COUNTY and the HealthChoices Program, as required in the PSR and
the COUNTY-DHS Agreement;
WHEREAS, the Parties desire to amend and restate in its entirety
the COUNTY-[MAGELLAN] Agreement, and any agreement relating
to the Program that has not otherwise expired or terminated shall be
superseded and replaced in its entirety by this Agreement;
WHEREAS, the foregoing recitations are essential elements
of the contractual relationship and are contractual in themselves;
NOW, THEREFORE . . . .
SECTION 1: RELATIONSHIP AND INTENTIONS OF THE
PARTIES
1.1 The purpose of this Agreement is to set forth the terms of the
relationship between COUNTY, as the Primary Contractor with DHS,
and [Magellan], to serve as COUNTY’s Commonwealth licensed
Behavioral Health [MCO] or “BH-MCO.” Pursuant to the PSR and the
COUNTY-DHS Agreement, [Magellan] is prepared to (i) assume,
satisfy and discharge all liabilities and obligations of COUNTY
under the COUNTY-DHS Agreement (except as otherwise herein
provided); (ii) to indemnify COUNTY as further set forth herein; and
(iii) to provide and deliver the [medical assistance] Behavioral Health
Services contemplated in the PSR, and the COUNTY-DHS Agreement.
While COUNTY retains ultimate responsibility to DHS for compliance
25
with the HealthChoices Program and its fiscal requirements, it does
hereby transfer to [Magellan], and [Magellan] hereby accepts, all
potential adverse financial risks inherent in performing [Magellan’s]
duties and carrying out its responsibilities hereunder including, without
limitation, responsibility for the costs of services provided pursuant
to the PSR in excess of capitation payments received by [Magellan]
hereunder. [Magellan] agrees to accept as its sole compensation
the compensation set forth in Section 8.1.A.2. herein. COUNTY
also specifically conditions all obligations and payments to [Magellan]
under this Agreement upon the fulfillment by DHS of its obligations
and payment responsibilities to COUNTY under the COUNTY-DHS
Agreement. [Magellan] acknowledges and agrees that it has no right to
receive payment from COUNTY apart from its rights under this
Agreement.
1.2 As of the Effective Date and subject to the terms and limitations
set forth in this Agreement, [Magellan] retains and assumes all of
COUNTY’s risk, liability and responsibility under the HealthChoices
Program and pursuant to the PSR, the COUNTY-DHS Agreement as
COUNTY’s BH-MCO, and as otherwise described herein; and
[Magellan] hereby stands behind and affirms its undertakings herein,
including the undertakings of all entities with which [Magellan]
subcontracts for [its] obligations hereunder.
(Agreement at 2-4, R.R. at 68a-71a (emphasis added).)
When entering into the Agreement, County and Magellan set forth the terms
and conditions under which funds for the HealthChoices Program would be
disbursed for those county residents in need of such medical services. As common
pleas explained, the redactions from the Payment Provisions which the OOR had
permitted to stand detailed the payments County was to remit to Magellan based on
funding County received from DHS and fines for non-compliance on the part of
Magellan; the standards by which Magellan was to provide services; details relating
to, inter alia, the cash reserves Magellan was to retain and the letter of credit and
performance bond Magellan was to post to protect County from Magellan’s
insolvency or nonperformance; discussion regarding a possible acquisition of
26
Magellan or its parent; and details concerning a covenant not to compete. (FOF
¶ 12.) Under Section 102 of the RTKL, each of these Payment Provisions deals with
“disbursements of public money and services acquisitions by agencies.” Eiseman,
125 A.3d at 29 (citations omitted). In Eiseman, the Court held that “subcontracts
containing MCO Rates plainly ‘deal with’ DPW’s disbursement of billions of dollars
of public monies to provide access to essential healthcare to vulnerable populations,
as well as [DPW’s] acquisition of services to meet its own obligations under federal
and state law (albeit through middlemen).” Id. at 30 (citing 65 P.S. § 67.102). In
Prince, the Supreme Court reinforced its broad reading of the term “financial record”
in Eiseman, stating “records bearing a sufficiently close connection to such
‘fiscally[-] related’ categories,” such as accounts, vouchers, and contracts, are
financial records “so long as they also ‘deal with the receipt or disbursement of funds
by an agency.’” Prince, 219 A.3d at 612 (quoting LaValle v. Off. of Gen. Counsel,
769 A.2d 449, 456 (Pa. 2001), and N. Hills News Record, 722 A.2d at 1039).
Magellan argues that common pleas’ reliance upon Eiseman was in error and
urges that this Court’s holdings in GTL and Baron are dispositive herein. In GTL,
this Court held an otherwise exempted document under Section 708(b), relating to
the financial capability of a bidder to perform the contracts and which is voluntarily
appended to the subsequently executed contract by the agency but was not actually
part of the contractual terms, is not automatically transformed into a financial
record that must be disclosed under the RTKL because it had been appended to the
contract. 147 A.3d at 981. The Court distinguished such a situation from that in
Eiseman by reasoning “GTL’s submission of its [f]inancial [r]ecords to [the
Department of Corrections] did not involve the disbursement of funds of the
acquisition of services. Rather, the [f]inancial [i]nformation was submitted to show
27
GTL’s economic capability to perform should it receive the . . . contracts.” Id. In
Baron, the requester asked DHS to disclose the rates it had paid to MCOs
participating in Medicaid. 171 A.3d at 946. Relevant herein, the requested rates
were not contained in the contracts between the MCOs and DHS but were separately
negotiated between private parties. Id. at 961. This Court stressed that the purpose
of allowing access to only those records that are directly related to the performance
of a governmental function was to “prevent[ ] access to records that may relate to
the contract but do not relate to its performance.” Id. at 963. Thus, the salient
consideration concerned “whether the information sought had a direct bearing on the
third-party contractor’s obligations” under its contract with the agency, and,
therefore, constituted a financial record of the agency. Id. at 964. We reasoned that
the requested rates did not relate directly to DHS’s performance of its governmental
function under the HealthChoices contract pursuant to Section 506(d)(1) of the
RTKL, 65 P.S. § 67.506(d)(1), because DHS’s knowledge of those rates was not
necessary for it to assure compliance with the contract. Id. There was no record
evidence that DHS utilized the rate information to monitor compliance with or
otherwise oversee the contract, and, in fact, DHS administered the medical
assistance program without that information; therefore, we remanded the matter to
the OOR to determine whether there was a direct relationship between the rates and
the MCO’s performance of the contract. Id.
Unlike the situations presented in GTL and Baron, the Payment Provisions
and other redacted material set forth in the Agreement herein were not appended
thereto to show financial fitness or separately negotiated between two private parties.
Rather, the redacted provisions set forth Magellan’s and County’s reciprocal
obligations under the Agreement and are inextricably bound therewith. As Leonard
28
acknowledged in his Supplemental Affidavit, Magellan’s rates were disclosed to
County as part of the negotiation process. (Supplemental Leonard Affidavit ¶¶ 6-7,
12, R.R. at 884a-85a.) Prior to their acceptance, these terms and necessary
accompanying documents had to be submitted to County for the possibility of further
negotiation and approval in formalizing the Agreement. Moreover, the record is
clear that these terms were part of the negotiation process, and the Agreement itself
indicates its purpose is to set forth the terms through which Magellan is to provide
and deliver services to County and the HealthChoices Program as required by the
PSR and County. The redacted provisions directly relate to County’s receipt of
funds, the payments County is to make to Magellan for its services, the sanctions to
be imposed if Magellan fails to comply with any requirements under the Agreement,
and the steps Magellan must take to ensure its solvency. In light of the foregoing,
we find the Agreement constitutes a financial record as its general terms and the
Payment Provisions in particular are part of a contract of a local agency and have a
direct bearing on the disbursement of funds by that agency.
B. Whether common pleas erred in ordering Magellan to reveal
confidential proprietary and/or trade secret information
1. Parties’ Arguments
Magellan next asserts that, without analysis, common pleas summarily
disregarded both County’s and the OOR’s determinations and failed to consider the
confidential proprietary and/or trade secret nature of the pricing information and
formula(s) in the Agreement it incorrectly deemed to be financial records.
(Magellan’s Br. at 33-34.) Magellan argues that as Leonard’s affidavits verify, the
redacted information amounts to sensitive business information, which is the product
of Magellan’s business strategy and/or confidential data, pricing methodologies, and
29
formulas that Magellan’s internal policies and procedures seek to protect. (Id. at 35-
36.) This information derives independent economic value from not being known
by competitors such as Optum, and, if disclosed, would substantially harm
Magellan’s competitive position in the market with other MCOs. (Id. at 37-39.)
Thus, Magellan concludes the redacted information is exempt from public disclosure
under Section 708(b)(11) of the RTKL, and common pleas abused its discretion in
finding otherwise without sufficient analysis. (Id. at 39-40.)
Requesters repeat that the Agreement is a financial record which County must
release in its entirety. Even if this were not the case, Magellan has failed to meet its
burden of proving that the Agreement contains confidential proprietary and/ or trade
secret information. (Requesters’ Br. at 20.) Critically, according to Requesters,
Leonard admitted in his Affidavit that the financial information and formulas were
never confidential within Magellan but, instead, were developed “in consultation
with [] County[.]” (Id. at 21 (quoting Leonard Affidavit ¶ 22, R.R. at 852a).)
Requesters argue that Leonard did not speak about the steps Magellan had taken to
keep the information confidential during the negotiation/consultation process and
instead described only the steps taken to do so thereafter. For this reason alone,
Requesters reason, Magellan cannot prove the redacted information constitutes trade
secrets within the meaning of the RTKL. (Id. at 21-22.) Requesters also cite to
decisions of the Pennsylvania Supreme Court, which caution against reliance on
affidavits absent in camera review. (Id. at 22 (citing McKelvey, 255 A.3d at 412,
and Am. Civ. Liberties Union of Pa. v. Pa. State Police, 232 A.3d 654, 670 (Pa.
2020)).).
Requesters also argue that some of the redacted percentages in the Payment
Provisions from Section 8.1.A.2 do not even pertain to Magellan. For example,
30
“[t]here is no justification for withholding how [] County— a public entity— allocates
payments it receives from [DHS], another public entity.” (Requesters’ Br. at 25.)
Similarly, Requesters state that Sections 8.1.A.2.a, 8.1.A.2.b, and 8.1.A.2.d pertain
only to government spending, which the public has a right to know. (Id. at 26.)
Requesters argue Appendix 2 entitled “Program Standards and Requirements –
Primary Contractor,” which County withheld in its entirety, apparently contains the
requirements, terms, and conditions by which Magellan must operate as an MCO in
County. As these standards were created by DHS and appear to be the same
document published on DHS’s website, they should be produced in their entirety.
(Id. at 27 n.4.) In addition, Appendix 3, which also was withheld, is titled
“Performance Indicators” and enumerates the standards by which Magellan agreed
to “perform and report.” (Id. at 27.) Requesters argue that such information cannot
be deemed confidential as County or DHS, not Magellan, creates the standards by
which Magellan’s performance is measured, and the public has a legitimate interest
in knowing the manner in which a company that performs important public services
is evaluated. (Id. at 27-28.)
In its Reply Brief, Magellan posits neither the Agreement itself nor the limited
redactions therefrom are financial records, but rather all of the redactions constitute
confidential proprietary and/or trade secret information. (Magellan’s Reply Br. at
13.) Magellan asserts that pursuant to well-established caselaw, Leonard’s affidavits
sufficiently establish the confidential proprietary and/or trade secret status of the
redactions, and common pleas’ determination regarding the Agreement should not
be afforded more weight simply because it conducted an in camera review of the
Agreement. (Id. at 13-16.) Magellan’s effort to develop the confidential pricing
information contained in Section 8.1.A.2 required Magellan to exercise its business
31
judgment and discretion to determine the rates and conditions that it included in its
Proposal to County to provide the HealthChoices Program services and which would
eventually become the salient components and their proportions set forth in the
Agreement. (Id. at 18-19.) Magellan likens this process to an “award winning
‘secret sauce’” or trade secret which is the product of Magellan’s experienced
business judgment and is necessarily exempt from disclosure under the RTKL. (Id.
at 18-21.) Magellan points out that Appendix 2 is a public document, which was not
attached to the Agreement but merely referenced therein, and Requesters could have
obtained this information at any time. (Id. at 22.) Magellan further explains that it
exclusively developed the pricing and incentive programs and metrics set forth in
Appendix 3, and like the percentage numbers, these programs and metrics are
Magellan’s confidential proprietary and/or trade secret information and their
disclosure will substantially harm its ability to compete in the HealthChoices
Program market. (Id. at 23-24.)
2. Analysis
In Eiseman, the Supreme Court stated “it is essentially undisputed that Section
708(c) renders the [RTKL]’s own internal trade-secrets/confidential-proprietary-
information [exemption] inapplicable.” 125 A.3d at 32. Section 708(c) does not
authorize County to redact “[a] record that constitutes or reveals a trade secret or
confidential proprietary information” of Magellan because the “internal trade-
secrets confidential proprietary information” exemption in Section 708(b)(11) is not
included in the limited list of exemptions applicable to financial records that may
be redacted. 65 P.S. § 67.708(b)(11), (c) (stating “an agency may redact that portion
of a financial record protected under subsection (b)(1), (2), (3), (4), (5), (6), (16), or
(17)”). The General Assembly sought to ensure the disclosure of financial records
32
through Section 708(c), including some information which may have otherwise been
considered a trade secret or confidential proprietary information, even if that
information might have been exempt from disclosure if not in a financial record.
Thus, an agency may not redact from financial records information which may have
otherwise been withheld as a trade secret. Prince, 219 A.3d at 618; Eiseman, 125
A.3d at 32. In light of our finding that the Agreement in which the redacted
paragraphs and appendices appear constitutes a financial record, the exemption in
Section 708(b)(11) of the RTKL does not apply. For this reason, we need not address
whether the redactions other than the Payment Provisions would qualify as trade
secrets or confidential proprietary information under the RTKL. Notwithstanding,
were we to do so, we agree with common pleas that these other redactions, which
pertain to such items as Magellan’s computer network and insurance policies, and
DHS program standards and solvency requirements, are not exempted from
disclosure under those exemptions. Thus, we next turn to a consideration of whether,
as Magellan argues, the UTSA protects the redacted information in the Agreement
from disclosure.
C. Whether common pleas’ interpretation of Section 708(c) in its July 6,
2022 Order is in direct conflict with the UTSA and in violation of
Sections 306 and 3101.1 of the RTKL
1. Parties’ Arguments
Magellan next posits that even if this Court were to determine common pleas
correctly found that the Section 708(b)(11) exemption does not apply to certain
redacted information at issue herein, the pricing information and formula(s)
contained in the Agreement are, nevertheless, exempt from disclosure under the
UTSA, and common pleas abused its discretion in deciding otherwise. Pursuant to
Sections 306 and 3101.1 of the RTKL, the provisions of the RTKL are rendered
33
inapplicable where they conflict with any other federal or state law. (Magellan’s Br.
at 42.) As such, Magellan posits that the instant matter is distinguishable from the
situation presented in Eiseman. Magellan argues the Eiseman holding was limited
to its facts, and the instant matter is controlled by this Court’s later decision in Baron
wherein we held, inter alia, that rates which had not been submitted to and approved
by the agency were not subject to the Section 708(c) exemption or the Supreme
Court’s ruling in Eiseman. (Id. at 42-43.) Magellan reasons that the Agreement
does not contain the rates paid to Magellan, but rather contains trade secret pricing
information that Magellan submitted as part of a confidential proposal, and the
amount paid to Magellan under the Agreement cannot be ascertained from the
redacted information from the Agreement. (Id. at 43-44.)
Requesters state Magellan’s present argument in support of this issue is in
direct contradiction with representations Magellan previously made before common
pleas that the Agreement contains “rates and conditions which are now set forth in
Section 8.1.A.2.” (Requesters’ Br. at 29-30 (citing Magellan’s Brief in Opposition
to Requesters’ Petition for Review at 29, R.R. at 1236a).) Requesters posit Eiseman
controls this issue, for its reference to the applicability of its decision in “this
instance” was not tied only to the existence of “rates.” (Id.)
Magellan counters that Eiseman’s analysis in regard to the interplay between
the UTSA and the RTKL is inapplicable herein. Magellan argues that, unlike the
situation in Eiseman, where the requested records contained certain payment rates,
the redacted information in the Agreement pertains only to Magellan’s confidential
proprietary and/or trade secret information that does not reflect any specific
payments Magellan is to receive. (Magellan’s Reply Br. at 24-25.) Magellan
reasons that notwithstanding Requesters’ arguments to the contrary, “the non-
34
inclusion of rates in the Agreement between Magellan and County limits any
applicability which Eiseman may have here and certainly undercuts any argument
that the []UTSA would not apply to protect Magellan’s trade secret information from
being disclosed.” (Id. at 25.) Magellan also posits the General Assembly’s failure
to include Section 708(b)(11) among the categories of permissible redactions to
financial records found in Section 708(c) does not evince its clear intent to override
the trade secrets exemption in the financial records provision of the RTKL, but
rather, may have been an oversight. Magellan emphasizes that there is currently a
bill in the Legislature that would add Section 708(b)(11) to the list of permissible
Section 708(b) redaction categories within a financial record pursuant to Section
708(c). (Id. at 25-26 & n.3.)
2. Analysis
This issue concerns the interplay between the UTSA and the RTKL. We begin
with this Court’s recent discussion of the manner in which the RTKL is to be read
with other legislation:
The RTKL mandates that a Commonwealth agency or a local agency
“shall provide public records in accordance with” the RTKL without
regard to a requester’s “intended use of the public record . . . unless
otherwise provided by law.” Sections 301 and 302 of the RTKL, 65
P.S. §§ 67.301, 67.302. A record in the possession of a Commonwealth
agency or local agency “shall be presumed to be a public record.”
Section 305(a) of the RTKL, 65 P.S. § 67.305(a). Relevantly, the
RTKL defines “public record” as “a record . . . of a Commonwealth
agency or local agency that . . . is not exempt from being disclosed
under any other Federal or State law or regulation or judicial order or
decree.” . . . 65 P.S. § 67.102(2). The RTKL establishes the OOR to
review[ ] record requests and denials of record requests
through the lens of the RTKL. In defining “public record”
in the RTKL, however, the General Assembly anticipated
the OOR’s interpretation of other laws. Cf. [Dep’t of Lab.
& Indus. v.] Heltzel, 90 A.3d [823,] 828 [(Pa. Cmwlth.
35
2014)] . . . . The RTKL contains two caveats related to
how other laws impact its presumption that a record is
public and, therefore, subject to public disclosure. These
caveats concern the nature of a record and the accessibility
of a record, which are distinct concepts. Id. at 831 . . . .
According to the first caveat, nothing in the RTKL “shall
supersede or modify the public or nonpublic nature of a
record or document established in Federal or State law,
regulation or judicial order or decree.” . . . 65 P.S. §
67.306. Thus, where a federal or state law establishes a
record as public, the record is not subject to a public record
analysis under the RTKL. “Given this significant
consequence, a statute should be clear when it establishes
the public nature of records.” Heltzel, 90 A.3d at 832.
According to the second caveat, if the provisions of the
RTKL “regarding access to records conflict with any other
Federal or State law, the provisions of [the RTKL] shall
not apply.” . . . 65 P.S. § 67.3101.1. Thus, where a
federal or state law prescribes certain procedures to
access records in a manner that conflicts with the
RTKL, the provisions of the other law prevail.
[Energy Transfer v. ]Friedman, 265 A.3d [421,] 429-30 [(Pa. 2021)]
(emphasis added).
Pa. Pub. Util. Comm’n v. Friedman, 293 A.3d 803, 814-15 (Pa. Cmwlth. 2023) .
The definition of trade secrets in the RTKL is identical to that contained in
the UTSA. PharmaCann Penn LLC v. Ullery (Pa. Cmwlth., Nos. 172-174, 183-184
C.D. 2018, filed Oct. 16, 2019), slip op. at 12 n.15 (citation omitted).8 The UTSA
defines a “[t]rade secret” as
[i]nformation, including a formula, drawing, pattern, compilation
including a customer list, program, device, method, technique or
process that:
8
While not binding, this Court’s unreported opinions may be cited for their persuasive
authority pursuant to Rule 126(b)(1) of the Pennsylvania Rules of Appellate Procedure, Pa.R.A.P.
126(b)(1), and Section 414(a) of our Internal Operating Procedures, 210 Pa. Code 69.414(a).
36
(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.
(2) Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
Section 5302 of the UTSA, 12 Pa.C.S. § 5302.
In Eiseman, our Supreme Court examined the interplay between the RTKL
and the UTSA. In doing so, the Court held that “the [RTKL’s] self-contained trade-
secrets [exemption] supplants the more general application of the [UTSA], based,
inter alia, on the principle of statutory construction that more specific provisions
control over general ones.” Eiseman, 125 A.3d at 32 (citing Section 1933 of the
SCA, 1 Pa.C.S. § 1933). The Court further reasoned that it is unlikely the General
Assembly would have withheld trade-secrets protection relative to financial records
within the four corners of the RTKL on the theory that such protection persists under
a different statute. Id. If the General Assembly had wished to withhold the
disclosure of trade secrets, the Supreme Court explained, it could have “provide[d]
for redaction of trade-secrets information in Section 708(c) of the [RTKL], as was
done in relation to eight of the other openness [exemptions] which are otherwise
withheld from financial records. See 65 P.S. § 67.708(c).” Eiseman, 125 A.3d at
32. While the Supreme Court recognized that the RTKL “generally recognize[s] the
primacy of other laws,” it held that the RTKL’s “own express and specific treatment
of trade secrets should control in this instance[,]” otherwise “the trade-secrets aspect
of the [exemption] in Section []708(b)(11) would be rendered into a mere
redundancy. Such a holding, however, would contravene the presumption that the
37
Legislature does not fashion statutory prescriptions as surplusage.” Id. at 32-33 n.13
(citations omitted).
This Court has continued to follow Eiseman’s reasoning. See PharmaCann,
slip. op. at 12 n.15 (rejecting the contention that the UTSA may serve as an exception
to the RTKL “to exempt public records containing no trade secrets at all” and stating
“[t]he RTKL’s “self-contained trade-secrets [exemption] supplants the more general
application of the [UTSA],” so that the OOR need not separately analyze whether
the UTSA applies. See Eiseman, 125 A.3d at 32-33.”). While Magellan urges us to
consider the possibility that the General Assembly’s failure to include trade secrets
among the short list of exemptions in the RTKL applicable to financial records may
have been an oversight, which it is seeking to correct through pending legislation,
stare decisis binds this Court to follow decisions of the Pennsylvania Supreme Court
and those of our own Court until they are either overruled or compelling reasons
persuade us to hold otherwise. State Farm Mut. Auto. Ins. Co. v. Dep’t of Ins., 720
A.2d 1071, 1073 (Pa. Cmwlth. 1998). Thus, Eiseman’s holding is controlling.
D. Whether common pleas abused its discretion and violated Section
708(b)(11) of the RTKL when issuing its July 6, 2022 Order without
any supporting analysis
1. Parties’ Arguments
Finally, Magellan argues common pleas “baldly” characterized the redacted
material as part of a financial record without conducting a thorough analysis and in
disregard of Leonard’s affidavits. (Magellan’s Br. at 45.) Magellan faults common
pleas for relying in large part upon Eiseman in reaching its decision without
considering the applicability of Eiseman’s progeny, Baron, and GTL. (Magellan’s
Br. at 45-46; Magellan’s Reply Br. at 26-27.) Magellan asserts that common pleas’
failure to recognize the confidential proprietary and/or trade secret nature of the
38
redacted information will harm Magellan’s competitive advantage as competitors
like Optum now can, and likely will, utilize the information to compete with
Magellan for subsequent contracts. (Magellan’s Br. at 46.)
In response, Requesters argue that this Court is not bound by common pleas’
determination. Notwithstanding, common pleas heard oral argument on Magellan’s
claims, read its brief, and specifically addressed and dismissed its arguments.
(Requesters’ Br. at 31; see also Notes of Testimony (N.T.) 5/18/22 at 1-50.9)
Common pleas detailed the contents of each redaction and explained why the
information contained therein should be revealed. (Requesters’ Br. at 31.)
2. Analysis
As previously stated, we are to determine whether common pleas’ findings of
fact are supported by substantial evidence or whether it committed an error of law
or an abuse of discretion in reaching its decision. Butler, 172 A.3d at 1178 n.7. The
trial court issued numerous and comprehensive findings of fact and conclusions of
law in support of its July Order and further expounded upon those findings in its
Rule 1925(a) Opinion. Therein, and with the benefit of the unredacted Agreement,
the trial court engaged in a detailed discussion as to the contents of each redacted
portion of the Agreement. In its Rule 1925(a) Opinion, common pleas applied the
relevant statutory authority and caselaw to its ultimate finding that the entire
Agreement should be made available to Requesters. Thus, we disagree that common
pleas abused its discretion or did not conduct a thorough analysis. We have also
conducted a thorough review of the entire record herein, including an unredacted
copy of the Agreement, as well as the statutory authority and caselaw, and for the
9
Although the notes of testimony do not appear in the Reproduced Record, they are part
of the original record.
39
reasons discussed above, we agree that the redacted information is not protected by
the RTKL.
IV. CONCLUSION
By its own terms, the Agreement was the result of negotiations between
Magellan and County to ensure Medicaid recipients in County were provided
necessary services under the HealthChoices Program. Pursuant to the RTKL,
Requesters have sought disclosure of the unredacted Agreement, and following our
review, we agree that the redacted provisions are disclosable because, pursuant to
Eiseman, the Agreement constitutes a financial record under Section 102 of the
RTKL, as it encompasses a contract dealing with the disbursement of public money
and service acquisitions by County to meet its legal obligations. Moreover, the
redacted provisions are not protected from disclosure by the UTSA, as per the
RTKL’s trade secrets exemption under Section 708(c) as interpreted by Eiseman.
Thus, we affirm common pleas’ July 6, 2022 Order requiring the disclosure of the
Agreement in its entirety.
__________________________________________
RENÉE COHN JUBELIRER, President Judge
Judge Wallace did not participate in the decision in this case.
40
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Garrett Hancock :
Optum Inc. :
:
v. : No. 846 C.D. 2022
:
Magellan Behavioral Health :
of Pennsylvania Inc., :
Appellant :
ORDER
NOW, August 15, 2023, the Order of the Court of Common Pleas of
Montgomery County, dated July 6, 2022, is AFFIRMED.
__________________________________________
RENÉE COHN JUBELIRER, President Judge