|
|
VIRGINIA FREEDOM OF INFORMATION ADVISORY COUNCIL
COMMONWEALTH
OF VIRGINIA |
AO-01-13
January
7, 2013
Virginia
Diamond, Esq.
Alexandria, Virginia
The
staff of the Freedom of Information Advisory Council
is authorized to issue advisory opinions. The ensuing
staff advisory opinion is based solely upon the information
presented in your electronic mail of November 8, 19
and 26, 2012 and your letter received December 6,
2012.
Dear
Ms. Diamond:
You have asked whether certain audited financial statements
provided to the Department of Medical Assistance Services
(DMAS) are subject to disclosure under the Virginia
Freedom of Information Act (FOIA). You stated that
your client requested the audited financial statements
of four nursing home providers that were submitted
to DMAS as required by regulation. My understanding
is that the regulation at issue, 12 VAC 30-90-70,
requires providers to submit cost reports, including
audited financial statements, balance sheets, and
other financial records, in order to receive reimbursement
from Medicaid. DMAS provided the requested records
for three of the four nursing facilities, but denied
the request for the fourth provider's records. It
appears that the fourth provider had marked the records
"proprietary and confidential," whereas
the other three had not so marked their submissions.
Your client protested the denial of her request as
to the fourth provider's records. Over the course
of several months, it appears that DMAS has continued
to deny that portion of the request, but has cited
three different exemptions as justification for the
denial. Each of the cited exemptions will be considered
in turn below. Additional facts will be presented
as necessary.
The policy of FOIA expressed in § 2.2-3700 is
to ensure the people of the Commonwealth ready
access to public records in the custody of a public
body or its officers and employees. To achieve
that end, the policy further states that FOIA
shall
be liberally construed to promote an increased
awareness by all persons of governmental activities
and afford every opportunity to citizens to witness
the operations of government. Any exemption from
public access to records or meetings shall be
narrowly construed and no record shall be withheld
or meeting closed to the public unless specifically
made exempt pursuant to this chapter or other
specific provision of law.
In
regard to public records, this policy is given practical
effect by the procedural requirements of § 2.2-3704.
Subsection A of that section provides that [e]xcept
as otherwise specifically provided by law, all public
records shall be open to inspection and copying by
any citizens of the Commonwealth during the regular
office hours of the custodian of such records.
Subdivisions B 1 and B 2 of the same section require
that if records are withheld in whole or in part,
then the custodian of records must respond in writing
and cite, as to each category of withheld records,
the specific Code section that authorizes the withholding
of the records.
In this instance, DMAS cited three different Code
sections at different times as exemptions for the
audited financial statements you requested: first
§ 2.2-4342, then subdivision 8 of § 2.2-3705.6,
and finally subdivision 3 of § 2.2-3705.6. The
first Code section cited, § 2.2-4342, is a provision
of the Virginia Public Procurement Act that concerns
the release of records in a procurement transaction.
Among other provisions, subsection F of § 2.2-4342
provides a mechanism to protect certain trade secrets
and proprietary information in a procurement transaction:
Trade
secrets or proprietary information submitted by
a bidder, offeror or contractor in connection
with a procurement transaction or prequalification
application submitted pursuant to subsection B
of § 2.2-4317 shall not be subject to the
Virginia Freedom of Information Act (§ 2.2-3700
et seq.); however, the bidder, offeror or contractor
shall (i) invoke the protections of this section
prior to or upon submission of the data or other
materials, (ii) identify the data or other materials
to be protected, and (iii) state the reasons why
protection is necessary.
Your
client protested the use of this exemption, as the
requested records were submitted as a matter of regulatory
compliance in order to receive Medicaid reimbursement,
not as records of a bidder, offeror, or contractor
involved in a procurement transaction. Giving heed
to the narrow construction rule quoted above, your
client is correct that the audited financial records
at issue would not be exempt from disclosure under
§ 2.2-4342.1 Based on the documents
you provided, it appears that DMAS continued to deny
your client's request but discontinued its reliance
upon § 2.2-4342. DMAS did not explicitly state
that it was doing so, but instead simply cited subdivision
8 of § 2.2-3705.6 as its next basis for denial.
Turning to the next exemption cited by DMAS, subdivision
8 of § 2.2-3705.6 provides an exemption from
mandatory disclosure for [c]onfidential proprietary
information furnished to the Board of Medical Assistance
Services or the Medicaid Prior Authorization Advisory
Committee pursuant to Article 4 (§ 32.1-331.12
et seq.) of Chapter 10 of Title 32.1. While it
appears that DMAS subsequently discontinued its reliance
on this exemption, it is worth addressing in order
to clarify any potential confusion that may occur
in the future. In a reply to your client, DMAS asserted
that the limiting clause of this exemption - pursuant
to Article 4 (§ 32.1-331.12 et seq.) of Chapter
10 of Title 32.1 - would only apply to records
provided to the Medicaid Prior Authorization Advisory
Committee (the Committee), and would not apply to
the Board of Medical Assistance Services (the Board),
based on construing the word "or" to divide
the exemption into two distinct provisions. This construction
would mean that the "or" in this exemption
effectively creates two exemptions: (1) a general
exemption for all [c]onfidential proprietary information
furnished to the [Board], and (2) a more narrow
exemption for [c]onfidential proprietary information
furnished to ... the [Committee] pursuant
to Article 4 (§ 32.1-331.12 et seq.) of Chapter
10 of Title 32.1. As previously opined by this
office,2 according to rules of statutory
construction, in the absence of a statutory definition,
a statutory term is considered to have its ordinary
meaning, given the context in which it is used.3
Generally, "or" is disjunctive, meaning
that it presents two or more alternatives. Rules of
statutory construction also state that whenever it
is necessary to effectuate the obvious intention of
the legislature, "or" may be construed to
mean "and." However, this interpretation
may only be applied where the context, other provisions
of the statute, or former laws relating to the same
subject indicates that such usage was the legislative
intent.4 In this case, we must be guided
by the principles of construction set forth in §
2.2-3700. Accepting the construction offered by DMAS
would effectively provide a broad exemption for all
proprietary records submitted to the Board, as well
as a narrower exemption for records submitted to the
Committee, by construing the limiting clause as applying
only to records submitted to the Committee. In the
alternative, the "or" could be construed
as a conjunctive, in which case the limiting clause
would apply to records submitted both to the Board
as well as to the Committee. The latter interpretation
is the narrower construction of the exemption, which
comports with the guidance set forth in § 2.2-3700.
The construction asserted by DMAS would give the exemption
broader effect, further limiting access to public
records, contrary to the policy and rules of construction
of FOIA. Therefore we must recommend the narrower
construction, applying the term "or" in
the conjunctive so that the limiting clause applies
to records submitted to the Board as well as to records
submitted to the Committee.
Applying
the narrower construction to this exemption, it would
then only apply to confidential proprietary information
furnished [either to the Board or to the Committee]
pursuant to Article 4 (§ 32.1-331.12 et seq.)
of Chapter 10 of Title 32.1. Article 4 of Chapter
10 of Title 32.1 of the Code establishes the Committee,
sets forth its duties, and provides for the prior
authorization of prescription drug products and coverage
under the state plan. It appears that the Committee
makes recommendations to the Board, and therefore
either or both entities might have relevant records.
Regarding records, subsection D of § 32.1-331.15
provides as follows:
Confidential
proprietary information identified as such by
a manufacturer or supplier in writing in advance
and furnished to the Committee or the Board pursuant
to this article shall not be subject to the disclosure
requirements of the Virginia Freedom of Information
Act (§ 2.2-3700 et seq.). The Board shall
establish by regulation the means by which such
confidential proprietary information shall be
protected.
This
appears to be the only relevant provision of Article
4 of Chapter 10 of Title 32.1 that corresponds to
the exemption provided in subdivision 8 of §
2.2-3705.6. Again applying the narrow construction
rule, it appears that this exemption therefore covers
certain information provided by certain manufacturers
or suppliers of prescription drugs to either the Committee,
the Board, or both. It does not provide an exemption
for audited financial records of a nursing home provider
submitted to receive reimbursement under Medicaid
as required by regulation. Based on a letter from
DMAS' counsel, it appears that DMAS recognized that
this exemption would not apply in this instance and
no longer relies upon this exemption in denying your
request for records.
Most recently, DMAS has asserted through counsel that
the requested records are exempt pursuant to subdivision
3 of § 2.2-3705.6, which exempts from mandatory
disclosure the following records:
Confidential
proprietary records, voluntarily provided by private
business pursuant to a promise of confidentiality
from a public body, used by the public body for
business, trade and tourism development or retention;
and memoranda, working papers or other records
related to businesses that are considering locating
or expanding in Virginia, prepared by a public
body, where competition or bargaining is involved
and where, if such records are made public, the
financial interest of the public body would be
adversely affected.
Generally
speaking, this exemption was enacted to promote economic
development and retention. It has two distinct clauses
separated by a semi-colon. The first addresses records
voluntarily submitted to a public body by a private
business, and the second concerns records prepared
by the public body itself. In this instance we need
only consider the first clause, as the records at
issue were submitted by the nursing home provider,
not prepared by DMAS. Considering the first clause,
the question is then whether audited financial statements
submitted by a nursing home provider to DMAS are
[c]onfidential proprietary records, voluntarily provided
by private business pursuant to a promise of confidentiality
from a public body, used by the public body for business,
trade and tourism development or retention. DMAS'
counsel asserted in a letter that the records
in question are confidential proprietary records that
[the nursing home provider] provided to DMAS for
business purposes pursuant to a promise of confidentiality.
This language largely tracks the language of the exemption,
and leaves only the question of whether the records
are or were used by the public body for business,
trade and tourism development or retention. It
appears that DMAS asserts that the records were provided
for business purposes and therefore would
answer that question in the affirmative. However,
that question would appear to be answered in the negative
based on the facts you have presented: the records
were submitted as required by regulation in order
to receive Medicaid reimbursement, not used for business,
trade, or tourism development or retention. Given
the facts as you have described them, we must respectfully
disagree with DMAS' assertion that these records are
exempt pursuant to subdivision 3 of § 2.2-3705.6,
as it appears the records were submitted as required
for regulatory compliance, not for business development
or retention. However, to the extent there is any
factual dispute, only a court has the authority to
resolve it.
Finally, I would note that while research did not
reveal any published opinions directly on point, dicta
from a prior Virginia Supreme Court case concerning
the same type of records states that
According
to the evidence, the State Health Department considers
the cost report files...accessible to almost "everyone
in the Division of Provider Reimbursement and
any member of the public who requests access to
them under the Freedom of Information Act.” 5
[Quotations
in original.] Considering this dicta and noting that
DMAS released the same type of records from three
other nursing home providers, it would appear that
the real issue here is that the withheld records were
marked "proprietary and confidential" by
the provider who submitted them. As previously opined
by this office, what matters for FOIA purposes is
whether there is a legal exemption and whether the
contents of the record in question are in fact subject
to that exemption. Whether a record is marked "confidential"
or "privileged" or otherwise does not make
it exempt. A record is only exempt if there is an
exemption specifically provided by law.6 Marking a
record as "proprietary and confidential"
may serve as notice that the record might be exempt,
but absent a specific provision of law that allows
the record to be withheld, it must be disclosed regardless
of any such markings.
Thank you for contacting this office. I hope that
I have been of assistance.
Sincerely,
Maria
J.K. Everett
Executive Director
1Further, observe that - although
not cited by DMAS in this case - subdivision 10 of
§ 2.2-3705.6 directly references the Virginia
Public Procurement Act and exempts from mandatory
disclosure [c]onfidential information designated
as provided in subsection F of § 2.2-4342 as
trade secrets or proprietary information by any person
who has submitted to a public body an application
for prequalification to bid on public construction
projects in accordance with subsection B of §
2.2-4317. Similarly, subdivision 11 of §
2.2-3705.6 exempts certain records involved in procurement
transactions under the Public-Private Transportation
Act of 1995 (§ 56-556 et seq.) or the Public
Private Education Facilities and Infrastructure Act
of 2002 (§ 56-575.1 et seq.). In addition, subdivision
12 of § 2.2-3705.1 provides an exemption for
certain records involved in the negotiation and award
of specific contracts, but explicitly excludes records
that are part of procurement transactions conducted
pursuant to the Virginia Public Procurement Act. Considering
all of these provisions together it is clear that
the General Assembly has provided distinct exemptions
for these various types of contractual and procurement
records, each of which applies to specific types of
transactions, and none of which would apply to the
audited financial statements under consideration here.
2Freedom
of Information Advisory Opinion 12 (2002).
3Commonwealth Department of Taxation v.
Orange-Madison Coop. Farm Service, 220 VA 655, 261
S.E. 2d 532 (1980), 1991 Op. Atty. Gen. Va. 140, 1988
Op. Atty. Gen. Va. 413, 1986-1987 Op. Atty. Gen. Va.
174; see generally Norman J. Singer, Statutes and
Statutory Construction, 6th ed., §46:01.
4See South East Pub. Service Corp. v. Commonwealth,
165 VA 116, 181 S.E. 448 (1935), Industrial Dev. Auth.
v. LaFrance Cleaners & Laundry Corp., 216 VA 277,
217 S.E. 2d 879 (1975), Patterson v. Commonwealth,
216 VA 306, 218 S.E. 2d 435 (1975).
5Commonwealth v. Edwards, 235
Va. 499, 508, 370 S.E.2d 296, 301 (1988).
6Freedom of Information Advisory Opinion
04 (2011). |