Commonwealth, Department of Public Welfare v. Eiseman
125 A.3d 19
| Pa. | 2015Background
- Pennsylvania's Medicaid (Medical Assistance) HealthChoices program pays managed care organizations (MCOs) to deliver services; MCOs subcontract dental services to DPW-approved subcontractors.
- Requesters (Eiseman and Public Interest Law Center) sought records under the Right-to-Know Law (RTKL) showing DPW's capitation rates paid to MCOs and the rates MCOs pay their dental subcontractors ("MCO Rates").
- DPW denied disclosure for MCO Rates based on MCOs' claims that the rates were trade secrets or confidential proprietary information; the MCOs intervened and presented testimony to support confidentiality claims.
- The Office of Open Records (OOR) ordered disclosure, concluding the contracts and related records are presumptively public and that the RTKL’s trade-secrets/confidential-proprietary exception does not apply to "financial records." The OOR relied on Lukes v. DPW.
- The Commonwealth Court (en banc) affirmed disclosure of DPW capitation contracts as financial records but held the MCO Rates (subcontract rates) were not financial records and were protected as confidential proprietary information (and arguably trade secrets).
- The Supreme Court reversed the Commonwealth Court as to the MCO Rates, holding that subcontracts required to be submitted to and approved by DPW are "financial records" under the RTKL and that the RTKL’s internal treatment of trade-secrets/confidential-proprietary exceptions controls (so the RTKL’s Section 708(c) disallows those exceptions for financial records).
Issues
| Issue | Plaintiff's Argument (Eiseman) | Defendant's Argument (DPW/MCOs) | Held |
|---|---|---|---|
| Are records reflecting MCO Rates "financial records" under the RTKL? | MCO Rates are in subcontracts submitted to DPW and therefore "deal with" agency disbursement and acquisition of services; thus financial records. | MCO Rates are set and disbursed by private MCOs (not the agency); funds become private once leaving DPW, so not financial records. | Yes. Subcontracts required to be submitted/approved by DPW "deal with" agency disbursements and are financial records under § 67.102. |
| Does RTKL § 708(c) permit withholding financial records as trade secrets/confidential proprietary information? | § 708(c) reflects legislative choice that financial records are subject to disclosure and thus the RTKL’s trade-secret/confidential exemptions do not apply to financial records. | MCOs argue confidentiality and competitive harm justify protection; also invoked Uniform Trade Secrets Act protections. | The RTKL’s own rule controls: Section 708(c) bars the RTKL’s trade-secrets/confidential-proprietary exception for financial records. |
| Can the Uniform Trade Secrets Act independently shield financial records from disclosure? | No. The RTKL’s specific treatment of trade secrets in § 708(c) supersedes general application of the Uniform Trade Secrets Act to financial records. | MCOs urged that the Uniform Trade Secrets Act should independently protect disclosure despite § 708(c). | No. Specific RTKL provision prevails; allowing UTSA to override § 708(c) would render the RTKL provision meaningless. |
| Was DPW’s assertion that it lacked possession/control of MCO Rate records persuasive? | Requesters noted subcontracts must be submitted to DPW; DPW did not assert non-possession at initial stages. | DPW later claimed it did not possess MCO Rate records and asked that MCOs provide them if disclosure ordered. | Court found DPW’s non-possession argument unavailing given submission/approval requirement and prior proceedings; treated records as agency financial records. |
Key Cases Cited
- Lukes v. Dep’t of Public Welfare, 976 A.2d 609 (Pa. Cmwlth.) (discusses openness where private parties participate in public programs and receive/disburse public funds)
- SWB Yankees LLC v. Wintermantel, 615 Pa. 640, 45 A.3d 1029 (Pa. 2012) (interpretation of RTKL expansively and guidance on construing new statutory regime)
- Bowling v. Office of Open Records, 621 Pa. 133, 75 A.3d 453 (Pa. 2013) (describes administrative RTKL appeal process and presumption of public access)
- Sapp Roofing Co. v. Sheet Metal Workers’ Int’l Ass’n, Local Union No. 12, 552 Pa. 105, 713 A.2d 627 (Pa. 1998) (private-contractor payroll records held to be public records when in government custody)
- Levy v. Senate of Pa., 619 Pa. 586, 65 A.3d 361 (Pa. 2013) (RTKL enacted to expand public access to government documents)