Brian BILES, Plaintiff, v. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendant.
Civil No. 11-1997.
United States District Court, District of Columbia.
March 21, 2013.
931 F. Supp. 2d 211
ROYCE C. LAMBERTH, Chief Judge.
CONCLUSION AND ORDER
The District has not shown that justice requires reconsideration of the March 21, 2013 memorandum opinion and order. Accordingly, it is hereby
ORDERED that the District‘s motion [35] for reconsideration be, and hereby is, DENIED.
Heather D. Graham-Oliver, U.S. Attorney‘s Office, Washington, DC, for Defendant.
MEMORANDUM OPINION
ROYCE C. LAMBERTH, Chief Judge.
Plaintiff Brian Biles, MD, MPH (“Dr. Biles”), brings an action against defendant U.S. Department of Health and Human Services (“HHS”) under the
Before the Court is defendant‘s Motion for Summary Judgment, ECF No. 20, April 30, 2012, and plaintiff‘s Cross Motion for Summary Judgment, ECF No. 24, July 13, 2012. Upon consideration of defendant‘s motion, plaintiff‘s cross motion and opposition, defendant‘s reply and opposition, ECF No. 27, Aug. 13, 2012, plaintiff‘s reply, ECF No. 30, Sept. 10, 2012, the applicable law, and the record herein, the Court will DENY defendant‘s motion and GRANT plaintiff‘s motion.
I. BACKGROUND
On July 18, 2011, plaintiff Dr. Biles—a professor at The George Washington University School of Public Health and Health Services who studies the Medicare Advantage (“MA”) program—filed a FOIA request with defendant HHS‘s Centers for Medicare and Medicaid Services (“CMS”), which oversees the Medicare Advantage (“MA”) program. Pl.‘s Mem. in Opp‘n to Def.‘s M. Summ. J. & in Supp. of Pl.‘s M. Summ. J. (“Pl.‘s Mem.”) 2, ECF No. 24-1; Biles Decl. ¶ 1, Exh. A(CV), ECF No. 24-2; Def.‘s Mem. in Supp. of Def.‘s M. Summ. J. (“Def.‘s Mem.”) 4, ECF No. 20. In order to analyze the efficiency and effectiveness of the MA and Medicare programs, Dr. Biles requested “specific data and other information for 2009 provided to CMS, in or about June 2010, by all Medicare Part C Medicare Advantage Organizations on WORKSHEET 1—MA BASE
Medicare Advantage organizations (“MAOs”) are private insurance companies that offer health insurance coverage to Medicare beneficiaries and are required, pursuant to
[T]he MA... program[ ][is] not competitive in the way that term is normally understood. Although [MAOs] do compete for members, primarily through the benefits offered and the cost (member cost sharing and premium) of those benefits, they do not directly compete for the payments that CMS makes.1
CMS “approve[s] all sustainable bids that are otherwise qualified without preference
Further unlike a competitive bid for a contract where the bidder can choose his desired bid amount, an MAO‘s “bid” is based on the MAO‘s actual costs expended by the MAO in the previous year to provide its offered Medicare benefits; this data is called the MAO‘s “base period” data and is the category from which Dr. Biles has requested specific data. Pl.‘s Mem. 7; see Rice Decl. ¶ 6. Base period data must be verified by an actuary. Pl.‘s Mem. 15, 42; Rice Decl. ¶ 12; 76 Fed. Reg. at 21,518 (statement by CMS/HHS) (“Utilization, costs, and trends must be certified by a qualified, independent actuary prior to bid submission.”);
Ultimately, the “bid” data is trended forward to the next year by a series of formulae, like inflation and other factors, embedded in the seven Excel worksheets of the Bid Pricing Tool. Pl.‘s Mem. 7; see Rice Decl. ¶ 6; 76 Fed. Reg. at 21,517. The formulae calculate the bid data to determine the expected revenue needed to cover the MAO‘s projected Medicare costs for the next year. Pl.‘s Mem. 7; Rice Decl. ¶ 6;
Additionally, while the payment plan is determined according to the MAO‘s estimated internal costs, the payment amount is limited by a federally-set benchmark, which is the maximum amount CMS will pay an MAO in a given locality. See
Dr. Biles requested “retroactive,” “historical” cost and utilization data from Sections I, II, III, and VI of Worksheet One3 of the Bid Pricing Tool and claims to have not requested any data that “disclose[s] MAO assumptions, predictions, projections, or expectations for how th[o]se costs may change in the future.” Pl.‘s Mem. 8;
Section II contains base period background information that defines the period of time that Section III data4 reflects and includes the “Paid Through Date,”5 “Member Months,”6 and the “Non ESRD Risk Score,”7 along with other background data. Biles Decl. ¶¶ 97-107.
Section III is retrospective 2009 cost and utilization data for various types of health services the MAO covers in its offered plans. Biles Decl. ¶ 108. Section III includes the rates that each service was utilized during 2009 and automatically pop-
Section VI reflects the MAO‘s revenue for the calendar year as well as non-benefit expenses, like internal operating costs, that were required to provide the services described in Section III for the 2009 calendar year. Biles Decl. ¶ 114.
II. LEGAL STANDARD
A. Summary Judgment
“The court shall grant summary judgment if the movant shows that (1) there is no genuine dispute as to any material fact and (2) the movant is entitled to judgment as a matter of law.”
The court must find that the movant is entitled to “judgment as a matter of law” in order to grant summary judgment,
If the moving party would have the burden of persuasion at trial, the moving party must provide enough credible evidence to show that it is entitled to a directed verdict if not controverted at trial, which shifts the burden to the nonmoving party to show, by credible evidence, that a “genuine issue” exists. 477 U.S. at 331 (Brennan, J., dissenting)
FOIA cases are typically and appropriately decided by summary judgment. Brayton v. Office of the U.S. Trade Representative, 641 F.3d 521, 527 (D.C.Cir.2011). By statute, the agency bears the burden in litigation to justify withholding any records.
B. Freedom of Information Act
The
The FOIA exemptions exemplify various policy interests that conflict with and ultimately supersede the basic FOIA policies of government transparency and an informed citizenry. John Doe, 493 U.S. at 152 (“Congress realized that legitimate governmental and private interests could be harmed by release of certain types of information,’ and therefore provided the ‘specific exemptions under which disclosure could be refused.’ ”) (citing FBI v. Abramson, 456 U.S. 615, 621 (1982)). An agency seeking to withhold information under a FOIA exemption has the burden of proving that the information falls under the claimed exemption, and the district court must review the agency‘s decision de novo.
Exemption Four to FOIA exempts from disclosure some information relating to trade secrets or commercial or financial information.
III. DISCUSSION
For Exemption Four to apply, the information must (1) involve trade secrets or commercial or financial information, (2) be obtained from a person outside the government, and (3) be privileged or confidential. National Parks, 498 F.2d at 766. It is undisputed that the information in this case is financial or commercial and was obtained from a “person” outside of the government, and HHS has not claimed that the information is privileged. Pl.‘s Mem. 18; Def.‘s Mem. 12-13. Thus, the only disputed issue is whether or not the requested information is confidential. Id.
To determine whether information is confidential, the court must first determine whether the information was submitted to the government voluntarily or
Under National Parks, information is confidential if its disclosure is likely to (1) “impair the Government‘s ability to obtain necessary information in the future” or (2) “cause substantial harm to the competitive position of the person from whom the information was obtained.” Nat‘l Parks, 498 F.2d at 770; see Critical Mass, 975 F.2d at 878. Here, HHS contends that both prongs of the test are satisfied as a matter of law (though HHS need only prove one of the prongs to prevail) and that there are no genuine issues of material fact, thus requesting summary judgment in its favor. Def.‘s Mem. 1, 14-21. Dr. Biles contends that HHS has not met its burden of proving with affirmative, non-conclusory evidence that Exemption Four applies in this case and therefore requests summary judgment in his favor. Pl.‘s Mem. 28.
A. Impairment to Government‘s Ability to Obtain Information in the Future
Because all MAOs are required by statute to submit the requested data to CMS in order to participate as an MAO the following year, the Government will continue to be able to obtain the data required by the mandatory Bid Pricing Tool submission even if the requested data is disclosed. Private companies participate as MAOs because it is profitable to them, and neither an MAO official nor HHS has suggested that an MAO would refuse to participate in the MA program if the requested data were released. See Pl.‘s Mem. 21-22; Biles Decl. ¶ 133; Rice Decl. ¶¶ 9-10. See generally Rice Decl.; Marquis Decl.; Yiu Decl., ECF No. 27-5; Smith Decl., ECF No. 27-4; Theisen Decl., ECF No. 27-3; Rice Supp. Decl., ECF No 27-2.
Because HHS will continue to be able to obtain the required data, HHS focuses on the quality of the data the Government will be able to obtain. HHS claims that the disclosure of the requested information will cause MAOs to adjust their bids in order to compete with other MAOs’ bids or to keep other MAOs from “decipher[ing] their bids,” which would deprive CMS of the detailed and reliable information it now obtains. Def.‘s Mem. 18-20; Rice Decl. ¶¶ 24-25. Dr. Biles disputes these claims, noting that “[i]f an MAO wishes to participate, but fails to provide the voluminous and detailed information required on the Bid Pricing Tool [and abide by the actuarial requirements], CMS is empowered not only to decline to renew their contract, but also to impose sanctions.” Pl.‘s Mem. 22 (citing
HHS fails to explain (1) how bids could be manipulated by MAOs by using the requested data when the Bid Pricing Tool requires actuary-verified data and other strict structural requirements that cannot
CMS claims that “[d]isclosure of the requested information would undermine the integrity of the bidding process.” Def.‘s Mem. 19. But in a 2010 response to MAOs that were claiming the exact same thing (that the release of certain payment data would undermine the integrity of the bidding process), CMS claimed that there was no risk of loss to the integrity of the bidding process, not because of the type of data that was being released, but because the bidding process consisted of actuary-verified data: “Utilization, costs, and trends must be certified by a qualified, independent actuary prior to bid submission. Since we will continue to require actuarial certification, integrity is unaffected.” 75 Fed. Reg. 21,432, 21,518. HHS fails to dispute Dr. Biles‘s claim that “plans cannot simply raise bids strategically [or] willy-nilly [because] [t]here must be an actuarial basis for doing so.” Pl.‘s Mem. 54. HHS offers “nothing but speculative opinion that [MAOs] may not be forthcoming in the data they submit if [HHS] allows disclosure ... [though] the agency has the burden of showing that requested information comes within a
Dr. Biles also cites a line of precedent holding that impairment is highly unlikely when disclosure of the information is compelled.10 In Mohawk, the court noted that disclosure of required data containing “hard, cold numbers”—a fitting description of the actuarial cost data required by the Bid Pricing Tool—refutes a conclusory claim by HHS that disclosure of the information will impair HHS‘s ability to obtain the information in the future. 169 F.3d at 18. This line of precedent, sourced initially from National Parks, is convincing to and binding on the Court. Even if HHS‘s contentions are true, HHS has failed to meet its burden of showing how disclosure of the information will impair CMS from obtaining the data in the future—the first prong of the National Parks test. HHS
B. Substantial Competitive Harm
To prove a likelihood of substantial competitive harm, HHS must prove that (1) the submitters of the information “actually face competition” and that (2) “substantial competitive injury [to the submitters] would likely result from disclosure.” Nat‘l Parks & Conservation Ass‘n v. Kleppe, 547 F.2d 673, 679 (D.C.Cir.1976) (“National Parks II”).
i. Proof of Competition
Though HHS‘s assertions of competition within the bidding process11 are contradicted,12 HHS‘s assertion that MAOs compete to attract enrollees is sufficient to support HHS‘s burden of production and
ii. Proof of Substantial Competitive Harm
“In reviewing an agency‘s determination as to substantial competitive harm, we recognize that ‘predictive judgments are not capable of exact proof,’ and we generally defer to the agency‘s predictive judgments as to “repercussions of disclosure,” ” ” but conclusory statements from the agency do not suffice. United Technologies Corp. v. U.S. Dep‘t of Def., 601 F.3d 557, 563 (D.C.Cir.2010) (citations omitted). “Under FOIA, an agency has the burden to demonstrate that the withheld documents are exempt from disclosure, which it may meet by submitting ‘affidavits [that] show, with reasonable specificity, why the documents fall within the exemption. The affidavits will not suffice if the agency‘s claims are conclusory, merely reciting statutory standards, or if they are too vague or sweeping.’ ” In Def. of Animals v. U.S. Dep‘t of Agric., 501 F.Supp.2d 1, 5-8 (D.D.C.2007). The question here is whether or not HHS‘s claims are too “conclusory” or “vague” to survive Dr. Biles‘s motion for summary judgment.
HHS‘s claims can be summarized by the following statement: “Releasing the requested ... data would cause harm” “by providing propriety plan information that is not publicly available” that would (1) provide “insight” into “enrollment stability,” “market shares,” “market strategy,” “target market,” “market strength,” utilization of services by enrollees, “financial details” and “position,” “underlying costs,” “efficiency of operations,” “profit objec-
Only the last three points hold any hope of rising above conclusory claims of commercial harm, as mere observations that disclosure will provide “insight” into certain types of information fail to show how such insight” creates a likelihood of substantial competitive harm and are therefore insufficient to establish HHS‘s burden of proof. The last three points can be distilled into two claims: (1) the disclosure of the information will allow MAOs to make changes to their own practices (such as design, pricing, benefits, and price negotiations with providers) that would allow them to better compete with other MAOs, and (2) providers with which MAOs contract could use the data to manipulate the negotiation process. See Theisen Decl. ¶ 10b.
HHS‘s assertion that disclosure will enable MAOs to change their practices to better compete with other MAOs is nothing more than arguing that disclosure has a likelihood of creating competition among MAOs—an assertion that does not neces-
Still, HHS‘s assertions of competitive harm are rebutted by Dr. Biles, without an adequate evidentiary response from HHS, when Dr. Biles claims that (a) the 2009 requested data cannot cause competitive “harm” because the disclosure of the data is “symmetrical,” meaning that all competitors are exposed to the same degree by the disclosure; (b) much of the data is already publicly available, which nullifies HHS‘s claims that the data is “confidential”; (c) the requested data is now stale for purposes of predicting MAOs’ future bids, as it is retrospective, historical data rather than projective data and cannot be “trended” in order to make predictions
a. Asymmetrical Harm
Dr. Biles argues that, when all MAOs have access to the requested data, there is no risk of substantial competitive harm to an MAO because all of the MAOs have access to data to which every other MAO has access—preventing any one MAO from unfairly benefiting to the detriment of another MAO. Pl.‘s Mem. 2. Dr. Biles refers to this as a lack of “asymmetric” disclosure and claims that asymmetric disclosure is required in order to prove substantial competitive harm. Pl.‘s Mem. at 30-33. (citing Silverberg v. Dep‘t of Health & Human Servs., 1991 WL 633740, *4 (D.D.C. June 14, 1991) (reasoning that because each laboratory would have access to the same type of information as every other laboratory in the program, that no single laboratory would receive a competitive advantage over the other)). The Court does not need to determine whether or not asymmetric disclosure is required for substantial competitive harm. However, precedent suggests that the “harm” aspect of “competitive harm” is an unfair commercial disadvantage by way of exposure.15 Thus, “asymmetric” disclosure, or
b. Public Availability of Requested Data
HHS admits that some information relating to the “bid” and the plan payment is already publicly available. Rice Decl. ¶ 19, Rice Supp. Decl. ¶¶ 4-7, ECF No. 27-2. However, HHS asserts: “The information requested by Dr. Biles goes far beyond the information that CMS proactively discloses to the public. Release of the specific information requested by Dr. Biles will cause substantial harm to the competitive positions of [MAOs]....” Rice Decl. ¶ 16. Dr. Biles rebuts that assertion by claiming that “[a]ny difference[s] between the data that is not public and the Worksheet 1 data are so small that they are irrelevant for analytic purposes by researchers[] or other MA[Os] and their consultants.” Biles Supp. Decl. ¶ 24. HHS does not show—by numbers, specific examples, or any evidence beyond conclusory statements—how the portions of data requested by Dr. Biles that Dr. Biles claims can already be obtained by public means are materially different than the public data for purposes of competitive use.16
Dr. Biles argues that because “a considerable amount of the data sought is already public or can be calculated based on data published by CMS,” any likelihood of substantial competitive harm must be considered in light of analogous data that is already available to MAOs. Pl.‘s Mem. 33. The Court agrees. But public availability of analogous data can cut both ways, as it can nullify claims that the requested data is confidential, but it can also make the requested data more harmful if the public data can be combined with the requested data to obtain commercial information that is likely to cause substantial competitive harm.
Whether or not some of the requested data is publicly available is clearly a “disputed fact” that is both material and a “genuine issue” upon which the case could turn because the public availability of the data would nullify HHS‘s Exemption Four claim: “Public availability of information defeats an argument that the disclosure of the information would likely cause competitive harm.” Nat‘l Cmty. Reinvestment Coal. v. Nat‘l Credit Union Admin., 290 F.Supp.2d 124, 134 (D.D.C. 2003). Thus, summary judgment in favor of HHS is inappropriate. However, summary judgment in favor of Dr. Biles is still a possibility: if HHS fails to offer enough evidence to satisfy its burden of proof regarding competitive harm, it would be irrelevant whether or not the data is publicly available since Dr. Biles would automatically prevail.
c. Staleness of Requested Data
Regarding FOIA, this Circuit has recognized that “stale information is of little value.”17 Payne Enterprises, Inc. v. United States, 837 F.2d 486, 494 (D.C.Cir. 1988). HHS has not explained why the
Dr. Biles claims that the passing of time, as well as the changes in the health care industry, which include rising costs, health care reform under the
HHS also contends that “competitors could ascertain (or at least closely estimate) the amounts and component pieces of a given [MAO]‘s recent bid,” Rice Decl. ¶ 17 (emphasis added), and could use that knowledge to “undermine [an MAO‘s] position in the marketplace” “if” that competitor could access an MAO‘s bid information for all of its plans “over a several year period.” Rice Decl. ¶ 22 (emphasis added). Dr. Biles notes that, because he has only requested historical cost data from 2009—a single year—and has not requested any projection data, the requested data cannot be trended. Pl.‘s Reply 13-14; 23; Def.‘s Mem. Ex. 1. Further, Dr. Biles claims that, because the 2009 data is now stale in the rapidly changing and non-linear healthcare market, MAOs cannot use the data effectively to predict an MAO‘s recent or future bid. Pl.‘s Mem. 2. HHS‘s only rebuttal to these claims is an assertion that if Exemption Four does not protect this 2009 data, Exemption Four would not
HHS has failed to explain why the 2009 data is still commercially valuable to competitors or how that data could be used in 2014 or later to create a likelihood of substantial competitive harm, thereby failing to meet its burden of proof in light of Dr. Biles‘s nullifying evidence.
d. HHS‘s Specific Claims Regarding the Requested Data
When there are various categories of data, the agency has the burden of establishing why or how each category of data is likely to cause substantial competitive harm. See S. Alliance for Clean Energy v. U.S. Dep‘t of Energy, 853 F.Supp.2d 60, 73-75 (D.D.C.2012); Gov‘t Accountability Project, 691 F.Supp.2d at 179. HHS does not explain how disclosure of Worksheet 1, Section II, Lines 1 (“Paid Through”), 4 (“Completion Factor”), 5 (“Plans in Base”), or 6 (“Describe the source of the base period experience data”) could cause competitive harm.
HHS objects to disclosure of Section II, Line 2 (“Member Months”) because release of that information would provide “insight into enrollment stability and mar-
In addition to HHS/CMS employees, several MAO officials provided declarations in support of HHS. The MAO officials’ main objections regarded the release of Section II “risk scores,” Section III “cost structure” and “utilization patterns,” and Section VI “expenses” and “profit/loss by plan.” Theisen Decl. ¶¶ 5, 9-11; Yui Decl. ¶ 14.
HHS contends that the disclosure of risk scores would “enable ... competitors to devise strategies aimed at unfairly attracting beneficiaries with higher or lower [health] scores,” which would “disrupt [an MAO‘s] risk pool” and “violate CMS‘s requirement that plans ‘not design benefit packages that discourage enrollment or
MAO officials claim that “cost structure” and “utilization patterns” data in Section III would allow competitors or providers to use the information to “undercut [an MAO] in price negotiations” when contracting. Yui Decl. ¶ 14; Theisen Decl. ¶¶ 5b, 10b-c, 11. Dr. Biles claims that the symmetric disclosure of the data, Pl.‘s Reply 9-13, the stale nature of the 2009 data, Biles Supp. Decl. ¶¶ 91-96; Biles Decl. ¶¶ 124-27, the existing public and industry knowledge of cost and utilization information, Biles Supp. Decl. ¶ 63, the inability to trend the requested data, Pl.‘s Reply 15-16, and the “high level of aggregation” of the Section III data24 prevents a competitor or a provider from effectively using the requested data to manipulate contract negotiations, Biles Decl. ¶ 113. HHS fails to explain how a competing MAO or provider would use the requested 2009 data to “undercut” an MAO in contract negotiations and does not provide sufficient evidence to rebut Dr. Biles‘s contradicting and possibly nullifying claims.
Finally, HHS asserts that Section VI cost data would “provide information about the efficiency of operations and the financial position of the organization.” Rice Decl ¶ 20. Here, HHS‘s claims are again too conclusory to satisfy their burden of proof. “Efficiency” and “financial position” are highly generalized terms that do not, in themselves, prove competitive harm; stating that disclosure of cost infor-
e. HHS‘s Burden
HHS contends that releasing the requested data would “cause harm” by providing “proprietary plan information” that is not publicly available, which would result in “insight” into various aspects of an MAO‘s operations like “market strategy” and “financial details.” Rice Decl. ¶ 18. HHS asserts that disclosure of the information would be “inappropriate” and “unfair.” Rice Decl. ¶¶ 21-22; Marquis Decl., ¶ 26. Crucial, and missing, in HHS‘s evidence is exactly how all of these
IV. ATTORNEYS’ FEES AND COSTS
Dr. Biles has moved for attorneys’ fees and costs. Pl.‘s Compl. 5 ¶ 15 (Relief). Though Dr. Biles has prevailed and though FOIA gives this Court authority to award attorneys’ fees to Dr. Biles,
V. CONCLUSION
For the foregoing reasons, defendant‘s Motion for Summary Judgment will be DENIED and plaintiff‘s Motion for Summary Judgment will be GRANTED. Defendant is ordered to disclose to plaintiff, in the form requested by plaintiff, all information requested in plaintiff‘s July 18, 2011, FOIA request submitted to CMS.
A separate Order consistent with this Memorandum Opinion shall issue this date.
ROYCE C. LAMBERTH
CHIEF JUDGE, UNITED STATES DISTRICT COURT