Center for the Study of Services, Also Dba Consumers' Checkbook v. United States Department of Health and Human Services , 130 F. Supp. 3d 1 ( 2015 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CENTER FOR THE STUDY OF
SERVICES, ALSO DBA CONSUMERS'
CHECKBOOK,
Plaintiff,
v. Civil Action No. 14-498 (GK)
UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
et al.,
Defendants.
MEMORANDUM OPINION
Plaintiff Center for the Study of Services ("Plaintiff" or
"CSS"), which is also known as "Consumers' CHECKBOOK," brings this
action against Defendants the U.S. Department of Health and Human
Services ("HHS") and the Centers for Medicare and Medicaid Services
("CMS") (collectively, "Defendants" or "the Government") under the
Freedom of Information Act ( "FOIA") , 5 U.S. C. § 552. Plaintiff
seeks certain information related to health plans offered pursuant
to the Patient Protection and Affordable Care Act ("ACA"), Pub. L.
No. 111-148, 124 Stat. 119 (2010). The Government has withheld the
requested information under FOIA Exemption 4, which exempts from
disclosure "trade secrets and commercial or financial information
obtained from a person and privileged or confidential." 5 U.S.C.
§ 552 (b) (4). Plaintiff initially asked this Court to enjoin
Defendants from withholding health plan benefits data for the 2014
plan year, which the Government subsequently released. Plaintiff
has since requested substantially similar data for the 2015 and
2016 plan years and asks the Court to permanently enjoin Defendants
from failing to disclose this type of information in future years.
On October 31, 2014, Plaintiff filed its Motion for Summary
Judgment ("Pl. 's Mot.") [Dkt. No. 28]. On December 15, 2014, the
Government filed a Combined Cross-Motion for Summary Judgment and
Opposition to Plaintiff's Motion for Summary Judgment ("Gov' t' s
Mot . " ) [Dkt . No. 3 2] On December 30, 2014, Plaintiff filed its
Combined Opposition to Defendants' Cross-Motion for Summary
Judgment and Reply in Support of Plaintiff's Motion for Summary
Judgment ("Pl. 's Opp'n") [Dkt. No. 36]. Finally, on January 20,
2015, the Government filed its Reply in Support of Its Motion for
Summary Judgment ("Gov't's Reply") [Dkt. No. 40] . 1
Upon consideration of the Motions, Oppositions, Replies, the
entire record herein, and for the reasons stated below, Plaintiff's
1 The Government refers to its Reply as its Combined Reply in
Support of Its Motion for Summary Judgment and Opposition to
Plaintiff's Cross-Motion for Summary Judgment, but the
Government's Combined Cross-Motion and Opposition, of course,
serves as the Government's Opposition. Therefore, the Reply is
cited herein as Gov't's Reply.
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Motion for Summary Judgment is hereby denied, and the Government's
Motion for Summary Judgement is hereby denied.
I . BACKGROUND
A. FOIA
FOIA allows individuals to request the disclosure of records
from government agencies. § 552 (a) (3) . The Act is "a means for
citizens to know what their Government is up to." Nat'l Archives
& Records Admin. v. Favish, 541 U.S. 157, 171 (2004) (internal
citations and quotation marks omitted) . FOIA thus "creates a
liberal disclosure requirement, limited only by specific
exemptions which are to be narrowly construed." Bristol-Myers Co.
v. F.T.C., 424 F.2d 935, 938 (D.C. Cir. 1970).
When an agency receives a request that "reasonably describes"
the records sought, § 552(a) (3) (A), it must "conduct[] a search
reasonably calculated to uncover all relevant documents." Morely
v. CIA, 508 F.3d 1108, 1114 (D.C. Cir. 2007) (internal quotation
marks omitted) . The agency must then disclose any responsive agency
records it locates, except to the extent that any such records are
protected from disclosure by one of FOIA's nine statutory
exemptions. See 5 U.S.C. § 552(b). If an agency withholds
responsive records not covered by one of FOIA's exemptions, the
requester may, after exhausting administrative remedies, file a
lawsuit in district court to challenge the agency's decision to
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withhold. See id. § 552(a) (4) (B). "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." Biles v. Dep' t of Health & Human
Servs., 931 F. Supp. 2d 211, 223 (D.D.C. 2013) (internal quotation
marks, citation, and brackets omitted).
B. FFM Data Submission Process
Under the ACA, individuals and families may purchase health
care insurance plans during the annual Open Enrollment Period
through on-line marketplaces called "exchanges," which are
operated by the federal or state governments. The exchange created
by the federal government -- the Federally-Facilitated Marketplace
("FFM") is administered by CMS and its Center for Consumer
Information and Insurance Oversight ("CCI IO") . See Plaintiff's
Statement of Material Facts a t , 3 ("Pl.'s SMF") [Dkt. No. 28-2).
Insurers who choose to offer Qualified Health Plans ("QHPs")
through the FFM must submit plan benefits information to CMS each
year during the Initial FFM QHP Application Submission Window. See
CCIIO, 2015 Letter to Issuers in the Federally-facilitated
Marketplaces (Mar. 14, 2014) ("2015 CCIIO Letter") [Dkt. No. 28-
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7] . Insurers in 36 states offered QHPs through the FFM for the
2015 plan year. Pl.'s SMF at~ 4.
Once the Government has received insurers' QHP data for an
upcoming plan year, it begins a lengthy, multi-step review process
that may result in a number of changes to the initially-submitted
data. 2015 CCIIO Letter at 6-11. "CCIIO reviews the data to ensure
it meets federal regulatory requirements and will display
correctly on HealthCare.gov [the FFM's website]." Gov't's Mot. at
7. For plans offered in certain states, state officials work in
concert with the federal Government to review and approve submitted
QHP data. 2015 CCIIO Letter at 9-10; Pl.'s SMF at ~ 4. Insurers
are limited in the changes they may make to submitted QHP data
during the submission cycle. Id. at 10. In the final stages of
review, CMS (and if relevant, the state involved) must approve any
proposed changes. Id.
For the 2015 plan year, CMS required insurers to submit their
initial QHP applications by June 27, 2014. Id. at 8, 10. After
June 27, 2014, insurers could not change their proposed service
areas or add new insurance plans but were otherwise permitted by
CCIIO to amend their data. Gov't's Statement of Material Facts at
~ 14 ("Gov't's SMF") [Dkt. No. 32-1]. Following the initial data
submission, CMS completed two rounds of review which ended about
August 25, 2014. 2015 CCIIO Letter at 10.
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September 4, 2014, marked the deadline to submit "final" QHP
application data and the beginning of the Limited Data Correction
Window. Id. After the September 4th deadline, insurers were
permitted to make changes only with "pre-approv[al] by CMS and [if
relevant for the particular state] the state." Id. 2
On October 6, 2014, the Limited Data Correction Window closed,
further restraining the scope of permissible amendments to QHP
data. Gov't's SMF a t ' 14. Although limited in terms of plan
amendments, insurers remained free to withdraw QHPs they had
planned to offer, and at least some insurers did so. Gov't's SMF
at ' 11.
In October 2014, the Government provided insurers with final
certifications of their ability to participate in the FFM. Pl.'s
SMF at ' 32. Insurers were then required to sign FFM agreements
before the beginning of the Open Enrollment Period on November 15,
2015. Gov't' s SMF at ' 8-9. The Government does not consider
" [d] ata related to plan offerings [to be] final until agreement
signing and plan confirmation [which occurs] approximately two
weeks prior to [O]pen [E]nrollment." Id. at ' 9.
2 The Parties do not agree as to the scope of permissible changes
to QHP data following the initial and final QHP application data
deadlines. See e.g., Pl.'s SMF a t ' 27; Gov't's Resp. to Pl.'s SMF
a t ' 27. They do agree, however, that changes made after September
4, 2014 required CMS approval. Gov't's Resp. to Pl.'s SMF a t ' 27.
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Insurers planning to offer QHPs through the FFM for the 2016
plan year were required to submit plan benefits data by May 15,
2015. See CCIIO, FINAL 2016 Letter to Issuers in the Federally-
facilitated Marketplaces ("2016 CCIIO Letter"), at 7 (Feb. 20,
2015), [Dkt. No. 42-2] . 3 The 2016 CCIIO Letter sets forth a data
review process for the 2016 plan year similar to the one described
above for the 2015 plan year.
C. Factual Background
Plaintiff CSS is a non-profit 501 (c) (3) corporation located
in Washington, D.C. whose mission includes conducting and
supporting studies of consumer services (including those provided
by government programs) and publishing materials to educate and
inform consumers about such services. Pl.'s Compl. at ~ 10 [Dkt.
No. 1]. It seeks certain information about the QHPs that insurers
will offer on the FFM in order to create an online tool to help
consumers compare health plans. Id. If Plaintiff's tool is to serve
its purpose of assisting consumers in the selection of heal th
plans, Plaintiff must obtain health plan benefits data each year
substantially before the beginning of the Open Enrollment Period.
Id. at ~ 5.
3Available at http://www.cms.gov/CCIIO/Resources/Regulations-and-
Guidance/Downloads/2016-Letter-to-Issuers-2-20-2015-R.pdf.
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On November 29, 2013, pursuant to FOIA, Plaintiff submitted
a request for health plan benefits data provided to CMS by all
insurers planning to offer QHPs through the FFM for plan year 2014.
Pl.' s SMF ~ 6. Specifically, Plaintiff's letter requested the
"complete set of insurance carrier-submitted facts on the benefits
(deductibles, coinsurance rates, copayment amounts, out-of-pocket
limits, etc.) offered by each Federally-Facilitated
! Exchange/Marketplace-eligible plan [QHP] [delivered in particular
template formats]." Letter from Robert Krughoff, President,
Consumers' CHECKBOOK, to Freedom of Information Officer, Ctrs. for
Medicare & Medicaid Servs. (Nov. 29, 2013) at 1 [Dkt. No. 11-4].
Noting the time-sensitive nature of its request, Plaintiff asked
CMS for "a very quick response." Id. at 2.
On December 2, 2013, CMS granted Plaintiff's request for
expedited processing but did not release the requested 2014 data
or set a production schedule. Pl.'s SMF at~ 7.
On March 24, 2014, nearly four months after submitting its
request, Plaintiff filed its Complaint challenging the
Government's failure to produce the requested information. Among
other things, the Complaint asks this Court to " [p] ermanently
enjoin Defendants from refusing to disclose or delaying the
disclosure of substantially the same information sought for future
plan years[.]" Pl.'s Compl. at~ D.
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:·.
On May 2, 2 014, Plaintiff filed a Motion for Preliminary
Injunction [Dkt. No. 11]. On May 20, 2014, the Court denied
Plaintiff's Motion, holding that Plaintiff failed to establish
that it or the public would suffer an irreparable injury from the
Government's failure to produce the requested data. Memorandum
Opinion and Order [Dkt. No. 17]. The Court also ordered Defendants
to file a detailed, written Status Report concerning production of
the requested information. Id.
On June 25, 2014, the Government filed its Status Report,
stating that it would provide Plaintiff with the 2014 plan year
data before July 1, 2014 [Dkt. No. 20]. However, the Government
did not complete production of the data identified in Plaintiff's
initial FOIA request until August 28, 2014. Joint Status Report
[Dkt. No. 27]
On June 30, 2014, Plaintiff submitted a second FOIA request,
which called for 2015 plan year data substantially similar to the
2014 plan year data that were the subject of the first request.
Letter from Robert Krughof f, President, Ctr. for the Study of
Servs., to Olen Clybourn, Acting Freedom of Info. Officer, CMS
(June 30, 2014) [Dkt. No. 28-4]. On July 30, 2014, CMS denied
Plaintiff's second FOIA request, invoking FOIA Exemptions 4 and 5,
§ 552(b) (4)-(5). Letter from Hugh Gilmore, Dir., Div. Freedom of
Info., CMS, to Robert Krughoff, Center for the Study of Servs.
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(July 30, 2014) [Dkt. No. 28-5]. On August 26, 2014, Plaintiff
requested an administrative appeal. Pl.'s SMF at~ 18-20.
On September 24, 2014, CMS issued its Appeal Decision, which
upheld the denial of Plaintiff's request. Letter from Andrew
Slavitt, Principal Deputy Adm'r, CMS, to Caroline M. Brown and
Paige M. Jennings, Covington & Burling LLP (Sept. 24, 2014) ("CMS
Appeal Decision") [Dkt. No. 28-7]. CMS overturned its initial
reliance on Exemption 5. However, it reaffirmed its finding that
the requested data were exempt from FOIA under Exemption 4 because
release would cause substantial competitive harm to FFM-
participating insurers and would otherwise harm the FFM program.
Id. at 3-4. The Appeal Decision also noted that CMS would release
the requested data once it had been "finalized" -- just before the
beginning of the Open Enrollment Period on November 15, 2014. Id.
at 5.
On October 31, 2014, Plaintiff filed the present Motion for
Summary Judgment seeking a "declaration that CMS's invocation of
Exemption 4 to withhold the requested data is improper, as well as
an order that [CMS] produce the requested 2015 data." Pl.'s Mot.
at 2.
On November 14, 2014, CMS released the requested 2015 plan
benefits data, and the Open Enrollment Period began the following
day. Gov't's SMF at ~ 19.
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On November 24, 2014, pursuant to Executive Order 12,600 and
45 C.F.R. § 5.65(d), Defendants sent a letter to FFM-participating
insurers requesting their views on release of QHP application
information in future years before data finalization and insurer
agreement execution. Id. at ~ 6. Defendants received letters from
78 insurers generally objecting to the release of QHP data
("insurer letters") . Id. at ~7.
On May 21, 2015, Plaintiff submitted a third FOIA request for
the 2016 plan year benefits data. On May 22, 2015, Plaintiff filed
a Status Report [Dkt. No. 42] notifying the Court of its pending
FOIA request for the 2016 data.
II. STANDARD OF REVIEW
Summary judgment should be granted only if the moving party
has shown that there is no genuine dispute of material fact and
that the moving party is entitled to judgment as a matter of law.
See Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317,
325 (1986); Waterhouse v. Dist. of Columbia, 298 F.3d 989, 991
(D.C. Cir. 2002). "A fact is material if it 'might affect the
outcome of the suit under the governing law,' and a dispute about
a material fact is genuine 'if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.'"
Steele v. Schafer, 535 F.3d 689, 692 (D.C. Cir. 2008) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
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:'.
The moving party bears the initial burden of demonstrating
the absence of genuine issues of material fact. See Celotex, 477
U.S. at 323. In determining whether a genuine issue of material
fact exists, the Court must view all facts in the light most
favorable to the non-moving party. See Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Keyes v. Dist. of
Columbia, 372 F.3d 434, 436 (D.C. Cir. 2004).
In deciding a motion for summary judgment, "the court must
draw all reasonable inferences in favor of the nonmoving party,
and it may not make credibility determinations or weigh the
evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 150 (2000). Ultimately, the court must determine "whether the
evidence presents a sufficient disagreement to require submission
to a jury or whether it is so one-sided that one party must prevail
as a matter of law." Liberty Lobby, 477 U.S. at 251-52.
III. ANALYSIS
A. Mootness
The Government contends that Plaintiff's action is moot. It
argues that because it has released the 2014 and 2015 plan year
data that Plaintiff requested, Plaintiff has received all the
relief it seeks.
Our Court of Appeals has made clear, however, that the release
of records following a "specific request under the FOIA . . . will
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not moot a claim that an agency policy or practice will impair the
party's lawful access to information in the future." Payne Enters.
v. U.S., 837 F.2d 486, 491 (D.C. Cir. 1988) . 4 Plaintiff intends to
request substantially the same information from Defendants every
year and has requested an injunction barring the Government from
withholding it under Exemption 4. Since filing this Motion,
Plaintiff has also provided notice that it has already requested
benefits data for the 2016 plan year. Status Report [Dkt. No. 42].
The Government has made clear that, in future years, it plans to
withhold the requested information under Exemption 4 until the
beginning of the Open Enrollment Period. Gov't's Mot. at 3
("Defendants . have no objection to releasing such information
for future plan years once the [O]pen [E]nrollment [P]eriod begins.
Defendants, however object to prematurely releasing proprietary
and commercial information . . prior to the [O]pen [E]nrollment
4 The Government attempts to distinguish Payne by arguing that the
challenge presented in Payne was not moot only because the agency
had unlawfully withheld documents under FOIA Exemptions 4 and 5,
whereas in this case, the Government is right to withhold the
requested information under Exemption 4. Gov't's Reply at 10-11.
The Government's argument rests entirely upon the presumption that
it will prevail on the merits, and thus, puts the cart before the
horse. "[M] ootness should not be confused with the merits. An
argument that an action is moot because the plaintiff is not
entitled to the requested relief, for example, is no more than an
argument on the merits that should be decided on the merits." 13B
Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 3533.1 (3d ed. 2015).
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[P] eriod [.] ") . Thus, the controversy described in Plaintiff's
Complaint is not moot but ongoing.
Moreover, the time-sensitive nature of annually-updated plan
benefits data renders the Government's allegedly unlawful
withholding "capable of repetition yet evading review." Friends of
the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC) , Inc., 528 U.S.
167, 190 (2000). Challenges to such conduct are not moot if "(1)
the challenged action [is] in its duration too short to be fully
litigated prior to its cessation or expiration, and (2) there [is]
a reasonable expectation that the same complaining party would be
subjected to the same action again.'" McDonnell Douglas Corp. v.
Nat'l Aeronautics & Space Admin., 102 F. Supp. 2d 21, 23 (D.D.C.
2000) (quoting Weinstein v. Bradford, 423 U.S. 147, 149 (1975));
see also Newport Aeronautical Sales v. Dep' t of Air Force, 684
F.3d 160, 164 (D.C. Cir. 2012) (FOIA action not moot because agency
had "no intention of abandoning [] policy because it d [id] not
believe the policy violate[d] FOIA"). Given the time required for
a FOIA case to fully ripen and the Government's statement that,
upon future requests for plan benefits data, it will rely on
Exemption 4 to withhold the data until the beginning of the annual
Open Enrollment Period, Gov't's Mot. at 3, the Court has little
difficulty concluding that this action is not moot.
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:'.
B. FOIA Exemption 4
Exemption 4 of FOIA permits agencies to withhold "[1] trade
secrets and commercial or financial information [2] obtained from
a person [that is] [3] privileged or confidential[.]" 5 U.S.C.
§ 552 (b) ( 4) . The Parties agree that the information Plaintiff seeks
is "commercial or financial" and was "obtained from a person." See
Pub. Citizen Health Research Group v. Nat'l Insts. of Health, 209
F. Supp. 2d 37, 44 (D.D.C. 2002) ("Public Citizen v. NIH") ("no
doubt that a corporation may be . . a person" under Exemption
4); Pub. Citizen Health Research Group v. FDA, 704 F.2d 1280 (D.C.
Cir. 1983) ("Public Citizen v. FDA") (information is "commercial
or financial" when it relates to commerce). Furthermore, neither
Party asserts that the requested information is "privileged" or
constitutes "trade secrets[.]" Accordingly, the only question is
whether the requested information qualifies as "confidential"
under 5 U.S.C. § 552 (b) (4).
The Government contends that all of the information Plaintiff
requested is confidential and thus exempt from FOIA. Plaintiff
disagrees, arguing that all of the requested information falls
outside of Exemption 4, or in the alternative, that some of the
requested information falls outside of the Exemption and is
reasonably segregable from any exempt information.
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The appropriate test for determining whether information is
confidential depends on whether the Government obtained the
information by way of voluntary or compelled submission. Critical
Mass Energy Project v. Nuclear Regulatory Comm'n, 975 F.2d 871,
872 (D.C. Cir. 1992) ("Critical Mass III"). When "the information
sought is given to the Government voluntarily, it will be treated
as confidential under Exemption 4 if it is of a kind that the
provider would not customarily make available to the public." Id.
However, when the Government possesses the information at
issue by way of compulsion, Courts must apply the two-part test
initially set forth in Nat'l Parks & Conservation Ass'n v. Morton,
498 F.2d 765, 770 (D. C. Cir. 1974) . The National Parks test
"define [s] as 'confidential' any financial or commercial
information whose disclosure would be likely either (1) to impair
the Government's ability to obtain necessary information in the
future; 5 or (2) to cause substantial harm to the competitive
position of the person from whom the information was obtained."
Critical Mass III, 975 F.2d at 878 (citing Nat'l Parks, 498 F.2d
at 770) (internal citations omitted).
Information provided to the Government "as a condition of
doing business" is generally considered to have been coerced rather
5The Government does not directly address the first prong of the
National Parks test in its briefs.
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than provided voluntarily. Biles v. Dep't of Health & Human Servs.,
931 F. Supp. 2d 211, 220 (D.D.C. 2013). In order to offer QHPs
through the FFM, insurers must submit plan benefits data to CMS.
Accordingly, the Parties agree that the latter test, applicable to
involuntary submissions of information, governs the Court's
analysis in this case. Gov't's Mot. at 13; Pl.'s Mot. at 12-13.
1. Competitive Harm
Defendants' chief argument against disclosure is that release
of the requested plan benefits data at any time before the
beginning of the Open Enrollment Period will cause participating
insurers to suffer competitive harm. In order "for the [G] overnment
to preclude disclosure based on a competitive injury claim, it
must prove that the submitters ' (1) actually face competition, and
(2) substantial competitive injury would likely result from
disclosure.'" Niagara Mohawk Power Corp. v. U.S. Dep't of Energy,
169 F.3d 16, 18 (D.C. Cir. 1999) (quoting Nat'l Parks &
Conservation Ass'n v. Kleppe, 547 F.2d 673, 679 (D.C. Cir. 1976).
a. Actual Competition
The Government argues that insurers submitting QHPs on the
FFM face actual competition both from each other and from insurers
offering plans outside of the FFM.
According to the Government, several sources demonstrate
competition among insurers offering QHPs on the exchanges. The
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Government cites 78 letters from insurers (or their parent
companies) stating that disclosure of plan benefits information
would likely cause competitive harm. Gov't's Mot. at 14-15; Gov't's
Reply at 2 (citing [Dkt. No. 32-4, 5]). Although the content of
these letters is most relevant to the second prong of the
competitive harm test, the Government relies on the letters'
descriptions of competitive harm to suggest that the insurers are
engaged in actual competition.
The Government also contends that the "one-stop-shop" nature
of the FFM "increas[es] competition between insurance companies."
Gov't's Reply at 2-3 (citing CMS, Creating a New Competitive Health
Insurance Marketplace 6 ) . Finally, the Government points to a
Bloomberg Government article that states, "Competition among
insurers offering coverage through federal exchanges established
under the Affordable Care Act is driving down the premiums charged
in the new marketplaces by as much as one third [.]" Peter Gosselin,
Exchange Competition Cuts Health Insruance Costs: BGov Insight,
Bloomberg Government (October 8, 2013) . 7 The Bloomberg article is
not evidence and is certainly no substitute for affidavits, expert
6 Available at http://www.cms.gov/CCIIO/Resources/Marketplace-
Grants/.
7 Available at http://about.bgov.com/2013-10-08/exchange-
competition-cuts-health-insurance-costs-bgov-insight/.
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reports, or deposition testimony -- evidentiary sources that the
Government has not brought to bear.
Viewed in the light most favorable to Plaintiffs, the
Government has put forth no reliable evidence of actual competition
between insurers participating in the FFM. The authors of the 78
letters HHS relies on were sent a carefully-worded letter
presenting HHS' legal interpretation of Exemption 4 and asking
whether each insurer's application information for a given plan
year may be protected by Exemption 4. HHS, Letter to Insurers at
34-35 [Dkt. No. 32-3] (setting forth the Government's theory of
Exemption 4's application to plan benefits data). Therefore, it is
not surprising that many of the letters describing the potential
for competitive harm agree with the Government's position.
In response, Plaintiffs cite the Government's own estimate
"that at least 95 percent of consumers will be automatically re-
enrolled in a plan in 2015, and will not have to make any
affirmative choice," Pl.'s Mot. at 13-14, as evidence of a lack of
competition among FFM-participating insurers.
In sum, because there are material facts in dispute, the
Government has failed to demonstrate that FFM-participating
insurers are engaged in actual competition with each other.
In addition, the Government fails to show that FFM-
participating insurers are in competition with insurers who offer
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plans outside of the FFM. The Government points to the same 78
letters describing the competitive harm that may befall FFM
insurers if off-FFM insurers obtain the requested plan benefits
data. Gov't's Reply at 2 (citing [Dkt. Nos. 32-4, 33-5)). Although
these letters suggest that FFM-participating insurers compete with
insurers who offer plans outside of the FFM, they could just as
easily suggest hypothetical or potential competition rather than
actual competition. Thus, with respect to competition between FFM-
participating insurers and non-FFM-participating insurers, the
Government also fails to prove actual competition. 8
Given the inadequacies of the Government's evidence, it has
not established that FFM-participating insurers face actual
competition from any source. Thus, its Motion cannot prevail on
grounds of competitive harm.
Plaintiff has also submitted a Motion for Summary Judgment.
Therefore, as to its arguments, the Court must now consider the
evidentiary record in the light most favorable to the Government.
As discussed above, the insurer letters provide weak support for
the Government's allegation of actual competition. However, when
8 Plaintiff also notes that "an estimated 85% of Exchange enrollees
depend on subsidies to purchase coverage. Given that unsubsidized
coverage in the non-[FFM] market is not significantly cheaper than
[FFM] coverage, it seems unlikely that [FFM] enrollees could afford
to purchase coverage outside of the [FFM] or that off-[FFM] plans
are competing for those same customers." Pl.'s Opp'n at 4.
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viewing Plaintiff's Motion in the light most favorable to the
Government, one could conclude that there is actual competition
from the letters' descriptions of competitive harm that would arise
from pre-Open Enrollment disclosure of plan benefits data.
Moreover, Plaintiff has not countered the Government's evidence
(weak as it is) of actual competition with any documentary evidence
of its own. Thus, there is a genuine issue of fact as to whether
FFM-participating insurers face actual competition.
However, this factual dispute does not entirely preclude
Summary Judgment9 because: 1) Plaintiff may prevail by
demonstrating that even if insurers faced actual competition,
early disclosure would not give rise to a likelihood of substantial
competitive harm and would do no harm to the FFM program; and, on
the other hand, 2) the Government may prevail on its alternative
"program effectiveness" ground for withholding the data sought.
See infra Section 2.
b. Likelihood of Substantial Competitive Harm
In addition to a demonstration of actual competition,
Exemption 4 requires a showing that a "likelihood of substantial
competitive injury" would arise from release of the data Plaintiff
has requested. Niagara Mohawk Power Corp., 169 F.3d at 18. "[W] hi le
9 Thus, neither Party has submitted sufficient convincing evidence
to prevail on its Motion for Summary Judgment.
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the parties cannot rest on a 'conclusory and generalized allegation
of substantial competitive harm,' the court need not engage in a
sophisticated economic analysis to determine whether there is a
likelihood of substantial competitive injury." Public Citizen v.
NIH, 209 F.Supp.2d at46 (quoting Public Citizen v. FDA, 704 F.2d
at 1291) . 10 However, the harm alleged is relevant only if it arises
from the "affirmative use of proprietary information by
competitors." Public Citizen v. FDA, 704 F.2d at 1291 n.30.
The Government argues that several forms of competitive harm
would arise from compliance with Plaintiff's request: 1) early
disclosure would allow insurers to learn about the rates and plan
specifications of their competitors in order to undercut each
other; 2) pre-Open Enrollment release of plan benefits data would
cause harm to innovative insurers by allowing competitors to amend
their plans in order to produce more appealing innovations; and 3)
because plan information may change up to the beginning of the
Open Enrollment Period, early disclosure would make conflicting
10 The Government contends that courts "generally defer to the
agency's predictive judgment as to the repercussions of
disclosure." Gov't's Mot. at 13 (quoting United Techs. Corp. v.
Dep't of Defense, 601 F.3d 557, 563 (D.C. Cir. 2010)). The passage
the Government quotes, however, concerned a "reverse FOIA" case
brought under the Administrative Procedure Act ("APA"). Id. Such
cases are reviewed under the APA' s deferential "arbitrary and
capricious" standard. Id. Agency determinations in direct FOIA
challenges, like the case at hand, are reviewed de novo. 5 U.S.C.
§ 552 (a) (4) (B).
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data sets available to the public and lead to consumer confusion,
which might harm some insurers to the benefit of others.
The Government bases its argument almost exclusively on the
78 insurer letters objecting to disclosure, id. at 14-15; see also
[Dkt. Nos. 32-3, -4 , -5], which the Court has already found to be
less than compelling. The Government also refers to a Declaration
by CCIIO Director Kevin Counihan. ("Counihan Deel.") [Dkt. No. 32-
2] .
To counter the Government's position, Plaintiff primarily
cites letters that the Government has sent (or plans to send) to
insurers, which detail the process for submitting and reviewing
plan benefits data in order to offer health insurance plans on the
FFM ("process letters") E.g., 2015 CCIIO Letter; 2016 CCIIO
Letter. Plaintiff also makes reference to publicly available
information on the Government's and insurers' websites. E.g.,
Website Screen Shots [Dkt. Nos. 28-11, 37-2].
Importantly, the Parties disagree about when the insurer-
submi t ted QHP data becomes "final" during the review process. The
Government contends that the data for any particular insurer is
not final until the insurer and the Government have executed an
agreement for the plan year -- a step that occurs just before the
beginning of the Open Enrollment Period.
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Plaintiff argues that after the initial data submission
deadline, insurers are greatly limited in their ability to alter
their submitted data, and that after the next deadline for "final
QHP data submissions," insurers can make almost no changes at all.
Thus, Plaintiffs contend that, as a practical matter, data should
be considered final after its initial submission or, at the very
latest, after the final data submission deadline. Accordingly, the
ultimate resolution of this case will almost certainly require an
answer to the question of when QHP data may be considered final.
i) Undercutting
The Government argues that "[d]isclosing the proposed health
plans prior to approval and clearance by HHS would allow the
submitters' competitors to 'learn about rates and plan information
that the submitters were planning to market,' and those competitors
could use the information to their advantage, i.e. by developing
competing plans and rates." Gov't's Mot. at 15 (source of quoted
material not indicated in original); see also Gov't's Reply at 4
(citing numerous insurer letters) .
Plaintiff objects on several grounds. First, citing a letter
from the Government to FFM-participating insurers, Plaintiff
asserts that once insurers have submitted their plan data, they
have "very little ability to change their plan benefits" and
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accordingly, could not undercut their competitors. Pl.'s Mot at
14-15.
The Government responds by describing a variety of scenarios
in which insurers could significantly charige their data after the
deadlines Plaintiff has cited. Gov't's Reply at 4 (citing insurer
letters) . But the Government also admits that it currently "reviews
the data submitted by the issuers mainly for regulatory compliance
and accuracy of data[,]" Gov't's Mot. at 17, thereby suggesting,
as Plaintiff argues, that there will be no substantive changes.
Plaintiff also contends that release of all FFM-participating
insurers' data not just particular insurers' data will
mitigate any possible harm by placing all insurers on equal
footing. Pl.' s Mot. at 20. The Government responds that "larger
entities who will have the staff and resources to quickly change
their products based on competitors' information" will gain an
advantage over smaller insurers through the early release of plan
data. Gov't's Mot. at 20.
Plaintiff responds that, to a large extent, FFM-participating
insurers already know' the details of the plans competitors submit
at the first deadline. As noted above, CMS expects 95 percent of
consumers to automatically re-enroll in their current plans. Under
CMS regulations, automatic re-enrollment can only occur if plans
retain roughly the same benefits and cost-sharing structure. See
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...
45 C.F.R. §§ 147 .106 (a), (b) (4), (c), (e). Accordingly, plans
covering the vast majority of consumers are not expected to undergo
significant changes, severely blunting any competitive advantage
that might be gained from early access to plan benefits data.
However, CMS's prediction of general stability among the
plans offered presumes the status quo (i.e., that plan benefits
data will not be released until Open Enrollment). The Government's
declarant states that if insurers had earlier access to their
competitors' data, "CCIIO expects that competitors would change
plan designs or prices[.]" Counihan Deel. at~ 6 (emphasis added).
The Government also contends that even if the information
that Plaintiff requests would not lead to competitive harm, the
requested information could be paired with publicly available
information, and together the requested and publicly available
information would likely lead to substantial competitive harm.
Gov't's Mot. at 18. The Government fails, however, to identify the
relevant public information, the relevant requested information,
or the type of harm that might occur if the two were combined. The
Government simply cannot rely on such "conclusory and generalized
allegation[s]" to defeat disclosure. Public Citizen v. NIH, 209 F.
Supp. 2d at 46.
In essence, the Parties again present a factual disagreement.
Whether one concludes that early release of the requested data
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could lead to undercutting depends on the light in which the
evidence is examined. Thus, summary judgement is inappropriate.
The record presented by the Parties is so incomplete and confusing
on the issue of undercutting, that it alone precludes granting
either Motion for Summary Judgment on this issue. 11
ii) Innovation
According to the Government, release of plan benefits data
before the Open Enrollment Period would "degrade[]" the "incentive
for innovation" and thereby subject some insurers to competitive
harm. Counihan Deel. at ~ 8. Plaintiff notes that the Government's
sole source for this claim is the affidavit of CCIIO Director Kevin
Counihan and contends that such a '"bald assertion' by an agency
declarant . . . is insufficient to support summary judgment. 11
Pl.' s
Resp. to Gov't's SMF at ~ 12 (quoting Ancient Coin Collectors Guild
v. U.S. Dep't of State, 641 F.3d 504, 512 (D.C. Cir. 2011)). The
Court agrees.
Moreover, Plaintiff notes that the ACA's requirements limit
the aspects of insurance plans that insurers may manipulate in
order to produce innovation. For example, the ACA requires health
plans to cover specific, identified "essential health benefits,"
42 U.S.C. § 300gg-6 (a); meet certain minimum actuarial value
11 Of course, the Government has to prevail at both steps of the
National Parks test but has already failed to meet its burden at
step one.
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requirements, see id. § 18022(d); comply with maximum annual cost-
sharing limits, id. § 300gg-6(b); not discriminate in benefit
design, 45 C. F. R. § 156 .125; and "[n] ot employ benefit
designs that will discourage the enrollment of individuals
with significant health needs," id. § 156.225(b).
In light of these statutory and regulatory limitations,
Plaintiff is correct that the ACA "has made it more difficult for
[insurers] to compete on the basis of plan benefit design." Pl.'s
Resp. to Gov't's SMF at ~ 12. However, the existence of genuine
issues of material fact regarding the Government's other grounds
for withholding precludes a grant of summary judgment to Plaintiff.
iii) Consumer Confusion
The Government argues that "[p]ublic release of [non-final]
information to consumers misinforms them of their benefits for a
particular plan, leading to competitive harm to the issuers whose
inaccurate, non-final information has been released." Gov't's Mot.
at 21 (citing Gov't's Att.3 at 41 [Dkt. No. 32-4]). The Government
notes that until insurers have signed their plan confirmation
agreements, they remain free to withdraw health plan offerings.
Consequently, consumers reviewing early-released data might find
plan offerings that are not actually included in the FFM.
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Plaintiff, again citing the Government's process letters 12 to
the insurers, argues that the Government exaggerates the extent to
which insurers may change their data late in the review process.
It also contends that the Government's argument that release of
information will confuse the public runs counter to FOIA' s
purpose, which is to provide "a means for citizens to know what
their Government is up to." Favish, 541 U.S. at 171.
The Government fails to respond to any of Plaintiff's
arguments in its Reply. Moreover, the insurer letter the Government
cites for the proposition that consumer confusion will lead to
competitive harm, Gov't's Ex. 3 at 41 [Dkt. No. 32-4], does not
even mention consumer confusion. Finally, our Court of Appeals has
"emphasize[d] that [t]he important point for competitive harm in
the FOIA context . is that it be limited to harm flowing from
the affirmative use of proprietary information by competitors.
Competitive harm should not be taken to mean simply any injury to
competitive position, as might flow from customer or employee
disgruntlement [.]" Public Citizen v. FDA, 704 F.2d at 1291. Even
viewed in the light most favorable to the Government, it has failed
to show that the harm it claims will arise from consumer confusion
would be caused by competitors' use of proprietary information as
Exemption 4 requires.
12 See p. 23.
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'·
2. Program Effectiveness
The Government also argues that it may withhold the requested
data because early release would damage the effectiveness of the
FFM program. Plaintiff denies that harm to "program effectiveness"
is a valid basis for withholding under Exemption 4. Even if harm
to program effectiveness is properly considered grounds for
withholding, the Government has failed to demonstrate that release
of the requested benefits data at any point before the beginning
of the Open Enrollment Period would harm the FFM program.
Consequently, summary judgment for the Government must be denied
on this claim for the following reasons.
As described above, our Court of Appeals has adopted the two-
pronged National Parks test, which considers the Government's
interest in obtaining information from private entities and
private parties' interest in avoiding competitive harm. National
Parks, 498 F.2d at 770. In that case, the Court of Appeals
mentioned, for the first time, program effectiveness in connection
with Exemption 4. National Parks, 498 F.2d at 770 n.17 ("We express
no opinion as to whether other governmental interests are embodied
in this exemption. Cf. 1963 Hearings at 200 [sic] where the
problems of compliance and program effectiveness are mentioned as
governmental interests possibly served by this exemption.").
-30-
Following that decision, the U.S. Court of Appeals for the
First Circuit interpreted National Parks to contemplate
application of Exemption 4 to information that, if released, would
harm government programs:
[The National Parks test does not impose] a limitation
on the number of legitimate interests which are
protected by Exemption 4. [I] n view of the
legitimate governmental interest of efficient operation,
it would do violence to the statutory purpose of
Exemption 4 were the Government to be disadvantaged by
disclosing information which serves a valuable purpose
and is useful for the effective execution of its
statutory responsibilities.
9 to 5 Org. for Women Office Workers v. Bd. of Governors of Fed.
Reserve Sys., 721 F.2d 1, 9-10 (1st Cir. 1983).
Thereafter, out Court of Appeals expressed support for the
First Circuit's ruling. Critical Mass Energy Project v. Nuclear
Regulatory Comm'n, 830 F.2d 278, 286 (D.C. Cir. 1987) ("Critical
Mass I") (agreeing with the First Circuit's reasoning but holding
that the Government had not shown how disclosure would harm the
effective performance of the agency's responsibilities). Sitting
en bane in Critical Mass III, our Court of Appeals later explained
that while the National Parks test is not exclusive, the Court
agreed with the "First Circuit's conclusion that the exemption
also protects a governmental interest in administrative efficiency
-31-
and effectiveness." Critical Mass III, 975 F.2d at 879 (citing
Critical Mass I, 830 F.2d at 286) . 1 3
The Government, of course, bears the burden of demonstrating
with specific factual and evidentiary material that disclosure
would cause the cited harm. 5 U.S.C. § 552 (a) (4) (B); Comstock,
464 F. Supp. at 807. The Government contends that maintaining the
confidentiality of plan benefits data until the Open Enrollment
Period begins is central to the FFM program's operation. Gov't's
Mot. at 18. However, the Government has failed to show concretely
how it (including the ACA and FFM) would be harmed through the
release of information prior to the Open Enrollment Period, and
instead relies on conclusory statements that are insufficient to
carry the Government's burden. See Comstock, 464 F. Supp. at 807.
Returning to its concern about consumer confusion, the
Government contends that pre-Open Enrollment disclosure would
cause confusion and harm the effectiveness of the FFM as a "one
stop shopping tool" for consumers to identify and purchase health
plans. Gov't's Mot. at 18-19. The Government has failed to
13 The Second Circuit has criticized the Government's assertion
of a right to withhold information that, if released, would harm
Government programs. Bloomberg, L.P. v. Bd. of Governors of the
Fed. Reserve Sys., 601 F.3d 143, 150 (2d Cir. 2010) ("The 'program
effectiveness' test, if applied as the [Government] invokes it,
would give impermissible deference to the agency, and would be
analogous to the 'public interest' standard rejected by the Supreme
Court in the context of Exemption Five.") (citing Fed. Open Market
Comm. of Fed. Reserve Sys. v. Merrill, 443 U.S. 340, 354 (1979)).
-32-
substantiate its claim that disclosure would result in consumer
confusion with specific factual and evidentiary material.
Moreover, the Government does not explain why public release of
data after the beginning of the Open Enrollment Period would not
be equally confusing to consumers given that such data is
"regularly" updated after its release. See CCIIO, Health Insurance
Marketplace Public Use Files (Marketplace PUF), CMS.GOV. 14
The Government also fails to explain how consumer confusion
would result in harm to the FFM program sufficient to warrant
withholding. Consumers choosing to enroll in a health insurance
plan through the FFM must complete CMS' s application during the
Open Enrollment Period whether by using HealthCare.gov, by calling
the Marketplace Call Center, or by meeting with a professional.
See Federal Marketplace Progress Fact Sheet, CMS.gov,
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/ffe.html
(updated May 31, 2013). The Government offers no reason why any
confusion would not be cured upon a consumer's first interaction
with the FFM itself.
The Government also contends improperly, for the first
time in its Reply, Am. Wildlands v. Kempthorne, 530 F.3d 991, 1001
(D.C. Cir. 2008) that early release of information "would
14 Available at http://www. ems. gov/CCIIO/Resources/Data-
Resources/marketplace-puf. html (last visited June 18, 2015).
-33-
...
likely" lead insurers to initially provide the Government with
false data and make last minute changes before plan finalization.
Gov' t' s Reply at 9. This is pure speculation. Moreover, the
Government's concern hardly seems plausible in light of its own
statement that after the initial submission period significant
changes may not be made to benefit plans except with permission
from CCIIO. Gov't's SMF at ~14; 2015 CCIIO Letter at 10.
Thus, the Government has failed to carry its burden to
demonstrate harm to program effectiveness. Because the Government
has failed to show either competitive harm or harm to program
effectiveness, its Motion for Summary Judgment must be denied.
C. Segregability
As Plaintiff points out, the Government has an obligation
under FOIA to consider whether any portion of the requested data
falls outside of Exemption 4 and is reasonably segregable from
exempt data. See 5 U.S. C. § 552 (b) ("Any reasonably segregable
portion of a record shall be provided to any person requesting
such record after deletion of the portions which are exempt under
this subsection."); Powell v. U.S. Bureau of Prisons, 927 F.2d
1239, 1242 (D.C. Cir. 1991) ("[T]his court has long recognized
that agencies are obliged to determine whether nonexempt
material can reasonably be segregated from exempt material.") ;
Mead Data Cent. v. u.s: Dep't of Air Force, 566 F.2d 242, 261 (D.C.
-34-
Cir. 1977) ("[U]nless the segregability provision of the FOIA is
to be nothing more than a precatory precept, agencies must be
required to provide the reasons behind their conclusions in order
that they may be challenged by FOIA plaintiffs and reviewed by the
courts.") .
In its Reply, the Government contends that release of any
plan benefits data before the beginning of the Open Enrollment
Period would cause FFM-participating insurers competitive harm and
that therefore, none of the requested data is reasonably segregable
from data covered by Exemption 4. Because both Parties' Motions
for Summary Judgment are being denied, the Court need not at this
time assess the merits of the Government's position.
IV. CONCLUSION
For the foregoing reasons, Plaintiffs' Motion for Summary
Judgment shall be denied and Defendants' Motion for Summary
Judgment shall be denied.
The Court warns the Parties that any future filings must
contain clearer presentation of the facts underlying this case.
July 1, 2015 Gladys Kessle~
United States District Judge
Copies to: attorneys on record via ECF
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