COVENTRY FIRST v. OFFICE OF INS. REGULATION

• Citation: 30 So.3d 552
• Decision Date: 12 February 2010
• Docket Number: No. 1D09-804.,1D09-804.
• Parties: COVENTRY FIRST, LLC, a Delaware Limited Liability Company, Appellant, v. STATE of Florida OFFICE OF INSURANCE REGULATION an Agency of the State of Florida, Appellee.
• Court: Florida District Court of Appeals

30 So.3d 552

COVENTRY FIRST, LLC, a Delaware Limited Liability Company, Appellant,
v.
STATE of Florida OFFICE OF INSURANCE REGULATION an Agency of the State of Florida, Appellee.

No. 1D09-804.

District Court of Appeal of Florida, First District.

February 12, 2010.

30 So.3d 554

Daniel C. Brown and Joseph H. Lang, of Carlton Fields, P.A., Tallahassee, and Frank J. Santry, of Frank J. Santry, P.L., Tallahassee, for Appellant.

Christopher Meadows and Jeffrey W. Joseph, of Office of Insurance Regulation, Tallahassee, for Appellee.

KAHN, J.

Coventry First, L.L.C. (Coventry), appeals a final order denying its second amended complaint for injunctive relief and a declaratory judgment. Coventry contends the trial court erred as a matter of law by retroactively applying chapter 2007-249, section 1, Laws of Florida, an amendment to section 624.319, Florida Statutes (the 2007 amendment), to certain work papers submitted by Coventry to the appellee, the Office of Insurance Regulation (OIR), in the course of a regulatory investigation. Coventry also asserts error in the trial court's treatment of "trade secret" objections to the publication of certain work papers. Because the trial court failed to apply the proper analysis to determine whether the application of the 2007 amendment impaired Coventry's vested property rights, and erred in finding the trade secrets issue moot, we reverse the final order.

I. FACTUAL AND PROCEDURAL BACKGROUND

Coventry is a privately held viatical (life settlement) provider that purchases life insurance policies. The OIR is the state agency charged under the Florida Insurance Code in chapter 624, Florida Statutes (2007), with licensing and regulating Florida viatical settlement providers. Before the 2007 amendment, work papers were deemed "confidential" and "exempt from the provisions of section 119.07(1) and section 24(a), Article I of the State Constitution." See § 624.319(3)(b), Fla. Stat. (2006). Beginning in October 2007, however, an amendment to section 624.319 effectively placed a time limitation upon the confidential and exempt status of work papers, extending such status only "until the examination report is filed, or until the investigation is complete or ceases to be active." See Ch. 2007-249, section 1, at 2503, Laws of Fla. The amended statute further provides that it "applies to work papers and such information held by the department or office before, on, or after the effective date of this exemption."

This appeal concerns work papers in the possession of the OIR before the October 1, 2007, effective date of the amendment, and frames the question whether certain rights in the confidentiality of work papers that arose before the 2007 amendment may constitutionally be nullified by that amendment. As noted above, the appeal also questions whether work papers, in this case designated as Bates Stamped Pages 503-516 by the OIR, also are trade secrets that must be protected from disclosure.

Coventry, a viatical settlement provider licensed under section 626.9912, Florida Statutes (2007), has provided thousands of pages of documents as the result of the OIR's regulatory inspection demands. Typically, the OIR demanded that documents

30 So.3d 555

requested by on-site examiners be delivered virtually immediately to the OIR, without a meaningful opportunity for Coventry to cull through the documents in advance. Accordingly, Coventry did not generally review these documents for trade secret information or designate certain documents as trade secret documents, nor did it have a meaningful opportunity to review documents for confidential personal information concerning its clients and its business practices.

According to an affidavit provided by Coventry's CEO, these documents contained trade secrets and confidential personal information. Such information included identification of brokers, names and addresses of viators, medical and personal financial information about insureds and potential viators, insurance policy numbers, negotiated contract prices, and identities of underwriting vendors.

The OIR received public records requests seeking information the agency had demanded from Coventry, including documents containing the information set forth in the previous paragraph. Upon learning of this request, Coventry brought a lawsuit seeking declaratory and injunctive relief to protect confidential information. Before issuance of the final order here under review, Coventry obtained four separate temporary injunctions, providing protection to Coventry against the release of confidential information. In the order granting the fourth temporary injunction, the trial court made detailed findings of fact, including:

Coventry has obtained the services of individuals and organizations with skills and expertise essential to Coventry's successful operations: senior executives, persons and organizations skilled in medical review and underwriting, financial underwriting, actuarial science, marketing, and systems design, escrow agents, and banking facilities. Coventry has developed means, processes, and procedures to efficiently organize, process, evaluate, and price potential viatical settlement contracts. Coventry has compiled considerable information useful and used in its business, and has developed means, processes and procedures to efficiently organize and evaluate the compiled data.

The trial court further determined that "Coventry regards and treats the information... as Coventry's trade secrets," and further detailed an extensive list of those items constituting trade secrets.

In reaching the findings and conclusions for the fourth injunction, the trial court did not view Coventry's standing as an obstacle to relief. Instead, the court found Coventry has standing to protect its trade secrets and confidential personal information concerning its customers. Recognizing that Coventry was an "affected noncustodian of a public record," the trial court upheld Coventry's right to seek adjudication of the confidential status of documents no longer in its possession.

The case proceeded to an October 2008 final hearing. At that time, the court and the parties focused upon work papers designated as Bates Stamped Pages 503-516. Although these are not the only work papers in the OIR's possession, they are the papers that were implicated as being responsive to the pending public records requests at issue in the case below. Coventry asserted that these documents are confidential and protected from disclosure on two grounds, as statutorily exempt work papers and as trade secrets. The Bates Stamped documents included the type of information detailed in the CEO's affidavit (reiterated in live testimony at the final hearing), including information about insureds, brokers, purchase prices, payment amounts, funding sources, and the like.

30 So.3d 556

Before the final hearing, the OIR issued a show-cause order that actually set out the contents of the Bates Stamped documents. At the final hearing, Coventry's CEO testified the company never had a meaningful opportunity to review or object to the show-cause order before its release.

The parties stipulated that section 624.319, Florida Statutes, had been amended by chapter 2007-249, Laws of Florida, effective October 1, 2007. The parties further stipulated that the relevant investigation by the OIR had been completed on or before September 28, 2007. No factual dispute existed that Coventry had created the work papers at issue before the effective date of the 2007 amendment.

Sometime after the hearing, the trial court entered an order denying Coventry's complaint for injunctive relief. The order contains several rulings relevant to this appeal. First, the trial court looked to the wording of the 2007 amendment to section 624.319, noting: "from the plain language from the statute ... the legislature intended the documents received prior to October 1, 2007, be dealt with under the new statute." The trial court did not, however, address the constitutional argument raised by Coventry concerning its vested property rights in the documents produced and turned over to the OIR under the old statute. Next, the trial court ruled that Coventry lacked standing to raise the exemptions set out by the 2007 amendment. Specifically, according to the trial court, only the OIR has standing to raise these exemptions under the new statute.

The trial court determined the "trade secrets" issue was moot, observing that the same information had been essentially revealed in the OIR's show-cause order, by that time posted on the OIR's public internet site. The court did not consider the propriety of the OIR's actions in issuing the show-cause order, nor did it consider certain exceptions to the "mootness" doctrine, including the likelihood that the issue would recur in the future and escape review and the principle that a party cannot render a disclosure issue moot based on the party's own unsanctioned disclosure of the data in question. Relying upon mootness, the trial court neither reached the merits of the trade secret objections nor made findings of fact concerning Coventry's challenges. The court did state in a general manner that the documents in question "are not subject to any existing exemption to chapter 119, Florida Statutes."

Coventry seeks review of the order denying an injunction and determining that the work papers at issue are subject to public release. The trial court has issued a partial stay of the order pending appeal.

II. ANALYSIS

The agency contends that an order imposing injunctive relief is reviewed for an abuse of discretion, to the extent the ruling rests on "live testimony or other evidence that the trial court is singularly well-suited to evaluate." See Smith v. Coalition to Reduce Class Size, 827 So.2d 959, 961 (Fla.2002). This case does not present such a scenario. Coventry correctly characterizes its appeal as raising a challenge to the...