New York Law Review

Tag: insurance regulation

  • Markowitz v. Serio, 11 N.Y.3d 43 (2008): FOIL Exemption and Competitive Injury in Insurance Regulation

    11 N.Y.3d 43 (2008)

    An insurance regulation mandating that reports be “public record” does not automatically negate an insurer’s right to assert a Freedom of Information Law (FOIL) exemption if disclosure would cause substantial competitive injury, but the burden of proving such injury is a high one requiring specific, persuasive evidence.

    Summary

    Brooklyn Borough President Markowitz sought zip code-level auto insurance data from the NYS Insurance Department under FOIL, arguing it was a public record under insurance regulations aimed at preventing redlining. The Department refused, claiming the data was a trade secret and its release would cause substantial competitive harm to insurers. The Court of Appeals held that while the reports are subject to FOIL, the insurers failed to demonstrate specific competitive injury. The court emphasized the narrow interpretation of FOIL exemptions and the requirement of concrete evidence of harm, reversing the Appellate Division’s decision and ordering disclosure.

    Facts

    Marty Markowitz, Brooklyn Borough President, filed FOIL requests with the NYS Insurance Department for Regulation 90 reports. These reports contain zip code-level data on auto insurance policies, including issuances, renewals, cancellations, and non-renewals, broken down by carrier. Markowitz argued the reports were public records under 11 NYCRR 218.7(d). The Insurance Department provided county-level data but refused to release zip code-specific data, asserting FOIL exemptions for trade secrets and potential competitive harm.

    Procedural History

    After exhausting administrative remedies, Markowitz filed an Article 78 proceeding. Supreme Court granted the petition, ordering disclosure. The Appellate Division reversed, finding the Department’s decision to withhold the reports reasonable, based on evidence of potential competitive harm to insurers. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether 11 NYCRR 218.7(d)’s designation of Regulation 90 reports as “public record” prevents the Insurance Department from withholding the reports under a FOIL exemption.

    2. Whether the Insurance Department and the intervening insurers met their burden of proving that disclosure of the Regulation 90 reports would cause substantial competitive injury under Public Officers Law § 87(2)(d).

    Holding

    1. No, because the “public record” designation does not negate the right of insurers to claim a FOIL exemption; the language means the reports are subject to public disclosure unless a FOIL exemption applies.

    2. No, because the Department and insurers failed to present specific, persuasive evidence that disclosure would cause substantial competitive injury; the evidence presented was theoretical at best.

    Court’s Reasoning

    The court reasoned that the “public record” language of 11 NYCRR 218.7(d) does not automatically mandate disclosure, but rather subjects the reports to FOIL provisions, including potential exemptions. The court deferred to the Department’s interpretation of the regulation, finding it reasonable and consistent with FOIL principles. Referencing previous cases, the Court stated that “the FOIL exemptions must be read as having engrafted, as a matter of public policy, certain limitations on the disclosure of otherwise accessible records”. The court emphasized that FOIL exemptions are narrowly construed to promote public access to government records. To justify a FOIL exemption under Public Officers Law § 87(2)(d), the party seeking the exemption must provide specific, persuasive evidence of substantial competitive injury, not merely speculative harm. Here, the insurers’ argument that competitors could exploit their geographic weaknesses was deemed theoretical, as they failed to demonstrate how zip code data alone would necessarily cause competitive disadvantage. The court stated that the party seeking the exemption must “articulating a particularized and specific justification for denying access”. Judge Smith concurred in result only, arguing the regulation made the reports automatically public records, but that if FOIL applied, the insurers had shown a substantial competitive injury. He criticized the majority for dismissing the insurers’ detailed factual submissions. The Court found that the Department and insurers did not meet their burden of justifying the exemption of the reports, and reversed the Appellate Division’s decision, ordering the reports be made available.

  • Washington Post Co. v. New York State Ins. Dep’t, 61 N.Y.2d 562 (1984): Public Access to Insurance Company Records Under FOIL

    Washington Post Co. v. New York State Ins. Dep’t, 61 N.Y.2d 562 (1984)

    Minutes of insurance company meetings submitted to the New York State Insurance Department are considered “records” under the Freedom of Information Law (FOIL) and are subject to public review unless a statutory exemption applies.

    Summary

    The Washington Post sought access under FOIL to the minutes of board meetings of several major insurance companies held by the New York State Insurance Department. The Department initially refused, arguing the minutes were not “records” under FOIL and were protected by confidentiality. The Court of Appeals held that the minutes are indeed “records” under FOIL because they constitute information kept by a state agency. The Court further found that no statutory exemption automatically applied and ordered an in camera inspection to determine if specific portions of the minutes warranted exemption due to potential competitive injury.

    Facts

    The New York State Insurance Department, as part of its regulatory oversight, examines domestic insurance companies. To facilitate this process, the Department requests copies of insurance companies’ board of directors’ meeting minutes. This practice was formalized through circular letters since 1927. The Washington Post filed a FOIL request seeking access to these minutes from Metropolitan Life Insurance Company, New York Life Insurance Company, and The Equitable Life Assurance Society of the United States. The Insurance Department initially denied the request, citing confidentiality concerns and arguing the minutes were not “records” under FOIL.

    Procedural History

    The Washington Post initiated an Article 78 proceeding to compel disclosure. Special Term granted the petition, finding the minutes were “records” and ordering an in camera inspection for potential exemptions. The Appellate Division reversed, holding the minutes were not “records” because they did not directly aid governmental decision-making. The New York Court of Appeals then reversed the Appellate Division’s decision.

    Issue(s)

    1. Whether minutes of insurance company meetings voluntarily submitted to the New York State Insurance Department constitute “records” subject to disclosure under the New York Freedom of Information Law (FOIL)?

    2. Whether a state agency’s promise of confidentiality to a private entity exempts documents from disclosure under FOIL?

    3. Whether the requested minutes are exempt from disclosure because of a specific state statute or because they contain trade secrets, the disclosure of which would cause substantial injury to the competitive position of the subject enterprise?

    Holding

    1. Yes, because the minutes constitute “information kept, held, filed, produced * * * by, with or for an agency” under the plain language of FOIL.

    2. No, because the definition of “records” under FOIL does not exclude or make any reference to information labeled as “confidential” by the agency.

    3. No, not entirely, because intervenors failed to prove that the records should be exempted in their entirety. However, an in camera inspection is warranted to assess whether specific portions warrant exemption.

    Court’s Reasoning

    The Court reasoned that the definition of “records” under FOIL is broad and encompasses “any information kept, held, filed, produced or reproduced by, with or for any agency”. The minutes fit this definition because they were submitted to and kept by the Insurance Department. The Court emphasized that FOIL is to be liberally construed to grant maximum access to government records. The Court dismissed the argument that the Department’s promise of confidentiality exempted the minutes, stating that confidentiality is only relevant when determining if a statutory exemption applies. Regarding the claim that the minutes should be exempt because they contain trade secrets, the Court found the insurance companies’ claims were conclusory and lacked evidentiary support to justify a blanket exemption. However, the Court acknowledged that some portions of the minutes might warrant protection and ordered an in camera inspection to determine which parts, if any, would cause substantial competitive injury if disclosed. The court quoted from *Matter of Westchester Rockland Newspapers v Kimball, 50 NY2d 575, 581*: “The statutory definition of ‘record’ makes nothing turn on the purpose for which a document was produced or the function to which it relates”.

  • Breen v. Cunard Lines, 33 N.Y.2d 508 (1974): Limiting Insurance Coverage for Loading and Unloading of Vehicles

    Breen v. Cunard Lines, 33 N.Y.2d 508 (1974)

    An insurance policy may limit liability coverage for loading and unloading of a vehicle to specific individuals or entities, such as lessees, borrowers, or employees of the named insured, pursuant to valid regulations by the Superintendent of Insurance.

    Summary

    Michael Breen, a truck driver, sued Cunard Lines for injuries sustained while unloading cargo. Cunard sought indemnity from Wooster Express’s insurer, Liberty Mutual, based on Wooster’s policy covering permissive users of the truck. The policy limited coverage for loading/unloading to lessees, borrowers, or Wooster’s employees. The court affirmed summary judgment for Liberty Mutual, holding that the policy limitation was valid under a regulation allowing such restrictions. The court reasoned that general statutory requirements for liability coverage do not preclude reasonable regulations defining the scope of coverage for loading and unloading operations. This case clarifies the extent to which insurance regulations can limit coverage mandated by broader statutes.

    Facts

    Michael Breen, a truck driver for Wooster Express, was injured on Cunard Lines’ pier when he fell through a broken board on a pallet while unloading heavy cases of paper from his truck.

    Procedural History

    Breen sued Cunard Lines for his injuries. Cunard then filed a third-party complaint against Liberty Mutual, Wooster Express’s liability insurer, seeking indemnity. The lower court granted summary judgment to Liberty Mutual, finding that Cunard was not covered under the policy’s loading/unloading provisions. The Appellate Division affirmed. The case then went to the New York Court of Appeals.

    Issue(s)

    Whether an insurance policy can validly limit liability coverage for loading and unloading of a vehicle to a lessee or borrower of the vehicle or an employee of the named insured, pursuant to a regulation of the Superintendent of Insurance, despite broader statutory requirements for liability coverage.

    Holding

    Yes, because the regulation of the Superintendent of Insurance permitting such limitation is valid and not in conflict with statutory provisions mandating liability coverage for permissive users of a vehicle. The statutory reference to “users” does not necessarily include every attenuated event associated with loading or unloading; therefore, the Superintendent has broad authority to define the scope of coverage.

    Court’s Reasoning

    The court reasoned that while Vehicle and Traffic Law § 345(b)(2) and Insurance Law § 167(2) mandate liability coverage for any party “using” the vehicle with the named insured’s permission, these provisions do not prevent a regulation from clarifying the extended coverage required for loading and unloading. The court acknowledged that the process of loading and unloading can be broadly construed, involving many parties and activities. However, it also noted that it may not be desirable or rational to extend the concept of “use” indefinitely. The court distinguished Wagman v. American Fid. & Cas. Co., 304 N. Y. 490, where the insurance policy expressly designated loading and unloading as a “use” of the vehicle for which all users were covered. Here, the statutory reference to “users” is general and does not automatically include every event associated with loading/unloading. The court emphasized the Superintendent of Insurance’s broad power to interpret and implement legislative policy, finding a rational basis for the regulation given the generality of the statutes, the indefiniteness of loading/unloading, and the practicalities of insurance rates. The court quoted, “Given the generality of the applicable statutes, the indefiniteness inherent to the loading and unloading process, and the practicalities of the overlapping of liability insurance and the insurance rate structure, there was a rational basis for the regulation by the Superintendent.” As Cunard was excluded by the policy provision pursuant to a valid regulation, it had no cause of action against Wooster’s insurer.