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United States ex rel. Scott v. Humana, Inc.

United States District Court, W.D. Kentucky, Louisville Division

November 5, 2019

UNITED STATES OF AMERICA ex rel. STEVEN SCOTT, Plaintiff,
v.
HUMANA, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          COLIN H LINDSAY, MAGISTRATE JUDGE, UNITED STATES DISTRICT COURT

         Before the Court is the omnibus motion for leave to file permanently under seal confidential information accompanying docket entries 201, 208 and 211 filed by Defendant, Humana Inc. (“Humana”) as briefed in DNs 217, 226, and 234. Also before the Court is the motion for leave to file Relator's opposition to Defendant Humana's omnibus motion for leave to file permanently under seal confidential information accompanying docket entries 201, 208 and 211 provisionally under seal filed by Relator, Steven Scott (“Relator”) as briefed in DNs 225 and DN 235.

         For the reasons set forth below, Humana's motion to seal (DN 217) is GRANTED IN PART and DENIED IN PART. Relator's motion for leave to file his opposition to Humana's omnibus motion under seal (DN 225) is DENIED.

         I. MOTIONS TO SEAL

         A. Legal Standard

         Although the Sixth Circuit has long recognized a “strong presumption in favor of openness” regarding court records, there are certain interests that overcome this “strong presumption.” Rudd Equipment Co., Inc. v. John Deere Construction & Forestry Co., 834 F.3d 589, 593 (6th Cir. 2016) (citing Brown & Williamson Tobacco Corp. v. FTC, 710 F.2d 1165, 1179 (6th Cir. 1983)). These interests include “certain privacy rights of participants or third parties, trade secrets, and national security.” Brown & Williamson Tobacco Corp., 710 F.2d at 1179. The party seeking to seal the records bears a “heavy” burden; simply showing that public disclosure of the information would, for instance, harm a company's reputation is insufficient. Id.; Shane Grp. Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299, 305 (6th Cir. 2016). Instead, the moving party must show that it will suffer a “clearly defined and serious injury” if the judicial records are not sealed. Shane Grp. Inc., 825 F.3d at 307. Examples of injuries sufficient to justify a sealing of judicial records include those that could be used as “sources of business information that might harm a litigant's competitive standing.” Nixon v. Warner Comm'ns, Inc., 435 U.S. 589, 598 (1978).

         In rendering a decision, the Court must articulate why the interests supporting nondisclosure are compelling, why the interests supporting public access are not as compelling, and why the scope of the seal is no broader than necessary. Shane Grp. Inc., 825 F.3d at 306. Importantly, the presumption that the public has the right to access judicial records does not vanish simply because all parties in the case agree that certain records should be sealed. Rudd Equipment Co., Inc., 834 F.3d at 595 (noting that although the defendant did not object to the plaintiff's motion to seal, his lack of objection did not waive the public's First Amendment and common law right of access to court filings); Shane Grp. Inc., 825 F.3d at 305 (“A court's obligation to keep its records open for public inspection is not conditioned on an objection from anybody.”)

         B. Discussion

         1. Humana's Omnibus Motion for Leave to File Permanently Under Seal Confidential Information Accompanying Docket Entries 201, 208, and 211 (DN 217)

         Humana moves to permanently file under seal excerpts of Relator's motion to compel Humana to fully comply with Realtor's Rule 30(b)(6) deposition notice (DN 201) and exhibits; Humana's opposition to Relator's motion to compel Rule 30(b)(6) testimony or in the alternative, Humana's motion for a protective order (DN 208) and exhibits; and Relator's reply to Humana's opposition to Relator's motion to compel (DN 211) and exhibits. (DN 217, at PageID # 12857.) DNs 201, 208 and 211 are filed provisionally under seal pursuant to this Court's order. (DN 241.) Humana states that pursuant to the parties' agreed-upon stipulation, the party who designated the information and exhibits as confidential shall move to permanently seal such information and exhibits. (DN 217, at PageID # 12857, n. 1.)

         Humana contends the portions of the motions and the exhibits subject to this motion include excerpts from DN 201 and corresponding exhibits A, B, D-K, M-Q; excerpts from DN 208, the Declarations of Rachael Theiss and William Buffaloe (DN 208-1 and DN 208-2) and corresponding exhibits 1-5, 7, 8, 11-17, 19-21, 23 and 24; and excerpts from DN 211 and corresponding exhibits S, T, and U. (DN 217, at PageID #12858.)

         Humana argues there is a compelling reason to seal the above identified excerpts since they contain three categories of non-public proprietary information that would cause commercial harm to Humana if filed in the public record. (DN 217, at PageID # 12858.) First, Humana argues the excerpts contain information about Humana's internal Medicare Part D bid practices that, if disclosed, would enable Humana's competitors to tailor their own Part D pricing strategy, putting Humana at a disadvantage in the Part D market because Humana would not have access to similar information concerning its competitors' internal Part D bid practices. (DN 217, at PageID #12858.) Second, Humana argues the excerpts reflect confidential internal financial information whose disclosure could also cause serious competitive and economic harm because they provide insight into the factors Humana considers when formulating its budgetary projections, which competitors and business partners could use to gain an advantage over Humana. (DN 217, at PageID #12858.) Lastly, Humana argues the excerpts reflect confidential internal compliance information including insight into the mechanisms and technological infrastructure Humana utilizes to ensure its compliance with regulations from CMS. (DN 217, at PageID #12859.) Humana argues this information can be used by competitors to develop their own compliance initiatives, unfairly bypassing the substantial investment required to develop such programs. (DN 217, at PageID #12859.)

         Humana argues that in recognition of the presumption of public access, Humana has moved to seal only narrowly tailored excerpts that contain confidential information, rather than moving to seal the applicable docket entries in their entirety.

         In response, Realtor argues Humana's request comes nearly five months after the parties' briefing on the motion to compel concluded and that the motion be denied on the grounds of unjustifiable delay. (DN 226, at PageID #17820). Relator argues the Court should deny Humana's request to permanently seal portions of the parties' motions and supporting declarations because the information Humana seeks to conceal is of significant public interest, as it concerns alleged misrepresentations related to the expenditure of vast sums of taxpayer money on healthcare. (DN 226, at PageID #17821.)

         Relator argues that his 30(b)(6) deposition notice, Humana's objection to that notice, the questions posed to witnesses during the depositions and the witness's responses to those questions are essential evidence for interested members of the public who wish to assess the Court's decisions for themselves. (DN 226, at PageID #17821.) Relator argues the above documents are critical to the Court's resolution of the pending motion because the documents demonstrate why the testimony Relator seeks to compel is relevant and why Humana's corporate testimony was wholly inadequate. (DN 226, at PageID #17826.)

         Relator argues that no portion of the parties' briefs or the declarations filed in support thereof should be sealed. (DN 226, at PageID #17826.) Realtor argues much of the information contained in the briefing and declarations have already been made public and that Humana's motion falls short of the line-by-line specific justification necessary to override the public's right of access.

         Relator argues that Humana's assertion that revealing the mechanisms used in its compliance program would cause it to suffer a competitive disadvantage is without merit because it is unclear what Humana considers to be its compliance program. (DN 226, at PageID #17826.) Further, Realtor argues that Humana does not explain how competitive harm would occur due to the revelation of the fact that Humana conducts scenario testing to determine what combination of preferred utilization, membership and benefits would satisfy the actuarial standard required by the Medicare regulations. Lastly, Relator argues information regarding Humana's internal attestations, which are required by statute, does not constitute highly competitive information. (DN 226, at PageID #17827.)

         Lastly, Relator argues that the Court ordered DNs 172, 174, 197 and 204 to be unsealed in its August 30, 2019 order (DN 216) and that Humana has filed a belated motion to permanently seal this information, which is essentially a motion for reconsideration. (DN 226, at PageID #17829.) Further, Relator argues that there is no basis to seal DN 201-6 and DN 201-7 on the grounds that these exhibits contain information that overlap with DNs 172, 174, 197 and 204.

         However, the Court notes that DNs 172, 174, 197 and 204 were ordered unsealed due to Humana's failure to timely file a response to Relator's motion to seal pursuant to a confidentiality stipulation.[1] As stated in DN 216, due to the fact that “[Relator's] motions to provisionally seal [DN 171, 173, 196 and 203] have not been superseded by any motions to permanently seal or redact, ” the arguments regarding DNs 172, 174, 197 and 204 were not addressed on the merits. The motions to provisionally seal have been superseded by DN 221, Humana's Omnibus Motion for Leave to file Permanently under seal confidential information accompanying docket entries 172, 174, 197 and 204.

         Further, the Court reminds all parties that if an exhibit has been previously ruled upon by the Court, attorneys have a duty of candor to the Court to state so in their pending motion to seal. However, any finding in a prior motion to seal does not ensure that the documents will remain redacted if cited again in the future or refiled elsewhere in the record. If presently-redacted information becomes more important to this Court's later decisions, the interests supporting public access may increase as well. See Rudd Equip. Co., Inc., 834 F.3d at 594. Likewise, absent a direct and meritorious motion, the Court will not endeavor to conceal these documents if presently in the record elsewhere.

         Relator does not oppose Humana's request to seal DN 201-4, DN 201-10, DN 201-13, DN 201-14, DN 201-15, DN 201-16, DN 201-17, DN 211-2, DN 211-3, DN 208-5, DN 208-7, DN 208-13, DN 208-14, DN 208-15, DN 208-16. (DN 226 at PageID #17828.) However, Relator's lack of objection does not end the Court's independent analysis of whether the above documents should be sealed from public inspection. Shane Grp. Inc., 825 F.3d at 305.

         The Court addresses each document at issue below.

         a) DN 201 Relator's Motion to Compel and Accompanying Exhibits

         (i) DN 201 Relator's Motion to Compel

         Humana argues that it seeks to redact what amounts to a few pages of text containing information related to Humana's internal bid and budgetary practices (specifically DN 201 at 1, 3-6, 8-11, 16, 17, 19-22), profit margins for Humana's Part D (DN 201 at 15, 16) plans from Relator's third page motion to compel. (DN 216, at PageID #12860.) Humana argues the excerpts contain information about Humana's internal Medicare Part D bid practices and internal financial information that would give Humana's competitors unfair insight into Humana's strategic business decisions and put Humana at a competitive disadvantage. (DN 217, at PageID # 12860.)

         Upon review, the Court finds that the requested redactions on page 1, 3, 4, 5, 6, 8, 9, 10, 11, 16, 17, 19, 20, 21, 22 contain generalized information about the case, and though unflattering, these pages do not contain information that if disclosed would harm Humana's competitive standing in the marketplace.

         However, the Court finds that the redactions on page 15 starting with the word “reported” to the word “HUM-000080060” and footnote 5, include information that could harm Humana's competitive standing in the marketplace because they reveal detailed numerical calculations regarding prior bids and profit margins that can be used by competitors to undercut Humana's business position in the Part D marketplace. Accordingly, the Court finds there is a compelling reason to seal portions of page 15 as modified above. As modified, the redactions on page 15 are narrowly tailored and the public interest in this information is low since the underlying motion is a motion to compel addressing whether Humana sufficiently answered questions at various 30(b)(6) depositions. The information on page 15 is not being offered as evidence on the merits of this case at this point in time.

         Accordingly, the motion to seal DN 201 is GRANTED IN PART and DENIED IN PART. DN 201 shall remain under seal, however Humana is ordered to file a supplemental redacted version DN 201 for public viewing containing only the redactions on page 15 in accordance with this Court's findings.

         (ii) DN 201-1 (Exhibit A at 7-8) and DN 201-2 (Exhibit B at 7-8)

         Humana seeks to redact two paragraphs of a twelve-page deposition notice containing information related to the development of assumptions used in Humana's internal bid and budgetary practices. (DN 217, at PageID #12861.) Humana argues that disclosure of this information would cause a clear and serious injury by giving Humana's competitors unfair insight into Humana's budget and bid strategy.

         In opposition Relator argues that Humana proposes to redact the entirety of Topic No. 1(b) and 1(c) and DN 217-3 at PageID # 12923-12924, 12936-12937, and 13435 (RX-241), but that Humana cannot assert a compelling justification for why Relator's requests for certain information presents a threat of competitive harm. (DN 226, at PageID #17828.)

         Upon review, the Court finds that the redactions requested in DN 201-1 and DN 201-2 are regarding generalized information about the case and do not contain information that if disclosed would harm Humana's competitive standing in the marketplace. Accordingly, Humana has not met its burden to show that a clearly defined and serious injury would occur and the motion to seal DN 201-1 and DN 201-2 is DENIED. The Court directs the Clerk to unseal DN 201-1 and DN 201-2.

         (iii) DN 201-4 (Exhibit D at 1-2)

         Humana seeks to redact roughly ten lines of text from a three-page email from W. Buffaloe to A. Shen on February 1, 2019 and from W. Buffaloe to S. Cenawood on January 30, 2019. (DN 217, at PageID #12861.) Humana argues the text describes the details of Humana's bid development and the role of Humana's certifying actuary in the bid development process. (DN 217, at PageID #12861.) Humana argues that its competitors could use this information to tailor their own bid development strategy. (DN 217, at PageID #12861.)

         Upon review, the Court finds that the redactions requested in DN 201-4 do not contain information that if disclosed would harm Humana's competitive standing in the marketplace. Accordingly, Humana has not met its burden to show that a clearly defined and serious injury would occur and the motion to seal DN 201-4 is DENIED. The Court directs the Clerk to unseal DN 201-4.

         (iv) DN 201-5 (Exhibit E at 6, 7, 9, 10, 11, 14, and 15)

         Humana seeks to redact roughly six paragraphs of text from Humana's fifty-two-page response to Relator's Rule 30(b)(6) notice. (DN 217, at PageID #12861.) Humana argues the excerpts contain details concerning how assumptions are developed for Humana's Part D bids and internal budgets that would provide unfair insight to competitors. (DN 217, at PageID #12862.)

         Upon review, the Court finds that the redactions requested in DN 201-5 do not contain information that if disclosed would harm Humana's competitive standing in the marketplace. Accordingly, Humana has not met its burden to show that a clearly defined and serious injury would occur and the motion to seal DN 201-5 is DENIED. The Court directs the Clerk to unseal DN 201-5.

         (v) DN 201-6 (Exhibit F) and DN 201-7 (Exhibit G)

         Humana argues that Relator's Summary Tables purport to contain several key bid and budget assumptions and metrics, and that CMS itself treats as confidential the data that Part D plan sponsors submit as part of the annual bid process. (DN 217, at PageID #12862.) Humana argues that this is evidenced by the fact that CMS resisted producing Bid Pricing Tool data to Humana since it contained “highly proprietary trade secrets and confidential business information.” (Id.) Humana argues this information would allow its competitors to adjust their bids and undercut Humana in the Part D market.

         The Court finds that the redactions requested in DN 201-6 and DN 201-7 do contain confidential information that if disclosed would harm Humana's competitive standing in the marketplace because they contain detailed numerical summaries regarding prior bids and profit margins that could be used by competitors to undercut Humana's marketplace standing. The Court finds the requests are narrowly tailored and the public interest in this information is low as the underlying motion is a motion to compel addressing whether Humana sufficiently answered questions at various 30(b)(6) depositions. The information in DN 201-6 and DN 201-7 is not being offered as evidence on the merits of this case at this point in time. Accordingly, the motion to seal DN 201-6 and DN 201-7 is GRANTED. DN 201-6 and DN 201-7 shall remain under seal.

         (vi) DN 201-8 (Exhibit H)

         Humana moves to redact roughly two pages of text from a thirteen-page excerpt of Susan Diamond's 30(b)(6) deposition transcript containing information related to Humana's internal bid and budgetary practices. (DN 217, at PageID #12862.) Humana argues that testimony at ¶ 201-8 at 25:19-22 discusses details about which assumptions are contained in internal Humana budgetary documents. Humana argues that testimony at 32:9-12, 14-18; 161:14-25; 162:1-14, 21-25; and 163:8-12 contain details concerning how assumptions are developed for Humana's Part D bids and Humana's internal budgets. (DN 217, at PageID #12863.) Humana argues disclosure of this confidential information would give competitors unfair insight into Humana's budget and bid strategy. (DN 217, at PageID #12863.)

         Upon review, the Court finds that the redactions at 25:19-22, 32:9-18, 161:14-25, 162:1-14, 162:21-25, and 163:8-12 include deposition testimony regarding the level of preparedness of the witness and the identity of individuals who may have relevant evidence and though the testimony is unflattering, these excerpts do not contain information that if disclosed would harm Humana's competitive standing in the marketplace. Accordingly, Humana has not met its burden to show that a clearly defined and serious injury would occur.

         Accordingly, the motion to seal DN 201-8 is DENIED. The Court directs the Clerk to unseal DN 201-8.

         (vii) DN 201-9 (Exhibit I)

         Humana moves to redact portions of Rachael Theiss's Rule 30(b)(6) deposition. (DN 217, at PageID #12863.) Humana argues DN 201-9 at 252:10-12 discusses the values used in Humana's bids and in internal budgetary documents. (DN 217, at PageID #12863.) Humana also argues DN 201-9 at 163:11-12; 164; 200; and 225 discusses the quantitative models and scenario testing that Humana used, the collaborative process of assumption development between Milliman and Humana, the member cost share actual experience, and the impact of specific plan changes on the plan's member cost share. Humana argues that excerpts at ¶ 201-9, at 163, 164, 200, 214, and 252 contain deposition testimony of an actuarial director discussing values for member cost share and benefits, confidential Market Call presentations and details regarding Humana and Milliman's actuarial pricing models. Humana argues disclosure of this information would give Humana's competitors unfair insight into Humana's budget and bid strategy, and it would allow competitors to adjust their bids to undercut Humana in the Part D market. (DN 217, at PageID #12863.)

         In its reply, Humana argues that DN 201-9 at 163, 164, 199, 200, 214 and 252 contain confidential and proprietary information. (DN 234, at PageID #17896.) However, it withdraws its redactions for DN 201-9 at 19, 20, 21, 22, 23, 24, 141, 142, 225, 246, 251. (DN 234, at PageID # 17896.) Humana argues that Relator's response makes no argument concerning individual redacted excerpts in 201-9 that contain confidential information. (DN 234, at PageID #17897.)

         The Court finds DN 201-9 at pages 163, 164, 199, 200, 214 and 252 contain confidential information that would harm Humana's competitive standing in the marketplace. Accordingly, the Court finds there is a compelling reason to seal excerpts of the document as modified above. As modified, the redactions on are narrowly tailored and the public interest in this information is low as the underlying motion is a motion to compel addressing whether Humana sufficiently answered questions at various 30(b)(6) depositions. The information contained in DN 201-9 at pages 163, 164, 199, 200, 214 and 252 is not being offered as evidence on the merits of this case at this point in time.

         Based on the foregoing, the motion to seal DN 201-9 is GRANTED IN PART as modified by Humana's reply and the Court's findings. The Clerk shall keep DN 201-9 under seal, however Humana is ordered to file an amended redacted version of DN 201-9 redacting only those portions consistent with the request in their reply and pursuant to this Court's above findings.

         (viii) DN 201-10 (Exhibit ...


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