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

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

November 13, 2019

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

          MEMORANDUM OPINION AND ORDER

          COLIN H LINDSAY, MAGISTRATE JUDGE

         First, before the Court is the omnibus motion for leave to file permanently under seal confidential information accompanying docket entries 172, 174, 197 and 204 filed by Defendant, Humana Inc. (“Humana”) as briefed in DNs 221, 232, and 240.

         Second, before the Court is the accompanying 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 172, 174, 197 and 204 provisionally under seal filed by Relator, Steven Scott (“Relator”) as briefed in DNs 231 and 239.

         Third, before the Court is Humana's omnibus motion for leave to file under seal confidential information accompanying docket entries 186 and 188 as briefed in DN 218, 228 and 236.

         Fourth, before the Court is the accompanying motion for leave to file Relator's opposition to Humana's omnibus motion for leave to file permanently under seal confidential information in docket entries 186-1 and 188 provisionally under seal as briefed in DN 227 and 237.

         Lastly, before the Court is Humana's motion to stay the unsealing of docket entries DN 172, 174, 197 and 204 as briefed in DN 219 and 230.

         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, its 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 172, 174, 197 and 204 (DN 221)

         Relator moved to provisionally seal DNs 172, 174, 197 and 204 pursuant to the parties' agreed-upon stipulation. (DN 221, at PageID # 13863.) In DN 216, the Court denied Relator's motions to provisionally seal on the grounds that after months had passed, Humana had yet to file a motion to seal permanently, and accordingly the Court directed the Clerk to unseal the docket entries. Humana subsequently moved to stay the unsealing of these documents pending the Court's review of Humana's motion to seal permanently. (DN 219.) In DN 222 the Court ordered the Clerk to stay the unsealing of DNs 172, 174, 197 and 204. On September 9, 2019, Humana filed the instant motion.

         Humana moves to seal (a) excerpts from Relator's motion to compel and accompanying exhibits A, B, C, D, E, and H; (b) excerpts from Relator's reply and accompanying exhibits P, Q, R, S, T, and U; (c) excerpts from Relator's opposition and corresponding exhibit A; and lastly (d) excerpts from Relator's supplemental notice DN 204 and corresponding exhibits A, B, D, F, G, H, I, J, K, L, M and N. (DN 221, at PageID # 13864.) Humana argues that the documents its moves to seal contain non-public proprietary data, business information and trade secrets whose disclosure would cause serious commercial harm to Humana. (DN 221, at PageID # 13863.) The Court addresses each of these documents in turn below.

         Humana argues there is a compelling reason to seal the above identified excerpts since they contain three categories of non-public proprietary information that could cause commercial harm to Humana. (DN 221, at PageID # 13864.) First, Humana argues that the excerpts contain trade secrets concerning Humana's internal budgets, financial projections and related budgeting practices that shed light on the factors Humana considers when formulating its budgetary projections, which competitors could use to gain an advantage over Humana. (DN 221, at PageID # 13864.) Second, Humana argues the excerpts discuss internal processes Humana follows when developing its Medicare Part D bids, its pricing practices, its actual experience data and the contributions of its actuarial consultant which could be used by Humana's competitors to tailor their own Part D pricing strategy. (DN 221 at PageID # 13865.) Third, Humana argues the excerpts include information concerning studies and initiatives Humana designed to increase its beneficiaries' utilization of pharmacies in the Walmart Plan's preferred network and internal compliance information that, if disclosed, could cause Humana serious competitive harm. (DN 221 at PageID # 13865.)

         Humana argues that in recognition of the presumption of public access, Humana limited its motion to seal to those narrowly tailored excerpts that contain confidential information, rather than moving to seal the applicable docket entries in their entirety. (DN 240, at PageID # 18015.)

         In response, Relator makes three arguments for why the Court should not seal the documents requested. First, Relator argues more than eight months passed after Relator filed his motion to provisionally seal pursuant to the stipulated agreement. (DN 232 at PageID # 17884.) Relator contends that DNs 172, 174, 197 and 204 were ordered unsealed no earlier than 21 days after entry of the August 30, 2019 order, thus the instant motion is a motion for reconsideration. 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. 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 the instant motion.

         Second, Relator argues that some of the documents were the target of the Court's scrutiny in DN 216, and therefore they are essential for interested members of the public who wish to assess this Court's decision for themselves. (DN 232, at PageID # 17884.)

         Third, Relator argues the Court should deny Humana's motion to seal the summary exhibits DN 172-1, 172-2, 204-3, 204-5, 204-7 and 204-14 on the grounds that they contain outdated financial information that could not be harmful to Humana's competitive standing, but that do go directly to the merits of the case. (DN 232, at PageID # 17885.)

         Lastly, in Relator's response he states that he will not object to the Court sealing DNs 172-3, 172-4, 172-5, 172-8, 174-1, 174-2, 174-4, 174-5, 174-6, 197-1, 204-2, 204-10, 204-11, 204-12, 204-13, and 204-15. (DN 232 at PageID # 17885.) Relator states that he would like to reserve his right to later move to unseal material filed in connection with any dispositive or other pre-trial motion.[1] (Id.) 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.

         a) DN 172 Relator's Motion to Compel Defendant Humana to Answer his Requests for Admission

         (i) DN 172 Relator's Motion

         Humana moves to redact approximately three lines of text from a nineteen-page brief discussing initiatives Humana designed and pursued to increase its beneficiaries' utilization of pharmacies in the Walmart Plan's preferred network. (DN 221, at PageID # 13867.) Humana argues it invested substantial capital to develop these initiatives and disclosure of these initiatives would grant Humana's competitors an unfair commercial advantage. (DN 221, at PageID #13868.) Further, Humana argues the redacted excerpt discusses the collaborative process of assumption development between Milliman and Humana that would give Humana's competitors unfair insight into Human's budget and bid strategy. (DN 221, at PageID # 13867.)

         In response, Relator objects to the to the Court sealing excerpts of DN 172. (DN 232, at PageID # 17887.) Relator argues that the information Humana seeks to conceal pertains to the name of one preferred utilization initiative, as well as Humana's failure to tell Milliman that its initiatives were not implemented. (DN 232, at PageID # 17887.) Relator argues this information is reflected in numerous public filings already. (DN 232, at PageID #17887.) Furthermore, Relator argues that Humana's claim that the revelation of this basic information would harm its competitive standing is perfunctory and unsupported. (Id.) Relator argues that the revelation that Humana failed to communicate certain information to Milliman would not have any effect on its pricing strategy or the strategies of its competitors. (Id.)

         Upon review, the Court finds that the name of the specific initiative shall remain redacted because it reveals the name of a third party Humana targeted for business that could be used by competitors to undercut Humana's position in the market. The Court finds the request is narrowly tailored as modified and the public interest in this information is low as the underlying motion is a motion to compel. The redacted information is not being offered as evidence on the merits of this case at this point in time.

         The remaining portions of the document do not otherwise provide any revealing information regarding the initiative and should not be sealed. Further, though the fact that Humana did not provide information regarding the imitative to a third party is unflattering, the requested remaining redactions do not contain information that if disclosed would harm Humana's competitive standing in the marketplace. The fact that Humana collaborated with Milliman has been disclosed in many unsealed documents, including Humana's own moving papers in the instant motion. Accordingly, Humana has not met its burden to show that a clearly defined and serious injury would occur if the redacted information was disclosed.

         Based on the foregoing, the motion to seal DN 172 is GRANTED IN PART and DENIED IN PART. DN 172 shall remain under seal, however Humana is ordered to file an amended redacted version of DN 172 consistent with this Court's order.

         (ii) DN 172-1 (Exhibit A)

         Humana argues exhibit A is a summary table from Relator containing several key values for preferred pharmacy utilization, membership and member cost share for the bids and budgets-at-bid from 2011 to 2018. (DN 221, at PageID # 13868.) Humana argues Exhibit A includes actual experience data for the same years for preferred retail utilization and preferred mail utilization. (DN 221, at PageID # 13868.) Humana inferred that CMS treats this information as confidential because CMS initially resisted producing data drawn from the Bid Pricing Tool documents that Part D sponsors submit to CMS along with the bid substantiation in discovery. (DN 221, at PageID # 13868.) Humana argues that disclosure of this confidential business information would harm Humana by allowing its competitors to adjust their bids and undercut Humana in the Part D market. (DN 221, at PageID # 13868.)

         In response, Relator objects to the Court sealing DN 172-1. (DN 232, at PageID #17886.) Relator argues that exhibit A should be unsealed because it is central to the underlying motion to compel. (DN 232, at PageID # 17887.) Relator argues that all of the information in the summary exhibits is at least two years old, and in many instances more than eight years old. (DN 232, at PageID #17888.) Relator argues that insurance companies must submit a new bid to CMS every year for Part D plans, thus the exhibit is out-of-date by at least two annual bid cycles. (DN 232, at PageID # 17888.) Relator further argues the metrics in the summary exhibits reflect the primary evidence of Humana's fraud, but Relator also argues none of the information regarding Humana's fraudulent practices would allow Humana's competitors to adjust their bids to undercut Humana. (Id.) Lastly, Relator argues that the information Humana seeks to conceal is of significant public interest in that it concerns alleged misrepresentations related to the expenditure of taxpayer money on healthcare. (DN 232, at PageID # 17889.)

         In reply, Humana argues that simply because data is historic does not mean that its public disclosure would not cause competitive harm to Humana. (DN 240, at PageID # 18010.) The Court agrees with Humana's last contention since historical data can be used to extrapolate current figures and applicable formulas.

         The Court finds that the redactions requested 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, even if historic, could be used by competitors to undercut Humana's marketplace standing. The Court finds the request is narrowly tailored and the public interest in this information is low as the underlying motion is a motion to compel responses. The redacted information is not being offered as evidence on the merits of this case at this point in time.

         Accordingly, the motion to seal DN 172-1 is GRANTED. DN 172-1 shall remain under seal.

         (iii) DN 172-2 (Exhibit B)

         Humana argues that exhibit B is also a summary table Relator created purporting to contain values for preferred pharmacy utilization, membership, and member cost share for Humana's final budgets from 2011 to 2018. (DN 221, at PageID # 13868.) Humana argues that disclosure of this information would harm Humana by providing its competitors with a trove of actuarial and financial metrics with which they could adjust their bids and undercut Humana in the Part D market. (DN 221, at PageID # 13869.)

         In response, Relator objects to the Court sealing excerpts of DN 172-2 for the same reasons articulated in the above section regarding DN 172-1. (DN 232 at PageID # 17886.)

         The Court finds that the redactions requested 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 request is narrowly tailored and the public interest in this information is low as the underlying motion is a motion to compel responses. The redacted information is not being offered as evidence on the merits of this case at this point in time.

         Accordingly, the motion to seal DN 172-2 is GRANTED. DN 172-2 shall remain under seal.

         (iv) DN 172-3 (Exhibit C)

         Humana argues that it seeks to redact roughly one page of deposition testimony at ¶ 172-3 at 209:1-2, 8-9 that references values and metrics for preferred utilization in Humana's bids. (DN 221, at PageID # 13869.) Humana argues that DN 172-3 at 173:24-25, and at 209:1-25 includes details about assumption development for Humana's bids. (Id.) Humana argues DN 172-3 at 173:1-2, 9-12, and 14-17 discusses initiatives Humana designed and pursued to increase it beneficiaries' utilization of pharmacies in the Walmart Plan's preferred network. (Id.) Humana argues it invested substantial capital to develop these initiatives and public disclosure would grant Humana's competitors an unfair commercial advantage. (Id.)

         Upon review, the Court finds that the name of the third party on page 173 shall be redacted for the same reasons articulated above, however the remaining content on page 173 and 209:5-6, 13-17, 19-25 does not include confidential information that if disclosed would harm Humana's competitive standing in the marketplace because these portions of the deposition testimony merely refer to information regarding Humana's communications about that initiative with the third party.

         However, the Court finds that the portions of the deposition transcript at 173:14-17, 24-25; and 209:1-2, 7-11 do contain confidential information, including specific metrics used by Humana, that if divulged could harm Humana's competitive standing in the marketplace. The Court finds the request as modified is narrowly tailored and the public interest in this information is low as the underlying motion is a motion to compel responses to requests for admission. The redacted information is not being offered as evidence on the merits of this case at this point in time.

         Accordingly, the motion to seal DN 172-3 is GRANTED IN PART and DENIED IN PART. DN 172-3 shall remain under seal, however Humana is ordered to file an amended redacted version of DN 172-3 consistent with this Court's order.

         (v) DN 172-4 (Exhibit D)

         Humana argues that it seeks to redact fourteen lines of deposition testimony concerning Humana's bid development detailing the assumptions developed for Humana's Part D bids contained in DN 172-4 at 127:1-6, 8-10 and 12-16. (DN 221, at PageID # 13869.)

         Upon review, the Court finds that the redactions requested are generalized information about the effects of preferred pharmacy use, and though unflattering, they 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. Based on the foregoing, the motion to seal DN 172-4 is DENIED. The Court directs the Clerk to unseal DN 172-4.

         (vi) DN 172-5 (Exhibit E)

         Humana argues that it seeks to redact three lines from DN 172-5 at 19 from Humana's responses to Relator's Fourth Set of Interrogatories. (DN 221, at PageID # 13870.) Humana argues that the Court previously granted its motion to seal Relator's Fourth Set of Interrogatories in DN 216 and that Humana has identified the same excerpts that the Court previously held would threaten Human's competitive standing if publicly disclosed. (DN 216 at 12 re DN 181-12.) Humana argues the Court should again seal these excerpts as they contain sensitive financial data including net liability and per member per month values, that if revealed could allow competitors an unfair advantage to compete more effectively against Humana in the Part D market. (DN 221, at PageID 13870.)

         The Court finds that the redactions requested in DN 172-5 do contain confidential information that if disclosed would harm Humana's competitive standing in the marketplace because they contain detailed numbers from prior bids and budgets that could be used by competitors to undercut Humana's marketplace standing. The Court finds the request is narrowly tailored and the public interest in this information is low as the underlying motion is a motion to compel responses to requests for admission. The redacted information is not being offered as evidence on the merits of this case at this point in time. Accordingly, the motion to seal DN 172-5 is GRANTED. DN 172-5 shall remain under seal.

         (vii) DN 172-8 (Exhibit H)

         Humana argues that it seeks to redact less than a single page from a seventeen-page email thread containing sensitive budgetary information such as gain/loss margins, profit targets, and strategic insights into budget development at ¶ 172-8 at 3. (DN 221 at PageID# 13870.) Humana argues that DN 172-8 at 4 contains confidential internal audit practices. (Id.) Humana argues the excerpts were contained in Humana's confidential “market call” presentations and the excerpts provide insight into the factors Humana uses when formulating budgetary projections, which competitors and business partners could use to gain an advantage over Humana. (Id.)

         Upon review, the Court finds that DN 172-8 at PageID #8919 starting with the words “For example” and ending with the words “Slide 13” of the email shall remain redacted because these lines contain confidential business information that if divulged could harm Humana's competitive standing in the marketplace due to the detailed numbers regarding prior profit margins that could be used by competitors to undercut Humana's marketplace standing. The Court finds the request is narrowly tailored as modified and the public interest in this information is low as the underlying ...


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