By The News Service of Florida’s Jim Saunders
March 20, 2017
An appeals court Monday sided with State Farm Florida in a dispute about whether policy information submitted to state regulators is a “trade secret” and should be shielded from public disclosure.
The unanimous ruling by a three-judge panel of the 1st District Court of Appeal was a defeat for the Office of Insurance Regulation, which argued that the property-insurance information should be publicly available. Insurers have long been required to file the information, which includes by county how many policies are written, canceled or non-renewed, through a database known as the Quarterly and Supplemental Reporting System, or QUASR.
A Leon County circuit judge last year agreed with State Farm’s arguments that the information was a trade secret that could be used by competitors if made public. That prompted the Office of Insurance Regulation to take the case to the appeals court.
In a concurring opinion Monday, Judge Allen Winsor wrote that he and the other members of the appeals court “cannot be swayed, for example, by arguments that the trial court’s order will harm consumers, undermine transparency, or increase the office’s administrative burdens.”
“The Legislature weighed the competing public policy interests at issue, the Legislature chose to exempt trade secrets from the public-records law, and the Legislature established the statutory trade-secret definition,” Winsor wrote. “State Farm presented evidence — including expert evidence — that its data met the Legislature’s definition, and the trial court found that State Farm met its burden. The trial court’s findings are supported by competent, substantial evidence, and so our job is to affirm.”
The main opinion, written by Judge Timothy Osterhaus, also said State Farm had showed the policy information to be “a trade secret as defined by Florida law.”
“As to the central issue here — whether State Farm demonstrated that its data possessed independent economic value to others — the testimony of multiple witnesses supported State Farm’s case,” said Osterhaus, who also was joined in the ruling by Judge Harvey Jay. “A State Farm executive testified, for instance, that a competitor could use the data ‘to see where we’re actively growing. And then go someplace else deriving economic advantage by not having to invest marketing money where they know they can’t advance.’ ”
During oral arguments in January, Elenita Gomez, an attorney for the Office of Insurance Regulation, said other insurers had not requested trade-secret protection for the information and that State Farm had not requested it before 2014. She said State’s Farm’s attempt to shield its information from disclosure would limit regulators’ ability to provide valid data and reports to the public, the Legislature and the governor.
The Office of Insurance Regulation has used the information, for example, to post reports online listing the top 25 property insurers by the numbers of policies and the amounts of premium written.
State Farm wrote limited amounts of property-insurance business in Florida from 2007 to 2014 before becoming more active in the market in 2014, according to Monday’s court ruling. At that time, State Farm sought trade-secret protections to keep confidential the QUASR reports it is required by law to submit to the state.
The insurer filed the lawsuit after the Office of Insurance Regulation indicated it would release the data to the public. [READ MORE]