2003-67

Final Decision

At its February 27, 2004 public meeting, the Government Records Council ("Council") considered the February 23, 2004 Findings and Recommendations of Executive Director and all related documentation submitted by the parties. The Council voted to adopt said Findings and Recommendations in its entirety and to dismiss the complaint on the basis that the custodian has met its burden of showing that the requested documents at issue in the case are exempt under the OPRA provision N.J.S.A. 47:1A-9, “Other laws regulations, privileges unaffected,” specifically citing, N.J.S.A. 17:23-24f; N.J.A.C. 11:1-36.6; N.J.A.C.11:2-39.10(a),  and the “advisory, consultative and deliberative” provisions of OPRA.  N.J.S.A.47:1A-1.1.  

Vincent P. Maltese, Chairman
Government Records Council

I attest the foregoing is a true and accurate record of the Government Records Council.

Virginia Hook, Secretary
Government Records Council

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Changes to Findings and Recommendations of the Executive Director

The Findings and Recommendations of the Executive Director in Complaint No. 2003-67 dated February 27, 2004 is modified to reflect the following changes:

Second Paragraph under “Recommendations of Acting Executive Director" change citation "-39.10 to read: N.J.A.C. 11:2-39.10(a).

Third Paragraph under "Recommendations of Acting Executive Director" and under the "Conclusions" add these citations:  N.J.S.A. 17:23-24f, N.J.A.C. 11:1-36.6, N.J.A.C. 11:2-39.10(a) and N.J.S.A. 47:1A-1.1.

Page 4, First Paragraph under “Legal Analysis” remove underline under "shall" and place emphasis underline under “not”.

________________________
Paul F. Dice
Acting Executive Director
Government Records Council

Dated:  February 27, 2004

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Findings and Recommendations of the Executive Director

Relevant Records Requested: Any and all information concerning the application, review, and/or issuance of an insurance license for MIIX Advantage Insurance Company

All information concerning the application, review, and/or issuance of or granting of approval of a request to continue operations in "solvent runoff" by operating subsidiaries of MIIX Group, Inc.
Custodian: Gary Vogler
Request Made: December 19, 2002
Response Made:   January 21, 2003
GRC Complaint filed: June 3, 2003

Recommendations of Acting Executive Director

At issue in this case is the denial of access to documents regarding the MIIX Group, Inc. ("MIXX") and its subsidiaries, which concerned its request to continue operations in "solvent run-off", and the draft financial documents submitted by MIIX Advantage regarding its proposed business operations.  On December 24, 2002, the custodian released 175 pages of requested documents as follows:

• DOBI's report of examination as to the organization of the MIIX Advantage's application for certificate
• Revised MIIX Advantage feasibility plan dated May 17, 2002, and other undescribed documents. 

The custodian asserted that all the documents withheld were exempt from disclosure under N.J.S.A. 17:23-24f, N.J.A.C. 11:1-36.6 and -39.10(a), and N.J.S.A. 47:1A-1.1 (exempting proprietary financial information and advisory, consultative or deliberative records).

The Acting Executive Director respectfully recommends the Council dismiss the complaint on the basis that the custodian has met its burden of showing that the requested documents at issue in the case are exempt under "Other laws regulations, privileges unaffected" and  "advisory, consultative and deliberative" provisions of OPRA. N.J.S.A. 47: 1A-9. 

Legal Analysis

The Commissioner of the Department of Banking and Insurance is authorized to examine the activities, operations, financial condition and affairs of all persons transacting the business of insurance in New Jersey. N.J.S.A. 17:23-20. DOBI examiners and personnel conduct these financial examinations pursuant to N.J.S.A. 17:23-24.  Companies that fail to provide any document requested by DOBI face suspension or revocation of their license to operate. N.J.S.A. 17:23-23(b).

The financial examination documents regarding MIXX received by DOBI include:

1. Financial examination information provided by MIXX to DOBI between April 25, 2002 and May 2, 2002;
2. DOBI review of MIXX loss and loss adjustment expense information;
3. DOBI review of loss reserve analysis of MIXX;
4. MIXX review of its loss adjustment expense information as of December 31, 2000;
5. Internal DOBI financial exam report of MIXX;
6. Letters from DOBI to MIXX regarding underwriting operations of MIXX;
7. Information from other jurisdictions regarding financial solvency of LP&C;
8. LP&C actuarial analysis as of December 31, 2001;
9. Draft MIXX reports regarding loss and loss adjustment expense reserve;
10. MIXX financial exhibits and agenda notes regarding financial examinations meeting;
11. MIXX consultant’s review of financial condition of MIXX;
12. Letters exchanged between MIXX and DOBI regarding various financial issues relative to financial examination;
13. Quarterly statements filed by MIXX;
14. Draft MIXX actuarial reports;
15. Solvent runoff model prepared by MIXX; and
16. Information provided to, and received from, the National Association of Insurance Commissioners (NAIC) regarding MIXX.

N.J.S.A. 17:23-24f renders all of this material confidential:

All working papers, recorded information, documents and copies thereof produced by, obtained by, or disclosed to the commissioner or any other person in the course of an examination made under this act shall be given confidential treatment and are not subject to subpoena and may not be made public by the commissioner or any other person ...

N.J.A.C. 11:1-36.6 extends this confidentiality provision "to any other documents obtained by the Department in exercising the examination power pursuant to N.J.S.A. 17:23-20 et seq., including the Department's ongoing financial analysis of insurers, and including, but not limited to, the following:

1. Actuarial reports;
2. NAIC Analyst System data;
3. NAIC Analyst notes;
4. NAIC Financial Analysis Solvency Tool/Insurance Regulatory Information System data;
5. Strategic business plans and related projections; and
6. Correspondence.” [N.J.A.C. 11:1-36.6(b)]

Moreover, because the documents provided to and reviewed by DOBI contain financial information extremely sensitive to the insurance company, such documents are “proprietary commercial or financial information obtained from any source” and “information which, if disclosed, would give an advantage to competitors” and, therefore, exempt from access pursuant to N.J.S.A. 47:1A-1.1.

RBC plans contain such confidential information as

• projections of the insurer's financial results in the current year and at least the four succeeding years,  both in the absence of proposed corrective actions and giving effect to proposed corrective actions, including projections of statutory operating income, net income, capital and/or surplus;
• problems associated with, the insurer's business including, but not limited to, its assets, anticipated business growth and associated  surplus strain, extraordinary exposure to risk, mix of business and use of reinsurance in each case, if any.[N.J.A.C. 11:2-39.4(b)]

RBC Plans "are intended solely for the use by the Commissioner in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers ..." N.J.A.C. 11:2-39.10(c). RBC Plans as well as the results or reports of any examinations or financial analysis of an insurer contain information "that might be damaging to the insurer if made available to its competitors, and therefore shall be kept confidential by the Commissioner." N.J.A.C. 11:2-39.10(a).  N.J.A.C. 11:2-39.10(a) provides “that “[t]his information shall not be made public ..." Ibid. (emphasis added). The Commissioner has no discretion to disclose this information.

Thus, drafts of the RBC Plan, DOBI review of the plan, letters exchanged between DOBI and MIC regarding assumptions that support the financial projections made in the RBC Plan, the financial projections themselves made by MIC, and DOBI’s review of those projections are confidential.

The RBC Plan and all related documents are also exempt from access pursuant to N.J.S.A. 47:1A-1.1 as they plainly contain proprietary financial information which, if disclosed, would provide an advantage to the companies’ competitors.

Finally, the internal memoranda and notes of DOBI examiners and staff concerning their review of the companies’ written submissions or meetings at which company submissions were discussed are ACD and confidential pursuant to N.J.S.A. 47:1A-1.1.  Additionally, those memorandum or notes pertaining to either the financial exam or the RBC plan are confidential pursuant to the statutes cited above.

The deliberative process privilege - referred to as"advisory, consultative and deliberative" exemption in OPRA - is a doctrine that permits the government to withhold documents which reflect advisory opinions, recommendations and deliberations comprising part of a process by which government decisions and policies are formulated.  In re: Liquidation of Integrity Insurance Company, 165 N.J. 75, 83 (2000). A document must meet two require- ments for the deliberative process privilege to apply.

First, it must have been generated before the adoption of  an agency's policy or decision. Id. at 84. Here, counsel for the custodian states that the withheld documents predate DOBI's decision to accept the RBC Plan of MIC, as well as the issuance of a certificate of authority to MA.

Second, the document must be deliberative in nature, containing opinions, recommendations, or advice about agency policies. Id. at 84-85. Here, custodian's counsel states that all of the withheld documents contain departmental analysis, advice and concerns about MIC and/or MA. Thus, both requirements have been satisfied.

In a submission to the GRC dated January 23, 2004, attorneys for the MIIX Group claimed its subsidiaries' submissions to DOBI were confidential based upon federal law and different sections of Title 17. Because we conclude that denial of access was appropriate for the reasons cited by the custodian, we do not address the MIIX Group’s claims to confidentiality.

The OPRA complaint should be dismissed because the custodian lawfully withheld access to the following records, specifically,

1. Documents obtained during the course of DOBI financial exam of MIC and LPC pursuant to N.J.S.A. 17:23-22a, that are confidential pursuant to N.J.S.A. 17:23-24f and N.J.A.C. 11:1-36.6;
2. Documents obtained during the course of DOBI review of documents related to a Risk-Based Capital Plan ("RBC Plan"), that are confidential pursuant to N.J.A.C. 11:2-39.10(a);* and
3. Internal memos and/or e-mails reflecting DOBI review and evaluation of the RBC Plan, notes about meetings with MIC representatives addressing various financial issues, memos about the companies' financial status, notes regarding DOBI's financial exam of MIXX as well as financial particulars related thereto, that are confidential pursuant to N.J.S.A. 47:1A-1.1 (excluding ACD records from access).
4. In addition, the records were properly withheld because they contain proprietary financial information that, if disclosed, would provide an advantage to the companies' competitors. N.J.S.A. 47:1A-1.1.

Documents Reviewed

The following documents have been submitted to members of the Government Records Council concerning the case:

• December 19, 2002 - Records Request and Custodian's Response on 12/24/02
• January 21, January 22 and February 3, 2003 - Email Correspondence from Custodian to Requestor Concerning the Records Request
• June 3, 2003 - Denial of Access Complaint Filed and Supplement Statement
• June 12, 2003 - Requestor Declines Mediation
• June 17, 2003 - Requestor’s Request to GRC for Expedited Hearing
• July 22, 2003 - GRC Request to Custodian to Submit Statement of Information
• July 25, 2003 - Custodian Counsel's Request to GRC for Extension on Submittal of Statement of Information
• August 15, 2003 - Custodian's Statement of Information and Supporting Certifications
• September 3, 2003 - Letter to GRC from MIIX's Attorney Requesting Opportunity to Present a Motion to Intervene with the GRC on the Complaint
• September 8, 2003 - Responding Letter from Requestor Regarding MIIX's Request
• January 15, 2004 - Letter from GRC to MIIX Attorney Advising of acceptance of Written Submissions regarding Complaint
• January 23, 2004 - Brief on Behalf of MIIX

Conclusion

The Acting Executive Director respectfully recommends the Council dismiss the complaint on the basis that the custodian has met its burden of showing that the requested documents at issue in the case are exempt under "Other laws regulations, privileges unaffected" and  "advisory, consultative and deliberative" provisions of OPRA. N.J.S.A. 47: 1A-9.

_________________________

Paul F. Dice
Acting Executive Director
Government Records Council

Dated:  February 23, 2004

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