On appeal from the State of New Jersey, Government Records Council, No. 2007-189.
The opinion of the court was delivered by: Winkelstein, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 25, 2008
Before Judges Winkelstein, Fuentes and Gilroy.
The issue presented in this appeal is the right of GEICO*fn1 to intervene in a Government Records Council (GRC) proceeding held pursuant to the Open Public Records Act, N.J.S.A. 47:1A-1 to -13 (OPRA), in which a third party seeks public disclosure of information GEICO provided to the New Jersey Department of Banking and Insurance (the DOBI). GEICO moved to intervene to object to the release of its confidential, proprietary information, and the GRC denied the motion. We reverse. We hold that GEICO is entitled to participate in the GRC proceeding to protect what it considers to be its confidential and proprietary information.
The facts are substantially uncontested. GEICO is a national insurance company that writes private passenger automobile insurance for more than 12.9 million vehicles in 49 states and the District of Columbia. In 2004, pursuant to N.J.S.A. 17:29A-1 to -32, which requires insurance companies using a rating system to determine policy rates to be licensed by the Commissioner of the DOBI, GEICO submitted an application to re-enter the New Jersey private passenger automobile insurance market. The DOBI approved GEICO's application in August 2004.
During the application process, GEICO submitted supporting documents containing details of how it rates its insureds, along with sophisticated internal business models and marketing plans that explain how GEICO conducts business, targets its markets and determines rates for its policyholders. Paul Lavrey, a GEICO Assistant Vice President, certified that the information had been developed over many years, through detailed record gathering, analysis and testing. GEICO submitted this information with a clear understanding that the documents contained confidential information that was not subject to public disclosure. Lavrey certified that if the information is made public, GEICO's competitors would "receive an unfair, free windfall because it [would] save them millions of dollars over several years to develop their own rating systems." He stated that: "To allow GEICO's competitors such easy access to this highly proprietary information would be extremely prejudicial to GEICO and would result in GEICO's business processes losing substantial value while saving competitors not only millions of dollars, but permitting the competitors to target GEICO's best risks."
On April 13, 2006, Senator Nia Gill, as the Chair of the Senate Commerce Committee, submitted an OPRA request to the DOBI seeking, among other information, documents related to "rating-systems and underwriting rules, and any supporting documentation, presented to the department pursuant to law, for GEICO and any other private passenger automobile insurer currently utilizing, or seeking to utilize, either occupation or education, or both, as underwriting factors in determining the insurers rate levels." The documents were sought in anticipation of a Senate Commerce Committee hearing that had been scheduled to investigate the use of occupation and education as underwriting factors in determining private passenger automobile insurance rates. At issue was whether the use of those underwriting factors circumvented the prohibition against using race and income to determine those rates.
The DOBI partially granted and partially denied the Senator's request. It provided the Senator with many public government records, including information regarding studies done by the insurance industry relating to utilization of either occupation or education as underwriting factors. The documents withheld by the DOBI were identified as documents "containing proprietary financial information and/or information which, if disclosed, would provide an advantage to the insurer's competitors." The DOBI declined to disclose other internal DOBI documents because they were "subject to the deliberative process privilege and/or contain proprietary financial information."
In August 2006, Senator Gill requested additional information from the DOBI, including: "an explanation of the reasonable and demonstrable relationship between the risk characteristic of the driver insured and the hazards insured against that the department found to justify the use of levels of education and occupation in underwriting insurance." The Senator also requested that the Senate Commerce Committee be provided with an "in camera" review of the proprietary information withheld from the OPRA response.
The Commissioner of the DOBI (the Commissioner) responded that, under OPRA, N.J.S.A. 47:1A-1.1, a government record does not include "trade secrets and proprietary commercial information or financial information obtained from any sources," and that the DOBI treats certain filings and information from insurers as proprietary because it is information that demonstrates how a company conducts its business and, if disclosed, would give an advantage to competitors. Nonetheless, with the consent of GEICO,*fn2 even though the documents were marked proprietary and confidential, the Commissioner provided Senator Gill with a list of GEICO's twenty-seven rating factors and seven discount factors used in its rating system, as well as GEICO's historical loss experience by occupation and education. The Commissioner explained that the loss ratio demonstrated to the DOBI that a correlation exists between education level and occupation and higher loss ratios, justifying the use of education and occupation as two factors used in underwriting policies.
Senator Gill subsequently filed a Denial of Access Complaint with the GRC. N.J.S.A. 47:1A-6; N.J.A.C. 5:105-2.1. The complaint identified the following information that the DOBI did not produce in response to the Senator's OPRA request: "[t]he rating-systems and underwriting rules, and any supporting documentation, presented to DOBI pursuant to law, for GEICO and any other private passenger automobile insurer currently utilizing, or seeking to ...