22 Fla. L. Weekly Supp. 882a

Online Reference: FLWSUPP 2208SMOKInsurance — Personal injury protection — Discovery — Trade secrets — Medical provider’s managed care contracts and information contained therein are proprietary in nature and can be defined as trade secrets — Trial court departed from essential requirements of law in ordering provider to disclose reimbursement amounts paid pursuant to managed care contracts, identifying insurance carriers only by number and type, without conducting in camera inspection to explicitly determine whether contracts and information contained therein should be classified as trade secrets, whether reimbursement amounts paid pursuant to contracts and amounts paid by uninsured persons should be classified as trade secrets, whether identities of carriers and uninsured persons should be classified as trade secrets, and whether trade secret privilege should apply to protect provider from having to disclose requested information

VIRTUAL IMAGING SERVICES, INC. a/a/o TRYTINIA SMOKES, Petitioner, v. UNITED AUTOMOBILE INSURANCE COMPANY, A Florida Corporation, Respondent. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 14-217 AP. L.T. Case No. 12-5305 SP 23. March 26, 2015. On appeal from a non-final discovery order rendered by the Miami-Dade County Court, Carlos M. Guzman, J. Counsel: Joseph Littman, The Greenspan Law Firm, P.A., for Petitioner. Michael J. Neimand, General Counsel of the Office of the General Counsel of United Automobile Insurance Company, for the Respondent.

(Before KORVICK, HOGAN SCOLA and CUETO, JJ.)

(PER CURIAM.) Respondent United Automobile Insurance Company (United Auto) submitted interrogatories to Petitioner Virtual Imaging Services, Inc. (Virtual Imagining) for purposes of obtaining information about the reimbursement amounts received from insurance carriers pursuant to established managed care contracts as well as uninsured patients as payment for medical services performed pursuant to CPT Codes 72125/72131.

Without benefit of an in camera inspection, the lower court rendered an order requiring Petitioner Virtual Imagining to:

. . . provide the reimbursement amounts for CPT Codes 72125 & 72131 for only the year of service, YEAR 2010, for each insurance provider/carrier listed . . . and the uninsured and to avoid the potential for disclosure of any trade secret or proprietary information, Plaintiff may simply identify said insurance provider by number and type of carrier, i.e., HMO#1 [reimbursement amount]: HMO #2_; PPO#1__, PPO#2, etc. (underlining in original).

An appeal via a petition for writ of certiorari followed.

Review by certiorari is appropriate when a discovery order departs from the essential requirements of the law, causing material injury to a petitioner throughout the remainder of the proceedings below, effectively leaving no adequate remedy on appeal. Allstate Insurance Company v. Langston, 655 So. 2d 91, 94 (Fla. 1995) [20 Fla. L. Weekly S217a]; see Martin-Johnson v. Savage, 509 So. 2d 1097, 1100 (Fla. 1987); Sheridan Healthcorp et. al v. Total Health Choice, Inc., 770 So. 2d 221, 222 (Fla. 3d DCA 2000) [25 Fla. L. Weekly D2503b]. Even though some discovery orders rendered by the court may provide confidentiality limitations, they are still subject to certiorari review if they improperly require the disclosure of trade secrets. Cooper Tire & Rubber Company v. Cabrera, 112 So. 3d 731, 733 (Fla. 3d DCA 2013) [38 Fla. L. Weekly D1012a].

At the hearing below¹ Petitioner Virtual Imaging argued, and in doing so, objected to being forced to disclose information requested pursuant to Interrogatory 3. It was Petitioner’s position that disclosure of the information would require disclosure of confidential business information that included confidential contract provisions that “prohibited not only the dissemination of the contracts, but also the disclosure of the terms of said contracts, including the rates included therein”.² (underlining and bold in the original). Therefore, it’s managed care contracts that it has negotiated with a number of HMOs and PPOs and the information contained within them are proprietary in nature, and as such should be defined as business trade secrets pursuant to section 688.002(4)(a) of Florida Statutes. Since it was Petitioner Virtual Imaging’s position that its managed care contracts and their contents are trade secrets, Petitioner also argued that the trade secret privilege provided by section 90.506 of the Florida Statutes protects it or anyone they may be in association with from having to disclose the contracts or their contents pursuant to discovery requests.

In addition, Petitioner Virtual Imaging also argued that the lower court was required to perform an in camera inspection to determine: 1) whether the requested HMO and PPO managed care contracts and/or the information contained within them should be classified as trade secrets under section 688.002(4)(a); and, 2) whether the trade secret privilege provided by section 90.506 protects its refusal to disclose and/or prevents other individuals from disclosing the HMO and PPO contracts and/or the information contained within them.³

Section 688.002(4)(a)(b)⁴ of the Florida Statutes (2014) defines a trade secret as “ . . . information, including a formula, pattern, compilation, program, device, method, technique, or process that: (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy”.

After reviewing the language of section 688.002(4)(a), this Court finds that Petitioner’s arguments have merit. Petitioner Virtual Imaging’s managed care contracts which it entered into with a number of HMOs and PPOs as well as the information contained within them can be defined as a trade secret(s) given the fact that Petitioner’s negotiated contract(s) contains information from which Petitioner derives both actual and potential economic value in a manner possibly not generally known by other individuals. Furthermore, knowledge of the terms of the contract could allow other individuals to obtain economic value from the disclosure of the information without having to go through the negotiating process, thus reaping the benefits of Petitioner Virtual Imagining’s economic bargain without having to make any pecuniary sacrifice.

This Appellate Court is also aware that a number of other Florida Courts have determined that information involving rates of reimbursement pursuant to managed care contracts is sensitive in nature and should be considered business trade secrets. The Second District Court in Laser Spine Inst. v. Makanast, determined that documents pertaining to billing and collection practices can involve trade secrets. 69 So. 3d 1045, 1046 (Fla. 2d DCA 2011) [36 Fla. L. Weekly D2077b]. In Columbia Hospital (Palm Beaches) Limited Partnership v. Hasson, the Fourth District Court accepted and acknowledged the fact that the amount a hospital charges different categories of patients for medical treatment is confidential, thus information regarding the method of charging is considered a trade secret. 33 So. 3d 148, 150-151 (Fla. 4th DCA 2010) [35 Fla. L. Weekly D1067a]. The First District Court of Appeal in Holmes Regional Medical Center v. ACHA, reached the conclusion that the managed care contracts and the information contained within them should be considered business trade secrets, even though it would not apply the trade secret privilege because the expert witness disclosed the protected information during a deposition. See generally, 731 So. 2d 51 (Fla. 1st DCA 1999) [24 Fla. L. Weekly D810a]. This Appellate Court finds that both existing statutory and case law support Petitioner Virtual Imaging’s claims that its managed care contracts and the information contained within them are proprietary in nature and can be defined as (business) trade secrets pursuant to the language of section 688.002(4)(a) of the Florida Statutes, and as such, would be entitled to protection pursuant to section 90.506 of the Florida Statute.

Section 90.506⁵ of the Florida Statutes (2014) states in part that “[A] person has a privilege to refuse to disclose, and to prevent other persons from disclosing, a trade secret owned by that person if the allowance of the privilege will not conceal fraud or otherwise work injustice”. This Appellate Court notes that the statutory language of section 90.506 expressly provides a trade secret discovery privilege. Therefore, any person or entity that can comply with the requirements of section 90.506 has access to the trade secret privilege and can avail itself of the privilege as a defense when refusing to disclose information pursuant to a discovery request, or in the alternative, prevent other persons from disclosing its trade secret(s) pursuant to a discovery request. Id.

As mentioned above, this Appellate Court has taken the position that Petitioner Virtual Imaging’s contracts and/or the information contained within them is proprietary information, and thus can be considered trade secrets as defined under section 688.002. Therefore, it follows that the statutory language in section 90.506 proves that Petitioner Virtual Imagining can be entitled to the protection provided by the trade secret privilege, and thus, can provide Petitioner with a legitimate defense against compliance with Interrogatory 3. Consequently, this Appellate Court finds that Petitioner Virtual Imaging’s claim of entitlement to its use of the trade secret privilege under section 90.506 has merit.

Petitioner further contends that it raised its trade secret definition arguments and its entitlement to the trade secret privilege at the hearing below in an effort to protect itself from having to provide the information required by Interrogatory 3. However, the lower court did not conduct an in camera inspection to determine whether its managed care contracts or the information contained within them, should be defined as trade secrets pursuant to section 688.002(4)(a)(b) , and thus protected by the trade secret privilege provided by section 90.506. Case law states that “[W]hen a party asserts the need for protection against disclosure of a trade secret, the court must first determine whether, in fact, the disputed information is a trade secret [which] usually requires the court to conduct an in camera review.” GulfCoast Surgery Center, Inc. v. Fisher, 107 So. 3d 493, 495 (Fla. 2nd DCA 2013) [38 Fla. L. Weekly D341a]; Salick Health Care, Inc. v. Jerome J. Spunberg et. al., 722 So. 2d 944, 946 (Fla. 4th DCA 1998) [24 Fla. L. Weekly D113a]; Rare Coin-it, Inc. v. I.J.E., Inc., 625 So. 2d 1277, 1278-1279 (Fla. 3d DCA 1993); Virtual Imagining Service, Inc. a/a/o Mayra Valdez De La Rosa v. United Automobile Insurance Company, 22 Fla. L. Weekly Supp. 429a, *2 (Fla. 11th Cir. Ct. Oct. 3, 2014) ; Virtual Imagining Services, Inc. a/a/o Raul Figuerora v. United Automobile Insurance Company, 22 Fla. L. Weekly Supp. 421a, *2 (Fla. 11th Cir. Ct. Sept. 9, 2014) Virtual Imaging Services, Inc. a/a/o Victor Alvarez v. United Automobile Insurance Company, 22 Fla. L. Weekly Supp. 184b, *2 (Fla. 11th Cir. Ct. Sept. 9, 2014).

Respondent United Auto argues that there was no need for the lower court to conduct an in camera inspection in this instance because it both accepted and acknowledged Petitioner’s trade secret definition arguments and access to the trade secret privilege. In doing so, the lower court tailored the court order accordingly as required by section 90.506 of the Florida Statute — “When the court directs disclosure, it shall take the protective measures that the interests of the holder of the privilege, the interests of the parties, and the furtherance of justice require.” This Court finds that the problem with Respondent’s contentions are that review of the order issued below does not clearly and expressly indicate that the lower court actually conducted an analysis, and in doing so, made a definitive decision regarding Petitioner Virtual Imagining’s trade secret and trade privilege defense claims.

The Third District Court of Appeal explained in Sheridan Healthcorp et. al. that “[W]hen the trade secret privilege is asserted as the basis for resisting production, the trial court must determine whether the requested production constitutes a trade secret. ” 770 So. 2d at 222, relying on Rare Coin-it, Inc. v. IJE., Inc., 625 So.2d 1277, 1278 (Fla. 3d DCA 1993); see Cabrera, 112 So. 3d at 734 (on remand the court is instructed to make a determination as to what documents, if any, constitute trade secrets). The district court in Sheridan further stated that “[I]f production is then ordered, the court must set forth its findings”. Sheridan Healthcorp et. al., 770 So. 2d at 222, again relying on Rare Coin-it, Inc., 625 So.2d at 1278; see Cabrera, 112 So. 3d at 734; Virtual Imagining Service, Inc. a/a/o Mayra Valdez De La Rosa v. United Automobile Insurance Company, 22 Fla. L. Weekly Supp. 429a, at *2; Virtual Imaging Services, Inc. a/a/o Victor Alvarez v. United Automobile Insurance Company, 22 Fla. L. Weekly Supp. 184b at *3.

This Appellate Court finds that in this instance, the lower court did not specifically state in the order the decision it reached regarding the status of the arguments tendered by Petitioner involving the classification of its contracts as trade secrets and its entitlement to the trade secret privilege defense. While the lower court in this instance may have “implicitly concluded that the trade secret [definition and] privilege applied, an implicit finding does not satisfy the legal criteria for a trade secret analysis. Virtual Imaging Services, Inc. a/a/o Victor Alvarez v. United Automobile Insurance Company, 22 Fla. L. Weekly Supp. 184b at *3. This Court acknowledges that the non-final order rendered below was crafted in a manner that directed Petitioner Virtual Imagining not to disclose the identities of the affected insurance companies and uninsured individuals. However, the lower court did not make a clear finding whether information regarding the reimbursement amounts paid by certain insurance companies and uninsured individuals as well as their identities should be considered trade secrets. See Virtual Imaging Services, Inc. a/a/o Victor Alvarez v. United Automobile Insurance Company, 22 Fla. L. Weekly Supp. 184b, at *2.

Therefore, this Appellate Court finds that the lower court’s failure to conduct an in camera inspection to determine: 1) whether Petitioner Virtual Imagining’s managed care contracts and any information contained within them should be classified as trade secrets pursuant to section 688.002(4) of the Florida Statutes; 2) whether the reimbursement amounts paid pursuant to the contracts and by uninsured individuals in this instance should be classified as trade secrets pursuant to section 688.002(4) of the Florida Statutes; 3) whether the identities of the affected insurance companies and uninsured individuals should be classified as trade secrets pursuant to section 688.002(4) of the Florida Statutes; and, 4) whether the trade secret privilege provided by section 90.506 of the Florida Statutes should apply to protect Petitioner from having to reveal the requested information pursuant to Interrogatory 3, was a failure to follow the essential requirements of the law. This failure to follow the essential requirements of the law could result in a material injury that would affect the Petitioner throughout the remainder of the proceedings below, effectively leaving Virtual Imagining without an adequate remedy on appeal. Langston, 655 So. 2d at 94.

Accordingly, this Appellate Court GRANTS the Petition for Writ of Certiorari, thus QUASHING the lower court order directing Petitioner Virtual Imaging to provide information pursuant to Interrogatory 3 without benefit of an in camera inspection.

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¹The hearing was convened on May 12, 2014.

²Petition Brief, p. 6.

³Id.

⁴(Uniform Trade Secrets Act: Definitions; Trade Secret).

⁵(Privilege with respect to trade secrets).

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