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Inc. v. Steel of West Virginia, Inc.

Supreme Court of West Virginia

January 31, 2018

ST. MARY'S MEDICAL CENTER, INC., and PALLOTTINE HEALTH SERVICES, INC., Petitioners
v.
STEEL OF WEST VIRGINIA, INC., and PATRICK MORRISEY, ATTORNEY GENERAL, Respondents and PATRICK MORRISEY, ATTORNEY GENERAL, Petitioner
v.
STEEL OF WEST VIRGINIA, INC., Respondent

          Submitted: January 23, 2018

         Appeals from the Circuit Court of Kanawha County The Honorable Tod J. Kaufman, Judge Civil Action No. 15-C-2214

          James W. Thomas, Esq. Rachel D. Ludwig, Esq. Jackson Kelly PLLC Charleston, West Virginia Counsel for Petitioners St. Mary's Medical Center, Inc., and Pallottine Health Services, Inc.

          Carte P. Goodwin, Esq. Frost Brown Todd LLC Charleston, West Virginia Counsel for Respondent Steel of West Virginia, Inc.

          Patrick Morrisey, Esq. Attorney General Elbert Lin, Esq. Solicitor General Edward M. Wenger, Esq. General Counsel Katherine A. Schultz, Esq. Steven A. Travis, Esq. Office of the Attorney General Charleston, West Virginia Counsel for the State of West Virginia.

         SYLLABUS

         1.The West Virginia Freedom of Information Act, W.Va. Code, 29B-1-4(a)(5) [2015], which excepts from public accessibility "information specifically exempted from disclosure by statute, " incorporates the investigative exemption from disclosure of information set forth in the West Virginia Antitrust Act, W.Va. Code, 47-18-7(d) [1978]. The investigative exemption is mandatory in specifying that the Attorney General "shall not" make public the name or identity of a person whose acts or conduct he investigates or "the facts" disclosed in the investigation.

         2."Where the language of a statute is free from ambiguity, its plain meaning is to be accepted and applied without resort to interpretation." Syl. pt. 2, Crockett v. Andrews, 153 W.Va. 714, 172 S.E.2d 384 (1970).

         3. "The presumption is that a statute is intended to operate prospectively, and not retrospectively, unless it appears, by clear, strong and imperative words or by necessary implication, that the Legislature intended to give the statute retroactive force and effect." Syl. pt. 4, Taylor v. State Comp. Comm'n., 140 W.Va. 572, 86 S.E.2d 114 (1955).

          OPINION

          KETCHUM JUSTICE.

         West Virginia Attorney General Patrick Morrisey ("Attorney General") appeals from two orders of the Circuit Court of Kanawha County entered on October 28, 2016, unsealing an index of 349 documents and directing the Attorney General to produce 89 of those documents. The orders were entered in an action brought by Steel of West Virginia, Inc. ("Steel"), to enforce its request for production of material under this State's Freedom of Information Act ("FOIA"). The Attorney General received the 349 documents in connection with his investigative powers under the West Virginia Antitrust Act regarding the proposed merger of St. Mary's Medical Center, Inc. ("St. Mary's"), and Cabell Huntington Hospital, Inc. ("Cabell Huntington").

         Steel opposed the merger before the West Virginia Health Care Authority. The Authority's approval of the merger through its award of a certificate of need was the subject of a separate appeal before this Court. The issues in that appeal, however, were settled and resolved, and Steel's appeal from the Authority's decision was dismissed as moot. A motion to dismiss the current FOIA matter in conjunction with the dismissal of Steel's appeal on the merits of the Authority's decision was refused by this Court. See syl. pt. 1, State ex rel. M.C.H. v. Kinder, 173 W.Va. 387, 317 S.E.2d 150 (1984) (A case not rendered moot if the issues "are capable of repetition and yet will evade review.").

         In the current matter, limited to Steel's FOIA request, both the Attorney General and St. Mary's contend that the index of the 349 documents and the 89 documents to be produced are exempt from disclosure.[1] Thus, the Attorney General's appeal has been consolidated with two related appeals filed by St. Mary's. In one appeal, St. Mary's challenges the denial of its motion to intervene in the underlying FOIA action. In the other, St. Mary's challenges the unsealing of the index and the production of the 89 documents.[2]

         This Court concludes that the circuit court committed error in ordering the production of the index and the 89 documents. The circuit court ordered the production of the index as a sanction against the Attorney General for sharing part of the index with the Federal Trade Commission. We find the sanction inappropriate. We further find that the 89 documents are not subject to production because of the statutory exemption raised by the Attorney General. That exemption is set forth in W.Va. Code, 29B-1-4 [2015], of the Freedom of Information Act which incorporates, in subsection (a)(5), the confidentiality provisions of the Antitrust Act. Finally, inasmuch as the arguments of St. Mary's largely mirror those of the Attorney General, we find the two appeals filed by St. Mary's to be moot.

         The orders entered by the circuit court on October 28, 2016, are reversed, and this action is remanded to the circuit court for the entry of an order dismissing Steel's FOIA action.

         I. Factual Background

         St. Mary's is a general, acute care hospital in Huntington, West Virginia. Its parent corporation is Pallottine Health Services, Inc. In 2014, Pallottine decided to sell St. Mary's, and, following a competitive bidding process, an agreement was reached in November 2014 whereby St. Mary's would merge with Cabell Huntington, another general, acute care hospital in the Huntington area. Support for the merger in the local community was based on the likelihood that the merger would save jobs, allow more portability of health care providers and result in better patient care. Steel opposed the merger, asserting that healthcare costs will increase if the two hospitals do not remain in competition.

         Various regulatory reviews and approvals were required before the merger could take place. Among the requirements was the opening in 2014 of antitrust investigations by the Federal Trade Commission and the West Virginia Attorney General. The Attorney General's investigative authority regarding the merger is found in the West Virginia Antitrust Act, W.Va. Code, 47-18-1 [1978], et seq.

         Documents concerning the business operations and finances of the two hospitals, and the bidding process, were sent by St. Mary's and Cabell Huntington to the Federal Trade Commission and the Attorney General. The Federal Trade Commission transferred a number of the documents it received to the Attorney General. On November 25, 2014, a confidentiality agreement was executed by St. Mary's, Cabell Huntington and the Attorney General which stated that the documents received by the Attorney General would not be subject to disclosure and would only be used in the investigation "for any legal challenge of the Transaction [merger] under federal or state antitrust laws, or for other law enforcement purposes."

         On July 31, 2015, the Attorney General filed an Assurance of Voluntary Compliance in the Office of the Clerk of Cabell County. An amended Assurance of Voluntary Compliance was filed on November 4, 2015.[3] In both documents, the Attorney General concluded that the merger was in the best interests of the State of West Virginia. However, the Assurances also secured commitments from St. Mary's and Cabell Huntington to abide by antitrust laws in future operations.

         Specifically, St. Mary's and Cabell Huntington were required under the Assurances of Voluntary Compliance to observe a number of conditions for a period of years following the merger's consummation. The November 4, 2015, amended Assurance extended the period of years from seven to ten years. Both Assurances stated that neither St. Mary's nor Cabell Huntington would oppose the award of a certificate of need to any health care provider seeking to provide services "similar to or competitive with" the services provided by St. Mary's or Cabell Huntington in the market area. The amended Assurance clarified that "services" in that context included both outpatient and inpatient services. Moreover, under the amended Assurance, St. Mary's and Cabell Huntington were required to submit compliance reports to the Attorney General until the amended Assurance expired. St. Mary's and Cabell Huntington were also required to submit additional information or documentation upon request of the Attorney General "at any time." Should such a request be made, the request would be deemed "made in the investigation of a potential violation of state and/or federal antitrust laws and as such both the request and any response thereto, including documents or things produced, are subject to confidentiality provisions contained in state and/or federal law."

         In September 2015, Steel sent the Attorney General a request under the West Virginia Freedom of Information Act, W.Va. Code, 29B-1-1 [1977], et seq., "to inspect or obtain copies of all public records and incoming and outgoing correspondence relating to the proposed merger of Cabell Huntington Hospital and St. Mary's Medical Center."

         In response, the Attorney General provided Steel with copies of documents considered subject to disclosure[4] but determined that the remaining documents were statutorily exempt under subsection (a)(5) of W.Va. Code, 29B-1-4 [2015]. Subsection (a)(5) provides in relevant part:

(a) There is a presumption of public accessibility to all public records, subject only to the following categories of information which are specifically exempt from disclosure under the provisions of this article:
(5) Information specifically exempted from disclosure by statute[.]

         The parties do not dispute that subsection (a)(5), concerning "statutory exemptions, " incorporates the "investigative exemption" of the West Virginia Antitrust Act, W.Va. Code, 47-18-7(d) [1978]. W.Va. Code, 47-18-7(d) [1978], states: "The attorney general shall not make public the name or identity of a person whose acts or conduct he investigates pursuant to this section or the facts disclosed in the investigation, but this subsection does not apply to disclosures in actions or enforcement proceedings pursuant to this article."

         II. Procedural Background

         In December 2015, Steel filed a complaint in the Circuit Court of Kanawha County to enjoin the Attorney General from withholding the documents claimed to be exempt from disclosure.[5] Steel alleged that the Attorney General had no basis for the exemptions and that, in any event, the Attorney General should submit a "Vaughn Index" of the withheld documents and an affidavit providing a detailed explanation why each document is exempt and why disclosure of the document would be harmful.[6] St. Mary's, Pallottine and Cabell Huntington were not named parties in the action.

         The Attorney General asserted in the answer that the documents sought were collected in the course of an antitrust investigation. Therefore, production of the documents or providing a Vaughn Index would be precluded by the confidentiality provisions of the Freedom of Information Act and the Antitrust Act.

         In a parallel proceeding, Cabell Huntington filed an application with the West Virginia Health Care Authority for a certificate of need regarding the merger.[7] Steel, granted "affected person" status by the Authority, was permitted to participate in the proceeding and oppose the merger.[8] On March 16, 2016, the Health Care Authority granted certificate of need approval to Cabell Huntington to complete the merger. That decision was affirmed by the Office of Judges. In April 2017, the Office of Judges's approval of the certificate of need was affirmed by the Circuit Court of Kanawha County. Steel's ...


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