Slip Copy
1999 WL 314796 (Tex.App.-Austin)

Alliance of American Insurers, et al., Appellees

NO. 03-97-00660-CV

Court of Appeals of Texas, Austin.

NO. 03-98-00208-CV

AND

David "Birny" Birnbaum; John Cornyn, Attorney General of Texas; and

Elton Bomer, Commissioner of Texas Department of Insurance, Appellants

National Association of Independent Insurers, et al., Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT NOS. 97- 09206 & 97-09206-A, HONORABLE PETER M. LOWRY, JUDGE PRESIDING AND HONORABLE PAUL R. DAVIS, JUDGE PRESIDING

John E. Powers, Justice

Before Justices Kidd, B.A. Smith and Powers *

Filed: May 20, 1999

In the first cause of a consolidated appeal, David "Birny" Birnbaum appeals from an order granting a temporary injunction on the application of several automobile insurance companies and trade associations ("appellees"). [FN1] In the second cause, Birnbaum, joined by Attorney General and Elton Bomer, [FN2] Commissioner of the Texas Department of Insurance (the "Department"), appeals from a summary judgment granting a permanent injunction as requested by appellees. Both the temporary injunction and the permanent injunction prohibit the Department from releasing information to Birnbaum in response to his open records request. We will reverse the summary judgment and dissolve the permanent injunction; we will modify the temporary injunction order, affirming it as modified.

FN1. State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company, and State Farm County Mutual Insurance Company of Texas are designated as "other parties" in the first cause and as "appellees" in the second cause. All other insurance companies and trade associations designated as "appellees" in the first cause are also "appellees" in the second cause. These entities include National Association of Independent Insurers, Alliance of American Insurers, United Services Automobile Association, USAA Casualty Insurance Company, USAA County Mutual Insurance Company; Texas Farmers Insurance Company, American Fire and Casualty Company, Farmers Texas County Mutual Insurance Company, Mid-Century Insurance Company of Texas, Ohio Casualty Insurance Company, Ohio Security Insurance Company, and Western American Insurance Company. To simplify the text, we will refer to all insurers and trade associations involved in the present consolidated appeal as "appellees."

FN2. We shall refer collectively to the Attorney General and the Commissioner as "the State officials."

THE CONTROVERSY

Texas law requires that motor vehicle operators establish their financial responsibility. See Tex. Transp. Code Ann. § 601.051 (West 1999). Compliance typically involves the purchase of an automobile liability-insurance policy. See id. § 601.071-.088; Office of Pub. Ins. Counsel v. Texas Auto. Ins. Plan, 860 S.W.2d 231, 233 (Tex.App.--Austin 1993, writ denied). Insurers are prohibited to engage in unfair discrimination by refusing to insure, refusing to continue to insure, limiting the amount, extent, or kind of coverage available, or charging an individual a different rate for the same coverage because of the individual's age, gender, marital status, or geographic location. See Tex. Ins.Code Ann. art. 21.21-6, §§ 1, 3(b) (West Supp.1999) (emphasis added).

In order to allocate high-risk drivers among insurers, the 73d Legislature established the Texas Automobile Insurance Plan Association ("TAIPA"). See Tex. Ins.Code Ann. art. 21.81, § 2(a); see also Office of Pub. Ins. Counsel, 860 S.W.2d at 233 n.2. TAIPA is a nonprofit corporation with members, all of which are authorized automobile insurers. See Tex. Ins.Code Ann. art. 21.81, § 2(a).

The governing committee of TAIPA is responsible for making, amending, and administering a "plan of operation," subject to the approval of the Commissioner of Insurance (the "Commissioner"). See id. § 3(a), (c). The purpose of the plan is to provide automobile liability-insurance coverage for drivers who are unable to obtain such coverage in the open or voluntary market. See id. § 1(4). The plan adopted by TAIPA contains an incentive program to encourage TAIPA members to write insurance on a voluntary basis for consumers in "underserved" [FN3] geographic areas, reducing thereby the need for TAIPA to assign high-risk drivers to specific insurers. [FN4] See id. § 3(e). An insurer who voluntarily sells automobile insurance in underserved areas is eligible for credits against such insurer's quota of TAIPA assignments. The TAIPA plan of operation establishes the method for calculating basic quotas and credit-adjusted quotas. [FN5] See 20 Tex. Reg. 334 (1995).

FN3. Under the authority and requirements of Insurance Code article 21.81, section 3(e), the Department has determined and designated by rule underserved geographic areas. See 28 Tex. Admin. Code Ann. § 5.206(a)- (e) (1998). Specific ZIP Codes are designated "underserved" based on "the availability of insurance, the number of uninsured drivers, the number of drivers insured through [TAIPA], and any other relevant factor." Tex. Ins.Code Ann. art. 21.81, § 3(e) (West Supp.1999). The formula for analyzing availability is "the share of average vehicles on policies in force in assigned risk and non-standard markets as a percentage of total average vehicles on policies in force by ZIP Code." 28 Tex. Admin. Code § 5.206(g) (1998).

FN4. The system for compelling insurance carriers to provide liability coverage to high-risk drivers is known as the "assigned risk plan." TAIPA administers the assigned risk plan. See Office of Pub. Ins. Counsel v. Texas Auto. Ins. Plan, 860 S.W.2d at 233 (Tex.App.--Austin 1993, writ denied).

FN5. The administrative rule designating "underserved" ZIP Codes divides them into five categories. See 28 Tex. Admin. Code § 5.206(a)- (e) (1998). The TAIPA plan of operation specifies that the category number refers to the number of credits awarded an insurer for each eligible insured vehicle in the ZIP Code. For example, no credits are awarded for eligible insured vehicles in a Category 0 ZIP Code while four credits are awarded for an eligible insured vehicle in a Category 4 ZIP Code. Furthermore, only vehicles insured at rates at or below the TAIPA rate set by the Commissioner are eligible for both basic and quota credits. As stated in the Texas Register, "The premise is that consumers do not benefit from a voluntary writing at rates above the TAIPA rate, so credits should not be earned for writing at non-standard rates." 20 Tex. Reg. 334 (1995).

The Texas Private Passenger Automobile Statistical Plan ("Statistical Plan"), promulgated by the Department, requires the reporting of certain information necessary for the calculation of quotas and credits. Four reports are required to be submitted to the Department by all companies "writing direct private passenger automobile business in Texas." The four reports are: the Annual Aggregate Experience Report, Annual Reconciliation Report, Quarterly Market Report, and Quarterly Detailed Experience Report.

Birnbaum filed with the Department on October 29, 1996, an open-records request under the Texas Public Information Act seeking information in the Quarterly Market Reports for the first and second quarters of 1996. See Tex. Gov't Code Ann. § 552.021 (West 1994 & Supp.1999). The Quarterly Market Reports list by ZIP Code [FN6] information concerning written premiums, [FN7] policy and membership fees, number of vehicles on policies at the end of the previous quarter, number of vehicles on policies at the end of the current quarter, and changes in the number of vehicles insured [FN8] for bodily injury liability and collision coverages. According to Department rules, information related to "the number of average vehicles on policies in force by company by ZIP Code" shall be available upon request in order that TAIPA, insurers, and the public may "make the necessary credit calculations and allow all interested parties to monitor which ZIP Code may be underserved in the future." 28 Tex. Admin. Code § 5.206(h) (1998).

FN6. The Statistical Plan states, "For the Quarterly Market Report, the location of vehicles is defined as the garage address of the vehicle and not the mailing address of the insured" (emphasis in original).

FN7. The Statistical Plan defines "written premium" as "total gross premium excluding policy and membership fees and less return premium and premium on policies not taken" (emphasis in original).

FN8. A Quarterly Market Report must account for changes in the number of vehicles insured by listing four elements: vehicles added in the quarter, vehicles canceled or non-renewed at the insurer's initiative, vehicles canceled for non-payment of premium, and vehicles canceled at the insured's initiative.

Pursuant to Government Code section 552.301, the Department requested from the Attorney General a decision on whether the reports fell within any of the several exceptions to required disclosure. See Tex. Gov't Code Ann. §§ 552.301, .101-.123 (West 1994 & Supp.1999). The Attorney General decided initially that the reports of some of the companies were excepted from mandatory disclosure as either trade secrets or as commercial or financial information. See Tex. Att'y Gen. ORD-0301 (1997); see also Tex. Gov't Code Ann. § 552.110 (West 1994). The Department requested that the Attorney General reconsider his decision. The Attorney General held again that the requested information was excepted from disclosure, but because Birnbaum alleged that the Department had previously released similar information, the Attorney General instructed the Department to decide whether to disclose the reports voluntarily. See Tex. Gov't Code Ann. § 552.007 (West Supp.1999).

The Department decided to release the information and appellees sued to enjoin the disclosure. After a pre-trial hearing, the district court determined the reports were probably protected from mandatory public disclosure under exceptions in the Texas Public Information Act that pertain to trade secrets, confidential commercial or financial information, and information "contained in or relating to examination, operating, or condition reports prepared by or for an agency responsible for the regulation or supervision of financial institutions or securities, or both." See Tex. Gov't Code Ann. §§ 552.110, .112 (West 1994). Finding that appellees would sustain immediate and irreparable harm if the reports were released to the public, the district court enjoined the Department pendente lite from releasing the reports. Birnbaum appealed to this Court.

While Birnbaum's appeal from the temporary injunction was pending, the district court decided the merits of the case by ruling on appellees' motion for summary judgment. The district court determined the Quarterly Market Reports were excepted from mandatory public disclosure as information relating to the regulation of financial institutions or securities. See Tex. Gov't Code Ann. § 552.112(a). A partial summary judgment was granted on this basis alone and the Department was permanently enjoined from releasing the reports. Birnbaum's motion to sever the partial summary judgment and make it the subject of a separate action was granted. Birnbaum and the State officials then appealed from the summary judgment order.DISCUSSION AND HOLDINGS

Permanent Injunction

The trial court ruled summarily that the Quarterly Market Reports are excepted from mandatory disclosure, as a matter of law, pursuant to section 552.112 of the Texas Public Information Act, and enjoined their release to Birnbaum.

Section 552.112 provides an exception for "information contained in or relating to examination, operating or condition reports prepared by or for an agency responsible for the regulation or supervision of financial institutions or securities, or both." Tex. Gov't Code Ann. § 552.112. Appellants Birnbaum and the State officials contend the exception does not apply to the Quarterly Market Reports. Birnbaum argues that the reports cannot be "operating or condition reports" because they do not provide a complete picture of the financial status or solvency of the affected insurance companies. The State officials assert that there is at least a factual dispute, precluding summary judgment, over whether the Quarterly Market Reports are "operating or condition reports." In addition, Birnbaum disputes that the insurance companies are "financial institutions" within the meaning of the exception. [FN9] The State officials contend in addition that even if the Quarterly Market Reports come within section 552.112, the Department may nevertheless elect to release the information at its discretion.

FN9. The State officials do not contest that insurers are "financial institutions" for the purposes of section 552.112.