No Sealing in Case Seeking to Enforce $17M Arbitration Award Related to Medicare Prescription Drug Benefits

From Judge Naomi Reice Buchwald's opinion Thursday in Caremark, L.L.C. v. N.Y. Cancer & Blood Specialists, Inc.:

Petitioners Caremark, L.L.C., … SilverScript Insurance Company, and Aetna, Inc. seek to file their petition to vacate an arbitration award under seal; or, in the alternative, partially under seal; or, in the second alternative, with some redactions….

Respondent New York Cancer & Blood Specialists ("respondent" or "NYCBS") is a community cancer center with locations in New York City and Long Island. Caremark is a Pharmacy Benefit Manager ("PBM"), which creates and manages pharmacy networks and prescription drug benefits on behalf of Medicare Part D plan sponsors…. NYCBS commenced arbitration proceedings against petitioners to recover fees that petitioners allegedly improperly imposed on NYCBS…. [T]he arbitration panel ruled in favor of NYCBS on several claims and awarded it approximately $17,000,000 in damages as well as attorneys' fees and interest…. [P]etitioners filed a petition to vacate the arbitration award….

[T]here is a "general presumption in favor of public access to judicial documents." … [T]he documents petitioners filed in support of their motion to vacate are "judicial documents" because they are undoubtedly "relevant to the performance of the judicial function and useful in the judicial process." … [T]hese judicial documents are entitled to a strong presumption of access given that they "directly affect" the Court's adjudication of the petition to vacate…. [And] against this strong presumption of public access, petitioners have failed to "articulate a compelling countervailing rationale for filing the documents under seal."

To overcome the presumption of access, petitioners first argue that the Court should seal the case, or at least large swaths of the record, pursuant to the confidentiality clause in the parties' arbitration agreement. However, "[c]ourts in this District have long held that bargained-for confidentiality does not overcome the presumption of access to judicial documents." …

Petitioners next argue that they should be permitted to seal or redact certain documents that purportedly contain trade secrets. Petitioners have not shown, however, that any documents in the record contain trade secrets. A trade secret is any "formula, pattern, device, or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." For one thing, petitioners fail to articulate with any specificity how disclosure would cause "a clearly defined and very serious injury" to their competitive position. Rather, petitioners rely on blanket assertions such as that "[t]he competitive standing of [petitioners] will be severely prejudiced if this information enters the public sphere" because "Caremark's competitors can use [this information] to their advantage." Such "vague and conclusory allegations will not suffice" to show proof of competitive harm.

Additionally, the "most important consideration in determining whether information is a trade secret is whether the information was secret." Much of the information that petitioners seek to seal or redact, however, is already in the public record. Indeed, in another case involving petitioners, the court refused to seal similar information for the same reason. Moreover, many of the documents that petitioners want redacted contain information that is up to seven years old. Petitioners have not shown that disclosure of such "outdated and stale" information "would result in any competitive harm." …

Finally, petitioners' attempts to downplay the public interest in this case are unpersuasive. The underlying dispute involves petitioners' use of Medicare Part D monies. Courts have recognized the public's "right of access to court documents and its interest in knowing how its tax monies are being spent in a matter of public importance." Furthermore, the specific type of fees that are at the heart of this dispute have been the subject of several government hearings and investigations. Therefore, there can be no question that the public has a strong interest in the documents filed in this case….