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….

Comments

[Longtobefree]

Wait, what?
Going to court over an arbitration award?
WTF?
I thought 'no courts allowed' was the only reason for arbitration.

[David Nieporent]

Arbitrators are private individuals; they can issue opinions but cannot force people to do anything. A court is the only body that can enforce the arbitrator's opinion.

[Mr. Bumble]

Let Mark Steyn know.

[neurodoc]

For those of us who don't know what you are alluding to with regard to Mark Steyn, how about letting us know?

[The Margrave of Azilia]

Under that way of thinking, the legislature with its criminal statutes, can't force people to do anything; it's the courts which enforce these decrees!

[neurodoc]

You are disputing what brother Nieporent said? How do you imagine that according to his "way of thinking," courts aren't necessary to effect arbitrator decisions if losing parties aren't going to comply with them?: legislatures need only enact criminal statues and courts don't have to involve themselves, those statutes will be self-enforcing; etc,?

What do I misunderstand here?

[The Margrave of Azilia]

I'm suggesting that both legislatures and arbitrators can issue binding decrees. It's up to the courts to enforce that binding-ness.

[Magister]

It's an entire system of enforcement; laws passed by the legislature are binding, but the process of enforcement often goes through courts making rulings on specific cases and various elements of government carrying out those rulings (locking up convicted criminals, evicting people, etc.).

The "no courts" aspect of arbitration is more that courts don't usually overrule the arbitration outcome, in the same way that appellate courts don't overrule findings of fact unless they are egregiously wrong. From Steelworkers v Enterprise Car, this sounds right to me, but I'm not a lawyer:

The refusal of courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements. The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards.

[David Nieporent]

.

I’m suggesting that both legislatures and arbitrators can issue binding decrees. It’s up to the courts to enforce that binding-ness.

That attempt at pedantry fails on its own merits. Courts do not actually enforce that bindingness. They also only issue decrees. It’s law enforcement that actually does the enforcing. (That’s right there in its name!)

The distinction between the court and the arbitrator is that the arbitrator's decision literally isn't enforceable. One can't go to the police and say, "The arbitrator said that I win and that my opponent has to do X; make him do it." One needs a court to confirm the arbitrator's decision and issue an order; only then can one get the police to act.

[The Margrave of Azilia]

Same for a renter violating a lease.

[neurodoc]

So you weren't disputing David Nieporent (above), you were just giving voice to a tautology. That wasn't clear before.

[neurodoc]

As a federal retiree insured by a Federal Employee Health Benefits Plan insurer (no Medicare B, C, or D on account of IRMAA) whose prescription coverage all comes through Pharmacy Benefits Manager (PMB) Caremark and its retail pharmacy subsidiary CVS, with said insurance company having tried to "slam" me into Silver Scripts telling me and other subscribers it will be for the best (it won't be in my case, that is it would prove thousands of dollars more expensive for no greater benefits), I am glad the court is telling the Petitioner in effect to cut the crap and let the public know how their oligopolistic business, or at least a little part of it works to their disadvantage. There is much in the US healthcare "system" that that threatens to fail economically, and as the late economist Herb Stein, father of Ben Stein, wisely said, "That which can't keep going on, will stop!" One of these days I believe our health care system will falter or fail economically like the American auto industry did before the government bailed it out.

More scrutiny of the "system" and all of its components from Big Pharma to PBM to players like McKinsey and others who helped foster the Oxycontin disaster to group medical practices of various sorts (e.g., anesthesiology ones) to voracious hospital chains to nursing homes...to all of it, is very much warranted before we have catastrophic failures of all sorts (e.g., Medicare). Other countries manage to deliver quality healthcare far more cheaply than we do, and I say that as very much a partisan of American medicine and a 50+ year veteran of it. (No, I am no socialist. And I demand and expect the best care for myself and family, and complain about dishonest billing practices.)

More transparency and scrutiny of this voracious "industry" (nobody referred to it as an "industry" when I started out!) apres le deluge.

[neurodoc]

the edit function doesn't seem to be working for me. I meant to called out the involvement of "private equity" as buyers of physician practices, nursing homes, and other component parts, running off or corrupting traditional non-profit participants in the marketplace.

Mark my words, this stuff doesn't bode well for the healthcare economy of this country.

[Stephen Lathrop]

+1