Opinion Number

Dear Mr. Karns:

This office is in receipt of you recent opinion request in which you present the following issues for our review.

1. Do the provisions of LSA R.S. 49:991 et seq. and the Administrative Procedure Act allow the Division of Administrative Law to conduct confidential proceedings concerning examination reports of the Louisiana Department of Insurance, and to keep all filings, pleadings, and other documents filed into the record in accordance with such proceedings confidential?

2. If the answer to question number 1 is yes, under what conditions and procedures must the Division of Administrative Law operate in order to keep such proceeding and filings confidential? It appears that there will be a need for the closed hearings, a need for certain files to be "flagged" so that the confidential nature of the proceedings and the filings will be protected, a need for separate storage of these proceedings under lock and key by the Division of Administrative Law so that there is no access to these files, no published docket as to these proceedings, etc.

3. Is the Louisiana Department of Insurance, and the employees thereof, in violation of the provisions of Title 22 if such employees allow confidential documents and confidential examination reports to be submitted to and stored by the Division of Administrative Law in conjunction with such confidential proceedings? Can the Division of Administrative Law be allowed to store these confidential documents, or should such documents remain under the sole control of the Department of Insurance?

Upon requesting further information from your department, it was determined that your request dealt with the confidential reports and hearings required under LSA-R.S. 22:1302.This statute provides, in pertinent part:

LSA-R.S. 22:1302, Examination Reports

H. The hearing provided for under Subsection E(2) or G of this Section shall be a confidential proceeding. At the conclusion of the hearing and in accordance with R.S. 22:1359, the commissioner shall enter an order adopting the examination report as filed or refiled, or with modification or corrections, and may order the company to take any action the commissioner considers necessary and appropriate to cure any violation of any law, regulation, or prior order of the commissioner.

I. (1) Upon the adoption of the examination report under either Subsection C(1), E(1), or H of this Section, the commissioner shall continue to hold the content of the examination report as private and confidential information for a period not to exceed thirty consecutive days, except to the extent provided in R.S. 22:1301(E) and Subsection B of this Section. Thereafter, the commissioner may open the report for public inspection so long as no court of competent jurisdiction has stayed its publication.

(2) Nothing contained in the Louisiana Insurance Code shall prevent, or be construed as prohibiting, the commissioner from disclosing the content of an examination report, preliminary examination report or results, or any matter relating thereto, to the insurance department of this or any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time, so long as such agency or office receiving the report or matters relating thereto agrees, in writing, to hold it confidential and in a manner consistent with this Part.

(3) If the commissioner determines that regulatory action is appropriate as a result of any examination, he may initiate any proceedings or actions as provided by law.

J. All working papers, recorded information, documents, and copies thereof produced by, obtained by, or disclosed to the commissioner, or any other person, in the course of an examination made under this Part, shall be given confidential treatment and are not subject to subpoena and may not be made public by the commissioner or any other person, except to the extent provided in R.S. 22:1301(E) and Subsection I of this Section. Any access may be granted to the National Association of Insurance Commissioners. The parties shall agree, in writing prior to receiving the information, to provide to it the same confidential treatment as required by this Section, unless the prior written consent of the company to which it pertains has been obtained. (Emphasis ours.)

This statute requires that all documents and information collected, and any hearings held in regards to, an examination report be kept confidential by the Commissioner and his employees. It further provides that such information is not subject to subpeona.

LSA-R.S. 49:950 et seq., also known as the Administrative Procedure Act (or APA), sets forth the requirements for state agencies, departments, boards and commissions to follow regarding hearings and adjudications held by that agency. However, there are some exceptions to this law. LSA-R.S. 49:956 provides:

LSA-R.S. 49:956, Rules of Evidence

(8)(a) Records and documents, in the possession of any agency or of any officer or employee thereof including any written conclusions drawn therefrom, which are deemed confidential and privileged shall not be made available for adjudication proceedings of that agency and shall not be subject to subpoena by any person or other state or federal agency.

(b) Such records or documents shall only include
any private contracts, geological and geophysical information and data, trade secrets and commercial or financial data, which are obtained by an agency through a voluntary agreement between the agency and any person, which said records and documents are designated as confidential and privileged by the parties when obtained, or records and documents which are specifically exempt from disclosure by statute.

(c) Any violation of this prohibition shall be a waiver of governmental immunity from suit for damage resulting from any such disclosure. (Emphasis ours.)

This section does not allow for the use of information deemed confidential and privileged in any adjudication proceedings. LSA-R.S.22:1302 clearly states that all information disclosed in the course of the examination shall be given confidential treatment and are not to be made public.

Since the APA specifically exempts confidential information from being introduced at a hearing and all information relevant to an examination report is confidential, the hearings held by the Department of Insurance regarding examination reports under LSA-R.S. 22:1302 are not subject to the Administrative Procedure Act or the provisions regarding the Division of Administrative Law. The statute clearly provides that such hearings are to be held before the commissioner or his duly authorized designee. The procedure outlined under the provisions of LSA-R.S. 22:1302 allows for the continued confidentiality of such documents and information within the Department of Insurance.

I trust this sufficiently addresses your concerns. If our office may be of further assistance, please do not hesitate to contact us.

Yours very truly,

RICHARD P. IEYOUB ATTORNEY GENERAL

By: _______________________________________________ CHARLES H. BRAUD, JR. Assistant Attorney General

RPI:CHB:glb

Dear Commissioner Travis:

You have requested this office to issue an advisory opinion on numerous issues regarding the Louisiana Administrative Procedure Act and the Office of Financial Institutions.

The request in particular asks whether the Administrative Procedure Act (APA) exempts certain information obtained by the Office of Financial Institutions (OFI) from use in its adjudications and proceedings. This involves a study of whether La.R.S. 49:991 et seq. and the APA allow the Division of Administrative Law (DAL) to conduct confidential proceedings concerning examination reports and licensing issues of the Louisiana Office of Financial Institutions and to keep confidential all filings, pleadings, and other documents filed into the record in accordance with such proceedings.

Your opinion request guides us to the Louisiana Banking Law (LBL), contained in Title 6 of the Revised Statutes. La.R.S. 6:103 (A) states that, "except as provided in Subsections B and H, all records of the office of financial institutions shall be kept strictly confidential within the office, and such records and reports shall not be subject to subpoena or other legal process except as provided for in Subsection H." This language is substantially similar to the language researched in a previous opinion request regarding the Department of Insurance pertaining to information collected during the preparation of examination reports. R.S. 22:1302 more specifically delineates that certain records are to be kept confidential and are not subject to subpoena ("all working papers, recorded information, documents, and copies thereof . . . in the course of an examination"). See La. Atty. Gen. Op. No. 99-93, enclosed herein. The opinion concludes that the Department of Insurance hearings pertaining to examination reports shall be kept confidential and shall not be subject to subpoena, similar to the Louisiana banking statute.

The Louisiana Administrative Procedure Act (APA) sets forth the requirements for state agencies, departments, boards, and commissions to follow regarding hearings and adjudications held by that agency. There is no dispute that the Office of Financial Institutions falls under the purview of the APA. Delta Bank Trust Co. v. Lassiter, 383 So.2d 330
(La. 1980). However, La.R.S. 49:956 (8)(a) of the APA states that "records and documents . . . which are deemed confidential and privileged shall not be made available for adjudication proceedings of that agency and shall not be subject to subpoena by any person or other state or federal agency." Section 956(8)(b) further states that "such records or documents shall only include . . . records and documents which are specifically exempt from disclosure by statute." This section, read along with the Louisiana Banking Law, does not allow for the use of information deemed confidential and privileged in APA adjudications.

Therefore, we are of the opinion that certain information which is deemed confidential by the Louisiana Banking Law is to be kept confidential and not subject to subpoena for use in APA adjudications.

This leads to the question of whether the Louisiana APA allows the Division of Administrative Law to conduct hearings involving issues and evidence deemed confidential by the Louisiana Banking Law. La.R.S. 6:121.1
specifically grants the commissioner of the OFI the discretion to:

Conduct such investigations and hearings as he deems necessary to ascertain possible violations of this Title. . . . Such hearings shall be private unless the commissioner, in his sole discretion and after considering the views of the person afforded the hearing, determines that a public hearing is necessary to protect the public interest. If the commissioner determines that a public hearing is necessary to protect the public interest, the confidentiality provisions of this Title and the Administrative Procedure Act, R.S. 49:950, et seq., shall not apply.

R.S. 49:992 (G) allows for the above exemption from the review of the Division of Administrative Law, stating "any board or commission authorized by law to conduct hearings may continue to hold such hearings" outside of the scope of the APA or the DAL. This provision, when read together with aforementioned sections of law, gives the commissioner the power to hold such hearings privately so as to shield statutorily protected information. However, if necessary to protect the public interest, the commissioner may declare a hearing public, which would exempt from application the confidentiality provisions of the LBL and the APA.

As to the other questions in your opinion request, the procedures and conditions to be used in handling of these confidential records of the Office of Financial Institutions are outlined in La.R.S. 6:103. These guidelines are to be used because the APA does not control records of the OFI, due to the fact that they are specifically exempted by statute. Any person or employee who allows records deemed confidential by La.R.S. 6:103
would be violating its provisions.

I trust this sufficiently addresses your concerns. If our office may be of further assistance, please feel free to contact us.

Yours very truly, CHARLES C. FOTI, JR. ATTORNEY GENERAL

BY: ____________________ CHARLES H. BRAUD, JR. ASSISTANT ATTORNEY GENERAL

OPINION NUMBER 99-93

May 13, 1999

54 — Insurance LSA-R.S. 22:1302
LSA-R.S. 49:956

The administrative hearings provided under LSA-R.S. 22:1302 are to be held before the Commissioner of Insurance or his duly authorized employee and are not to be held before an Administrative Law Judge.

Mr. Barry W. Karns Deputy General Counsel Department of Insurance PO Box 94214 Baton Rouge, Louisiana 70804-9214