May 9, 2001


The staff of the Committee on Open Government is authorized to issue advisory opinions. The
ensuing staff advisory opinion is based solely upon the information presented in your
correspondence, unless otherwise indicated.


As you are aware, I have received your letter in which you asked that I "clarify and
reconsider" issues addressed in an opinion of September 23 sought by Mr. John L. McCarthy relating
to access to records maintained by the Workers' Compensation Board. The records at issue,
according to your letter, "consist of a computerized database containing the name[s] of all employers
in New York, the identity of their Workers' Compensation carrier, and the expiration date of the
Worker's Compensation policy." In that opinion, it was advised that the database could be withheld
under §87(2)(d) of the Freedom of Information Law on the ground that disclosure would cause
substantial injury to the competitive position of the State Insurance Fund ("the Fund").

You have sought guidance "as to whether the ‘substantial injury' could be averted by
redacting the identity of the Workers' Compensation carrier, and limiting the information disclosed
to the expiration dates of Workers' Compensation policies for employers." You contend that "[a]s
a result of such redaction, there would be no mention of the State Insurance Fund, or, for that matter,
of any identified carrier, and the information disclosed would not be proprietary." It is your view
that "the mere disclosure of expiration dates, without mention of the carrier, does not hurt the
competitive position of any carrier, and that there is therefore no reason for such information not to
be made available upon request." You added that the "State Insurance Fund's alleged injury is the
fact that, as a result of disclosure of the database, all insurance carriers will be able to compete on
an equal basis."

In an effort to learn more of the matter, I have contacted officials of both the Workers'
Compensation Board and the Fund, and the Executive Director of the Fund, Mr. Henry Neal Conolly,
has contended that disclosure would clearly cause substantial injury to the competitive position of
the Fund. Citing the Workers' Compensation Law, Mr. Conolly suggested that disclosure of the
information sought would "significantly undermine NYSIF's ability to perform its central mission
– to be the stabilizing force in the WC market by acting as the insurer of last resort and by fixing
premiums ‘at the lowest possible rates consistent with the maintenance of a solvent fund' [WCL

In describing the history and the role of the Fund, Mr. Conolly wrote that:

"Since every employer is required to purchase WC insurance, the
state created NYSIF to provide a guaranteed source of coverage.
Private carriers may reject presumed bad risks summarily and may
cancel a policy for any reason. As a result, NYSIF must write all
risks regardless of their past histories and may only cancel a policy or
refuse continued coverage for non-payment of premium.

"However, a state insurance fund limited to the residual market, with
the resulting high expenses of covering just the bad risks rejected by
the private carriers, would not be capable of offering coverage at
affordable prices. Similarly, since all employers must secure
coverage, private carriers would have a great deal of bargaining
leverage and would not have sufficient incentive to keep costs low if
they had the WC market to themselves.

"The solution, to those who designed the state's WC system, was to
charge the Fund with the responsibility of fixing premiums at the
lowest possible rates. Since NYSIF would be incapable of doing this
if it were restricted to the residual market, it was created to be an
active and aggressive competitor in the marketplace capable of
providing coverage to preferred risks as well as bad. As a full
participant in the WC market covering the full spectrum of risks,
NYSIF is able to fulfill its fundamental purpose - to stabilize the
market and to act as a moderating force on WC costs for all New
York employers...

"Anything that impairs NYSIF's ability to find and retain preferred
risks undermines NYSIF's capacity to fulfill its mission and
jeopardizes the stability of the WC system. This is the substantial
competitive harm that will result if NYSIF's list of policyholders is
disclosed to DataLister. The product sold by DataLister has one
overriding purpose - to give private carriers and insurance agents data
they can use to target their marketing efforts. And the companies
they will target are the preferred risks covered by NYSIF...

"By turning NYSIF's preferred risks into a target audience for
DataLister's customers, disclosures of the Funds customer list,
particularly the policy expiration dates, directly conflicts with state
public policy and undermines NYSIF's ability to fulfill its mission."

Based on the foregoing and the unique situation of the Fund, it appears that the expiration
date is the most significant aspect of the database in the context of marketing, and that disclosure
would not enable the Fund, in your words, "to compete on an equal basis" with other carriers. That
being so, I believe that disclosure of employers' policy expiration dates, even without the name of
the insurance carrier, would cause competitive harm to the Fund. Moreover, disclosure would likely
have the additional effect of raising the premiums of the employers who could least afford a higher
cost of doing business.

In the opinion addressed to Mr. McCarthy, reference was made to the decision rendered by
the Court of Appeals in Encore College Bookstores, Inc. v. Auxiliary Services Corporation [87
NY2d 410 (1995)] and the Court's reliance upon the construction of the provision analogous to
§87(2)(d) in the federal Freedom of Information Act in Worthington Compressors v. Costle [662 F2d
45 (DC Cir.)]. The Court determined that when "material is available from other sources at little or
no cost, its disclosure is unlikely to cause competitive damage to the submitting commercial
enterprise" (Encore, at 420). However, the Court then cited Worthington, in which it was found that:

"Because competition in business turns on the relative costs and
opportunities faced by members of the same industry, there is a
potential windfall for competitors to whom valuable information is
released under FOIA. If those competitors are charged only minimal
FOIA retrieval costs for the information, rather than the considerable
costs of private reproduction, they may be getting quite a bargain.
Such bargains could easily have competitive consequences not
contemplated as part of FOIA's principal aim of promoting openness
in government (id., 419-420)."

Although the information sought is available from the Workers' Compensation Board
following requests by company name on a per call basis, Mr. Conolly indicated that the Board
informed him that it receives approximately twenty-five (25) calls annually from persons seeking
to verify an employer's coverage. He referred to your client's claim that the information is public
and that the database, therefore, should be public and wrote that:

"It is disingenuous to suggest that this insignificant disclosure of
information to individuals seeking to protect themselves justifies the
public release of a database containing information on 1.6 million
employers to an entity that will use it to compete against the very
parties that submitted the data.

"In applying its test, the court in Worthington stated, ‘If private
reproduction of the information would be so expensive or arcane as
to be impracticable, disclosure of that information through the FOIA
conduit could damage the competitive position of the submitters, to
the advantage of FOIA requesters.' The fact that it would take 1.6
million individual phone calls to an office that handles 25 such calls
a year is precisely the type of expensive and impracticable
reproduction referred to by the court."

From my perspective, in consideration of the Fund's role in the Workers' Compensation
insurance industry, the disclosure of the expiration dates of policies would be just as damaging to
its competitive position without the names of current carriers as with the names of carriers included.
Consequently, I believe that the Workers' Compensation Board may justifiably withhold that data
pursuant to §87(2)(d) of the Freedom of Information Law.

If you would like to discuss the matter, please feel free to contact me. I hope that I have been
of assistance.



Robert J. Freeman
Executive Director



cc: Henry Neal Conolly
John L. McCarthy
Peter J. Molinaro
Paul Magaril