Florida Business Litigation Lawyer Blog
Protection of trade secrets and proprietary information is critical when a business receives a subpoena for its business information and documents. Even when a business is not a party to a lawsuit, it can be compelled to produce sensitive information that can cause irreparable harm. It is often necessary to seek an order of protection and confidentiality from the court. The court, however, must first determine whether the disputed information is in fact a trade secret or proprietary information. Summitbridge Nat’l Invs. LLC v. 1221 Palm Harbor, L.L.C., 67 So.3d 448 (Fla. 2d DCA 2011). Peter Mavrick is an experienced trade secret attorney and business litigation attorney.
In Lake Worth Surgical Center, Inc. v. Gates, 266 So.3d 198 (Fla. 4th DCA 2019), the plaintiff filed a lawsuit against defendants for damages arising from a car accident. The plaintiff treated at Lake Worth Surgical Center, Inc. (“Center”), a non-party, and was billed for the Center’s services. Defendants served the Center with a subpoena that requested billing information that included, among other things, examples of reimbursement rates from unnamed insurers for the Center’s patients. The Center immediately moved for a protective order to prohibit disclosure of confidential financial information. The Center argued that insurance reimbursement rates and the makeup of the center’s patients are trade secret. The trial court denied the Center’s motion for protective and confidentiality order. The Center immediately filed a petition for certiorari review.
The Center contended that the trial court departed from the essential requirements of law by denying the request for a confidentiality of its proprietary and trade secret information. The appellate court granted the petition in part and denied it in part.
Section 688.002(4) of the Florida Statutes defines a trade secret as information including a formula, pattern, compilation, program, device, method, technique, or process that:
(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
The appellate court held that “internal cost structure information, including methodologies or formulas used to compute pricing and insurance reimbursement rates, constitutes trade secret information that should be protected from disclosure to third parties if obtained through discovery processes.” Lake Worth Surgical Center, Inc. v. Gates, supra. The appellate court also held that not all business information falls within this privilege. For example, the price for a single transaction, such as the amount received for a previous service to a litigant, is not information subject to protection as a trade secret. Summitbridge Nat’l Invs. LLC v. Palm Harbor, L.L.C., 67 So.3d 448, 449 (Fla. 2d DCA 2011).
The appellate court held that: (1) the information defendants requested regarding two examples of contracted reimbursement rates with unnamed insurance carriers for surgery that a motorist received for an injury that was being litigated was a trade secret or proprietary information because it involved the methodologies in computing reimbursement rates; (2) the information defendants requested regarding the approximate percentage of provider’s practice consisting of treating patients who were involved in a pre-suit claim or personal injury litigation over a three-year period was not a trade secret or proprietary information because the Center did not present any evidence to support a finding that the percentage of practice information was trade secret; and (3) the information defendants requested regarding the amounts paid for services rendered to motorist on two different dates was not a trade secret or proprietary information based on the application of the statutory definition of trade secret and the case law regarding single transactions.
The appellate court concluded that the trial court properly declined to impose confidentiality restrictions on information regarding the amounts paid for services rendered to Plaintiff on two different dates and the approximate percentage of the Center’s practice of treating patients who are involved in a pre-suit claim or personal injury litigation over a three-year period. On the other hand, the appellate court held that the trial court erred because it failed to grant the Center’s request for confidentiality of the information regarding the two examples of contracted reimbursement rates by private health insurance carriers for the surgery received by plaintiff. The appellate court quashed the portion of the order that denied confidentiality protection for trade secret or proprietary information and remanded the case for the trial court to stay the discovery until the parties have an opportunity to negotiate a confidentiality agreement as to that information.
Peter Mavrick is a trade secret lawyer who represents businesses in Broward, Miami-Dade, and Palm Beach Counties, Florida. This article does not serve as a substitute for legal advice tailored to a particular situation.