Opinion
1 CA-CV 23-0345
04-09-2024
Phillip Potter, Scottsdale Plaintiff/Appellant Broening Oberg Woods &Wilson, P.C., Phoenix By Kelley M. Jancaitis, Jathan P. McLaughlin Counsel for Defendant/Appellee AHCCCS Fennemore Craig, P.C., Phoenix By Timothy J. Berg, Brett C. Gilmore Counsel for Defendant/Appellee Mercy Care
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. CV2022-014146 The Honorable Katherine Cooper, Judge
Phillip Potter, Scottsdale Plaintiff/Appellant Broening Oberg Woods &Wilson, P.C., Phoenix By Kelley M. Jancaitis, Jathan P. McLaughlin Counsel for Defendant/Appellee AHCCCS
Fennemore Craig, P.C., Phoenix By Timothy J. Berg, Brett C. Gilmore Counsel for Defendant/Appellee Mercy Care
Judge James B. Morse Jr. delivered the decision of the Court, in which Presiding Judge Angela K. Paton and Judge Michael S. Catlett joined.
MEMORANDUM DECISION
MORSE, Judge:
¶1 Phillip Potter appeals the superior court's grant of summary judgment to Carmen Heredia, in her official capacity as the director of the Arizona Health Care Cost Containment System ("AHCCCS"), and Mercy Care. For the following reasons, we affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 In August 2022, Potter sent a public-records request to AHCCCS and Mercy Care regarding the Regional Behavioral Health Authority ("RBHA") contract under A.R.S. § 36-3410. Potter requested "[a]ll records reflecting agreements, contracts, subcontracts, interactions, transactions, community support, and communications regarding philanthropic support, services contracts, grants, or other financial or non-financial benefits derivative of the Mercy Care RBHA contract,"including any involvement from Tad Gary, a Mercy Care executive, State Representative Robert Meza, and 15 private entities. AHCCCS indicated it would provide a response to Potter's request and asked Mercy Care to identify and produce public records that are responsive to Potter's request and "in furtherance of Mercy Care's responsibilities under the RBHA contract."
Potter specifies that "agreements, contracts, subcontracts, interactions, transactions, community support, and communications" includes "all emails and email attachments, text messages, voicemails, messages on encrypted or open messaging platforms . . ., telephone call logs," calendar invitations, entries, and attachments, meeting notices and agendas, "informational material, talking points, marketing collateral, handwritten or electronic notes taken during any oral communications, summaries of any oral communications, videos or pictures, financial and bookkeeping records, invoices, receipts, contracts, bank or credit card statements, or other similar materials."
¶3 Potter sent a follow-up records request on September 29. Mercy Care responded, indicating it had "no documents within the scope" of Potter's request that qualify as public records. AHCCCS directed Potter to its website for "all contracts, health plan financial statements, and health plan oversight activities." In response, Potter claimed AHCCCS has a right to control Mercy Care records and "that Mercy Care seeks to withhold information related to . . . public healthcare dollars under [an] AHCCCS contract being misused and leveraged to the covert private benefit of State Representative Robert Meza, with Mercy Care senior executive Tad Gary's full knowledge and intentional participation."
¶4 On October 25, 2022, Potter filed a special action under A.R.S. § 39-121.02(A), seeking records regarding Mercy Care's support of nonprofit behavioral healthcare organizations that allegedly "used AHCCCS funds to covertly pay Rep. Meza." The court set a show-cause hearing for November 2022. After the hearing, AHCCCS and Mercy Care moved for summary judgment.
¶5 Potter filed a request for relief and expedited hearing under Arizona Rule of Civil Procedure ("Rule") 56(d). The court denied Potter's request and set a hearing for the summary judgment motions. The court granted AHCCCS and Mercy Care's motions, concluding (1) the requested documents do not have a "substantial nexus" to a government activity because they do not pertain to the services that Mercy Care administers or to AHCCCS funds used to provide those services, (2) AHCCCS presented uncontroverted evidence that it does not dictate or limit the entities or activities Mercy Care chooses to support, "which are funded with [Mercy Care's] own profits," (3) there is no evidence that Mercy Care is an agent of AHCCCS regarding Mercy Care's community reinvestment activities, and (4) disclosure is not in the best interests of AHCCCS or the population that Mercy Care serves.
¶6 Potter timely appealed. We have jurisdiction under A.R.S. § 12-2101(A)(1).
DISCUSSION
I. Summary Judgment.
¶7 Potter argues the superior court erred in granting summary judgment to Mercy Care and AHCCCS. Summary judgment is appropriate only if no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(a). We review de novo the court's application of the law and its determination that no genuine disputes of material fact preclude summary judgment. Takieh v. O'Meara, 252 Ariz. 51, 56, ¶ 11 (App. 2021).
¶8 Viewing the evidence and all reasonable inferences in the light most favorable to Potter, he requests records generated under the Mercy Care RBHA contract. Id. Potter specifically requested that AHCCCS and Mercy Care produce copies of all records reflecting "agreements, contracts, subcontracts, interactions, transactions, community support, and communications regarding philanthropic support, services contracts, grants, or other financial or non-financial benefits derivative of the Mercy Care RBHA contract, including any involvement from Tad Gary," Robert Meza, and 15 private entities. The parties do not dispute that the documents AHCCCS disclosed, i.e., contracts, health plan financial statements, and health plan oversight activities, are responsive to Potter's public-records request. See A.R.S. § 36-3410(G) ("The summaries and the contracts on which they are based are open to public inspection."). The additional documents that Mercy Care submits to AHCCCS under the RBHA contract, i.e., annual listings and community reinvestment plans, are also not at issue. The parties' dispute only involves records generated between Mercy Care, "Tad Gary in his Mercy Care role," Robert Meza, and 15 private entities.
In his reply brief, Potter argues that AHCCCS has not made Mercy Care's community reinvestment reports or plans available for inspection. Potter did not raise this argument before the superior court nor did he raise it in his opening brief. "We will not address arguments raised for the first time in the reply brief." Ariz. Dep't of Revenue v. Ormond Builders, Inc., 216 Ariz. 379, 385, ¶ 24 n.7 (App. 2007); see Barkhurst v. Kingsmen of Route 66, Inc., 234 Ariz. 470, 476, ¶ 22 & n.8 (App. 2014) (waiving argument not presented to the superior court).
A. In Camera Inspection.
¶9 Potter argues Mercy Care and AHCCCS failed to present evidence on whether the requested records were private or public by not submitting the documents for in camera inspection. Potter alternatively argues that even if Mercy Care and AHCCCS met their burden of production, they failed to prove the requested records were "purely private." See Griffis v. Pinal County, 215 Ariz. 1, 6, ¶ 16 (2007) ("The party claiming that the disputed documents are not public records bears the burden of establishing its claim.").
¶10 There are three alternative definitions for "public record":
(1) a record "made by a public officer in pursuance of a duty, the immediate purpose of which is to disseminate information to the public;" (2) a record "required by law to be kept, or necessary to be kept in the discharge of a duty imposed by law or directed by law to serve as a memorial and evidence of something written, said or done;" or (3) any "written record of transactions of a public officer in his office, which is a convenient and appropriate method of discharging his duties, and is kept by him as such, whether required by . . . law or not." Lunney v. State, 244 Ariz. 170, 174, ¶ 8 (App. 2017) (quoting Mathews v. Pyle, 75 Ariz. 76, 78-79 (1952)). Each definition focuses on records relating to public officials' duties. See id.; Griffis, 215 Ariz. at 3, ¶ 7 ("Whether a document is a public record under Arizona's public records law presents a question of law, which we review de novo.").
¶11 Potter's request concerns Mercy Care's agreements, contracts, subcontracts, community support, communications, transactions, and interactions with private entities about philanthropic activities. Mercy Care's involvement with private entities would not generate public records without some showing that Mercy Care transacted government activities or discharged governmental duties when engaging in philanthropic activities. See Lunney, 244 Ariz. at 174, ¶ 8. Potter provides no contrary evidence indicating that Mercy Care was discharging a governmental duty when engaging in philanthropic activities outside of its community reinvestment obligations, which are not at issue. Instead, Potter argues that Mercy Care's supporting affidavits are "factually empty" or insufficient to support a summary judgment motion. We disagree. The supporting affidavits describe specific duties under the RBHA contract regarding community reinvestment reporting obligations and the administration of physical and behavioral health services that are separate from the activities which Potter claims are subject to inspection.
¶12 Mercy Care and AHCCCS presented uncontroverted evidence that the RBHA contract does not require AHCCCS to engage in philanthropic activities through Mercy Care nor is Mercy Care "spending taxpayer money" by supporting local communities with its profits. See Griffis, 215 Ariz. at 5, ¶ 12 ("Disclosure of purely private documents does nothing to advance the purposes underlying the public records law. The contents of purely private documents shed no light on how the government is conducting its business or spending taxpayer money."); Salt River Pima-Maricopa Indian Cmty. v. Rogers, 168 Ariz. 531, 541 (1991) (noting that the public does not have the right to access private records that are unrelated to the government agency's activities). AHCCCS and Mercy Care's production duties are limited to public records. See A.R.S. §§ 39-121, -121.01(B).
¶13 As to in camera inspection, "no Arizona decision imposes a per se rule requiring an in camera inspection of public records (and we do not announce one here)." Schoeneweis v. Hamner, 223 Ariz. 169, 175, ¶ 22 (App. 2009). Relying on Griffis, Potter argues that the court must conduct an in camera inspection of the requested records to determine whether they are private or not.
¶14 In Griffis, our supreme court held that public records do "not encompass documents of a purely private or personal nature. Instead, only those documents having a 'substantial nexus' with a government agency's activities qualify as public records." 215 Ariz. at 4, ¶ 10 (quoting Salt River, 168 Ariz. at 541). Further, the "'nature and purpose of the document' determine its status as a public record." Id. (quoting Salt River, 168 Ariz. at 538). "Because the nature and purpose of the document determine its status, mere possession of a document by a public officer or agency does not by itself make that document a public record, nor does expenditure of public funds in creating the document." Id. at ¶ 11 (citations omitted). A court may conduct an in camera inspection "to determine whether the required nexus exists" by "[c]omparing the nature and purpose of a document with an official's or agency's activities." Id. at 5, ¶ 15.
¶15 Here, Potter seems to argue that the court was required to conduct an in camera inspection of the requested records to determine whether the required nexus existed between those records and AHCCCS and Mercy Care's activities under the RBHA contract. But the requested records are not in AHCCCS's possession and relate to Mercy Care's private activities with private entities; they do not pertain to the mental health services that Mercy Care administers under the RBHA contract nor the AHCCCS funds used to provide those services. The RBHA contract exists to provide behavioral health care and integrated health services to eligible individuals. Griffis emphasizes that the "public records law was never intended to encompass [private] documents; the purpose of the law is to open government activity to public scrutiny, not to disclose information about private citizens." Id. at 4, ¶ 11. The court must determine whether a document is a public record when "the facts of a particular case 'raise a substantial question as to the threshold determination of whether the document is subject to the statute.'" Id. at 5, ¶ 13 (quoting Salt River, 168 Ariz. at 536). Thus, the "initial inquiry must be whether the document is subject to the statute." Id. at ¶ 12.
¶16 Potter has not demonstrated any disputed material facts that "raise a substantial question" of whether the requested records are subject to the statute. Under A.R.S. § 35-214(A), all state contracts must have a provision requiring contractors to make records available for inspection. See cf. A.R.S. § 36-2903(H) (requiring "as a condition of a contract with any contractor that all records relating to contract compliance are available for inspection by" AHCCCS) (emphasis added). Under the RBHA contract, Mercy Care's "books, accounts, reports, files and other records" are at "all reasonable times" subject to inspection by AHCCCS. A.R.S. § 35-214(A). But AHCCCS's contractual authority to inspect otherwise private documents does not make such materials public records. See Griffis, 215 Ariz. at 4, ¶ 10 ("'[T]he nature and purpose of the document' determine its status as a public record." (quoting Salt River, 168 Ariz. at 538)).
¶17 Potter cites Fann v. Kemp, 253 Ariz. 537 (2022), to argue that any "element of public involvement, no matter how small or where it occurs in the contractor-subcontractor chain of outsourced government functions, places documents in the realm of public records." See Fann v. Kemp, 1 CA-SA 21-0141, 2021 WL 3674157, at *5, ¶ 25 (Ariz. App. Aug. 19, 2021) (mem. decision) (review denied Sept. 14, 2021) (concluding the "requested documents are public records that must be disclosed"). Although we concluded that a private company produces public records when it performs an "important legislative function," id. at ¶¶ 24-25, our supreme court did not require the legislature to disclose all records, "no matter how small or where it occurs in the contractor-subcontractor chain," see Fann, 253 Ariz. at 548, ¶¶ 35-36 (requiring the superior court to defer to the legislature's descriptions of privileged communications without conducting an in camera review). Potter has made no showing that the records requested involved an "important legislative function."
¶18 Moreover, Potter requests records generated between Mercy Care and private entities, who are neither parties to the RBHA contract nor subject to record inspections under the contract or statute. See A.R.S. §§ 39-121.01(A)(1), (2), -121.02(A) (limiting and defining the public officers and bodies subject to public-record requests). Thus, Mercy Care's obligations under the RBHA contract and inspection statute alone do not convert the requested records into public records. Besides, Potter requests documents, see infra ¶ 19, that exceed the records Mercy Care is obliged to make available to AHCCCS for inspection under the RBHA contract.
¶19 As to specific community reinvestment activities, under the RBHA contract, Mercy Care is required to contribute six percent of its annual after-tax profits to community reinvestment and submit plans and listings of its activities showing the amounts it reinvests. AHCCCS is then required to review the reports and verify that the amount reinvested into the community is at least six percent on a contract-year basis. Although the RBHA contract places a duty on Mercy Care to submit community reinvestment plans and reports to AHCCCS, it does not impose a corresponding duty on AHCCCS to collect emails, text messages, voicemails, messages on encrypted or open messaging platforms, telephone call logs, calendar invitations, meeting agendas, talking points, videos, pictures, notes taken during oral communications, bookkeeping records, receipts, or credit card statements regarding philanthropic support between Mercy Care and private entities. And although the RBHA contract places a duty on Mercy Care to make reports and plans available for inspection, it does not convert all documents generated between Mercy Care and the entities in which it reinvests its profits into public records. See, e.g., Stuart v. Lane, 1 CA-CV 15-0746, 2017 WL 3765499, at *9, ¶ 46 (Ariz. App. Aug. 31, 2017) (mem. decision) (review denied Aug. 29, 2018) (finding the details of how a city contractor invests its profits irrelevant to the city's duties under the contract). Only those records which AHCCCS generates or retains as part of its duty to review and verify that Mercy Care reinvested its profits in the year applicable to the plan and the amount reinvested was at least six percent of after-tax profit are public records. See Griffis, 215 Ariz. at 4-5, ¶ 11 (citing cases highlighting the absurdity of classifying notes about personal conversations and personal appointment materials as public records). Thus, in camera inspection was not necessary under these facts.
¶20 Even if we were to conclude that Potter met the "relatively low" threshold showing needed to raise a "substantial question" about the status of the requested records, Mercy Care and AHCCCS presented uncontroverted evidence that those records have no "substantial nexus" to government activities under the RBHA contract. See Salt River, 168 Ariz. at 538 (requiring public records to "have some relation to the official duties of the public officer that holds the record"). We recently addressed a similar public-records request from Potter for documents from Robert Meza regarding his communications and involvement with private charitable organizations. Potter v. Ariz. House of Representatives, 1 CA-CV 23-0213, 2024 WL 368095, at *1, 3-4, ¶¶ 2, 18-21 (Ariz. App. Feb. 1, 2024) (mem. decision). We held that Potter failed to demonstrate that the requested records had a "substantial nexus" with governmental activity and were not subject to a public-records request "without some showing that [Meza] transacted government activities or discharged governmental duties during" those events. Id. at *3-4, ¶¶ 20-21.
Potter sent the Arizona House of Representatives and State Representative Robert Meza a public-records request, "seeking records mainly about Meza's involvement with two nonprofit organizations, Open Hearts Family Wellness and The Arouet Foundation, and their respective events held in 2020 and 2021." Potter, 2024 WL 368095, at *1, ¶ 2. Open Hearts Family Wellness and The Arouet Foundation are two of the 15 private entities that Potter included in the public-records request he sent to AHCCCS and Mercy Care.
¶21 Because we determine that there are no genuine disputes of material fact regarding the status of the requested records and that Mercy Care and AHCCCS are entitled to judgment as a matter of law, we need not address whether Mercy Care and AHCCCS are entitled to disclosure exemptions. See Griffis, 215 Ariz. at 5, ¶ 13 &n.7 ("If a document falls within the scope of the public records statute, then the presumption favoring disclosure applies and, when necessary, the court can perform a balancing test to determine whether privacy, confidentiality, or the best interests of the state outweigh the policy in favor of disclosure.").
B. Agency and Right to Control.
¶22 Potter also argues Mercy Care and AHCCCS failed to present evidence on whether AHCCCS's director had the right to control the requested records and there are genuine disputes of material fact regarding Mercy Care and AHCCCS's agency relationship and search for records.
¶23 "Generally, whether an agency relationship exists is a question of fact, although we may determine the existence of such a relationship as a matter of law when the material facts are not in dispute." Salvation Army v. Bryson, 229 Ariz. 204, 211, ¶ 23 (App. 2012). Potter argues there are genuine disputes of material fact regarding Mercy Care and AHCCCS's agency relationship, but his opening brief does not present factual disputes. Instead, Potter presents legal arguments about Mercy Care and AHCCCS having an expressed and implied agency relationship based on state and federal statutes.
¶24 Potter also cites to Southeast Arizona Medical Center v. Arizona Health Care Cost Containment System Administration, 188 Ariz. 276 (App. 1996), to argue that agency exists between Mercy Care and AHCCCS to reach records generated between Mercy Care and private entities. But in that case we stated that any agency between AHCCCS and plan contractors was limited to the gathering of encounter data that AHCCCS was obligated to collect for the federal government's evaluation of AHCCCS. Se. Ariz. Med. Ctr., 188 Ariz. at 282.
¶25 In contrast, the RBHA contract does not obligate AHCCCS to collect the records Potter seeks. And AHCCCS has disclosed the information Mercy Care is required to submit, i.e., the annual plans and reports under Mercy Care's community reinvestment contract term. Thus, even if we were to conclude, as a matter of law, that an agency relationship exists between Mercy Care and AHCCCS under the RBHA contract, Potter fails to show how this relationship grants AHCCCS the right to control records generated between Mercy Care and private entities.
¶26 As to custody, control, and record searches, each "public body shall be responsible for the preservation, maintenance and care of that body's public records, and each officer shall be responsible for the preservation, maintenance and care of that officer's public records." A.R.S. § 39-121.01(C). Further, inspection of public records is limited to those "in the custody of any officer." A.R.S. § 39-121; see Phoenix New Times, L.L.C. v. Arpaio, 217 Ariz. 533, 540, ¶ 22 (App. 2008) (providing that a public body's "burden under the public records law is to provide access to public records that are in its custody"). Thus, a public body does not have to maintain records other than its own and must only produce records within its custody. A.R.S. §§ 39-121, -121.01(C). "Custody" means "the care and control of a thing or person for inspection, preservation, or security." W.Valley View, Inc. v. Maricopa Cnty. Sheriff's Off., 216 Ariz. 225, 229, ¶ 16 (App. 2007) (cleaned up). And constructive custody exists where a body "has the right to control the records, either directly or through another person." Bd. of Pilot Comm'rs v. Superior Court, 160 Cal.Rptr.3d 285, 302 (Cal.Ct.App. 2013) (citation omitted); see Salt River, 168 Ariz. at 537 ("The Arizona statute, adopted in 1901, was taken from a California provision. Consequently, cases arising under the California statute are helpful to the interpretation of our law.") (citation omitted).
¶27 Here, AHCCCS searched and produced "contracts, health plan financial statements, and health plan oversight activities" responsive to Potter's request. AHCCCS also required Mercy Care to provide any records that were responsive to Potter's request and "in furtherance of Mercy Care's responsibilities under the RBHA contract." See cf. Forsham v. Harris, 445 U.S. 169, 186 (1980) (holding that FOIA only applies to records an agency has "in fact [created] or obtain[ed], and not to records which merely could have been obtained"); Humphrey v. State, 249 Ariz. 57, 68, ¶ 42 (App. 2020) (holding that Arizona's public-records law does not require an agency to create a new record or to tally and compile previously untallied and uncompiled information or data in a database). But AHCCCS did not have a duty to obtain records generated between Mercy Care and private entities because the documents relating to their private activities were not in AHCCCS's "care and control." W.Valley View, Inc., 216 Ariz. at 229, ¶ 16.
¶28 Mercy Care separately searched and stated it did not have any public records responsive to Potter's request, which demanded all records regarding "philanthropic support, services contracts, grants, or other financial or non-financial benefits" that derived from the Mercy Care RBHA contract and involved private entities. Potter again argues that Mercy Care and AHCCCS's agency relationship allows for the inspection of records generated between Mercy Care and private entities, but those records are not subject to Mercy Care and AHCCCS's preservation, maintenance, and care responsibilities under the RBHA contract. A.R.S. §§ 39-121.01(C), 35-214. And Potter does not claim that AHCCCS has an agency relationship with the private entities that would provide AHCCCS the right to control their records relevant to the RBHA contract. Thus, AHCCCS did not have actual or constructive possession over the records maintained by Mercy Care and private entities. See W.Valley View, Inc., 216 Ariz. at 229, ¶ 16 (defining "custody" as the care and control of a thing or person for preservation, inspection, or security); Bd. of Pilot Comm'rs, 160 Cal.Rptr.3d at 302 (defining "constructive possession" as having the right to control records directly or through another person).
C. Rule 56(d) Request.
¶29 Potter argues that additional discovery would have aided an in camera inspection and established facts on the issue of whether any disclosure exemptions applied. A court's denial of a Rule 56(d) request for discovery to oppose a summary judgment motion is reviewed for an abuse of discretion. Simon v. Safeway, Inc., 217 Ariz. 330, 332 (App. 2007). Here, the court did not abuse its discretion in finding that Mercy Care and AHCCCS's pending motions for summary judgment presented "strictly legal issues," and that Potter failed to establish "specific and adequate grounds" for discovery on these legal issues, including in camera inspection and disclosure exemptions based on "undisputed facts."
II. Sanctions.
¶30 Potter argues Mercy Care and AHCCCS should be sanctioned under Rule 11, ARCAP 25, and A.R.S. § 12-349. Potter asks us to sanction Mercy Care and AHCCCS under Rule 11 for any misrepresentations we find in their answering brief. Potter did not raise any Rule 11 arguments before the superior court. See Michael Weller, Inc. v. Aetna Cas. &Sur. Co., 126 Ariz. 323, 326-27 (App. 1980) (waiving Rule 11 arguments on appeal). We find no authority, however, and Potter has cited none, permitting an appellate court to impose Rule 11 sanctions based upon a party's anticipated actions on appeal. Rule 11 applies to proceedings "in the superior court." Ariz. R. Civ. P. 1. Thus, we decline to impose sanctions on appeal under Rule 11.
¶31 Potter further argues Mercy Care and AHCCCS's motion to strike Potter's notice of appeal was frivolous, brought without substantial justification and solely to delay or harass, and unreasonably expanded the proceedings. See A.R.S. § 12-349(A)(1)-(3), (F); ARCAP 25 ("An appellate court may impose sanctions on an attorney or a party if it determines that an appeal or a motion is frivolous, or was filed solely for the purpose of delay."). The motion to strike was based on Potter's status as a pro se vexatious litigant, which prohibits Potter from filing "any new pleading, motion or other document in this case or any other pending civil action without prior leave of the judge assigned to that case." See A.R.S. § 12-3201(B) (pro se vexatious litigant); Potter, 2024 WL 368095, at *7-10, ¶¶ 44-57 (affirming pro se vexatious litigant order issued on February 24, 2023, in the matter CV2022-008626); see also Munger Chadwick, P.L.C. v. Farwest Dev. &Constr. of the Sw., LLC, 235 Ariz. 125, 126, ¶ 5 (App. 2014) ("In Arizona, it is the rule that parties who represent themselves in a legal action are not entitled to recover attorney fees."). Though we denied the motion to strike, it was not frivolous, brought without substantial justification or solely to delay or harass, nor did it unreasonably expand the proceedings. Thus, we deny Potter's requests for sanctions under ARCAP 25 and A.R.S. § 12-349.
CONCLUSION
¶32 We affirm.