Facts and Procedural History:

Pursuant to Minnesota Statutes Section 62J.17, MDH collects data concerning capital expenditures from health care providers. These reports come to MDH in the form of capital expenditure reports, hereinafter reports, and they contain considerable detail as required by statute including the actual dollar amounts associated with an individual capital expenditure. Section 62J.17 does not state a specific data classification for data in the reports.

As of the date of Commissioner O'Brien's request, MDH had received 159 capital expenditure reports from health care providers. In response to questions about the reports or in follow up correspondence, MDH has, in 32 instances, expressly encouraged persons filing reports to identify information they consider to be trade secret information. (Trade secret information are classified, pursuant to Minnesota Statutes Section 13.37, as nonpublic data.) An unspecified number of those persons have discussed the status of certain capital expenditure information with MDH.

Correspondence about those discussions, as provided by MDH, reveals the following. One provider sought protection for data about agreements relating to the dollar amounts of contributions it receives from other medical facilities with which it is associated. Another provider, a public hospital, discussed signing a contract for an equipment purchase and agreeing to keep the transaction . . . private to the extent possible. Another wrote of seeing nothing in sales contracts, it had entered into, requiring the terms of the contract to be proprietary. MDH provided copies of this correspondence and a regional summary of expenditures.

Issue:

Discussion:

1. the data are supplied to a Minnesota governmental entity by an individual or organization that would be affected by the data's disclosure to the public;

2. the data are the subject of efforts by the individual or organization that are reasonable under the circumstances to maintain its secrecy, and

3. the data derive 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.

   It is clear from this language that for data to qualify as a trade secret the data in question and the situation associated with the data must meet all four elements of this definition. The definition of trade secret that appears in Section 13.37 is drawn from the definition of trade secret that appears in Minnesota Statutes Section 325C, the Uniform Trade Secrets Act.

   A review of the capital expenditure summary provided by MDH shows a wide variety of capital expenditures that are reported. Examples include: purchase of a medical facility; purchase of equipment; remodeling of a building; construction of an employee parking facility; replacement of water lines and replacement of exterior signage. None of the items that are listed on the expenditure summary report appear to meet the definitional requirement that a trade secret be a formula, pattern, process and so forth. Although the use of the term including in the first sentence of Section 13.37 (b) appears to say that a trade secret may be more than a formula, pattern, and so forth, other laws construing the meaning of the term trade secret provide clearer guidance.

   For example, the federal Freedom of Information Act, 5 U.S.C. 552, as interpreted, requires that information claimed to be a trade secret, must be a commercially valuable plan, process, formula or device used for making, preparing, compounding or processing trade commodities. Federal law further requires that the information claimed to be a trade secret must be the product of innovation or substantial effort. (See Anderson v. Department of Health and Human Services, 907 F. 2d 936 (10th Cir. 1990).) Examination of federal law is helpful in this instance because Minnesota courts have not interpreted the elements of the trade secret definition in the context of discussion about public access to information provided to the government by persons outside the government.

   Applying the federal standard in this instance to the items contained in capital expenditure reports would, on the items summarized and provided by MDH, reveal few if any items reported that are plans, formulas, etc. used to make, prepare, compound or process a trade commodity. Furthermore, the items reported, and particularly the dollar amounts associated with the capital expenditures, do not appear to be the product of innovation or a substantial effort. The data in question, items of expenditure and the dollar amounts for those expenditures, are simply summaries of how a health care provider is spending or plans to spend money.

   The second element of the definition, that must be met in order for certain data to be treated as a trade secret, is the data in question be subject to efforts, by the person providing the data, that make it reasonable to maintain the secrecy of the data. The fourth element requires that the data not be readily ascertainable by proper means by other persons who can obtain economic value from disclosure of the data. In the instance of the capital expenditure reports, application of the test required by these two elements also leads to a conclusion that the reports do not qualify as trade secrets.

   The types of data reported, as described above, include data that do not appear to be kept secret by the health care providers reporting the data. It does not appear reasonable under the circumstances described to determine they should be kept secret. The data often appear to be data that are readily ascertainable by proper means by other persons. None of the persons who discussed this issue with MDH described a situation in which that person was required by the circumstances or any contracts with suppliers or building or other contractors to keep data about the expenditure, including its costs, not public. One health care provider discussed an understanding with a equipment supplier that the favorable terms of a contract would be kept private but only to the extent possible. Another provider stated that its sales contracts were silent on the issue of any confidentiality associated with the agreement. A third provider asked for protection of information about a contribution arrangement among facilities that were all owned by the same religious order. However, it is not clear how that arrangement could be viewed as formula, pattern process, etc. that could even begin to qualify as a trade secret.

   In the case of the fourth element of the trade secret definition, that the data not be readily ascertainable by others through proper means, it appears that much of the capital expenditure data, including dollar amounts of the expenditure, could be available to others through proper means. Many of the health care providers that report capital expenditures are publicly owned facilities. Those facilities are subject to all of the requirements of Chapter 13, the Minnesota Government Data Practices Act. In practice, that means that the terms of contracts they enter into with contractors are public data. Accounting records that document their capital and other expenditures are accessible by the public. (See Minnesota Statutes Section 13.03, subdivision 1.)

   In the case of nongovernmental facilities, the costs of things like remodeling and other construction projects can be readily ascertainable by others, unless the health care facility has specifically required that the person providing it with the equipment, construction or other services keep that information secret. A person curious about the costs of a hospital addition, of changes to signs and so forth could merely call the contractor doing the work and ask for that information. There is no indication in the information provided by MDH that the facilities reporting the capital expenditures require the contractors doing the work to keep the costs of the work a confidential.

   Minnesota cases construing the definition of a trade secret in Chapter 325C, in non governmental contexts, make it clear that for a person to claim trade secret protection, that person must show that it exerted reasonable efforts to maintain the secrecy of the information. (See Electro Craft Corp. v. Controlled Motion, Inc.332 N.W. 2d 890 (Minn. 1983).) In the instance of expenditure reports, it appears that none of the health care facilities were concerned about the issue of the possible secrecy of the data they were reporting until MDH encouraged them to consider a trade secret claim. If these facilities were concerned with the secrecy of this information, it seems reasonable that they would have exerted the initial effort to raise that issue with MDH before MDH raised it with them. That does not appear to be the case in this instance.

   The capital expenditure reports, and particularly the dollar amounts associated with the expenditure, fail to meet at least three of the elements that are required for data to be treated as a trade secret. As these reports do not qualify for trade secret protection, and there does not appear to be another specific statute classifying them as not public, they fall within the general presumption that all data are public under Minnesota Statutes Section 13.03.

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   Opinion:

   
   Based on the correspondence in this matter, my opinion on the issue raised by Commissioner O'Brien is as follows:

   Capital expenditure reports, including dollar amounts associated with the expenditures, as reported to the MDH under Minnesota Statues Section 62J.17, do not meet the definition of a trade secret under Minnesota Statutes Section 13.37 and are therefore public data under Minnesota Statutes Chapter 13.

   
   

   Signed:

   Debra Rae Anderson
   Commissioner

   Dated: September 23, 1994
   

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