Florida Appeals Court Bars Release of ‘Trade Secret’ Info in Heritage Claims Litigation
A Florida appeals court has blocked, at least for now, a lower court’s order that would have required the release of financial records that Heritage Property & Casualty Insurance and two other carriers have said are trade secrets protected by state law.
“They’ve fought tooth and nail to avoid releasing the information, and it looks like they’re still getting away with it,” Ben Mandell, an independent claims adjuster, said after the ruling by Florida’s 1st District Court of Appeals was posted Wednesday, Nov. 4.
Mandell was one of three independent, or freelance, adjusters who publicly alleged in 2022 that a number of Florida insurers, including Heritage, had been doctoring field adjusters’ damage reports and slashing homeowner estimates inappropriately.
The appeals court ruling is the latest development in a thicket of litigation stemming from those allegations and from a well-publicized lawsuit brought against Heritage after Hurricane Ian ripped part of the roof off a North Port, Florida, home in 2022. The homeowners, Jeffrey and Virginia Rapkin, early this year asked a judge in Tallahassee to force the state Department of Financial Services to divulge records relating to its investigation into Mandell’s accusations.
Later, Mandell and fellow whistleblower adjuster Jordan Lee joined the litigation, urging the court to release more than 800 pages of records, even if the records were to be sealed and not to be made public. Then, Florida Peninsula Insurance and its sister company, Edison Insurance, joined on the other side, asking the court to block the release of what the insurers said includes proprietary information that should not be shown to their competitors and others.
The Leon County Circuit Court Judge Jonathan Sjostrom in March sided with the Rapkins and the adjusters and ordered DFS to release the information, under conditions. The judge directed that the sealed records be provided to the Rapkins and the adjusters, subject to a confidentiality order.
But after the insurers appealed, the 1st District appellate court said this week that the lower court judge had not followed the rules spelled out in Florida’s trade-secret statute, Section 624.4213.
That law, enacted in 2008, “bars release of records containing claimed trade secrets until a circuit court rules on their trade-secret status,” the appellate court wrote.
The trial court did not follow that sequence. “It made no exemption determination, yet ordered the sealed records produced to the requestor-intervenors and permitted their full participation and discovery.”
The circuit judge’s initial in camera review, done outside a public courtroom, was not thorough enough. “Resolving the exemption at a hearing rather than through in camera review would have been permissible; ordering production and full participation of the requestor-intervenors before deciding exempt status is not,” the appellate judges said.
The trade-secret statute has long been a source of complaints from journalists, lawyers and others seeking carrier information, such as policy counts, premiums written, and geographic and line-of-business data. Some carriers choose to release it. Others don’t.
The law allows insurers to avoid disclosure of certain records as long as a company representative attests that “this information is a trade secret that has value and provides an advantage or an opportunity to obtain an advantage over those who do not know or use it,” and that the information is not already publicly available elsewhere.
Judge Sjostrom’s March decision, “ordering production before the trade-secret determination, violates the statutory safeguards and defeats the declaratory actions’ purpose, giving the requestors access regardless of how the exemption is decided,” the appeals court wrote in its order.
As an example, the appeals court pointed out that one day after the lower court’s order, adjuster Lee, who had been sued by Heritage after he aired his doctored-reports allegations on CBS News’ “60 Minutes” show in 2024, demanded similar information from Edison and Florida Peninsula.
“Certain information may reasonably cause material injury of an irreparable nature, such as ‘cat out of the bag’ material that could be used by an unscrupulous litigant to injure another person or party outside the litigation,” the 1st DCA judges wrote.
The appeals court remanded the case back to the Leon County Circuit Court to properly determine the exemption and/or trade secrets status of the records in question, before allowing access. That determination must be made through a confidentiality-preserving in camera inspection or evidentiary hearing that does not disclose the records to those seeking them, the judges added.
“We take no position on whether the records are trade secrets or otherwise exempt,” the order reads.
It’s possible that the adjusters or the Rapkins can appeal the order to the Florida Supreme Court. Jeffrey Rapkin could not be reached Wednesday. Chip Merlin, an attorney for Mandell, said his team is considering an appeal. But he noted that the lower court may yet release some information after further proceedings.
“The judge is going to have to look at them in camera, and he may come back and say that they are not trade secrets,” Merlin told Insurance Journal. “So it’s not as if we’re completely out. It’s just another step.”
Still, the trade-secret statute rankles and continues to be a roadblock for information that may be useful for policyholder and may or may not expose information that could be useful to insurers’ competitors, he and Mandell noted.
“It makes it very difficult for consumers to know what’s there,” and for attorneys to explain things to a judge, Merlin said. “It might suggest that the Legislature should reconsider what they consider to be trade secrets.”
Merlin called the insurers’ efforts to block release of the investigatory information another example of the “cat and mouse games” that carriers often play with policyholders in claims disputes. “Insurance company lawyers try to use every means possible to keep those documents from seeing the light of day,” he added.
Mandell said that the trade-secret argument is a smokescreen. By now, after multiple national news articles, testimony from adjusters and responses from carriers, most people in the insurance industry are aware of the alleged tactics that at least six insurers have followed in arbitrarily reducing field adjusters’ damage estimates, he said.
The DFS investigation into the adjusters’ claims led nowhere. Officials with the department have told the adjusters that Florida law does not provide a framework to prosecute insurers for fraud in altering reports.
Heritage officials could not be reached for comment Wednesday. In recent years, they have denied the adjusters’ allegations except to say that the field adjusters’ names had been inadvertently left off some of the revised damage reports.
In court filings in the Rapkin case, Heritage attorneys argued that withholding proprietary information is “a lawful, proper procedure.” The requested records may include vendor contracts, vendor investigations performed for Heritage under confidential agreements, affiliated companies’ internal work product and strategies.
Still, Heritage has claimed public-records exemptions for only 14 of the 878 pages requested by the plaintiffs, the Heritage attorneys’ brief explains.
Top photo: The Rapkins interviewed by 60 Minutes’ correspondent Sharyn Alfonsi in 2024. (CBS News)