Could a Maryland citizen obtain Delaware captive-insurance licenses through FOIA or the Insurance Code’s inspection provision?

Official title

21 – IB11 05/12/2021 FOIA Opinion Letter to Jason M. Schupp re: FOIA Complaint Concerning the Delaware Department of Insurance

Plain-English summary

Jason Schupp, representing Centers for Better Insurance, LLC with a Frederick, Maryland address, asked the Delaware Department of Insurance for "documents representing the licenses issued to active captive insurance companies domiciled in the State of Delaware." The Department denied on two grounds: Schupp is not a Delaware citizen, and the licenses are confidential under 18 Del. C. § 6920. Schupp resubmitted under 18 Del. C. § 314, an insurance-specific inspection statute that requires the Commissioner to permit "persons found to have an identified and proper interest" to inspect Department records. The Department again pointed him to a FOIA appeal.

When Schupp petitioned, the AG sustained the denial.

The Office's citizens-only interpretation of FOIA, which the opinion grounds in McBurney v. Young, settled the FOIA question. Schupp conceded he is a Maryland citizen and said the LLC was organized under Maryland law. Department counsel, however, called “Better Insurance, LLC” a Pennsylvania LLC. The AG did not resolve the company’s organization or adopt the Department’s proposed LLC citizenship test. On that record the AG found the Department did not violate FOIA in denying the request.

Schupp's separate argument under 18 Del. C. § 314, that the Department had failed to make the required determinations of "identified and proper interest" and whether inspection would be "prejudicial to the public interest," was outside the AG's authority. The opinion states that because this Office's authority is limited to determining whether a violation of FOIA occurred, the § 314 issue was not addressed.

Currency note

This opinion was issued in 2021. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Can an LLC use Delaware FOIA if it has a Delaware-citizen owner?

The opinion does not decide that scenario. Department counsel argued that a managing member’s citizenship controls an LLC’s citizenship, but the AG resolved the FOIA claim based on Schupp’s conceded Maryland citizenship. The parties gave conflicting descriptions of the LLC’s state of organization.

Is 18 Del. C. § 314 broader than FOIA?

It uses the phrase “persons found to have an identified and proper interest,” but the AG did not decide how § 314 applies to this request or whether it gives Schupp a separate right of inspection.

What about 18 Del. C. § 6920? Does that matter for citizens?

The Department cited § 6920 as another reason to deny access to the licenses. The AG did not decide whether that provision covered them because it resolved the FOIA petition on citizenship.

Does the AG ever look at non-FOIA statutes?

Not through this petition channel as a freestanding question. The opinion states the Office's authority is limited to determining whether a FOIA violation occurred, so it declined to address the Department's obligations under 18 Del. C. § 314. The opinion does not identify a forum or remedy for a separate § 314 claim.

Did the AG decide whether Schupp could file a petition?

It decided the merits, but footnote 6 says he might lack standing to use FOIA’s enforcement provisions, including the petition process. It did not finally decide standing.

Background and statutory framework

Delaware's FOIA, the opinion states, is interpreted to apply to Delaware citizens only, "consistent with McBurney v. Young," so a public body may deny a request solely because the requester is a non-citizen. Schupp conceded he is a citizen of Maryland and said the company is organized under Maryland law. The Department had described a similarly named LLC as organized in Pennsylvania; the opinion did not settle that conflict.

18 Del. C. § 314 is the Delaware Insurance Code's inspection provision. It uses different access criteria ("persons found to have an identified and proper interest"). The opinion treats it as outside the Office's FOIA-petition authority, even though Schupp invoked both statutes.

18 Del. C. § 6920 is part of Delaware's captive-insurance regulatory regime. The Department asserted it as an independent confidentiality basis for captive licenses, but the AG did not reach that ground because the citizens-only issue disposed of the petition.

Citations

• 29 Del. C. §§ 10001-10007 (Delaware FOIA)
• 29 Del. C. § 10005
• 18 Del. C. § 314 (insurance records inspection)
• 18 Del. C. § 6920 (captive insurance confidentiality)
• McBurney v. Young

Source

• Landing page: https://attorneygeneral.delaware.gov/2021/05/12/21-ib11-05-12-2021-foia-opinion-letter-to-jason-m-schupp-re-foia-complaint-concerning-the-delaware-department-of-insurance/
• Original PDF: https://attorneygeneral.delaware.gov/wp-content/uploads/sites/50/2021/05/Attorney-General-Opinion-21-IB11.pdf

Original opinion text

CIVIL DIVISION (302) 577-8400
FAX: (302) 577-6630
DEPARTMENT OF JUSTICE CRIMINAL DIVISION (302) 577-8500
NEW CASTLE COUNTY
FAX: (302) 577-2496
KATHLEEN JENNINGS 820 NORTH FRENCH STREET FRAUD DIVISION (302) 577-8600
ATTORNEY GENERAL WILMINGTON, DELAWARE 19801 FAX: (302) 577-6499

OFFICE OF THE ATTORNEY GENERAL OF THE STATE OF DELAWARE

Attorney General Opinion No. 21-IB11

May 12, 2021

VIA EMAIL

Jason M. Schupp
9006 Bush Creek Circle
Frederick, MD 21704
[email protected]

RE: FOIA Petition Regarding the Delaware Department of Insurance

Dear Mr. Schupp:

We write in response to your correspondence, alleging that the Delaware Department of Insurance (“Department”) violated Delaware’s Freedom of Information Act, 29 Del. C. §§ 10001- 10007 (“FOIA”) in connection with your request for records. We treat your correspondence as a Petition for a determination pursuant to 29 Del. C. § 10005 regarding whether a violation of FOIA has occurred or is about to occur. As discussed below, we find that no violation of FOIA occurred as alleged.

BACKGROUND

On March 26, 2021, you submitted a FOIA request to the Department, signed as a representative of Centers for Better Insurance, LLC of Frederick, Maryland, and seeking “documents representing the license[s] issued to active captive insurance companies domiciled in the State of Delaware.” 1 The Department denied the request because FOIA does not require that public bodies provide records to non-citizens, and you are not a citizen of Delaware. In addition, the Department stated that these licenses are confidential pursuant to 18 Del. C. § 6920. You

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Petition. resubmitted this same request under 18 Del. C. § 314, which states “[e]xcept where the Commissioner deems the same to be prejudicial to the public interest, the Commissioner shall permit inspection of the papers, records and filings in the Department by persons found to have an identified and proper interest therein.” A few days later, the Department responded, advising you of the ability to file a petition to appeal its decision under the FOIA statute. This Petition followed.

The Petition alleges that the Department’s response to your request was inadequate. The Petition contends that that Department “clearly regards its obligations to allow public inspection pursuant to 18 Del. C. § 314 as an expansion of and integral with its obligations under the FOIA statute.” 2 Thus, you allege the Department’s denial of this request under 18 Del. C. § 314 is arbitrary and capricious, as the Department failed to determine whether an interest in the requested records had been identified, whether that interest is proper, and whether the inspection would be prejudicial to the public interest.

On April 22, 2021, the Department’s counsel replied to your Petition (“Response”). The Department argues that the Petition should be denied because you are not a Delaware citizen, citing various records demonstrating your Maryland citizenship and noting that Better Insurance, LLC is a Pennsylvania limited liability company. As a limited liability company, the Department contends that the managing member’s citizenship determines the citizenship of the limited liability company and accordingly, the Department asserts that your request was appropriately denied. In addition, the Department argues that this Office does not have the authority to address 18 Del. C. § 314 and that the FOIA statute supersedes 18 Del. C. § 314 because it is a later-enacted statute covering the entire field that 18 Del. C. § 314 occupies.

On April 22, 2021, you submitted correspondence conceding that you are a citizen of Maryland and the Centers for Better Insurance, LLC is organized under the laws of Maryland. You argue that the Department seeks to merge its obligations under FOIA and 18 Del. C. § 314 to impermissibly restrict its obligation to disclose records under 18 Del. C. § 314 to “citizens,” as provided by FOIA, instead of to “persons” as provided by 18 Del. C. § 314. Moreover, you contend that the Department’s arguments fail because the Department also acknowledged in its Response that this Office does not have the authority to make determinations about a statute other than FOIA.

DISCUSSION

Consistent with McBurney v. Young, 3 our Office interprets Delaware’s FOIA statute to apply to Delaware citizens only, thereby permitting a public body to deny a FOIA request solely

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Id.
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569 U.S. 221 (2013) (determining that Virginia’s citizens-only FOIA statute does not violate the Privileges and Immunities Clause or the dormant Commerce Clause of the U.S. Constitution).

2 because it is submitted by a non-citizen of Delaware. 4 The factual record indicates that you are not a citizen of the State of Delaware. In accordance with this Office’s established precedent, we determine that the Department did not violate FOIA in denying your request. As this Office’s authority is limited to determining whether a violation of FOIA occurred, the remaining issue related to the Department’s obligations under 18 Del. C. § 314 is not addressed in this Opinion. 5

CONCLUSION

For the reasons set forth above, we find that the Department did not violate FOIA as alleged in the Petition. 6

Very truly yours,

/s/ Alexander S. Mackler
_____
Alexander S. Mackler
Chief Deputy Attorney General

cc: Kathleen P. Makowski, Deputy Attorney General Dorey L. Cole, Deputy Attorney General

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See, e.g., Del. Op. Att’y Gen. 19-IB66, 2019 WL 6839917, at 1 (Nov. 26, 2019); Del. Op.
Att’y Gen. 18-IB54, 2018 WL 6591819, at 2 (Dec. 5, 2018); Del. Op. Att’y Gen. 18-IB50, 2018 WL 6015765, at 2 (Oct. 12, 2018); Del. Op. Att’y Gen. 18-IB18, 2018 WL 2267112, at 1 (Apr. 6, 2018); Del. Op. Att’y Gen. 17-IB14, 2017 WL 3426252, at 1 (July 6, 2017); Del. Op. Att’y Gen. 16-IB20, 2016 WL 5888776, at 2-6 (Sept. 30, 2016). 5 29 Del. C. § 10005(e); see e.g., Del. Op. Att’y Gen. 18-IB50, 2018 WL 6015765, at 2 (Oct. 12, 2018) (finding that this Office has “no authority under FOIA to direct [the public body] with regard to this Office's interpretation of any other Delaware statute”); Del. Op. Atty. Gen. 96- IB28, 1996 WL 517455, at 2 (Aug. 8, 1996) (“To the extent you allege that Sussex County has not complied with the requirements of 9 Del. C. § 6921, that matter is beyond the jurisdiction of this office and is not addressed here”). 6 While we have decided to issue a determination regarding the merits of your claim, we feel compelled to note that you may lack standing to avail yourself of the enforcement provisions contained in 29 Del. C. § 10005, including the petition process set forth in Section 10005(e).
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