Seller Beware: FIPPA Third-party Exemption Not Applicable To Hospital Purchase Orders
On July 31, 2015 the Information and Privacy Commissioner of Ontario (IPC) issued Order PO-3518, in which it ordered a hospital to disclose invoices requested pursuant to a request made under the Freedom of Information and Privacy Act (FIPPA) .
In its Order, the IPC ruled that purchase orders and other internal documents created or issued by the hospital, and invoices issued by a software development company in connection with payments paid by the hospital to the company for its services did not qualify for exemption under the third party information exemption under section 17(1) of FIPPA. The IPC found that the purchase orders, invoices and other documents did not meet the “supplied” test in section 17(1) and ordered the hospital to disclose the records to the requester seeking access to the information.
Section 17(1) of FIPPA creates a mandatory exemption that requires the head of an institution, such as a hospital, to refuse to disclose records that would reveal third party information, supplied in confidence by a third party, where disclosure could be reasonably expected to result in one or more enumerated harms. In order to qualify for this exemption, the institution and/or the third party must satisfy each part of the following three-part test: (i) the record must reveal information that is a trade secret or scientific, technical, commercial, financial or labour relations information; (ii) the information must have been supplied to the institution in confidence, either implicitly or explicitly; and (iii) the prospect of disclosure of the record must give rise to a reasonable expectation that one of the harms specified in paragraph (a), (b), (c) and/or (d) of section 17(1) will occur. According to the IPC, section 17(1) serves to limit disclosure of confidential information of third parties that could be exploited by a competitor in the marketplace.
In Order PO-3518, the IPC found that the records at issue met the first part of the three-part test for the third party information exemption under section 17(1). The records did contain commercial, technical or financial information, as the third party provided software solutions and technical support to the hospital sector and the records provided a breakdown of the financial costs for services provided to the hospital. However, the IPC found that the records did not meet the first half of the second part of the three-part test as the pricing information was the product of negotiation and thus was not “supplied” to the hospital. As all three parts of the section 17(1) test must be met, the IPC did not consider it necessary to also review the confidentiality requirement of the second half of the second part or the harms contemplated in the third part of the three-part test.
What does this mean for suppliers of services to hospitals?
Suppliers to hospitals should be aware that pricing information contained in purchase orders and invoices will likely not be found to meet the test for third party information exemption under section 17(1) of FIPPA. The biggest hurdle appears to be meeting the “supplied” part of the three-part test. The approach of the IPC in Order PO-3518 is consistent with prior decisions of the IPC that have found that pricing information found in purchase orders and invoices are generally not captured by the third party information exemption (see for example, IPC Orders PO-3450, PO-3347, PO-3237 and PO-3174). This approach has also been upheld by the Ontario Divisional Court. Where pricing information can be traced back to the negotiated agreement between parties, the IPC will likely find that the records could not be said to have been “supplied”. The provisions of a contract, in general, are viewed by the IPC as being mutually generated, rather than “supplied” by the third party, even where the contract is preceded by little or no negotiation, or where the final agreement reflects information that originated from a single party. In Order PO-3518, the IPC also notes that the approach of the IPC, which has also been consistently upheld by the courts, is that information regarding the amount of monies a government institution has contractually agreed to pay for a service should be available to the public.
Although the IPC does acknowledge that there are two exceptions to the general rule, the “inferred disclosure” and “immutability” exceptions, it appears based on this Order and the prior orders cited above, that these exceptions do not generally apply. The “inferred disclosure” exception applies where disclosure of the information in a contract would permit accurate inferences to be made with respect to underlying non-negotiated confidential information supplied by the affected party to the institution. The “immutability” exception applies to information that is immutable or is not susceptible to negotiation, such as financial statements, underlying fixed costs and product samples or designs. In Order PO-3518, the IPC found that the “inferred disclosure” exception did not apply as the disclosure of the amounts paid by the hospital to the third party supplier would not reveal non-negotiated confidential information and that the “immutability” exception did not apply as there was no evidence that the information at issue was immutable or not susceptible to change.