Maine Education Ass'n Benefits Trust v. Cioppa

United States Court of Appeals
For the First Circuit

No. 12-1199

THE MAINE EDUCATION ASSOCIATION BENEFITS TRUST,
and ROGER YOUNG, SUSAN GRONDIN, SALLY PLOURDE,
MARY KAY DYER, CHRIS GALGAY, KELLY LITTLEFIELD, LOIS
KILBY-CHESLEY, DARRELL KING, and DENNIS TOWLE, in their
capacities as trustees of the Maine Education Association
Benefits Trust,

Plaintiffs, Appellants,

v.

ERIC CIOPPA, in his official capacity as Superintendent
of Insurance of the State of Maine,
and
MAINE SCHOOL ADMINISTRATIVE DISTRICT 60; AUGUSTA
SCHOOL DEPARTMENT; MAINE SCHOOL BOARD ASSOCIATION;
BANGOR SCHOOL DEPARTMENT; REGIONAL SCHOOL UNIT 23,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. George Z. Singal, U.S. District Judge]

Before

Lynch, Chief Judge,
Lipez and Howard, Circuit Judges.

Christopher C. Taintor, with whom Norman, Hanson & DeTroy
LLC was on brief, for appellants.
Jonathan R. Bolton, Assistant Attorney General, with whom
William J. Schneider, Attorney General, Andrew L. Black and
Thomas A. Knowlton were on brief, for appellees.
September 24, 2012
 HOWARD, Circuit Judge. In October 2011, the State of

Maine enacted L.D. 1326, "An Act To Allow School Administrative

Units To Seek Less Expensive Health Insurance Alternatives,"

pursuant to which health insurers must disclose, upon written

request from a public school district, aggregate loss information

pertaining to any group policies held by the district's employees.1

L.D. 1326, 125th Leg., 1st Reg. Sess. (Me. 2011). Shortly

thereafter, plaintiff-appellant Maine Education Association

Benefits Trust (the "Trust") -- which manages a statewide health

insurance plan for a substantial segment of Maine's public school

work force -- filed suit in the district court, seeking to

permanently enjoin the law prior to its enforcement. The Trust

alleged, inter alia, that because its loss information constitutes

a confidential trade secret, the Act's disclosure requirement

results in an uncompensated taking proscribed by the Fifth

Amendment. The district court denied the Trust's motion for a

preliminary injunction, and the Trust now challenges that denial in

this timely appeal. After careful consideration, we affirm.

I.

A brief overview of the Trust, its health insurance plan,

and the statutory scheme at issue is necessary for an understanding

of the claims presented on appeal. The district court's thoughtful

1
The phrase "school administrative unit" is, for our
purposes, synonymous with "school district."

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and comprehensive order, see Maine Educ. Ass'n Benefits Trust v.

Cioppa, No. 1:11-cv-381-GZS, 2012 WL 363923 (D. Me. Feb. 3, 2012),

contains a detailed exposition of the undisputed facts, from which

we borrow.

A. The Trust and Its Health Insurance Plan

Since 1993, the Trust has provided health insurance to

the bulk of Maine's public school employees and their dependents

through a plan underwritten by various insurers, most recently

Anthem Blue Cross Blue Shield of Maine ("Anthem"). The insurance

plan (the "Plan"), which currently covers nearly 67,000 members

from 99 percent of Maine's school districts, is community-rated;

that is, the price of coverage is negotiated on the basis of group-

wide utilization costs, and accounts for neither geographic

variation nor an individual employer's demographic mix, prior

utilization, or loss experience. This community-rated plan is

designed in part to subsidize, through members who are actuarially

favorable, the premiums paid by members who are actuarially less

attractive to insurers. The Plan as designed economically benefits

employees of educational institutions whose work forces are older

or less healthy than other members of the group, or who reside in

regions -- typically Northern and Eastern Maine -- with higher

health care costs and, on average, lower salaries than their

Southern Maine counterparts. The Plan is thus structured, in part,

to help mitigate this disparity.

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 Eligibility for enrollment in the Plan is determined by

the collective bargaining agreements negotiated between local

bargaining units and individual employers, predominantly school

districts. The employees of a given school district are eligible

to participate in the Plan if the largest collective bargaining

unit in that district is represented by the Maine Education

Association ("MEA"), the statewide teachers' union that founded the

Trust. Once eligibility has been established, the school board and

the employees decide together, by a collaborative vote, whether the

employees will be offered the Plan. Those who receive the offer

and elect to enroll do so directly with the Plan's insurer, Anthem.

The Trust has no contracts with individual educational

institutions, and those institutions are not considered to be

sponsors of the Plan. Rather, based on the amount agreed to in its

own collective bargaining agreement, each school district pays to

the Plan a percentage of its employees' health insurance premiums,

and the employees are responsible for the remainder.

For the most recent plan year for which there was

evidence at the preliminary injunction hearing, the Plan's annual

premium was nearly $370,000,000, resulting in an average monthly

cost of approximately $460 per member. The Trust itself maintains

a reserve fund that, according to its last available audit, held in

excess of $87,000,000. The Trust uses the reserve fund to buy down

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rate increases, thereby avoiding inflation in the monthly cost

charged to Plan participants.

B. The Statutory Scheme

Similar to the other states, Maine heavily regulates the

insurance industry. "Title 24-A, the 'Maine Insurance Code,' has

85 separate chapters and fills almost two complete volumes of the

Maine Revised Statutes Annotated. There is [also] an entire

department of State Government, the Insurance Bureau, devoted to

regulating the business of insurance." Lessard v. Allstate Ins.

Co., No. Civ. A. cv-98-162, 2001 WL 1712653, at *4 (Me. Super. Ct.

March 12, 2001).

Under Maine's regime, the state has historically

compelled the disclosure of basic "loss information," generally

defined as the aggregate claims experience of a given policy, or

more specifically, the ratio of premiums charged to claims paid --

in short, a simple equation, and the applicable data, for

deciphering the purchaser's own healthcare costs. For example,

Maine law has entitled holders of property and casualty insurance

policies to obtain such loss information from their carriers since

1989, see 1989 Me. Laws, Ch. 696, "An Act Requiring the

Availability of Insurance Loss Information" (codified at Me. Rev.

Stat. Ann. tit. 24-A, §§ 2910, 3042). In 1995, this access was

expanded to cover current and former policyholders of group and

blanket health insurance, see 1995 Me. Laws, Ch. 71, "An Act to

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Require Insurance Companies to Provide Loss Information to Insured

Groups" (codified at Me. Rev. Stat. Ann. tit. 24-A, § 2803-A)

("Disclosure of Loss information. Upon written request, every

insurer shall provide loss information concerning a group policy or

contract to its policyholder . . . ." (emphasis added)). L.D. 1326

is incidentally more expansive, extending the right of access not

just to "policyholders," but also to the small subgroup of public

school districts whose employees are enrolled in a shared health

insurance policy.

In seeking preliminary injunctive relief, the Trust

mounted challenges to the two provisions of the Act that deal with

loss information, codified at 20-A M.R.S.A. § 1001(14)(E) and 24-A

M.R.S.A. § 2803-A(2). As amended, 20-A M.R.S.A. § 1001(14)(E)

states, in pertinent part:

Insurance purchase by competitive bidding
. . . .

E. In order to facilitate the competitive
bidding process in procuring health insurance
for a school administrative unit's employees
under this subsection, a school administrative
unit may request from the insurer providing
health insurance coverage to its employees and
retirees loss information concerning all of
that school administrative unit's employees
and retirees and their dependents covered
under the school administrative unit's policy
or contract pursuant to Title 24-A, section
2803-A.

24-A M.R.S.A. § 2803-A(2) reads, in turn:

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 2. Disclosure of basic loss information. Upon
written request, every insurer shall provide
loss information concerning a group policy or
contract to its policyholder, to a former
policyholder or to a school administrative
unit pursuant to Title 20-A, section 1001,
subsection 14, paragraph E within 21 business
days of the date of the request. This
subsection does not apply to a former
policyholder whose coverage terminated more
than 18 months prior to the date of a request.

The "loss information" at the center of this controversy is

statutorily defined as "the aggregate claims experience of the

group insurance policy or contract," including "the amount of

premium received, the amount of claims paid[,] and the loss ratio,"

but not including "any information or data pertaining to the

medical diagnosis, treatment[,] or health status that identifies an

individual covered under the group contract or policy." Me. Rev.

Stat. Ann. tit. 24-A, § 2803-A(1)(B).

C. The Trust's Past Treatment of Loss Information

The Trust has structured itself, as well as its

relationships with insurers, to keep the Plan's loss information

confidential. Since the Trust's formation in 1993, its Trust

Agreement has provided, in relevant part:

Fiduciary Authority. The Trustees shall have
absolute discretion and authority to make all
fiduciary decisions, plan provision
interpretations and constructions, and other
determinations under this Trust and any plans
maintained under the Trust, except as
specifically delegated to the Plan
Administrator in writing; including, without
limitation, decisions relating to the use and
dissemination (if any) of the participant

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 claims experience data under any plan
maintained under the Trust.

Additionally, since 2005, the Trust's Group Agreements with Anthem

have included the following confidentiality clause:

All experience data relative to the [Trust]
and its subgroups is owned by the Trust, and
that data will not be released, either
directly or indirectly, by Anthem without
prior written consent of the Trust, and the
Trust can withhold its permission for any
reason it deems appropriate. Additionally,
Anthem agrees not to utilize data relating to
specific active subgroups for standalone
rating purposes.

In accordance with these provisions, the Trust has always

considered the experience ratings and claims history of individual

school districts to be a proprietary, confidential trade secret.

The information is not conveyed to anyone outside of Anthem

(including to members of the Trust itself), and the Trust has

undertaken reasonable efforts to ensure the information's

confidentiality by neither collecting it nor allowing Anthem to use

or release it.2

A driving force behind these efforts at maintaining

confidentiality is to prevent actuarially desirable districts from

acquiring the information and leaving the community-rated plan for

less expensive individual coverage, thereby increasing the monthly

2
The loss information is collected and maintained not by the
Trust, but by the insurer. The Trust's only role with respect to
the loss information is in preserving its confidentiality by
precluding third-party access.

-9-
costs for the Plan's remaining members (or, alternatively, forcing

the Trust to expend additional resources from its reserve fund to

pay down the resulting rate increases). Prior to the passage of

L.D. 1326, the Trust was able to do exactly that, denying multiple

school district requests for loss information over the years by

virtue of the fact that the Trust, and not the individual school

districts, was always the primary "policyholder." See 1995 Me.

Laws, Ch. 71 (requiring disclosure of loss information concerning

a group health insurance policy or contract only to "its

policyholder").

Generally, group insurers in Maine require at least two

years of aggregate loss information from an employer in order to

provide a quote. Thus, without access to loss information, school

districts cannot meaningfully explore insurance options outside

those offered by the Trust. Following the enactment of L.D. 1326,

at least one district has already submitted a renewed request to

Anthem. In the absence of an injunction, it is apparent that

school districts will continue to request access in order to obtain

competing quotes based on that loss information. Depending on the

quotes and the terms of each district's collective bargaining

agreement, this process may or may not result in some districts

withdrawing their employees from the Plan. In most cases, if not

all of them, negotiating changes to the respective collective

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bargaining agreements is a lengthy process that may take months, if

not years, to complete.

D. The Proceedings Below

The Trust filed suit in the district court shortly after

L.D. 1326 was enacted. Its amended complaint claimed that the Act

was preempted by federal law, and that it ran afoul of several

constitutional impediments, including the Contracts Clause, the

Takings Clause, and the Due Process Clause. The district court

resolved the preemption question, as well as the impairment of

contract and due process claims, in favor of the defendants-

appellees, and it denied the Trust's subsequent request for a

preliminary injunction, finding primarily that the Trust was not

likely to succeed on the merits of its only remaining claim -- that

the Act works as an unconstitutional taking. This interlocutory

appeal ensued, in which the Trust challenges only the denial of its

request for a preliminary injunction on takings grounds.3 We have

jurisdiction under 28 U.S.C. § 1292(a)(1), and on March 30, 2012,

3
We note that, ordinarily, injunctive relief is not available
under the Takings Clause. See Ruckelshaus v. Monsanto Co., 467
U.S. 986, 1016 (1984) ("Equitable relief is not available to enjoin
an alleged taking of private property for public use, duly
authorized by law, when a suit for compensation can be brought
against the sovereign subsequent to the taking."); Fideicomiso De
La Tierra Del Caño Martin Peña v. Fortuño, 604 F.3d 7, 19 n.10 (1st
Cir. 2010). Because the appellees failed to object to the
appropriateness of this remedy on appeal, however, they have waived
the argument. See Philip Morris, Inc. v. Reilly, 312 F.3d 24, 47
n.22 (1st Cir. 2002) (en banc) ("Philip Morris II").

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we entered a temporary injunction prohibiting the enforcement of

L.D. 1326 pending appeal.

II.

In considering a request for a preliminary injunction, a

trial court must weigh several factors: (1) the likelihood of

success on the merits; (2) the potential for irreparable harm to

the movant in the absence of an injunction; (3) the balance of the

movant's hardship if relief is denied versus the nonmovant's

hardship if the relief is granted; and (4) the effect, if any, of

the decision on the public interest. Ross-Simons of Warwick, Inc.

v. Baccarat, Inc., 102 F.3d 12, 15 (1st Cir. 1996). Of these four

factors, the movant's likelihood of success "is the touchstone of

the preliminary injunction inquiry." Philip Morris, Inc. v.

Harshbarger, 159 F.3d 670, 674 (1st Cir. 1998) ("Philip Morris I").

"[I]f the moving party cannot demonstrate that he is likely to

succeed in his quest, the remaining factors become matters of idle

curiosity." New Comm Wireless Servs., Inc. v. SprintCom, Inc., 287

F.3d 1, 9 (1st Cir. 2002).

We will set aside a district court's ruling on a request

for a preliminary injunction only if the court clearly erred in

assessing the facts, misapprehended the applicable legal

principles, or otherwise is shown to have manifestly abused its

discretion. Cohen v. Brown University, 991 F.2d 888, 902 (1st Cir.

1993). This standard requires "a party who appeals from the

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issuance [or denial] of a preliminary injunction [to] bear[] the

considerable burden of demonstrating that the trial court

mishandled the fourpart framework." Philip Morris I, 159 F.3d at

674 (second and third alterations in original) (quoting Ross-

Simmons, 102 F.3d at 16) (internal quotation marks omitted). In

this case, our analysis begins and ends with the evaluation of the

often dispositive factor: whether the Trust has a reasonable

likelihood of success on the merits of its takings claim.

A. Likelihood of Success on the Merits

The Takings Clause of the Fifth Amendment, which applies

to the states through the Fourteenth Amendment, prohibits the

taking of private property for public use without just

compensation. Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 536

(2005). This prohibition extends not only to the paradigmatic

physical taking -- i.e., where the government condemns or

physically appropriates a person's property -- but also to

regulatory interferences, which transpire "when some significant

restriction is placed upon an owner's use of his property for which

'justice and fairness' require that compensation be given." Philip

Morris, Inc. v. Reilly, 312 F.3d 24, 33 (1st Cir. 2002) (en banc)

("Philip Morris II").4

4
"Property," as contemplated by the Fifth Amendment, may be
real, tangible, or intangible like the purported trade secret at
issue here. See Monsanto, 467 U.S. at 1000-04. Although it is far
from clear that the loss information would qualify as a trade
secret under Maine law, see Me. Rev. Stat. Ann. tit. 10, § 1542(4),

-13-
 The dichotomy between physical and regulatory takings is

critical, for it often determines the level of scrutiny that a

challenged government action will receive. In contrast to the law

of physical takings, which involves, for the most part, the

"straightforward application of per se rules," the Supreme Court's

regulatory takings jurisprudence has eschewed any bright-line

formulations. Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l

Planning Agency, 535 U.S. 302, 322 (2002). To assess the propriety

of a regulatory takings claim, the Court has instead enumerated a

more nuanced, three-pronged inquiry into (1) the extent to which

the regulation interferes with the claimant's reasonable

investment-backed expectations; (2) the regulation's economic

impact on the property owner; and (3) the character of the

government action. Penn Cent. Transp. Co. v. City of New York, 438

U.S. 104, 124 (1978). Designed to facilitate a careful examination

and weighing of all the relevant circumstances, the context-

sensitive "Penn Central" factors operate not as a "checklist of

items that can be ticked off as fulfilled or unfulfilled," but

rather as "lenses through which a court can view and process the

facts of a given case." Philip Morris I, 159 F.3d at 674.

The Supreme Court has recognized two circumstances under

which a regulatory action may justify bypassing the Penn Central

we assume, arguendo, that it comprises a sufficient property
interest on which to ground a Fifth Amendment takings claim.

-14-
factors in favor of per se rules. First, where a regulation

inflicts a permanent physical invasion of private property --

however minor -- the government must provide just compensation.

Lingle, 544 U.S. at 538; see, e.g., Loretto v. Teleprompter

Manhattan CATV Corp., 458 U.S. 419 (1982) (finding a taking where

a state law required landlords to permit cable companies to install

cable facilities in apartment buildings). A second categorical

rule applies to "regulations that completely deprive an owner of

all economically beneficial use of her property." Lingle, 544 U.S.

at 538 (internal quotation marks and alterations omitted); see,

e.g., Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1019 (1992)

(holding that a regulation prohibiting the erection of any

permanent habitable structures constituted a taking). The

allegation here -- that L.D. 1326's disclosure requirement impinges

upon the Trust's purported trade secret -- encompasses neither of

these scenarios. Accordingly, and because the challenged

government action does not directly appropriate the Trust's

property, we proceed to analyze L.D. 1326 under the law of

regulatory takings.5

5
The Trust contends that a taking of intellectual property,
such as a trade secret, is more properly analyzed under the per se
rules of the physical takings rubric. Because the Trust did not
adequately develop this argument in the trial court -- merely
inviting the district court to "truncate its [Penn Central]
analysis if it finds that [L.D. 1326] . . . is more analogous to a
'physical' than a 'regulatory' taking" -- it cannot unveil the
argument's essence for the first time in the court of appeals. See
Back Bay Spas, Inc. v. 441 Stuart Marketing, LLC, 688 F.3d 61, 67

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 i. Reasonable Investment-Backed Expectations

Although generally recognized as the figurative ballast

of the Penn Central framework, "reasonable investment-backed

expectations" is a concept that can be difficult to define more

concretely. See generally J. David Breemer & R.S. Radford, The

(Less?) Murky Doctrine of Investment-Backed Expectations After

Palazzolo, and the Lower Courts' Disturbing Insistence on Wallowing

in the Pre-Palazzolo Muck, 34 S.W.U. L. Rev. 351 (2005).

Nevertheless, one very general contour is clear: "Courts [will]

only protect [a claimant's] reasonable expectations." Philip

Morris II, 312 F.3d at 36. Thus, in considering whether the Trust

possesses the requisite expectations to support a takings claim,

the inquiry must acknowledge that "not every investment deserves

protection and . . . some investors inevitably will be

disappointed." Id. The question reduces to whether the Trust,

given all of the attendant facts and circumstances, has a

probability of success of showing that it had a reasonable

(1st Cir. 2012) ("[H]aving chosen its theory of the case below, and
failed, [the appellant] cannot start over."); McCoy v. Mass. Inst.
of Tech., 950 F.2d 13, 22 (1st Cir. 1991) ("If claims are merely
insinuated rather than actually articulated in the trial court, we
will ordinarily refuse to deem them preserved for appellate
review."). In any event, we are confident that under the
circumstances presented, our precedent supports the application of
the Penn Central factors. See Philip Morris II, 312 F.3d at 33-34
(applying a regulatory takings analysis to an alleged taking of a
trade secret); see also Monsanto, 467 U.S. at 1005 (same); Pharm.
Care Mgmt. Ass'n v. Rowe, 429 F.3d 294, 315 (1st Cir. 2005) (same).

-16-
expectation that the Plan's loss information will be kept

confidential. We think not.

As a baseline proposition, the Trust's expectations are

substantially diminished by the highly regulated nature of the

industry in which it operates. See Franklin Mem'l Hosp. v. Harvey,

575 F.3d 121, 128 (1st Cir. 2009) (holding that a claimant's

investment-backed expectations were "tempered by the fact that it

operate[d] in the highly regulated hospital industry"); see also

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1007 (1984) (noting that

expectations are necessarily adjusted in areas that "ha[ve] long

been the source of public concern and the subject of government

regulation"). Given the historically heavy and continuous

regulation of insurance in Maine, see Lessard, 2001 WL 17126553, at

*4, the Trust, in choosing how and where to allocate its resources,

ought to at least be aware of the heightened possibility that new

insurance regulations might hinder the use or value of its loss

information, see Lucas, 505 U.S. at 1027-28.

This is particularly true where, as here, the extensive

regulatory framework in place prior to the passage of the

challenged legislation has consistently regulated the type of

property interest for which the claimant seeks constitutional

protection. See, e.g., Connolly v. Pension Ben. Guar. Corp., 475

U.S. 211, 226 (1986) (finding no reasonable investment-backed

expectations where the property interest at issue had been the

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"object[] of legislative concern long before the passage of [the

challenged legislation]"). Since 1989, holders of property and

casualty insurance in Maine have been able to obtain their

policies' loss information. See 1989 Me. Laws, Ch. 696. In 1995

-- not long after the Trust was formed, and well before it began to

insist on the inclusion of confidentiality provisions in its Group

Agreements -- this right of access to loss information was expanded

to policyholders of group and blanket health insurance like the

Plan at issue here. See 1995 Me. Laws, Ch. 71. Thus, for years

the Trust was spared the obligation of disclosure solely because of

the Plan's unique structure, whereby the Trust, and not the school

district, was the technical policyholder. Throughout this extended

period, several of the state's school districts were clamoring for

loss information, and ultimately, for the legislature to close this

perceived loophole. See Apollo Fuels, Inc. v. United States, 381

F.3d 1338, 1349 (Fed. Cir. 2004) (suggesting that a key aspect of

the investment-backed expectations inquiry is the claimant's

awareness of "the problem that spawned the [challenged]

regulation"). Under these circumstances, the prospect of the

legislature's continued expansion of this right of access was

reasonably foreseeable.6

6
Maine health insurers must additionally submit group-policy
loss information to the Maine Bureau of Insurance through rate
filings, see Me. Rev. Stat. Ann. tit. 24-A, §§ 2736, 2808-B(2-A) &
2839, annual reports, see Me. Rev. Stat. Ann. tit. 24-A, §§ 423 &
423-D, and beginning in 2012, in medical loss ratio reports, see 42

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 The Trust, in challenging this conclusion, relies

principally on the distinction between "policyholders" and "non-

policyholders." It contends that because L.D. 1326 grants non-

policyholders (the school districts) access to confidential

policyholder information, it represents an "extraordinary and

unprecedented" regulatory shift. We disagree.

As a preliminary matter, requiring the disclosure of

otherwise private information to non-policyholders is not a novel

concept in Maine insurance law. See, e.g., Me. Rev. Stat. Ann.

tit. 24-A, § 2210 (requiring insurers to provide personal data to

claimants and insureds over a policyholder's objection); Me. Code.

R. 90 590 243 §§ 2, 5 (2003) (requiring insurers to provide claims

data to the government over a policyholder's objection).

Moreover, the significant role that school districts play

in the Plan's overall scheme is important to the analysis. While

it is true that the districts do not formally sign the insurance

agreements on behalf of their employees, and therefore are not the

formal sponsors of the Plan, they are otherwise integrally involved

U.S.C. § 300gg-18(a). Although insurers may request that any such
data submitted in large-group rate filings be treated as
confidential, any loss information included in annual reports or
medical loss ratio reports is subject to full public disclosure.
While the loss information shared in these instruments is typically
aggregated across entire policies (or perhaps even entire blocks of
business), and therefore does not necessitate disclosure of the
district-by-district breakdown that constitutes the Trust's
purported trade secret, these additional disclosure requirements
serve to further highlight the State's extensive regulation of loss
information.

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in just about every step of the process, from negotiating the

collective bargaining agreements to organizing and participating in

collaborative votes to determine whether their employees may enroll

in the Plan in the first instance. In the event that loss

information is to be disclosed for the purpose of exploring

alternative district-specific coverage, the district itself is the

obvious choice to assume "policyholder" status. Indeed, the Act

forecloses the type of "unprecedented" access argued by the Trust,

by restricting disclosure to loss information that concerns the

inquiring district's own employees, retirees, and their dependents;

it does not grant access to the Trust's policy-wide loss ratios.

See Me. Rev. Stat. Ann. tit. 20-A, § 1001(14)(E). Thus, the

districts are not, as the Trust suggests, mere "strangers to the

insurance contract" in the ordinary sense, and L.D. 1326 is not at

odds with Maine's existing body of insurance law.7

7
The Trust's attempt to analogize the facts of this case to
those we considered in Philip Morris II is also unpersuasive. See
312 F.3d 24. Although Philip Morris II addressed, as here, the
potential regulatory taking of a trade secret, its factual context
was dramatically different. There, tobacco companies challenged a
Massachusetts law which compelled them to disclose their cigarette
recipes -- traditionally protected trade secrets in which they
invested substantial amounts to maintain an advantage in a highly
competitive private industry. Here, by contrast, the Trust
challenges a Maine law that compels the disclosure of loss
information -- a purported trade secret in which the Trust has made
no significant developmental investment, and a type of property
interest which has consistently been targeted by state regulation
given the need for transparency in the public-oriented insurance
industry. Fundamentally distinguishable on its facts, Philip
Morris II does not suggest a finding of reasonable investment-
backed expectations in this case.

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 While this conclusion is largely dictated by precedent,

it is also rational from a policy standpoint. The motivation

behind the State's previous attempts to regulate loss information

was clear: to prevent sellers of group health insurance from

acquiring disproportionate leverage over buyers by ensuring that

both parties have access to the relevant cost information. The

construct created and advocated by the Trust, under which such

information cannot be released to "non-policyholders," effectively

precludes any member school district from opting out of the Plan,

and thus is contrary to the regulation's intent by denying school

districts the benefit of equal access.

We recognize that the Trust's purpose is to spread health

risk among a larger population, thereby bringing insurance costs

down for districts in which enrollees, on average, are less healthy

and where health care costs are relatively high. Nonetheless, the

fact remains that the legislation is highly consistent with

legitimate policy objectives. L.D. 1326 simply continues what the

1989 and 1995 regulations started by addressing a unique scenario

which, in all likelihood, was not contemplated by the original

legislation. Cf. Connolly, 475 U.S. at 227 ("Those who do business

in the regulated field cannot object if the legislative scheme is

buttressed by subsequent amendments to achieve the legislative

end." (quoting FHA v. The Darlington, Inc., 358 U.S. 84, 91

(1958)).

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 The Trust's remaining arguments on this issue require

little discussion. It attempts to treat the aforementioned facts

in isolation, asserting that none, standing alone, was sufficient

to provide the Trust with constructive notice of L.D. 1326. It may

be that neither the fact that the insurance industry is highly

regulated nor the fact that school districts routinely sought

access to the seemingly confidential loss information, standing

alone, sufficiently undermines the reasonableness of the Trust's

expectations. But taken together, and in light of the State's

history of aggressively regulating the use and disclosure of loss

information, L.D. 1326 is a relatively minor expansion which the

Trust could, and should, have anticipated.

We do not discount the fact that, since its inception,

the Trust has gone to lengths to preserve the confidentiality of

its purported trade secret. Its Trust Agreements, as well as its

post-2004 Group Agreements with Anthem, unequivocally reserve to

the Trust all rights respecting the Plan's loss information, and

the Trust has enforced those rights in the face of repeated school

district inquiries. The Trust therefore has demonstrated an

expectation of confidentiality. But unilateral expectations, no

matter how adamantly pursued, are not enough. See Monsanto, 467

U.S. at 1005-06. The expectation must be a reasonable one, and on

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the record before us, we cannot conclude that the plaintiffs have

shown a probability of success on this issue.8

ii. Economic Impact

Evaluating the magnitude of the economic impact of

regulatory action ordinarily requires an assessment of the extent

to which the action "impairs the value or [typical] use" of the

property. PruneYard Shopping Ctr. v. Robins, 447 U.S. 74, 83

(1980). In this regard, a result of the law's requirement that

loss information be disclosed to districts upon request is that the

Trust may be less able to prevent districts with favorable claims

experience from shopping for alternative coverage. Upon acquiring

their respective loss information, some actuarially favorable

school districts may leave the Plan for less expensive district-

specific coverage, resulting in relatively higher premiums for the

Plan's remaining members (or greater expenditures by the Trust to

pay those rate increases down). We do not minimize this possible

impact, and we acknowledge the Trust's defensible goal of making

insurance more affordable for those in areas where health care

costs are higher and teacher salaries are lower.

8
The parties and the district court bifurcate the
expectations analysis, addressing pre- and post-L.D. 1326 loss
information separately. Because the Trust has not demonstrated a
probability of success in establishing a reasonable expectation
regarding the confidentiality of loss information accumulated prior
to L.D. 1326, however, it follows that no such expectation would
exist subsequent to the legislation's enactment.

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 The likelihood and severity of the exodus of members,

however, are completely unknown. The only concrete evidence on the

issue includes the affidavits of the parties' dueling actuaries who

debate, at a high level of generality, the extent to which L.D.

1326 will undermine the Trust's prospective viability. To wit, the

Trust's actuarial expert, having been denied access to the

district-specific loss ratios,9 was able to conclude only that "if

individual school districts purchase insurance on their own, some

groups with lower average age, more favorable utilization history,

or a lower cost of geographic area might be able to take advantage

of that more favorable profile and obtain insurance from Anthem or

another carrier at lower cost than they currently pay to

participate in the . . . [P]lan." This evidence merely serves to

highlight the conjectural nature of the Act's economic impact, and

is "not sufficiently concrete to establish a taking." In re Jones

Truck Lines, Inc., 57 F.3d 642, 651 (8th Cir. 1995) (finding that

economic impact was too speculative to support a takings claim);

see also Tenn. Scrap Recyclers Ass'n v. Bredesen, 556 F.3d 442, 456

(6th Cir. 2009) (finding that the economic impact of the challenged

regulation did not support the movant's takings claim, in part

because "the [economic] impact of [the regulation was]

speculative").

9
The expert stated in his affidavit that "I do not have
access to the experience of the individual districts whose
employees and retirees are covered by the . . . [P]lan."

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 Whether or not at trial, and with a more developed

evidentiary foundation, the Trust may be able to prove the

requisite economic impact, it has not yet done so sufficiently to

show a probability of success on the merits.

iii. Character of the Government Action

The third and final consideration in the regulatory

takings analysis -- the character of the government action -- also

weighs against the Trust's takings claim. Under Penn Central, "[a]

'taking' may more readily be found when the interference with

property can be characterized as a physical invasion by government

than when [the] interference arises from some public program

adjusting the benefits and burdens of economic life to promote the

common good." Id. (citation omitted). L.D. 1326 clearly falls on

the latter end of the spectrum, reflecting the legislature's

judgment that allowing school districts to access their employees'

loss information will promote the common good by creating a wider

array of competitively priced group health insurance options. See

Me. Rev. Stat. Ann. tit. 20-A, § 1001(14)(E) (enabling school

districts to request their loss information "[i]n order to

facilitate the competitive bidding process in procuring [group]

health insurance").

The Trust argues that even if the Act is intended to

promote the common good, it does so improperly by reallocating to

the Trust alone what is essentially a public burden. Claiming that

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it has been effectively "singl[ed] out" by the Maine legislature,

the Trust directs us to five comments in the Act's legislative

record which, more or less, appear to cast the Trust in a negative

light.

The argument, however, is unavailing. L.D. 1326 does not

apply solely to the Trust; it applies to every existing or future

multi-employer group health insurance plan in which the State's

public school districts choose to enroll. That the Trust attracted

the attention of a handful of legislators, and currently bears the

brunt of the Act's burden, is merely a byproduct of its holding the

predominant share of the targeted market -- a virtual monopoly,

perpetuated by the very policy of non-disclosure which it seeks to

protect. At the preliminary injunction stage, the Trust has not

shown that the Act attempts to impose on the Trust an excessive

burden that should in fairness be borne by other entities or by

society as a whole. Cf. E. Enter. v. Apfel, 524 U.S. 498, 537

(1998) (holding that the character of a state regulation supported

the movant's takings claim only where it "single[d] out certain

employers to bear a burden that is substantial in amount, based on

the employers' conduct far in the past, and unrelated to any

commitment that the employers made or to any injury that they

caused"). Thus, the third Penn Central factor, like the two before

it, counsels against finding that a taking has occurred.

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 We emphasize that because we hear this matter on appeal

from the denial of a preliminary injunction, our likelihood-of-

success determinations are to be understood only as probable

outcomes. See Cohen, 991 F.2d at 902. At the upcoming trial, the

Trust will have the opportunity to demonstrate more concretely and

comprehensively the economic impact that it fears, namely, the

withdrawal of school districts with better claims experience and

the resulting increased cost of health insurance coverage for the

Trust's remaining members. Based on the present state of the

record, however, we cannot conclude that the Trust is likely to

succeed on the merits.

III.

Because the plaintiffs have not established a likelihood

of success, and such a showing is essential to the issuance of a

preliminary injunction, see Philip Morris I, 159 F.3d at 674, it

would serve no useful purpose to explore the remaining three facets

of the preliminary injunction framework. We conclude that there

was no abuse of discretion in the denial of the Trust's motion for

a preliminary injunction, and leave to the trial court to determine

whether it should stay enforcement of the Act pending hearing

evidence and decision on the merits. The decision of the district

court is affirmed. Each side shall bear its own costs of this

appeal.

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