No Sealing of Record to Protect Reputation of Defendants

From Liberty Mutual Fire Ins. Co. v. Maple Manor Neuro Center Inc., decided Tuesday by Judge Linda Parker (E.D. Mich.):

This dispute arises from no-fault insurance benefits that Plaintiffs … paid to Defendants … for the treatment of [Plaintiffs'] insureds pursuant to Michigan’s No-Fault Act. Plaintiffs are insurance companies providing no-fault insurance coverage in Michigan…. Plaintiffs filed a Complaint alleging that Defendants engaged in a scheme to submit false and fraudulent medical records, bills, and invoices through interstate wires, which sought payment for treatment and services from an unlicensed healthcare provider. Plaintiffs allege that Defendants conduct violates the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c) and (d), and state law.

On or about December 16, 2022, the parties entered into a good faith Settlement Agreement and Mutual Release …. On December 22, 2022, Defendants filed a motion to seal the entire record, which Plaintiffs consented to as part of the Settlement….

Defendants argued “that Plaintiff’s complaint has ‘zero merit’ due to a recently issued Michigan Court of Appeals opinion, thus warranting the sealing of the entire record”; the court disagreed:

[E]ven if the Court did find the Complaint to be without merit, Defendants do not cite any case law that would support a decision to seal the entire record based on this fact….

And defendants also argued that the complaint “wrongfully named” the doctors who owned Maple Manor “as individual defendants, thus tarnishing their reputation.” But the court again disagreed, and refused to even redact the individual defendants’ names:

[T]he Sixth Circuit has repeatedly held that harm to reputation does not outweigh the public’s interest in access to court records. See Rudd Equip. Co., Inc. v. John Deere Constr. & Forestry Co. (6th Cir. 2016) (“Simply showing that the information would harm the company’s reputation is not sufficient to overcome the strong common law presumption in favor of public access to court proceedings and records”); Kiwewa v. Postmaster Gen. of United States (6th Cir. 2019) (“Harm to reputation is insufficient to overcome the strong presumption in favor of public access…”); Procter & Gamble Co. v. Bankers Tr. Co. (6th Cir. 1996) (“The private litigants’ interest in protecting their vanity or their commercial self-interest simply does not qualify as grounds for imposing a prior restraint. It is not even grounds for keeping the information under seal…”).

As a final point, Defendants’ decision to start a business and receive profits logically follows that Defendants may be subjected to lawsuits—meritless or not—regarding those business transactions: this is the cost of doing business. Merely being named as a defendant in a litigation does not entitle anyone to seal an entire record absent any recognized exception. See Shane Grp., Inc. v. Blue Cross Blue Shield of Michigan (6th Cir. 2016) (noting that “only the most compelling reasons can justify non-disclosure of judicial records.”) (citation omitted).

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