For The Defense, July 2010 - DRI Today
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<strong>DRI</strong>—<strong>The</strong> Voiceof the <strong>Defense</strong> BarVol. 52, No. 7 <strong>July</strong> <strong>2010</strong>PresidentCary E. HiltgenOklahoma City, OklahomaImmediate Past President Marc E. WilliamsHuntington, West VirginiaPresident-Elect1st Vice President2nd Vice PresidentSecretary-TreasurerExecutive DirectorR. Matthew CairnsConcord, New HampshireHenry M. SneathPittsburgh, PennsylvaniaMary Massaron RossDetroit, MichiganCharles H. ColeChicago, IllinoisJohn R. KourisDeputy Executive Director Tyler HowesEditor-in-ChiefManaging EditorEditorProduction ManagerSenior ProductionCoordinatorContributing EditorsAdvertisingRepresentativeDonald J. HirschJay LudlamMichelle ParriniJulia BergerudColin JacksonMarge MotluckCheryl PalombizioLaurie P. Mokry<strong>For</strong> <strong>The</strong> <strong>Defense</strong>, <strong>July</strong> <strong>2010</strong>, Vol. 52, No. 7 (ISSN 0015-6884). Copyright ©<strong>2010</strong>, <strong>DRI</strong>. All rights reserved.Published monthly by <strong>DRI</strong>, 55 West Monroe Street ~Suite 2000, Chicago, Illinois 60603. Telephone: (312)795-1101. Fax: (312) 795-0747.Periodicals postage paid at Chicago, Illinois, and atadditional mailing offices. Subscription price is $65.00per year, and, for <strong>DRI</strong> members, is included in the membershipdues. Individual copies are $7.00 for <strong>DRI</strong> membersand $12.00 for non-members, plus postage andhandling.POSTMASTER: Send address changes to <strong>For</strong> <strong>The</strong><strong>Defense</strong>, <strong>DRI</strong>, 55 West Monroe Street ~ Suite 2000, Chicago,Illinois 60603.Correspondence and manuscripts should be sent tothe Editor.All views, opinions and conclusions expressed in thismagazine are those of the authors, and do not necessarilyreflect the opinion and/or policy of <strong>DRI</strong> and itsleadership.I N T H I S I S S U E1 On <strong>The</strong> Record<strong>2010</strong> <strong>DRI</strong> Annual Meeting: I Hope It Is Not a CoincidenceBy Chuck Stewart, <strong>2010</strong> Annual Meeting Program Chair4 <strong>DRI</strong> NewsCharm City Plays Host for Mid Atlantic Meeting • Diversity ScholarshipsAwarded • <strong>DRI</strong> Calendar • Members on the MoveC E L E B R AT I N G 5 0 Y E A R S8 Education: <strong>The</strong> First Pillar<strong>DRI</strong>—Its Law Institute and Its SeminarsBy Chrys A. MartinM E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A W10 From the Chair 36 Facing Prosecution and Prison<strong>The</strong> Challenge ofWhen Does Medical NegligenceChange in Health Care Become Criminal?By Philip L. WillmanBy Heidi A. Barcus and Eric Shen12 Let Medical Science Improve 39 <strong>The</strong> First WaveLegal OutcomesEmerging Trends in ElectronicPreserving SummaryHealth Record LiabilityJudgment as an OptionBy Chad P. BrouillardBy Thomas V. Laprade45 Coupling Evidentiary and Procedural Tools17 <strong>Defense</strong> of Corporate ParentsDefending Negligent Credentialing CasesManaging Direct ParticipantBy Thomas J. Hurney, Jr., Rodney W. Stieger,Liability ClaimsPhilip L. Willman and Angela E. PozzoBy Michael J. Griffin52 Typical Complications23 Malpractice Jury VerdictsEnforcing Arbitration Agreements<strong>The</strong> Trial Lawyer’sin Long-Term Care LitigationDifferential DiagnosisBy Brad W. Smith, W. Davis Frye and Brad C. MoodyBy Sue Seif and Thomas G. Leverage 57 Staying Out of the Rabbit Hole29 <strong>The</strong> National Practitioner Data Bank <strong>The</strong> Entanglements of AlteredHow Required Reporting CanMedical RecordsImpact Case ResolutionBy John Zen Jackson and Ann Marie VaurioBy J. Richard Moore and J. Bart McNielP R O F E S S I O N A L L I A B I L I T Y62 From the ChairGrowing Strong with BigPlans for the FutureBy Matthew S. Marrone64 Privilege and Work Product IssuesInsurers’ Retention of Outside CounselBy Scott D. Braun and Jenna L. Buda68 It Depends<strong>The</strong> Ins and Outs of Attorney-Corporate-Client PrivilegeBy Shari Claire Lewis84 Writers’ CornerSimplicity, Faking, and Genius: Tips for Writing about Technical and Scientific TopicsBy Mary Massaron Ross85 Think GloballyFive Tips for Preventing Problems: Supply Chain Issues in the Global EraBy Christopher G. Campbell and Laura T. Vogel86 <strong>Defense</strong> Ethics and ProfessionalismProtecting Personal Information: What You Don’t Know Could Hurt You and OthersBy Diane M. Saunders92 Advocates and New Members74 When Is It Needed?Expert Testimony in LegalMalpractice CasesBy Jeffrey M. James78 Legal MalpracticeClaims Arising from Multiple-Defendant LitigationBy Susan E. Wassell
O N T H E R E C O R D<strong>2010</strong> <strong>DRI</strong> Annual MeetingI Hope It Is Not a CoincidenceBy Chuck Stewart, <strong>2010</strong> Annual Meeting Program ChairI hope that it is not a coincidence that <strong>DRI</strong> President-Elect Matt Cairns asked me to chair the <strong>2010</strong> AnnualMeeting, October 20–24 in San Diego, during the veryyear that both <strong>DRI</strong> and I turned 50 years old. I hopethat Matt chose me to chair this meeting to permit meto demonstrate to <strong>DRI</strong> the important role that the organizationplays in my daily life and practice. This will be<strong>DRI</strong>’s 15th Annual Meeting, and I have made them all—except when trials stood in the way. <strong>For</strong> one half of mylife, I have been a member of <strong>DRI</strong>. I cannot even beginto count the number of <strong>DRI</strong> seminars I have attended—I won’t try. Turning 50 has had that deteriorating affecton my brain, and me generally. In <strong>DRI</strong>’s case, however,the chronological age has resulted in a great number ofgood changes. Over these past 50 years, <strong>DRI</strong> grew fromthe brainchild of a few brilliant visionaries into thelargest and most prominent defense organization specificallydedicated to the advancement of education, justice,professionalism, service, economics, and balance.<strong>The</strong> program, the setting, and the speakers for thisAnnual Meeting create a perfect beginning for the next50 years. On the first day, the opening speaker MarcusLuttrell, a former U.S. Navy Seal and the author of theNew York Times bestseller Lone Survivor, sets the tone.Luttrell’s story is absolutely amazing and very compelling.As a child, in his home state of Texas, he yearnedto join the Navy Seals. Luttrell ran thousands of miles,trained religiously, and was accepted into the Navy Sealprogram. <strong>For</strong> his efforts, he was sent into the mountainousregion of northern Afghanistan, near the borderwith Pakistan. Dropped into the mountains withhis team, Luttrell fought alongside his team membersand survived a frightening nightmare when his teammembers did not. His stirring, courageous story is filledwith examples of sacrifice, honor, patriotism, communityand destiny.Luttrell is not the only blockbuster speaker on theprogram. He is only the first. On the second day, SoledadO’Brien, CNN anchor and special correspondent,will share her tale of determination and hard work, valuesthat allowed O’Brien to reach the pinnacle of reporting.She strongly believes that education is crucial forour young people, and that mentoring keeps young peoplemotivated and hopeful. You will not want to missher speech.On Saturday, Mara Liasson, the award- winning journalistand national political correspondent for NPRushers in the third day, addressing the current politicalclimate, its impact on the legal profession, and policyissues facing the country. Her knowledge of the WhiteHouse, Congress, and politics beyond the Beltway causeNPR to call on her regularly for its award- winning newsprograms All Things Considered and Morning Edition.Matt Miller, brilliant author, columnist, and publicradio host, will speak at Thursday’s Awards Luncheon.A senior fellow with the Center for American Progress,Miller is a columnist for <strong>The</strong> Daily Beast and WashingtonPost, a contributing editor for <strong>For</strong>tune, and the hostof public radio’s popular, political week- in- review program,Left, Right & Center. Miller’s speaking and writingstyle makes his insightful commentary a terrific, mustseepart of the Annual Meeting.Annual Meetings mean networking and entertainmentas much as they mean education and enrichment.This year’s Thursday evening off-site Networking Receptionwill take place on the deck of the U.S.S. Midway aircraftcarrier. One of the largest ships in the Navy, theU.S.S. Midway played a crucial role in the defense ofour country, as well as serving as the Persian Gulf flagshipfor Operation Desert Storm in 1991. Members andguests will be able to explore the ship, cross- examine thedocents on the history of the ship, walk under the wingsand props of aircraft, climb into fighters, and even tryout flight simulators. Refreshments and live music willawait us on deck, and we will have the run of the aircraftcarrier against the stunning backdrop of downtown SanDiego and the marina. I promise a truly special night.Of course, that will not be the only reception. <strong>The</strong> WelcomeReception will start off the meeting on October 20.Before walking into this culinary arts and wine experience,stop by the First-Time Attendees and New MemberReception and join the <strong>DRI</strong> leadership for a few minutes.On October 21, before being shuttled to the U.S.S. Midway,attend the Diversity Reception for delicious horsd’oeuvres and refreshing cocktails. <strong>The</strong> Young LawyersCommittee is the host of the Networking Reception onFriday followed by dine-arounds at some of San Diego’sbest restaurants. <strong>The</strong>re is an Awards Luncheon on Thursdayand a Women’s Networking Luncheon on Friday.Finally, the President’s Gala and Installation Ceremonywill cap off the last day on Saturday. Great food and wineare not the only highlights of this event. <strong>DRI</strong> is havingits first Silent Auction and Saturday night is the finalOn <strong>The</strong> Record, continued next page<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 1
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<strong>DRI</strong> Services55 West Monroe StreetSuite 2000Chicago, Illinois 60603Phone (312) 795-1101Fax (312) 795-0747Internet www.dri.orgE-mail dri@dri.orgHours8:30-4:30 CSTMonday-Friday<strong>DRI</strong> Staff Contacts (direct-dialnumbers in area code 312).n Membership Servicesn Change of Addressn Group Life Insurancen Disability andMajor Medicaln Accidental Deathand Dismembermemtn Professional LiabilityInsurancen <strong>DRI</strong> Credit Card ProgramE-MAIL: membership@dri.orgCheryl Palombizio, 698-6207Ashley Butkovic, 698-6250Marge Motluck, 698-6237Sarah M. Vlcek, 698-6258n <strong>DRI</strong> CommitteesE-MAIL: committees@dri.orgLynn Conneen, 698-6221Char Graczyk, 698-6243n Meeting ServicesLisa M. Sykes, 698-6233Beth DeMars, 698-6234Sandra Galindo, 698-6254n Annual MeetingE-MAIL: annualmeeting@dri.orgn Advertising/Marketing/SponsorshipE-MAIL: marketing@dri.orgKatie Malinich, 698-6256Laurie P. Mokry, 698-6259Autumn Wolfer, 698-6225n Expert Witness Databasen <strong>DRI</strong> Onlinen Website Content MgmtE-MAIL: ewd@dri.orgJohn Hovis, 698-6218n <strong>For</strong> <strong>The</strong> <strong>Defense</strong>E-MAIL: ftd@dri.orgn In-House <strong>Defense</strong> QuarterlyE-MAIL: idq@dri.orgJay Ludlam, 698-6210n <strong>The</strong> VoiceE-MAIL: thevoice@dri.orgBarb Lowery, 698-6219n LegislationE-MAIL: legislation@dri.orgn Publication OrdersE-MAIL: publ-orders@dri.orgn SeminarsE-MAIL: seminars@dri.orgJennifer Cout, 698-6205Stefanie R. Favia, 698-6241n Webconferences/CLEJamie Rocks, 698-6212n Customer ServiceE-MAIL: custservice@dri.orgTiffany Caldwell, 698-6230Angelique Diaz-Rodriguez,698-6257Shnese Ingram, 698-6255n Web Siten Discussion ListsE-MAIL: webmaster@dri.orgD R I N E W S4 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Charm City Plays Host forMid Atlantic Meeting<strong>The</strong> <strong>2010</strong> <strong>DRI</strong> Mid Atlantic Regional Meeting washeld May 21–22 in Baltimore. <strong>The</strong> meeting beganwith a Friday lunch at the Hyatt Regency. John S.Willardson, Mid Atlantic Regional Director, moderatedthe meeting. Marc E. Williams, <strong>DRI</strong> ImmediatePast President, was on hand to speak about <strong>DRI</strong><strong>Today</strong>. His talk was followed by the state reports.Friday afternoon also included a panel discussionon “Membership Recruitment & Retention—WhatWorks, What Doesn’t, Transitioning Leadership andthe <strong>DRI</strong> Membership Tracking Template.” Panelistsincluded Juli Z. Haller, <strong>DRI</strong> District of ColumbiaState Representative; Daniel P. Moylan, <strong>DRI</strong> MarylandState Representative; Brian O. Beverly, NorthCarolina Association of <strong>Defense</strong> Attorneys (NCADA)Immediate Past President; H. Michael Bowers, <strong>DRI</strong>South Carolina State Representative; Heather K. Bardot,<strong>DRI</strong> Virginia State Representative; and LynetteD. Pitt, NCADA Executive Director.Toyja E. Kelley, Chair of <strong>DRI</strong>’s Diversity Committee,provided an update on his committee’s activities.<strong>DRI</strong> board member John S. Willardson gave a reporton the National Foundation for Judicial Excellenceand board member John E. Cuttino discussed the<strong>2010</strong> <strong>DRI</strong> Annual Meeting. Margaret Fonshell Wardwas then introduced to all attendees as the nomineefor <strong>DRI</strong>’s next Mid Atlantic Regional Director.On Friday evening, a cocktail reception was held atthe Hyatt Regency, and all attendees were invited toAldo’s for a delicious dinner.On Saturday, the Baltimore office of Semmes,Bowen & Semmes was the location for the technologyprogram that included talks on professional networkingand basic elements of a social media policyfor law firms. Marisa A. Trasatti, a member of the<strong>DRI</strong> Annual Meeting Steering Committee, spoke on“Trial Director” and former <strong>DRI</strong> president StephenG. Morrison moderated a discussion concerning theimpact of social media on juries and the judiciary.Cheryl PalombizioDiversity and Inclusion in <strong>DRI</strong>: A Statement of Principle<strong>DRI</strong> is the largest international membership organization of attorneys defending the interestsof business and individuals in civil litigation.Diversity is a core value at <strong>DRI</strong>. Indeed, diversity is fundamental to the success of theorganization, and we seek out and embrace the innumerable benefits and contributions that the perspectives,backgrounds, cultures, and life experiences a diverse membership provides.Inclusiveness is the chief means to increase the diversity of <strong>DRI</strong>’s membership and leadership positions. <strong>DRI</strong>’smembers and potential leaders are often also members and leaders of other defense organizations. Accordingly,<strong>DRI</strong> encourages all national, state, and local defense organizations to promote diversity and inclusion in theirmembership and leadership.
CalendarUpcoming eventsof interest to<strong>DRI</strong> members andother defense lawyers<strong>For</strong> more informationabout any of theseevents, call <strong>DRI</strong>Customer Service at(312) 795-1101,or visit our website atwww.dri.org.September 16 Twitter and Facebook and MySpace, Oh My:New Rules for New TechnologyWebcastMediation: How Smart Lawyers and Clients AchieveWebcastSuccess in Business and Complex LitigationSeptember 23–24 Nursing Home/ALF Litigation ChicagoSeptember 30– Construction LawLas VegasOctober 1October 20–24 <strong>DRI</strong> Annual Meeting San DiegoNovember 4–5 Fire and Casualty ChicagoNovember 11–12 Asbestos Medicine San DiegoSeptember 20<strong>DRI</strong> CalendarNovember 18–19 Corporate Conduct: Emerging Sources of Criminal and Civil Liability London, EnglandAcross Europe for Corporations and <strong>The</strong>ir Directors and OfficersNovember 18–19 Insurance Coverage and Practice New York CityNovember 18–19 Best Practices for Law Firm Profitability New York City2011January 26–28 Civil Rights and Governmental Tort Liability New OrleansMarch 10–11 Appellate Advocacy OrlandoMarch 10–11 Medical Liability and Health Care Law San FranciscoMarch 16–18 Damages Las VegasApril 6–8 Product Liability Conference New OrleansApril 27–29 Life, Health, Disability and ERISA Claims BostonMay 5–6 Drug and Medical Device Litigation ChicagoMay 18–20 Employment Law Scottsdale, AZDiversityScholarshipsAwarded<strong>The</strong> recipients of the annually awarded <strong>DRI</strong>Diversity Scholarships were announced June10 in Chicago, during the Thursday luncheonat <strong>DRI</strong>’s Diversity for Success Seminar.This year’s winners are India Williams,a second-year law student at the Universityof Alabama, and Alka Srivastava, a thirdyearlaw student at Campbell University. Ms.Williams and Ms. Srivastava were selectedout of a pool of over 50 applicants as the twowho best met the diversity scholarship’s criteriaof demonstrated academic excellence,service to the profession, service to the community,and service to the cause of diversity.Ms. Williams is co-founder of a nonprofitcharitable organization, “<strong>The</strong> GoodShepherd’s Project,” which was designed tobring ministers of different faiths togetherto create a network to help combat ongoingissues in Tuscaloosa, Alabama. Shehas served as Orientation and Office Managerfor the University of Alabama HousingCommunities and is a member of herschool’s Black Law Student Association.Diversity Committee Chair Toyja E. Kelley (from left), recipients India Williams and Alka Srivastava,and <strong>DRI</strong> President Cary E. Hiltgen.Ms. Srivastava received her undergraduatedegree at the University of Delhi Collegeof Business Studies in New Delhi, India.She also attended the Indian Institute of<strong>For</strong>eign Trade where she was awarded asilver medal for graduating second in herclass, earning an MBA equivalent. She wasa first-place winner in the Intramural ClientCounseling Competition in 2009, anda semi-finalist at the ABA Regional ClientCounseling Competition in <strong>2010</strong>.Please join <strong>DRI</strong> in congratulating Indiaand Alka!<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 5
D R I N E W SMembers on the MoveNelson Mullins Riley & Scarborough LLPhas announced that it will open its 12thlocation, in Huntington, West Virginia, onDecember 1, <strong>2010</strong>. This is the second newcity for the firm since January and will beits first office in West Virginia.Joining the firm will be three wellknownWest Virginia attorneys, including<strong>DRI</strong> Immediate Past President Marc E.Williams. Joining Mr. Williams are partnersRobert L. Massie and Melissa FosterBird. <strong>The</strong> new attorneys all have extensivelitigation practices. <strong>The</strong> offices of NelsonMullins will be located at 949 Third Avenue,Suite 200, Huntington.“This new office is geographically a goodfit for us because of our current work forclients in West Virginia,” said Nelson MullinsManaging Partner David E. Dukes,also a past president of <strong>DRI</strong>. “This new litigationteam also is a perfect complementto our national litigation practice, and weare excited that they will be helping us openour 12th office.” Litigation is Nelson Mullins’largest practice area, representing 55percent of the firm’s total practice.In other firm news, Nelson Mullins alsorecently received three national recognitions.Legal directory publisher Chambersand Partners has recognized the firm as anational leader in products liability litigationand gave Mr. Dukes, along with fellowpartner Stephen G. Morrison, nationalrankings for their products liability andmass torts practices. <strong>The</strong> American HealthLawyers Association also ranked NelsonMullins as having the fifth largest healthcare practice in the United States. <strong>The</strong> rankingswere published in Modern Healthcaremagazine. Finally, the <strong>2010</strong> U.S. edition of<strong>The</strong> Legal 500 calls Nelson Mullins’ productliability and mass tort defense practicesin automotive/transport and pharmaceuticalsand medical devices “excellent” and“cost- effective” and highlights the workof Mr. Dukes, Mr. Morrison, Richard K.Hines, and Marvin A. Quattlebaum, Jr.,for their litigation skills.Picadio Sneath Miller & Norton, P.C.,is pleased to announce that Kelly A. Williamshas become a partner. Ms. Williamsfocuses her practice on complexcommercial litigation, insurance cover-age and intellectual property law, handlingall phases of litigation in state and federalcourts. She also has experience with complexe- discovery and has presented on thistopic at continuing legal education courses.Ms. Williams is actively involved with theAllegheny County Bar Association, servingas the chair of the Public Service Committee’sVolunteer Recognition Event and onseveral committees for the Women in theLaw Division. Ms. Williams volunteers forAllegheny County’s mortgage foreclosureconciliation and child custody conciliationprograms. She also serves <strong>DRI</strong>’s Women inthe Law Committee as publications chairand on the Sharing Success Seminar SteeringCommittee.David E. Chamberlain, a partner inChamberlain McHaney in Austin, Texas,was recently elected president- elect of theAustin Bar Association, an association ofover 4,000 lawyers in the Texas state capital.Mr. Chamberlain also serves as a nationaldirector on the <strong>DRI</strong> Board of Directors. Hispractice focuses on the defense of productliability, construction defect, professionalliability and personal injury litigation.Providence, Rhode Island, firm Vetter &White is pleased to announce that its partner,George E. Lieberman, has been againrecognized as one of the best lawyers inthe field of Commercial Litigation by BestLawyers In America in its <strong>2010</strong> edition. Mr.Lieberman has also been named again as a“Super Lawyer” in the area of Business Litigationby the New England Super LawyersMagazine, <strong>2010</strong> ed.Stephen G. Rhoads of Gawthrop Greenwood,PC, in West Chester, Pennsylvania,recently addressed licensed marriageand family counselors, social workers andprofessional counselors at the PennsylvaniaAssociation for Marriage and Family<strong>The</strong>rapy Annual Conference, held April 9at the Union League of Philadelphia. In aprogram entitled “Ethics in the Life Cycleof the Marriage and Family <strong>The</strong>rapist,”he discussed ethical and risk managementissues to be considered when starting,maintaining and closing a private practice,including record- keeping, managing riskin client relationship, applicable privilegesand duties of confidentiality, and subpoenasfor records and testimony. Mr. Rhoadsconcentrates his practice in the representationof various licensed professionals andcommercial litigation.Thomas G. Plunkett of Williams, Williams,Rattner & Plunkett P.C. in Birmingham,Michigan, has been selected forinclusion in Law and Politics Media Inc.’sSuperLawyers <strong>2010</strong>. Thomas G. Plunkettis a partner whose law practice focuses oncommercial litigation.Sandberg Phoenix & von Gontard P.C. isproud to announce that the following attorneyswill be included in the September <strong>2010</strong>Corporate Counsel Edition of Super Lawyers.Mary Ann Mellow, G. Keith Phoenix,Reed W. Sugg and Peter von Gontardwere named Super Lawyers for <strong>2010</strong> in thearea of product personal injury defense.<strong>The</strong> Ohio-based law firm of WestonHurd LLP is pleased to announce that DanielT. Downey has joined the Columbusoffice as a partner. Mr. Downey focuses hispractice on civil litigation, with an emphasison insurance defense, political subdivisionimmunity and civil rights defense. Mr.Downey also has admission before the U.S.District Court for the Northern District ofOhio, the U.S. District Court for the SouthernDistrict of Ohio and the U.S. Court ofAppeals for the Sixth Circuit.Mark D. Fullerton is pleased toannounce the formation of the law firmof Mark D. Fullerton PC, located in Mesa,Arizona. Mr. Fullerton and his associateswill continue to provide legal representationthroughout the state of Arizona in theareas of commercial litigation, product liability,motor vehicle liability and insurancedefense.Bullivant Houser Bailey PC, a leadingWest Coast business and complex litigationlaw firm, is pleased to announce thatJeanne F. Loftis has been admitted to theAmerican Board of Trial Advocates. Ms.Loftis is the chair of Bullivant Houser Bailey’sproduct liability practice. She has triedmore than 30 cases to verdict as first chairattorney. She represents companies in thePacific Northwest in a wide variety of commercialand casualty cases, with an emphasison asbestos product liability claims andother mass tort litigation. Ms. Loftis has6 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>
D R I N E W S<strong>DRI</strong> joins Thompson &Knight LLP in congratulatingJohn H. Martinon being namedpresident of Lawyersfor Civil Justice (LCJ),a national organizationof defense lawyersand corporate counsel dedicated to fairnessand improvements within the civil justicesystem. Mr. Martin was inducted on May3, <strong>2010</strong>, at the Spring Membership Meetingin Washington, D.C. He served as LCJpresident- elect in 2009.Mr. Martin is a partner in the Trial PracticeGroup of Thompson & Knight’s Dallasoffice. He is widely recognized for his legalwork and public speaking on the subjects ofPast <strong>DRI</strong> Leader John H. Martin Named President of Lawyers for Civil Justicecatastrophic injury, mass tort, and aviationlitigation. He is one of the state’s most distinguishedattorneys in the civil defense field.Mr. Martin has been named to <strong>The</strong> Best Lawyersin America by Woodward/White Inc.,Texas Super Lawyers by Thomson Reuters,Lawdragon 500 “Leading Lawyers in America”by Lawdragon Inc., and Who’s WhoLegal: Texas by Law Business Research Limitedfor numerous years. <strong>The</strong> Best Lawyersin America also named him “Dallas PersonalInjury Litigator of the Year” in <strong>2010</strong>.Mr. Martin is a past president of <strong>DRI</strong> and afellow of the American College of Trial Lawyers,International Academy of Trial Lawyers,the Center for American and InternationalLaw, Texas Bar Foundation, and Dallas BarFoundation. He is also a member of the Collegeof the State Bar of Texas and the InternationalAssociation of <strong>Defense</strong> Counseland serves on the Board of Directors for theNational Foundation for Judicial Excellence.Created by defense trial lawyers and corporatecounsel, Lawyers for Civil Justice is anational coalition supporting excellence, fairness,and improvements within the civil justicesystem. It supports activities at both thestate and national level designed to achievereforms, which will ensure balance in thecivil justice system. Greater predictability indamage awards, streamlining the discoveryprocess, and improving the management oflitigation and scarce judicial resources are alllong-range goals of Lawyers for Civil Justice.<strong>For</strong> more information, please visit http://www.lfcj.com.represented businesses in many sectors,including construction, manufacturing,retail, food service, publishing and professionalservices.Linda G. Burwell, a founding partnerof Detroit- based employment law firmNemeth Burwell, P.C., was among eightwomen recently honored by the MichiganBusiness and Professional Associationat its 14th Annual Women and LeadershipSymposium and Awards Event at theFairlane Club in Dearborn, Michigan. <strong>The</strong>award recognizes extraordinary professionalwomen who have excelled in sevendistinct categories. Ms. Nemeth was recognizedin the small business category.After many years at a national litigationlaw firm, <strong>DRI</strong> members Bradley D. Fisherand Gerald H. Bren formed the law firm ofFisher Bren & Sheridan LLP, a full servicelitigation law firm in Minneapolis focusingon construction, product liability, environmental,employment, insurance coverageand personal injury defense.James McQueen, Jr., and Amanda J.Davis are joining Roy D. Baker, Jr., inan existing AV-rated firm in Huntington,West Virginia, that will now be known asBaker, Davis & McQueen, PLLC. <strong>The</strong> firmwill focus on insurance bad faith litigation,insurance coverage analysis, and insurancecoverage litigation, as well as self- insureddefense work involving mass tort situationsand general insurance defense workarising under CGL, D&O, and other commercialpolicies. <strong>The</strong>y will also continueto represent professionals, such as lawyersand doctors, in the defense of disciplinary<strong>For</strong> over 25 years, LMI has provideddefendants with award winningrecord acquisition, medical recordanalysis, complex litigation anddocument management services,all delivered via LM[I]SIGHT,our secure client site designedexclusively for the defense.Our experienced medical and legalprofessionals stand ready to deliver theinsight you need, when you need it.complaints made by patients and clients totheir particular licensing agencies.Marge MotluckElizabeth B. Juliano, Founder & Chief Executive Officer1 9 8 4-2 0 0 9CELEBRATING 25 YEARSTRANSFORMING INFORMATION, DELIVERING INSIGHTwww.medicineforthedefense.com1 800.778.5424<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 7
C E L E B R AT I N G 5 0 Y E A R SEducation: <strong>The</strong> First Pillar<strong>DRI</strong>—Its LawInstitute andIts SeminarsBy Chrys A. MartinJust what is the <strong>DRI</strong> “Law Institute”? Some kind of think tank? I getasked this question almost every time I mention the <strong>DRI</strong> Law Institute.It’s a funny name, but serious business for <strong>DRI</strong>. It is simply a fancy namefor the “seminar committee” that evolved out of <strong>DRI</strong>’s educational efforts.<strong>The</strong> initial reason for the creation of the “<strong>Defense</strong>Research Institute” was the goal of providing qualityeducation for the defense bar and the public, initiallydealing with matters such as high verdicts andimportant issues within the insurance industry. <strong>The</strong>very name of the organization was intended to reflectits origins as the “research arm” of the IAIC, a defensebar organization for lawyers that was <strong>DRI</strong>’s foundingentity. <strong>The</strong> research was to include education;thus resulting in the title “Institute” in <strong>DRI</strong>’s name.Monthly newsletters were the first tool used to providesuch legal education and sharing of information,but the evolution to high- quality legal education seminarsoccurred rapidly.<strong>The</strong> Law Institutes Committee was formed in 1965and started the <strong>DRI</strong> <strong>Defense</strong> Practice Seminars; a programthat has been so successful over the years thatit now brings in a substantial percentage of <strong>DRI</strong>’s revenue,allowing the organization to bring so manyother quality programs and services to the defensebar and general public. <strong>The</strong> Law Institute’s activitieshave mushroomed from a few seminars each year to asmany as 25 or more annual programs, many of whichhave become regular fixtures on the calendar and arerecognized as the preeminent legal educational eventsin their respective substantive areas of the law. Somedraw over 1,000 attendees, and each adds to <strong>DRI</strong>’s reputationfor presenting the highest quality live continuinglegal education.Currently, Law Institute, or “L.I.,” members arecarefully selected based on their prior outstandingservice to <strong>DRI</strong> and their proven expertise in runningsuccessful committees and seminars. Each member isassigned to work with substantive law committees toselect seminar subjects to educate members on emerginghot topics, review new developments in traditionalsubstantive law areas, and bring outstanding speakersto our members and attendees. Law Institute memberseach have responsibility for at least two seminarsa year and work year-round with the committees, as it8 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>n Chrys A. Martin is a partner with Bullivant Houser Bailey PC in Portland, Oregon. Her many contributions to <strong>DRI</strong> include serviceon the board of directors and as chair of the Employment Law Committee. She is currently chair emeritus of <strong>DRI</strong>’s Law Institute.
YEARS50 CELEBRATINGLEADERSHIP ■ EXCELLENCE ■ EDUCATIONtakes a full year to plan and market a qualityseminar. Most seminars are sponsoredby a substantive law committee or a combinationof committees who join forces toprovide cutting- edge legal education.<strong>The</strong> committee leaders appoint seasonedvolunteers to form a program committee,which works closely with an assignedLaw Institute liaison to ensure that <strong>DRI</strong>’sstandards are reflected in the topics andfaculty selected. <strong>The</strong> program committeeand Law Institute liaison assure that seminarsfeature a diverse selection of <strong>DRI</strong>members, outstanding judges, corporaterepresentatives, and other specialists intheir fields, such as government leaders orexpert witnesses. This unique combinationof speakers has lead to rave reviews by ourattendees. Some recent comments include:Asbestos:“Excellent venue, facility, organizationand presentations all the wayaround—Thanks Al, for the 30 years,you’ll be missed at the helm!”“My first <strong>DRI</strong> seminar and it wasexcellently run. Can’t believe youstayed on schedule so well. Materialand speakers were excellent.”Insurance Coverage:“This seminar is typically one of thebest presented by <strong>DRI</strong>. This one did notdisappoint.”Nursing Home:“All of the medical speakers wereexcellent and very helpful.”<strong>The</strong> Law Institute’s goals are to providehigh quality legal education to both inhouseand outside defense counsel. Ournationally recognized speakers on cuttingedgetopics help our attendees learn the lawin depth, keep up with new cases and statutes,learn the latest in best practices fortrial work and improve their personal aswell as professional lives. <strong>The</strong> Law Institutemust follow legal trends to offer newseminars, and more recently webcasts andwebconferences, on the hottest legal topics,as well as maintaining tried and truelegal education programming. Recent seminarofferings include Commercial Litigation,as many of our members transitiontheir practices from traditional insurancedefense to business disputes, intellectualproperty issues and protecting businesstrade secrets.<strong>DRI</strong> has shown itself to be a “thoughtleader” by helping its members recruit, retainand advance minorities and women,and by offering seminars that specificallyaddress issues of particular importanceto those groups. <strong>The</strong>annual Diversity forSuccess Seminar hasdrawn over 500 attendeesevery yearand features a uniqueoffering, the DiversityExpo, where businessescan interviewdiverse attorneys for potential retention asoutside counsel in efforts to diversify theirlegal vendors. Also, in the mid-1990s, <strong>DRI</strong>was one of the first legal professional organizationsto offer programming geared towardsthe female trial attorney, providinglegal education on tough issues such as genderdiscrimination in the courtroom, trialtactics that women could use that mightbackfire on a male advocate and work-lifebalance issues. <strong>The</strong> success of those seminarsjumpstarted <strong>DRI</strong>’s ability to diversifyits membership and leadership, encouragingwomen to get involved. Many of thewomen who participated in those seminarsare now in leadership positions in <strong>DRI</strong> includinga past president and officers. <strong>The</strong>renewed need for training specifically for femaleattorneys led the Law Institute to reinstitutethese seminars again in 2008 to assistwomen in advancing in the profession andto provide guidance for law firms and corporatelegal departments on retaining andadvancing women in their organizations.<strong>DRI</strong>’s seminars also have the addedbenefit of providing opportunities for ourmembers to interact with their clients andpotential clients at these seminars. <strong>The</strong> programsfeature breaks and receptions fornetworking with clients, colleagues, speakersand expert witnesses. Dine Aroundsare another common feature of <strong>DRI</strong> seminars.Attendees can sign up on site forthese no-host dinners, which ensure anopportunity—especially for the first-timeattendees—to join in the fun and camaraderiethat these seminars provide. Manyattendees have met lifelong professionalcolleagues who have also become closeOver 1,600 sites registeredfor <strong>DRI</strong> webcastsand webconferencesin 2009 alone!personal friends. Others have met crossreferralsources from across the country.Clients use these seminars to meet outsideattorneys, who are experts in the particularsubstantive law area, for potential hire.<strong>The</strong> biggest problem that program chairsface is getting the seminar restarted ontime due to the networking going on duringbreaks! And yet,another hallmark of<strong>DRI</strong> seminars is beingon time. Speakersuse all, and only,their allotted time, includingtime for audiencequestions todelve into complextopics in greater depth as dictated by attendeesophistication level. <strong>DRI</strong> seminarsprovide something for both the experiencedpractitioner as well as the novice attorney.Some seminars offer dual tracks for “newbies”and seasoned trial attorneys, alike,such as “primers” on the area of law or separatesessions that delve into more sophisticatedtopics.Speakers are invited to speak only aftersignificant vetting and <strong>DRI</strong> never uses“pay to play” tactics where speakers can“buy” their way onto the podium. Whileexpert witnesses and other vendors criticalto a trial attorney’s success are speakers,they are not allowed to “sell” and must beproven experts on their topics to be invited.All speakers are required to provide thoroughwritten materials to supplement theirpresentation and attendees use these topquality educational tools as resources intheir firms, for briefing and trial tactics.It is impossible to describe accuratelythe myriad of tasks performed by LawInstitute members in their dual roles ofleading the strategic direction of <strong>DRI</strong>’s educationalefforts and in helping to run eachseminar. You simply have to attend to seefor yourself the excellent educational offeringsthat <strong>DRI</strong> provides, which continue tomake it a top notch provider of continuinglegal education in our country. Our seminarsare reasonably priced and reach over9,000 attendees per year, providing attendeeswith the MCLE credits required by moststates and, more importantly, the opportunityto learn the law from the defense perspectivein a safe setting with colleaguesand clients in the defense bar.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 9
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WFrom the ChairBy Philip L. Willman<strong>The</strong> Challengeof Change inHealth CareWe are committedto helping youthrough educatiion,professionalism andpractice growth.10 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>■ Philip L. Willman is a principal of Moser & Marsalek, P.C., in St. Louis, where he devotes his trial practice to defending physicians,nurses, hospitals, nursing homes, psychologists and other health care providers in medical negligence and health carelawsuits and medical device manufactures in medical device lawsuits. Mr. Willman also provides representation in environmentallitigation.
“Change” was the rallying cry heard during the lastnationwide election. This call for change resulted inthe recently enacted federal health care reform legislationthat reshapes the way the United States paysfor and delivers health care services.Certainly one of the challenges for thealmost 1,400 members of <strong>DRI</strong>’s MedicalLiability and Health Care LawCommittee is to understand and respondto the changes this legislationbrings to our health care system. Butother challenges continue for committeemembers. <strong>The</strong> landscape of tort reformcontinues to cause shifts in theway practitioners defend health careproviders. And the greatest recessionsince the Great Depression has addedcost burdens to the abilities of membersto help clients in the health caresystem. <strong>The</strong> goal of the Medical Liabilityand Health Care Law Committeeis to provide its members with thetools to meet the challenge of change inhealth care. <strong>The</strong> committee has committeditself to help through education,professionalism and practice growth.<strong>The</strong> educational efforts of the committeecontinue to be its strength. <strong>The</strong>Medical Liability and Health CareLaw Seminar, held February 10–11,<strong>2010</strong>, in Phoenix, was a remarkablesuccess. Program Chair Betty Cornacchioand Program Vice Chair Jim Cravendid an outstanding job of puttingtogether a top-notch program, with aheavy emphasis on birth trauma, aswell as on contemporary topics suchas new developments in Medicare andMedicaid recovery and set-off.Committee members who defendlong-term care claims should registernow for the Nursing Home/ALF LitigationSeminar scheduled for September23–24 in Chicago. ProgramChair Anthony J. Fernandez and ProgramVice Chair Jacquelyn J. Corehave assembled a program that hasbecome the standard of care for thosedefending long-term care providers.Planning is already underway forthe 2011 Medical Liability and HealthCare Law Seminar, scheduled forMarch 10–11, 2011, in San Francisco.Please feel free to contact Jim Craven,who will chair next year’s program, orhis vice chair, Alex Hagan, if you wantto be involved in planning, organizingor promoting this seminar.<strong>The</strong> committee’s education effortsalso continue through its publications.In this issue of <strong>For</strong> <strong>The</strong> <strong>Defense</strong>,committee members have writtenarticles on nine medical and legal topics.Members representing health careproviders will surely want to read andreview them to improve the servicethey provide to clients. PublicationsVice Chair Tracy Zuckett did an outstandingjob compiling and editingthese articles. Tracy and PublicationsChair Mary Wydysh continue to prepareand edit <strong>The</strong> MedLaw Update,the committee’s quarterly electronicnewsletter. Please contact either ofthem if you are interested in publishingan article about a case you havejust won, or a medical liability topicof interest to you.<strong>The</strong> committee is undertaking severalnew initiatives to extend its educationalreach. Rob Smith has agreedto shepherd an effort to put together acompendium of the medical liabilitystatutes of every state. <strong>The</strong> goal is to createone simple, easy reference, availableto committee members on line at the<strong>DRI</strong> website, as well as available to insuranceindustry professionals and riskmanagers. In addition, Jackie Trimm isspearheading an update of the HIPAAcompendium that the committee previouslyassembled. Please feel free tocontact either one of them if you areinterested in helping in their efforts.To assist members with practicegrowth, the committee is using <strong>DRI</strong>’snew Industry Partnership Initiativewith the goal of establishing relationshipswith organizations and institutionsoutside of <strong>DRI</strong>. <strong>The</strong> committeehas appointed Suzanne Bachovin tobe its liaison with the American Societyof Health Risk Managers. And,Al D’Aquino has agreed to be thecommittee’s liaison with Health Systems.<strong>The</strong> hope is that we can increaseopportunities for committee membersto learn from and participate withother health care related institutionsthrough seminar programming, webcasts and joint meetings.<strong>The</strong> committee continues to seestrong participation in the <strong>DRI</strong> AnnualMeeting. At the meeting in Chicagolast fall, more than 45 membersattended the business meeting. <strong>The</strong>rethey heard Jackie Trimm give a precisepresentation on how Medicare reportingrequirements are applicableto health care providers. This year, atthe Annual Meeting in San Diego, October20–24, the committee will onceagain gather to plan our business for2011 and listen to a presentation fromScott Salter on the interplay betweenHIPAA requirements and ex parte contactswith treating physicians.Finally, opportunities for the committeemembers to connect with eachother abound. If any committee memberis interested in participating in anyof the projects above, it is easy to do so.Simply go to the <strong>DRI</strong> website, click onthe Medical Liability and Health CareLaw Committee page, and all the contactinformation needed is right there.Also, committee members can workwith each other through the MedicalLiability list serve. It is very easy for a<strong>DRI</strong> member to join the list serve. Indoing so, members have a quick andeasy network to find out informationabout expert witnesses, to locate expertsin specialties, to ask for help onlegal issues and even to refer clientsor potential clients to members fromother states in the country.<strong>The</strong> most important function thecommittee can serve for its membersis to provide the opportunity todevelop relationships and friendshipsthroughout the country. It is throughthe bonds of these relationships thatall of us in the committee will be ableto meet the continuing challenge ofchange in health care.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 11
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WLet MedicalScience ImproveLegal OutcomesBy Thomas V. LapradePreservingSummary Judgmentas an Option<strong>Defense</strong> counsel cansnatch the causationdefense from the jawsof the difficult “loss ofchance” doctrine.“You can’t move for summary judgment, it’s a medicalliabilitycase,” says the lead attorney, “the issue is the reasonablenessof the doctor’s care. You can’t get summaryjudgment in a negligence case just because it involvesmedical liability.” If you’ve ever thoughtsomething like this, uttered something likethis, or heard something like this, it wouldbe hard to fault you. Because courts traditionallydo not view summary judgmentmotions in negligence cases favorably, particularlyin medical liability cases, summaryjudgment practice in this area hasbeen rarely used. See McMackin v. JohnsonCounty Healthcare Center, 73 P.3d 1094,1097 (Wyo. 2003). This article will try tomake a dent in that convention, especiallywith respect to cases that involve strongcausation defenses. Lawyers, just as physicians,need to make a differential diagnosis,eliminating unknowns in every case.And part of every lawyer’s differential diagnosisshould include the question, is a summaryjudgment possible in this case?Yes, many medical liability cases focuson whether the provider acted within thestandards of care that apply to particularpractices. Cases turning on standardsof care rarely lend themselves to successfulmotions for summary judgment. Butevery medical negligence case also requiresa plaintiff to prove that the physician’sconduct caused the plaintiff’s injury. Andcourts can often decide causation, unlikestandards of care, as a matter of law whenthe medical research eliminates all thefactual issues needed to determine causation.So even though some courts characterizesummary judgment as an “extremeremedy,” a judge can render a decision oncausation in response to and in granting amotion for summary judgment.A major obstacle to obtaining summaryjudgment on causation has been the “lossof chance” doctrine, also known as the “lostopportunity,” “lost chance,” or “lost chanceof survival” doctrine, which relaxes thetraditional evidentiary requirement that aplaintiff prove that the alleged negligencemore likely than not caused the injury inquestion. Currently, the loss of chance doctrineis vigorously competing with the traditionalstandard of proof for causation,which requires a plaintiff to prove thatthe alleged medical negligence caused the12 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>■ Thomas V. Laprade is a partner in the Portland, Maine, law firm of Lambert Coffin. He is a trial lawyer whose practice focuseson the defense of medical and legal professionals. He represents clients in the trial and appellate courts of Maine, New Hampshire,and Massachusetts. He is also active participant in <strong>DRI</strong>’s Medical Liability and Health Care Law, Lawyers’ Professionalismand Ethics, and Product Liability Committees. Jeff Russell assisted in the research and editing of this article.
complained of injury by a preponderanceof the evidence, for supremacy in the statecourts. As most courts explain the traditionalevidentiary standard, the negligentact must have “more likely than not” causeda plaintiff’s injury. Or, in a formulation thatdoctors hate but lawyers love, a plaintiff’scausation expert must opine that withoutthe allegedly negligent act, the chance thatthe injury would not have occurred wouldhave been at least 51 percent.This article will suggest ways that defensecounsel can use a causation defenseto achieve success without taking cases toa jury. It will review the prevailing rulethat enforces the traditional evidentiarystandard for causation, examine the challengesposed by the loss of chance doctrine,provide examples of how these twoapproaches have played out in the courts,and explain how attorneys defending medicalprofessionals can best use a causationdefense, even in jurisdictions where relaxedcausation proof standards pose challenges.Causation as a Purely Legal <strong>Defense</strong>Even when a plaintiff has enough evidencethat a physician may not have abided by theapplicable standard of care to meet the burdenrequired to submit the issue to a jury,a medical liability defendant may still beentitled to summary judgment if the evidencedoes not sufficiently establish thatthe defendant’s acts were the direct andproximate cause of the injury to the plaintiff.Most courts adhere to the traditionalevidentiary standard of proximate causethat states that “recovery is disallowedunless it can be shown that the plaintiffwould not have suffered the physical harmbut for the defendant’s negligence, i.e., thatit is more probable than not (greater than50 percent) that but for the negligence ofthe defendant the plaintiff would haverecovered or survived.” Valadez v. Newstart,LLC, 2008 WL 4831306, at *4 (Tenn.Ct. App. Nov. 7, 2008). <strong>The</strong> law on causationstandards in medical liability cases isin such a state of flux that it is difficult tostate definitively that this is the “majority”rule, but without doubt, more than half thestates either adhere to this rule or have yetto depart from it in favor of a relaxed causationproof standard.It is important to note that courts thatadhere to traditional proximate cause requirementsdo not do so without reasonsimply because of loyalty to tradition andprecedent. <strong>The</strong>re are very important judicialand social policies furthered by the 51percent formula requiring that plaintiffsshow that “it is more probably than not”that defendants’ negligent acts caused injury.<strong>For</strong>emost, these courts recognize thatcausation is a matter of probability, not possibility.Allowing a jury to consider causationwhen medical opinion cannot supporta finding that negligence more likely thannot caused an injury would permit a juryto consider a case even if all the plaintiffcould prove was that the physician “mighthave” or “could have” caused an injury,eviscerating the need to show how the outcomewould have been different to a reasonabledegree of medical certainty if thephysician had acted differently. Given thedifficulty of concretely predicting patientcare outcomes, such an evidence standardwould open the floodgates to claims no matterhow loosely connected the patients’ outcomeswere to treatment decisions.Indeed it would be hard to square therequirement in almost every medical liabilitycase that a plaintiff establish throughexpert testimony that a physician’s conductcaused the plaintiff’s injury with a rulethat allows anything less than that causeis based on medical probability. Anythingless would be tantamount to placing oftencomplex medical causation issues in thehands of a jury and allowing it to speculateabout what “might have been.” Courtsshould not allow jurors to play doctor. Inthe words of one court, “Allowing a jury toinfer causation on complex medical factswithout the aid of expert testimony on thesubject and without some showing that[the] conduct was ‘more likely than not’ acause of [plain tiff]’s injury, stretches thejury’s role beyond its capacity.” Merriam v.Wanger, 757 A.2d 778, 782 (Me 2000).At present, no other type of professionalmalpractice defendant—or personal injurydefendant of any kind—carries a burdenof liability without the requirement that aplaintiff prove the alleged negligence probably,rather than possibly, caused an injury.In fact, the courts that have adopted andapplied the loss of chance doctrine havemade a distinct point in their decisions of“limiting” these holdings to medical malpracticecases. No principled distinction,however, prevents its application to suitsinvolving other professions. What wouldprevent an unsuccessful litigant in a casein which that litigant had a less than 50percent chance of winning from pursuinga legal malpractice case if he or shecould find an expert who would testify thatthe litigant’s lawyer negligently reducedthe chance of winning to some degree?Currently, the lossof chance doctrine isvigorously competing withthe traditional standardof proof for causationWhat would stop someone from trying toapply the doctrine to disturb the standardsfor proving lost business profits? Asone court noted, “Only a business with nochance of success would be foreclosed fromsome recovery.” Kramer v. Lewisville Mem’lHosp., 858 S.W.2d 397, 406 (Tex. 1993).Without question someone who has hada poor medical outcome yet cannot prove bya preponderance of the evidence that a physician’smisconduct caused that poor outcomepresents a strong emotional appealto fairness. Courts, however, have notedthat for every perceived injustice to a particularplaintiff in a specific case, one canimagine greater systemic injustices arisingfrom a legal structure that allows speculationto replace a reasonable degree of medicalcertainty. <strong>For</strong> instance, “Health careproviders could find themselves defendingcases simply because a patient fails toimprove or where serious disease processesare not arrested because another course ofaction could possibly bring a better result.”Gooding v. University Hosp. Bldg, Inc., 445So. 2d 1015, 1019–20 (Fla. 1984).In fact, rather than creating an exceptionto traditional standards of causationin medical liability cases, traditional standardsshould remain particularly strong inmedical liability cases, even more so than inother negligence cases. This is because medicalliability cases almost always require a<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 13
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wplaintiff to prove causation through the useof expert testimony. Additionally, expertstestifying on medical causation must statetheir opinions based on a reasonable degreeof medical certainty. If courts allow testimonybased on speculation and mere possibilityto satisfy the plaintiff’s evidentiaryburdens, medical expert testimony reallybecomes meaningless—an empty vesselMost courts adhere tothe traditional evidentiarystandard of proximate cause.into which plaintiffs may pour whateverspeculative theory they can devise.Finally, the traditional standard of proofreflects the importance of scientific studiesand their findings to the real-life, clinicaljudgment that physicians exercise. Whena physician exercises clinical judgmentto construct differential diagnoses or tochoose treatment options, he or she presumablydoes so based on his or her learning,experience, and education. Physicians oftenrely on their knowledge of the latestoutcome studies, information that theyhave learned from morbidity and mortalityconferences, and other developments in thescience of medicine. <strong>The</strong>y make treatmentdecisions based on the clinical pictures ofinjuries or diseases in light of scientific datathat may have a bearing on treatment decisionsin individual cases. When physiciansmake these decisions in emergency roomsor operative suites during trauma surgery,where time for reflection and observationare more limited clinical judgment buttressedby the prevailing science will oftendictate the course of treatment.Causation in the CourtsA lawyer should consider a motion forsummary judgment based on a causationdefense whenever the medical science supportsan argument that too many variablesor alternative explanations exist fora patient’s poor outcome to identify concretelythe alleged negligent act as themore- likely- than- not cause. Counselshould also strongly consider it when the14 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>science behind a medication or a treatmentcannot establish that the medicationor treatment provides a better than 50 percentchance of a favorable outcome.<strong>The</strong> courts have shown willingness toenter a judgment without a trial whenpresented with these types of causationdefenses in a variety of cases. Causationdefenses, for example, often arise in casesinvolving failure to diagnose cancer orin recurrent cancer cases. In these casesthe expert opinion as to the staging ofthe patient’s cancer when the physicianallegedly should have made the diagnosishighly influences the causation analysis.If a plaintiff’s expert cannot specify witha reasonable degree of medical certaintythat a patient had a better than 50 percentchance of survival or of avoiding the badoutcome in dispute—that is, if the expertcannot assign a percentage to the differencethat early diagnosis would have madeto the outcome—then the defense has astrong argument that the clinician is entitledto judgment as a matter of law. Thiscan be a particularly strong argument ifthe patient survives yet still has a mortalityrisk, and the gist of the claim is that thepatient’s chance of surviving would haveimproved with earlier diagnosis and treatment.E.g., Leubner v. Sterner, 493 N.W.2d119, 122 (Minn. 1992) (stating that “[T]heplaintiff cannot use the fact that her conditionhas worsened as proof the defendantdoctor made it worse. Plaintiff must stillshow causation.”).Causation defenses have prevailed at thesummary judgment stage in many casesother than cancer cases, too. <strong>For</strong> example,a court granted summary judgmentin favor of a physician who unsuccessfullyattempted to wean from a respiratora patient who had been suffering from sepsisand multisystem organ failure after hedetermined that breathing only throughthe machine would not benefit the patientin the long run. <strong>The</strong> plaintiff’s pulmonaryspecialist testified that a person inthe patient’s condition on the day she wasremoved from the respirator only wouldhave had a 40 percent chance of living evenif the person had remained on the respirator.Park Place Hosp. v. Estate of Milo, 39Tex. Sup. Ct. 70, 909 S.W.2d 508, 510–11(Tex. 1995). Another court granted summaryjudgment when a plaintiff’s evidenceshowed only “the mere possibility thattimely discovery of the blood clot at issuewould have made it possible to save thefunction of plaintiff’s kidney.” Goggin v.Goldman, 433 S.E.2d 85, 87 (Ga. Ct. App.1993). It has been granted when a plaintifffailed to show that finger- reimplantationsurgery would have succeeded for a traumapatient. Alfonso v. Lund, 783 F.2d 958, 963(10th Cir. 1986). And a court granted it ina case involving injuries allegedly causedby a postsurgical infection. Farley v. Shook,629 S.E.2d 739, 742 (W. Va. 2006).A federal judge in South Dakota recentlyentered summary judgment for the defendantin a case that nicely illustrates thetype of medical professional liability case inwhich courts should grant summary judgment.<strong>The</strong> plaintiff in Smith v. Bubak sufferedan ischemic stroke and claimed thathe should have received a so-called “clotbusting” drug known as tPA (tissue plasminogenactivator) to increase his chancesof achieving a better outcome despite hisstroke. Smith v. Bubak, No. CIV-0844032,<strong>2010</strong> WL 605269 (D. S.D. Feb. 18, <strong>2010</strong>).<strong>The</strong> causation defense relied on a rangeof authoritative tPA outcome studies thatshowed conclusively that 32 percent of patientstreated with tPA achieved a betteroutcome from receiving the drug. Id. at *7,n.5. In fact, a significant percentage of patientshad worse outcomes as a result of receivingthe drug than would otherwise havebeen the case. <strong>The</strong> court held that SouthDakota law required the plaintiff to provethat he would have had a “better than evenchance of improvement” to establish causation.Because the outcome studies showedclearly that the probability of improvementcould not exceed 50 percent, as required bylaw, the court barred the plaintiff’s expertfrom testifying and granted summary judgmentto the physician. Id. at *8.<strong>The</strong> ObstaclePlaintiffs faced with meeting the “probability”burden have argued that the requirementthat they prove that injuries wouldmore likely than not have occurred butfor the physicians’ negligence should notalways apply in cases of alleged medicalnegligence. <strong>The</strong> biggest weapon in theirarsenal in this battle has been the loss ofchance doctrine. <strong>The</strong> loss of chance doctrinestands for the proposition that a jury
should have an opportunity to consider testimonythat the alleged negligence diminisheda patient’s chances for recovery orsurvival, even if he or she is unable to provideexpert testimony that the negligencemore likely than not caused the patient’sloss. Courts have justified this relaxed burdenof proof on various grounds.One justification offered by courts insupport of the loss of chance doctrine isthat the relaxed burden of proof forestallsinjustice by preventing arbitrary distinctionsamong plaintiffs based on their abilityto locate witnesses willing to testify thatpatients had a 51 percent chance, ratherthan a 49 or 50 percent chance, of achievingbetter outcomes. Anyone who regularlyhandles medical liability cases knows,however, that this is a polemical argumentbecause it is exceedingly rare to encountera plaintiff with a decent causation argumentwhose claim fails because he or shecannot find an expert to testify that adifferent course of treatment would haveresulted in at least a 51 percent chance ofachieving a better outcome.Courts have also asserted that the loss ofchance doctrine serves a purpose becauserequiring testimony to meet the traditionalstandard of proof under all circumstances,and in particular, when physicianshave been clearly negligent, would providethem with a “blanket release fromliability” merely because the injured partieshad poor prospects even without malpractice.Herskovits v. Group Health Coop.of Puget Sound, 664 P.2d 476 (Wash. 1983).<strong>The</strong>se courts have concluded that permittingpatients to recover damages by showingonly that malpractice diminished theirprospects for a better result provides aneffective deterrent to negligence in thetreatment of patients whose prospects arepoor. McMackin v. Johnson County HealthcareCtr., 73 P.3d 1094, 1099 (Wyo. 2003).In addition, courts have said that a courtshould not permit a defendant to raise conjecturesabout a patient’s lost opportunitieswhen the defendant’s own conduct eliminatedthe possibility of their realization.Courts following this line of reasoning haveconcluded that a patient’s loss of chance fora better outcome should be recognized asan injury in and of itself.Matsuyama v. Birnbaum exemplifieshow some courts have been swayed by thesiren song of the loss of chance doctrine.890 N.E.2d 819 (Mass. 2008). A close readingof the decision, however, also providesclues about how a lawyer can challenge theloss of chance doctrine even in the jurisdictionswhere it is the law. Matsuyama executedan end-run around all the argumentsin favor of traditional causation analysisby a clever turn of legal legerdemain. <strong>The</strong>court opined that the loss of chance doctrinewas “not a theory of causation, but…a theory of injury.” 890 N.E.2d at 832. <strong>The</strong>court then held that that injury—the lossof chance for a better outcome—had to beproved by a preponderance of the evidence,providing the appearance of adherenceto traditional causation proof rules whileactually making a plaintiff friendly pivot.As the next section will address, however,lawyers may use the court’s reasonssupporting this approach to attackattempts by plaintiffs to invoke this doctrine.<strong>For</strong> example, the court reasonedthat “<strong>The</strong> key is the reliability of the evidenceavailable to the fact finder.” Id. at 833.Thus, even in loss of chance jurisdictions,plaintiffs’ experts may remain vulnerableto exclusion based on the reliability of thesupport that they provide for their opinions.Also, the court rested its adoption ofthis doctrine, in part, on the reasoning that“Although there are few certainties in medicineor in life, progress in medical sciencenow makes it possible, at least with regardto certain medical conditions, to estimate apatient’s probability of survival to a reasonabledegree of medical certainty.” Id. at 832.Fighting the Loss of Chance DoctrineLawyers practicing in jurisdictions thathave not adopted the loss of chance doctrineshould aggressively analyze everyangle of possible causation defenses withan eye to possibly moving for summaryjudgments. Study the medical literature,consult with your client on the scientificbases for his or her decisions, and exploityour retained experts’ knowledge of the<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 15
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A W<strong>The</strong> greatest challengefaces those practicingin jurisdictions that haveadopted some formof a relaxed causationevidentiary standard.science of causation. In the appropriatecases, defense counsel should design a discoveryplan that will build the case forsummary judgment When the possibilityof summary judgment seems realistic,depose a plaintiff’s causation experts withquestions tailored to the inquiries you willneed to explore to support your motionand to enable your experts and your clientto provide the testimony that supportsyour motion.Lawyers practicing in jurisdictionswhere the courts or the legislature havenot expressly addressed the loss of chancedoctrine should pursue a causation defensein such a way that develops information thatyou could use to undermine attempts bythe plaintiff to rely on the doctrine. Studythe cases in which courts have rejected theloss of chance doctrine and develop thefacts that will help attack the cases in whichcourts have supported the doctrine. Thispreparation will well arm defense counselto fight attempts by a plaintiff to introducethe doctrine to your jurisdiction in responseto your motion for summary judgment.<strong>The</strong> greatest challenge faces those practicingin jurisdictions that have adoptedsome form of a relaxed causation evidentiarystandard, but even in those jurisdictionspractitioners may prevail. One optioncounsel should consider outside of litigationis to address any unhelpful judicial rulingsby lobbying the state legislature for a changein the law. Most states have comprehensivestatutes governing the conduct of litigationin medical liability cases that have set upcase- screening mechanisms, standards ofcare for certain types of medical liabilityclaims, and damages. State legislatures have16 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>historically shown that they are receptiveto controlling the manner in which medicalliability claims are litigated. Indeed, thecourt in Smith v. Bubak did not apply theloss of chance doctrine precisely becauseSouth Dakota legislatively abrogated thedoctrine after the Supreme Court of SouthDakota had adopted it in a prior case.What if the South Dakota legislature hadnot changed the law? Could the defensehave obtained summary judgment in Smithv. Bubak despite the loss of chance doctrine?Considering this question helps toillustrate ways in which defendants canattack the loss of chance doctrine with astrong causation defense.<strong>The</strong> first strategy for success is to challengean expert on Daubert grounds, asopposed to attacking causation head on,which allows a lawyer to use the scienceto undermine the reliability of the expert.Keep in mind that even the courts thatuse the loss of chance doctrine requirethat a plaintiff present reliable evidenceto establish that the plaintiff in fact losta chance of achieving a better outcome.And many courts that follow the doctrinestill insist that a plaintiff establish the lossof chance by a preponderance of the evidence.Thus, when defense counsel canestablish through cross- examination andexpert testimony that a plaintiff’s expertsimply got the science wrong, as in Smith v.Bubak, counsel’s strategy would be to challengeplaintiff’s causation expert througha Daubert motion and then move for summaryjudgment based on the plaintiff’s lackof medical expert testimony to support hisor her claim of a loss of chance for a betteroutcome.Your next approach entails identifyingthe holes in the loss of chance doctrine’snuances as used in your jurisdiction. <strong>For</strong>example, if your jurisdiction, as Massachusettsin Maruyama, has adopted the loss ofchance doctrine reasoning, in part, thatmedical science has advanced so much thata jury can estimate a patient’s probabilityof survival based on the medical evidence,defense counsel should consider whetherthe “probability of survival,” or “improbability,”was actually one of the reasons thatthe physician chose a particular treatmentoption. This focuses on whether the physicianmade a reasonable medical judgmentby choosing a treatment option in partbecause of the medical probabilities ratherthan on a causation analysis. Taking againSmith v. Bubak as an example, had defensecounsel confronted the loss of chance doctrine,he could have argued that the physicianconsidered that tPA outcome studiesestablished a low rate of improved outcomes,and in fact, demonstrated potentiallyworse outcomes, when exercising hisclinical judgment not to administer thedrug. Whether this approach is appropriatewill, of course, depend on the facts of acase, but defense counsel should search forways to use the rationales for the doctrineto benefit a defendant.Finally, even in a pure loss of chancedoctrine jurisdiction, where plaintiffs willbe able to ward off causation defenses atthe summary judgment stage, it may beworthwhile for the defense to consider amotion in limine that will work to containthe plaintiff’s claim. In a case with factssimilar to Smith v. Bubak’s, for instance,it would help the defense to obtain a courtruling prior to trial that would set the precisepercentage of a chance of a better outcomethat the jury would consider if thecourt determined that the case warrantedpermitting a relaxed standard of proof,and the jury would consider that proof.<strong>Defense</strong> counsel also could consider presentinga motion that would ask a court tospecify the formula to calculate damages ina case in which a plaintiff could only offerproof that he or she would have had a limitedchance of a better outcome if a physicianhad acted differently. <strong>The</strong> facts of acase may call for other motions that willhelp limit the ways in which the chance ofloss doctrine works to benefit a plaintiff.Limiting the scope of the doctrine in anyway possible aids your client by making themost of a difficult legal doctrine.Just as medical science can help patientsachieve better outcomes, it can also helpmedical liability defendants achieve betteroutcomes, particularly when the sciencesupports a strong causation defense.When you can use a causation defense toavoid the vicissitudes of a jury trial, defensecounsel should aggressively use it to defendtheir doctors. And even in those jurisdictionswhere the jaws of the loss of chancedoctrine have appeared to clamp down oncausation defenses, you should make everyeffort to snatch it back.
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A W<strong>Defense</strong> ofCorporate ParentsBy Michael J. GriffinManaging DirectParticipantLiability ClaimsStrategies for limiting orpreventing the burdens,costs and disadvantagesassociated with claimsagainst corporate parents.In recent years, the typical corporate structure of hospitals,nursing homes and other health care providers hasevolved from a relatively simple linear structure to a morecomplex multi- layered model. This development hasnot been lost on the health care plaintiffs’bar. <strong>The</strong>ir complaints now name not onlyhealth care facilities, but also their corporateparents, and other affiliated entities,casting a wide net for potential defendants.It is blackletter law, however, thatparents and other stakeholders are generallynot liable for the torts of a subsidiaryfacility. Plaintiffs’ efforts to circumventthis principle through the legal doctrineof “piercing the corporate veil” are oftenunsuccessful because the standards forpiercing the corporate veil are quite stringentin most jurisdictions. Plaintiffs aretherefore beginning to resort to an alternatestrategy for reaching corporate parents:arguing that the parents themselveshave direct responsibility for the plaintiff’sinjuries. <strong>For</strong> example, a plaintiff mayclaim that a corporate parent caused budgetcuts at a facility that led to a reductionin safety measures that could haveprevented a patient’s injuries. Liabilityunder this theory, called “direct participantliability,” is not predicated on principlesof vicarious liability but, rather, asthe name suggests, is based upon a parent’sown conduct and participation in thealleged wrong.This article will describe the contoursand limits of direct participant liability,as well as some of the burdens defensecounsel face when parent corporations arenamed as defendants in litigation againsta subsidiary health care facility. <strong>The</strong> articlewill also describe strategies for dealingwith claims against parents of health carefacilities, particularly motions to dismiss,which, because of recent developments incivil procedure, have become formidableweapons against such claims. Finally, thisarticle will discuss the use of early discoveryrequests to develop a factual recordin support of a later motion for summaryjudgment or in support of motions for protectiveorders against overburdensome andcostly discovery requests aimed at multiplecorporate defendants.■ Michael J. Griffin is a partner with Peabody & Arnold LLP in Boston. He is a member of <strong>DRI</strong>’s Medical Liability and Health CareLaw, Product Liability, and Professional Liability Committees and serves on the steering committee of the <strong>DRI</strong> Nursing Home/Assisted Living Facility Seminar. He is also an active member of the American Health Lawyers Association, Massachusetts BarAssociation, and Massachusetts <strong>Defense</strong> Lawyers Association. <strong>The</strong> author wishes to acknowledge the invaluable contribution ofhis colleague Timothy Pomarole, who assisted in the research and preparation of this article.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 17
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WCorporate StructureOnce upon a time, hospitals, nursinghomes and other health care institutionswere owned and operated under a relativelysimple “top down” structure wherein thecorporate parent essentially owned, operated,and controlled one or several healthcare facilities under a single roof. <strong>Today</strong>,this linear structure has been replaced byDirect participantliability will not attachunless the parent’s oversightof a subsidiary’s facilityis eccentric both in termsof degree and control.a more complex multi- layered model withseparate corporate entities—typically limitedliability companies—utilized for differentfunctions, which include ownershipof real estate, holding state licenses, managementand administration, provision ofsupplies or equipment, and employment ofmedical staff. In some cases, a separate realestate investment trust or REIT is createdto hold ownership of the building or facilityitself, which then leases the building to oneor more separate LLCs. This modern corporatestructure has at least two advantages:(1) the many different functions neededto operate a successful health care organizationare segregated into discrete corporateentities that can be operated moreefficiently and effectively than through thetraditional linear structure; and (2) thepotential liability of each separate corporateentity, and the structure as a whole, isminimized through the use of multiple corporateforms with distinct functions andresponsibilities.Traditional Corporate VeilPiercing <strong>The</strong>oryIn “extraordinary cases,” courts will piercethe corporate veil and disregard the corporatestructure, treating the parent corporationand its subsidiary as a single entity.18 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Corrigan v. U.S. Steel Corp., 478 F.3d 718,724 (6th Cir. 2007). Generally speaking,a plaintiff seeking to pierce the corporateveil of a subsidiary to reach a parentcorporation or shareholder bears a heavyburden and is required to present evidencedemonstrating various factors suchas: (1) undercapitalization; (2) absence ofcorporate representation; (3) fraudulentrepresentation by corporate directors orshareholders; (4) use of the corporation topromote fraud, injustice or illegal activities;(5) comingling of assets or affairs; (6)failure to observe corporate formalities; or(7) shareholder conduct ignoring, controllingor manipulating the corporate form.See Community Care Centers, Inc. v. Hamilton,774 N.E.2d 559, 565 (Ind. App. Ct.2002). Because of these exacting standardsand the difficulties of marshalling admissibleevidence with respect to the multiplefactors required under this theory, plaintiffshave had limited success in piercingthe corporate veil in the context of litigationagainst health care entities.Direct Participant LiabilityRecognizing the difficulties involved in convincinga court to disregard the distinctionbetween a subsidiary and its parent, plaintiffs’lawyers are increasingly turning to thetheory of direct participant liability. Underthis theory, liability may be imposed when“the alleged wrong can seemingly be tracedto the parent through the conduit of its ownpersonnel and management” and “the parentis directly a participant in the wrongcomplained of.” United States v. Bestfoods,524 U.S. 51, 64 (1998) (citation omitted). Inother words, even if it is not liable under aveil piercing theory, a parent corporation,like all other persons and entities, may beheld liable for its own tortious conduct.<strong>The</strong> concept of direct parental liabilityfor the negligence or other wrong of asubsidiary is not new. In a seminal 1929law review article, Supreme Court Justice(then- professor) William Douglas surveyeda number of cases in which “the parent isdirectly a participant in the wrong complainedof.” Douglas & Shanks, Insulationfrom Liability Through Subsidiary Corporations,39 Yale L.J. 193, 208 (1929).Justice Douglas noted the following commoncharacteristics giving rise to parentalliability in these cases: (1) the use oflatent power incident to stock ownershipto accomplish a specific result; (2) interferencein the internal management of thesubsidiary; (3) an overriding of the discretionof the managers of the subsidiary; and(4) a close connection between the injuryand the interference. Id. at 209.In United States v. Bestfoods, infra, theSupreme Court cited the Douglas articleapprovingly while at the same time articulatingimportant limits on direct participantliability to ensure that its use isconsistent with the principle of limited liabilityfor corporations, which is “deeplyingrained in our economic and legal systems.”Id. at 61 (citation omitted). First, theCourt stressed that direct liability cannotbe based on the mere fact that the parentand subsidiary have directors and officersin common, a standard and unobjectionablecorporate practice. Id. at 69. Moreover,because courts presume that officersand directors are wearing their “subsidiaryhats,” and not their “parent hats,” whenthey are engaged in subsidiary- relatedactions, liability cannot be based on thefact that “dual officers and directors madepolicy decisions and supervised activitiesat the facilities.” Id. Next, the Court notedthat activities involving a subsidiary’s facilitythat are “consistent with the parent’sinvestor status, such as monitoring of thesubsidiary’s performance, supervision ofthe subsidiary’s finance and capital budgetdecisions, and articulation of generalpolicies and procedures, should not giverise to direct liability.” Id. at 72. In otherwords, to determine whether a parent maybe held directly liable, the “critical questionis whether, in degree and detail, actionsdirected to the facility by an agent of theparent alone are eccentric under acceptednorms of parental oversight of a subsidiary’sfacility.” Id.Although Bestfoods describes many ofthe important principles governing andlimiting direct participant liability, it isin many ways an atypical case because itrevolved around whether the parent couldbe considered an “operator” for purposesof CERCLA, rather than on whether itwas directly liable for any specific tort.Later cases, however, have relied on theprinciples articulated in Bestfoods, andelsewhere, and applied them to more traditionaltort contexts.
A notable recent case analyzing a corporateparent’s tort liability for an injuryoccurring at one of its subsidiary’s facilitiesis <strong>For</strong>syth v. Clark USA, Inc., 864 N.E.2d 227(Ill. 2007). In <strong>For</strong>syth, two mechanics whoworked at a refinery operated by the defendant’ssubsidiary were killed in an industrialaccident. Id. at 230–31. <strong>The</strong> decedents’estates alleged that the parent was directlyliable for the accident. <strong>The</strong>y argued thatthe defendant breached its duty of care by(1) requiring the subsidiary to minimizeoperating costs, including those relatingto training, safety, and maintenance; (2)requiring the subsidiary to limit capitalinvestments, which allegedly prevented thesubsidiary from making adequate safetyexpenditures; (3) failing to properly evaluatethe subsidiary’s training and safetyprocedures; and (4) by forcing capital cutbacksthat resulted in unqualified employeesacting as maintenance mechanics. Id. at231. This theory, based on budgetary- typecontrols, is highly relevant in the healthcare context, where parents typically exercisesome control over budgetary mattersinvolving individual facilities or providers.<strong>The</strong> Supreme Court of Illinois had littledifficulty accepting that direct participantliability was, in principle, a valid theory ofrecovery. Id. at 236–37. <strong>The</strong> question waswhether, and in what circumstances, a parentcould be held liable for its control overa subsidiary’s budget. In canvassing thecase law on direct participant liability, theCourt took note of two principles. First, followingthe teaching of Bestfoods, a parentwill not be liable for actions that are consistentwith the normal control that a parentexercises over its subsidiary. Id. at 233–37.Accordingly, direct participant liabilitywill not attach unless the parent’s oversightof a subsidiary’s facility is eccentricboth in terms of degree and control. Id. at237. Second, the parent must actually havehad some hand in directing or authorizingthe specific conduct at issue. Id. at 234, 237.Considering both of these principlestogether, the court held thatWhere there is evidence sufficient toprove that a parent company mandatedan overall business and budgetary strategyand carried that strategy out by itsown specific direction or authorization,surpassing the control exercised as anormal incident of ownership in disregardfor the interest of the subsidiary,that parent could face liability.Id. at 237. (emphasis in original). This rulecombines the requirements of eccentricity(control deviating from the normal parentsubsidiaryrelationship), and specificity(specific direction or authorization of theconduct at issue). <strong>The</strong> Court stressed that“mere budgetary mismanagement alonedoes not give rise to the application ofdirect participant liability.” Id.Turning to the facts before it, the courtobserved that the parent’s president, whowas also CEO of the subsidiary, drafted adocument setting forth budget prioritiesfor the subsidiary that included a “survivalmode” business philosophy with a goalof replenishing the parent’s strategic cashreserves by $200 million. Id. at 238–40.<strong>The</strong> court determined that there was a factualquestion whether the president/CEOwas acting for the benefit of the parent,rather than the subsidiary, in setting andimplementing the subsidiary’s budgetarypriorities. Id. at 240. Reversing the lowercourt’s order granting summary judgmentto the parent, the court concluded that ifthis officer was wearing his “parent hat”rather than his “subsidiary hat” when hewas directing the manner in which the subsidiary’sbudget cuts were made, this wouldbe an eccentric level of control supportingdirect participant liability. Id.Budgetary control over a subsidiary isperhaps the classic ground for allegingdirect participant liability, but other formsof participation can give rise to a potentialdirect liability claim as well. <strong>For</strong> example,in Spires v. Hospital Corporation of America,a putative class of representatives ofestates of deceased hospital patients allegedthat the parent corporation had created acomputer program for staffing at subsidiaryhospitals that caused the hospitals toprovide an inadequate level of staffing. 289Fed. Appx. 269 (10th Cir. 2008). <strong>The</strong> TenthCircuit remanded the case for further considerationof the issue, but noted that if theplaintiffs did not allege “a level of controlbeyond ordinary involvement of a parentcorporation in the affairs of its subsidiaries,”the claim would not likely be viable.Id. at 272. Other bases for relief sometimesalleged by plaintiffs include, but are notlimited to: (1) a parent’s alleged failure toprovide supplies or services necessary toprovide appropriate medical care or treatment;(2) a corporate property owner’s negligentmaintenance of property leading toan unsafe or hazardous condition; (3) amanagement company’s negligent hiringor supervision of staff; and (4) a parent’sfailure to implement appropriate policiesand procedures.<strong>The</strong> Plaintiff’s PerspectiveIt can be reasonably argued that, in somecases, naming multiple corporate defendantsunder various theories of direct participantliability is far more trouble to aplaintiff than it is worth. Injecting theoriesof direct participant liability into agarden variety case involving a patient’sfall, a medication error, or an elopement,will not only significantly increase thecosts and burden of the discovery process,but may also have the effect of needlesslycomplicating what might otherwise be astraightforward case. In many cases, theinclusion of multiple corporate defendantsdoes not increase the amount of availableinsurance coverage because the affiliatedentities are typically additional namedinsureds under a single limit professionalliability policy covering the facility andstaff. Indeed, under some single- limit policies,the increased discovery costs coulderode the amount available for settlement.In other cases, particularly where thereis no clear cut deviation from the requiredstandard of care, or where the incidentor accident was unwitnessed, interjectingtheories of budgetary malfeasance orother corporate neglect may be viewed byplaintiff’s counsel as a useful distractionand enable the plaintiff to focus on favoritethemes such as “profits over people.”In terms of discovery costs, the burdensupon health care defendants in defendingagainst such claims far outweigh the marginalburdens on plaintiffs in assertingthem. If plaintiffs’ claims alleging directparticipant liability against multiple corporateentities survive a motion to dismiss,defendants can expect separate written discoveryrequests directed to each corporateentity, soon to be followed by multiple 30(b)(6) deposition notices covering an exhaustivelist of topics, many of which may haveno apparent relationship to the facts of thecase. If the case proceeds to trial, one ofthe plaintiff’s likely trial themes will be<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 19
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wthe “David and Goliath” battle betweenthe plaintiff and the many-headed corporategiant.<strong>The</strong> mere right or powerto control a subsidiarydoes not give rise to aduty to third parties.Responding to a Claim ofDirect Participant Liability<strong>For</strong>tunately, there are strategies for limitingor preventing the problems associatedwith the assertion of claims against corporateparents under a direct liability theory.<strong>The</strong>se include motions to dismiss theparent for failure to state a claim against it,and discovery requests directed at developinga case for an early motion for summaryjudgment. Such discovery requestsmay include a set of contention interrogatories,a request for documents or requeststo admit which, collectively or individually,seek to reveal or highlight the absenceof sufficient facts in support of plaintiff’sallegations of parental liability. <strong>The</strong>se discoverytools can also be useful in seekingprotective orders against over burdensomediscovery directed to multiple corporateentities or to officers and directors.<strong>The</strong> New Pleading Standards<strong>The</strong> new pleading standards articulatedby the Supreme Court in Bell Atlantic v.Twombly, 550 U.S. 544 (2007) and Ashcroftv. Iqbal, 556 U.S. , 129 S. Ct. 1937 (2009),have greatly enhanced defense attorneys’ability to secure dismissal before a singlediscovery request is served. Under thenew standards, claims against parents on adirect participant liability theory are nowexcellent candidates for dismissal.Prior to Twombly and Iqbal, a complaintcould not be dismissed “for failure to statea claim unless it appears beyond doubtthat the plaintiff can prove no set of factsin support of his claim which would entitlehim to relief.” Conley v. Gibson, 351 U.S.41, 45 (1957). Under this standard, it was20 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>very easy to state a claim against a corporateparent, even if the complaint did nothingother than name the parent and makeconclusory allegations of liability. Oftentimes,a plaintiff would have little reasonto believe that the parent had actual liabilityand sued it as a matter of course inan effort to ensnare a deep- pocketed corporatedefendant. <strong>The</strong> strategy was to suefirst, ask questions later, and extract whateverleverage could be had by having theparent in the case.<strong>The</strong> old, permissive pleading standard,however, has been cast aside in the last fewyears. Under the new pleading standardsset forth in Twombly and Iqbal, to survivea motion to dismiss, it is not enough for acomplaint to allege facts that are merelycompatible with relief; instead, what isrequired “at the pleading stage [are] factualallegations plausibly suggesting (not merelyconsistent with)” an entitlement to relief.Twombly, 550 U.S. at 557 (emphasis supplied).Where a complaint only pleads factsthat are “‘merely consistent with’” liability,it “‘stops short of the line between possibilityand plausibility of entitlement to relief.’”Iqbal, 129 S. Ct. at 1949 (quoting Twombly,550 U.S. at 557). Under Twombly and Iqbal,if “the well-pleaded facts do not permit thecourt to infer more than the mere possibilityof misconduct, the complaint hasalleged—but it has not ‘show[n]’—‘that thepleader is entitled to relief’” and must bedismissed. Id. at 1950 (quotation omitted).In determining whether a complaintmeets this “plausibility standard,” Iqbal,129 S. Ct. at 1949, a court must disregard“‘legal conclusion[s] couched as factualallegation[s].’” Twombly, 550 U.S. at 555(quoting Papasan v. Allain, 478 U.S. 265,286 (1986)). Pleadings that “are no morethan mere conclusions [] are not entitled tothe assumption of truth.” Iqbal, 129 S. Ct. at1950. Under the old pleading regime, plaintiffscould file their complaint first andonly determine later in discovery whetherthey in fact had a claim against the defendants;now, under Twombly and Iqbal,“a plaintiff armed with nothing more thanconclusions” cannot “unlock the doors todiscovery.” Id.Application of Iqbal/Twomblyto Direct Participant ClaimsTo allege a non- conclusory claim of directparticipant liability in the context of anegligent care claim against a health careprovider, a plaintiff must assert specificfacts plausibly suggesting that (1) the parentowed a duty of care to the plaintiff; (2)the parent breached its duty by exertingan unusual or “eccentric” level of controlover its subsidiary; and (3) the parent specificallyauthorized or directed the conductthat allegedly caused harm or injuryto the plaintiff. Additionally the plaintiffmust plead facts plausibly suggesting thatthe alleged wrongful conduct proximatelycaused injury to the plaintiff.In addressing the issue of duty, defensecounsel should bear in mind the generalprinciple that a parent company does notowe a duty to third parties to superviseor control the conduct of its subsidiary toensure that the subsidiary acts with reasonablecare. See <strong>For</strong>syth, 864 N.E.2d at 236.In other words, the mere right or power tocontrol a subsidiary does not give rise to aduty to third parties. Id. In the health carecontext, a parent that has no involvementin the day-to-day operations of a subsidiary’shealth care facility, the provision ofcare to patients, or the control of medicalstaff generally owes no duty to patients atthe facility. Likewise, a holding companythat owns a facility or the real estate uponwhich a facility is located, without more,does not owe a duty of care to patients toensure that medical staff provides appropriatecare.Generic allegations that the parent exercisedbudgetary or financial control overa subsidiary or that dual officers directedpolicy or supervised the operations of afacility are also insufficient, without more,to state a viable cause of action againsta parent for direct participant liability.As noted in Bestfoods, such activities arewithin the norms of accepted corporatebehavior. Bestfoods, 524 U.S. at 71–72 (“[I]tcannot be enough to establish liability herethat dual officers and directors made policydecisions and supervised activities atthe facility.”). Instead, plaintiffs would haveto assert factual allegations demonstratingthat, with respect to the specific conduct atissue, a dual officer was in fact acting onbehalf of the parent and not on behalf ofthe subsidiary, in connection with the actor conduct alleged. While plaintiffs mayattempt to characterize customary bud-
getary or financial control, dual officer ordirector status, or supervision of operationsas somehow improper or part of anefarious plot by the defendants, defensecounsel should emphasize that such activitiesare within accepted corporate normsand are “consistent with the parent’s investorstatus.” Bestfoods, 524 U.S. at 72.Furthermore, in the context of claimsinvolving allegations that the parent exercisedcontrol over the business decisions orbudgetary strategy of a subsidiary, it shouldbe remembered that “mere budgetary mismanagementalone does not give rise to theapplication of direct participant liability.”<strong>For</strong>syth, 864 N.E.2d at 237. Accordingly,a plaintiff must allege that the parent specificallydirected or authorized budgetarydecisions in a manner inconsistent withthe normal parent/subsidiary relationship.Typically, complaints alleging direct participantliability against parents springingfrom budgetary oversight lack the requiredelements of both specificity and eccentricityof parental control required by the caselaw.More often, the complaint will simplyallege in conclusory fashion that the parentmade budgetary decisions that resultedin reductions in staff or in supervision ofpatients resulting in harm. Counsel shouldargue that such bald allegations are insufficientas a matter of law to state a claim fordirect participant liability because they donot describe an abnormal or eccentric levelof budgetary oversight specifically directedby the parent.Finally, in attacking the sufficiency of acomplaint alleging direct participant liability,defense counsel should pay specialattention to the required element of proximatecause. It is one thing for a plaintiffto generally allege that a parent corporationmade budgetary decisions, exercisedcontrol over policies and procedures, ortook other actions which, in the abstract,might potentially lead to understaffing, inadequateequipment, or the like. However,such generalized allegations of potentialharm are inadequate unless they are tiedto the specific incident or injury alleged.<strong>For</strong> example, where a patient suffers an unwitnessedfall, it is conceivable that the fallresulted from a lack of adequate staffing.Under the old pleading standard, a simpleconclusory allegation that the plaintiff felldue to inadequate staffing, and that the inadequatestaffing was related to the parent’sbudgetary decisions, would probably beenough to state a claim against a parent asa direct participant. However, under Iqbaland Twombly, such an allegation would be<strong>The</strong> Most Timesaving,plainly insufficient. At a minimum, thecomplaint would have to allege facts plausiblysuggesting that (1) a staffing shortageactually existed at the time of the accident;(2) the fall would not have occurred but forCost-Effective Source<strong>For</strong> <strong>The</strong> Best ExpertsExpert referralsin virtually allfields, includingunique specialtiesMost referrals madewithin 24 hoursIndependent Consultingand Testifying Expertsfor any stage of your caseFlexibility for budgetsof all sizesTechnical Advisory Service for Attorneys800-523-2319experts@tasanet.comwww.TASAnet.com<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 21
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wthe fact of inadequate staffing; and (3) theparent’s budgetary directives, made in derogationof traditional parent/subsidiary relationships,resulted in understaffing at thetime of the incident. Absent appropriatefactual allegations supporting the requiredelement of proximate cause, a claim of a directparticipant liability will likely be subjectto dismissal.<strong>Defense</strong> counsel shouldpay special attention tothe required elementof proximate cause.Discovery ApproachesEven where the plaintiff’s allegations insupport of direct participant claims areinadequately pled, defense counsel maywish to bring a motion for summary judgmentinstead. In that case, written discoveryrequests aimed at revealing the lack offactual support for the plaintiff’s claimsshould be served without delay.Contention interrogatories asking theplaintiff to “state the complete factualbasis” for each separate allegation assertingparental liability, paired with a request fordocuments seeking production of “all documentsthat relate to or support” the plaintiff’sdirect- participant liability claims, canbe effective in demonstrating that plaintiff’sclaims lack a sufficient factual basis.If, as often happens, the plaintiff objects tosuch interrogatories as premature, overlyburdensome, or irrelevant, the point willhave been tacitly conceded. Requests foradmissions asking the plaintiff to admit ordeny that the plaintiff knows of no facts insupport of the direct participant liabilityclaims other than those alleged in the complaint,or asking the plaintiff to admit ordeny that the only documents in support ofsuch claims are those attached to the complaintor those produced in discovery, servethe same purpose.Because the burden of proof on claimsfor direct participant liability rests withthe plaintiff, summary judgment as tothese claims is warranted if the plaintiff22 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>is unable to come forward with admissibleevidence supporting each essentialelement of the claim. See Celotex Corp. v.Catrett, 477 U.S. 322–323 (1985). Where theplaintiff’s responses to the defendant’s initialdiscovery requests are evasive or lackreal substance, summary judgment maybe appropriate—even where the plaintiffargues that further discovery is needed—because inadequate responses may indicatethat there is no reason to believe thatfurther discovery is likely to elicit informationthat would defeat summary judgment.Getting an early jump on discoveryrelating to the plaintiff’s direct participantliability claims also serves to provide defendantswith strong arguments in supportof motions for protective orders againstcostly and burdensome discovery requestsdirected at multiple corporate defendants.Duplicative or overlapping discoveryrequests, including Rule 30(b)(6) corporaterepresentative deposition notices, althoughburdensome and expensive, may be difficultto prevent given the liberal scope ofdiscovery envisioned by the rules of civilprocedure. However, if defense counsel isable to demonstrate, via the plaintiff’s inadequatediscovery responses, that the factualunderpinnings for the direct participantclaims asserted against the parent andrelated entities are weak or non- existent,the Court may be inclined to agree that theburden of such discovery outweighs anylikely benefit.Proactive and forward thinking discoverymanagement is another tool forcombating the problems associated withcorporate parent defendants. <strong>Defense</strong>counsel should also consider pressing forhighly controlled phased discovery on theparent’s direct participation. It should notbe necessary to conduct all of the discoverythat might illuminate direct participation.Instead, an early phase should be limitedto answering the question whether thereis reason to conclude that a second, andmore robust, phase on this issue would befruitful. This may not be practical in everycase, but a premium should be placed onattempting to frame the discovery debateearly on rather than on responding to theissues as they arise. Moreover, in our experience,courts often respond more positivelyto a proactive and even-handed planthan to ad hoc discovery disputes.ConclusionPlaintiffs’ litigation groups throughoutthe country now recommend the use ofdirect participant liability theory in claimsagainst health care providers. This theoryis favored over traditional corporateveil piercing theory because it is viewedas easier to allege and prove. Assertion ofdirect participant claims creates burdensand challenges for the defense, includingincreased defense costs, obfuscation ofboth factual and liability issues, and susceptibilityto familiar and misleading argumentsabout corporate greed or “profitsover people.” However, these challengescan be managed if they are approachedwith care and forethought.<strong>The</strong> first step in minimizing the riskof exposure to direct participant liabilityclaims is to closely adhere to corporateformalities to avoid any appearance thata parent is mandating a course of conductfor its subsidiary in disregard of thesubsidiary’s interests. Careful documentationof the decision making process atthe subsidiary level, particularly in areasthat could affect the safety or the deliveryof care to patients, is critical. Dual officersor directors must avoid the appearanceof “wearing two hats” when engagedin subsidiary- related actions. <strong>The</strong>se measureswill minimize the likelihood thatdirect participant liability claims againstparents or related entities in the healthcare field will be successful.Where direct participant claims againstparent corporations are asserted, an understandingof the principles governing andlimiting direct participant liability is criticalin seeking their dismissal. Plaintiffsmust allege facts plausibly suggesting bothan eccentric level of control over the subsidiary,and specificity in directing the conductat issue. Traditional tort elements,such as duty and proximate cause, mustalso be properly alleged. A complaint thatbaldly asserts parental liability in conclusoryfashion should not survive a motionto dismiss.Even where parents are not dismissedat the outset, proactive and early discoverycan yield substantial benefits for thedefense and minimize the burdens, costs,and disadvantages associated with claimsagainst corporate parents.
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WMalpractice JuryVerdictsBy Sue Seifand Thomas G. Leverage<strong>The</strong> Trial Lawyer’sDifferentialDiagnosisRetrospective analysis ofa jury’s verdict can help toidentify and select futurejurors who will possessreasonable health literacy.In trying to diagnose how a jury reached its verdict in aparticular case, we can engage in a type of differentialdiagnosis, although somewhat differently from how doctorsuse the technique. Instead of starting with multiple,possible causes for the patient’s symptomsand then ruling out those that are notproven, in the case of trying to diagnosewhy a jury reached a verdict, we start withthe verdict and then create a list of all thepossible reasons why the jury did what itdid. Our analysis rules in possibilities andour differential grows. How many thingshad an influence on the jury’s verdict andwhat was most important?Medical malpractice litigation is affectedby both internal and external factors inaddition to the medical issues of a givencase. Many of these are well known tothose of us actively involved in medicalmalpractice defense: changing insurer’spriorities and policies, efforts toward tortreform, venue, “likeability” of the parties(including counsel), defendants’ needs andconcerns—the list goes on. Most cases settleprior to going before a jury, but attorneystaking their cases through to verdictneed to consider a factor that has not gottenmuch attention from either the medicalor legal communities: health literacyand its communication. This article willexplain some of the learning theory behindthe problem and its evolving solutions, andgive defense lawyers a personal and practicaltake on dealing with health literacy,communication and your jury.A couple of years ago, I picked a jury inQueens County, New York, which has tobe one of the most diverse locations onearth. When we sat the first six jurors forquestioning, not one had been born in theUnited States. I felt like I was living thefirst line of a bad joke, “A German juror, aKorean juror, a Guatemalan juror, a Polishjuror, an Argentine juror, and a Thai jurorare deciding the case of an elderly Italianwoman suing a nursing home administeredby an Orthodox Jewish lady.” Ofcourse, it is my job to tell the carrier howI think the jury will decide the case….—tl■ Sue Seif, MA, CMI, is president of Seif & Associates Medical Graphics. She is a past- president of theAssociation of Medical Illustrators and past- chairperson of the Board of Certification of Medical Illustrators.Both authors are members of <strong>DRI</strong> and its Medical Liability and Health Care Law Committees. ThomasG. Leverage is a partner in the firm of Furey, Furey, Leverage, Manzione, Williams, and Darlington, P.C., inHempstead, New York. This firm specializes in defending high exposure personal injury cases, includingmedical malpractice.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 23
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WHealth LiteracyAfter an attorney has spent years workingon a file and put in weeks of intensive workgetting ready for trial, it is very difficult tothink back to how the case looked when heor she knew nothing about it. What was thefirst impression? What concepts were difficultto grasp? Where did he or she take apath that led nowhere? What assumptionsIn the case of trying todiagnose why a jury reacheda verdict, we start with theverdict and then create a listof all the possible reasonswhy the jury did what it did.turned out to be wrong and what was it thatsteered him or her in the right direction?After you have lived with the case for solong, now you have to put yourself into thejurors’ shoes. Not only are the jurors startingwith zero knowledge, they will havefar less time to figure the case out thanyou had. In addition, the presentation ofthe material comes to them piecemeal, likeone piece of a puzzle at a time, through thestructure of direct and cross examinationof witnesses. Add to all this that many jurorsnever had the formal training necessaryto understand the basic science,think analytically, and process complexmedical- related thoughts. In other words,jurors often have very poor health literacy.How, then, does the trial attorney communicate—muchless persuade the jury—especially when the case involves complexissues?I have a vivid memory of giving my summationto a Bronx jury on a case that involvedfailure to diagnose diverticulitis,which resulted in a colostomy and hernia.Although advanced degrees mightnot have made much difference, none ofthose jurors had matriculated beyond highschool. As I was summarizing the medicaltestimony and trying to explain whymy client did not commit malpractice, I24 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>was making eye contact with the jurors. Ifelt my stomach turn as their blank staresalerted me that they were not followingmy argument. This was a lesson I try notto forget when I prepare for trial.—tlHealth literacy is defined as the “degreeto which individuals have the capacityto obtain, process and understand basichealth information and services neededto make appropriate health decisions.” Itis estimated that only 12 percent of U.Sadults have proficient health literacy, with14 percent being categorized as having“below basic” literacy. See http://www.health.gov/communication/literacy/issuebrief/.Health literacy impacts nearly every facetof health care and, by logical extension,medical litigation. It is estimated that thecosts of poor health literacy range between$50–75 billion annually, not counting theadditional costs of medical litigation. Onestudy noted that the annual cost of Medicarepatients in Arizona was $2,891 per enrollee,but those with limited health literacyaveraged $10,688 per enrollee. <strong>The</strong> link betweengeneral literacy and health literacy isintuitive, and the data confirm this.<strong>The</strong> government’s Healthy People <strong>2010</strong>initiative added a health communicationfocus area to examine and improve communicationbetween the health care systemand the patient, at all levels. <strong>The</strong>yreport research indicating that approximately75 percent of people with chronicphysical or mental health problems are inthe limited literacy category. T.C. Davis,et al., “How Poor Literacy Leads to PoorHealthcare,” Patient Care 94–108, 1996.Are they suffering from some of thesediseases because their illiteracy makesthem unable to understand their diseaseprocesses, treatment plans and preventivemeasures? <strong>The</strong>y are likely your plaintiffs—are they also on your jury?<strong>The</strong> growing body of literature has distilledsome risk factors for health illiteracy.At-risk populations include thosewith poor reading or numeracy (interpretingnumerical data) skills, less than a highschool education, no access to the Internet(the so-called “digital divide”), no healthinsurance, or physical/mental disabilities,as well as non- English speakers, people ofadvanced age, the chronically unemployed,and Medicaid patients.<strong>The</strong> degree to which ethnicity impactshealth literacy is likely due to other socioeconomicissues, but the cost to the systemand the potential personal toll is noless. It is important to note, however, thatthe majority of people with marginal orlow literacy are white, native- born Americans.As one author noted, while there arelifestyle and performance triggers for raisingthe level of suspicion, “you can’t tell bylooking.”While education and socioeconomic factorsare important, so are cultural and languageissues, communication skills andstyles and health status. As defense advocates,we have seen the havoc wrought bycaregivers’ poor verbal and non- verbal communicationin explaining medical issues,giving instructions, expressing empathyand obtaining proper informed consent. Ifone job of the system is to improve healthby making patients able to understandingand manage their own care, the systemhas failed.This failure has certainly greatly impactedthe litigation process. Data indicatethat communication style and attitude aremajor factors in nearly 75 percent of malpracticesuits. A core issue in health illiteracymay well have its origin in the way theinformation is transmitted to the patient.By extension, then, a core issue for the defenseis how information is transmitted tothe jury.Jurors often make their decisions in largemeasure on the overall impression theyreceive from observing how the attorneystry their case, the impression witnessesmake, and what appears to make commonsense. Non- verbal communicationcan be hurtful before you have even consideredit, particularly with visual/spatiallearners sensitive to visual nuance.Several more real-life examples wereexcellent lessons. During jury selection ina personal injury case in the Bronx, oneof the jurors referred to me as the “corporateattorney.” I realized that just bymy appearance, dress, and demeanor,I was conveying an impression to thisBronx jury that may not have been what Iwanted to convey.In a medical malpractice case that hadmuch sympathy on the side of the plaintiff,the jury (who rendered a defense verdict)told me that they appreciated my
consideration when I corrected plaintiff’scounsel’s misstatements, such as datesor the right name of a party or hospital,for the sake of clarity and accuracy. Thismay be somewhat counterintuitive, butthe jury appreciated my politeness to myadversary.In a case where the verdict was adisaster for me, one of the jurors thoughtI smiled too much. Did I seem cocky duringthe trial? Did I seem disrespectful tothe other side? Whatever it was, it had animpact on the verdict. <strong>The</strong> jury knockedme down.—tlHealth Literacy and Your JuryBoth verbal and non- verbal signals are sentwith every social interchange and learnersrely on these cues in varying proportions.It is critical that you be aware of the healthliteracy of your potential jury and use everypossible tool to ensure understanding.It goes without saying that you will try tocull out jurors who are not English- speakersor cannot see, hear or read, but the triggerslisted above that can cue a caregiver as torisks of low level health literacy might behelpful to you when you are selecting yourjury. <strong>The</strong> plaintiff is relying on emotion andfeeling to convey his or her case; this is intrinsicallyengaging and the more empathya juror has, the more likely he or she may beto side with the plaintiff. <strong>The</strong> defense needsto engage and educate the jury so that theycan develop a reasonable understanding ofwhy the defendant made the decisions he orshe made—a very different and more difficultgoal. If the health literacy level is low,counsel must at least raise it to a baselinelevel to meet his or her goal.During the questioning of a medical witnessin a medical malpractice case, thejurors became very restless and agitated.<strong>The</strong> judge asked what the problem was.<strong>The</strong> jurors had complained that therewas a term being used that they did notunderstand. Evidently, it had been usedthroughout the trial and on breaks the jurorshad been talking among themselves,asking each other if they knew what theterm meant. <strong>The</strong>y said the term wassomething like CRB, or ETC. <strong>The</strong> judgeand the lawyers asked if it was CAT, orMRI, or IME, or EEG, or EKG. <strong>The</strong> jury saidno, it was not any of those.After the judge and we lawyersexhausted our thoughts on this, the judgesaid we will proceed with the trial and ifthe term comes up again that the juryshould let us know. <strong>The</strong> lawyer startedquestioning the witness again and asked,“Now doctor, you read the EBT of my client….”At that point the jury all jumpedup and said, “That’s it. That’s the term.What is an EBT?” It never crossed ourminds that the jury did not understandthat EBT was the abbreviation for examinationbefore trial. It is difficult to imaginewhat another person may not know,especially if that knowledge is very familiarto you. Is this a version of how we gothere in the first place—poor realizationthat the learner may not be functioningwith an adequate database and regardlessof how skilled we may be as communicators,the holes in the baseline havenot been plugged?—tl<strong>The</strong>re is considerable literature in the healthliteracy community on how to improvecommunication. One of the research arms isreview of individual learning styles, the effectof graphics and animation on learningand retention, and the development ofunique ways of providing information sothat it is understandable and engaging.<strong>The</strong>se lessons will also apply to us.Learning Styles and Your JuryGiven that one of your primary jobs is toeducate the jury, it would be importantto understand what the learning stylesare, how to detect them, and how to usethat information for the best understandingand retention. Current learning theoryposits three major learning styles: auditory(approximately 15 percent of the population),visual/spatial (50 percent) and kinesthetic(35 percent). Interestingly, thereseems to be considerable overlap betweenthe kinesthetic and visual/spatial. Techniquesthat work for one group seem towork for the other.Auditory/verbal learners are most comfortablewith the spoken word and take ininformation better in a linear, bottom- up,parts-to-whole manner. <strong>The</strong>y are veryattuned to auditory nuances and subtleties,and tend to be verbal. If you were toask an auditory learner if he or she understoodsomething, he or she would likely say“I hear you,” “that rings a bell,” “I’m listening,”or similar.Kinesthetic learners are known to be“tactile learners.” <strong>The</strong>y learn by doing,wanting to literally get their hands into asubject before thinking about it. As children,they may be disadvantaged in theclassroom because of their need to beactive, but research has found that mixedSince most of thepopulation are eithervisual learners orkinesthetic learners, itwould be important…to focus… educationalmaterials and exhibitson these two groups.modality (visual and auditory) presentationsseems to be the most effective withthis group. When asked if they understandsomething, they will say “I can see myselfdoing that,” “it’s starting to come alive,”“I’ve got it,” or similar. Kinesthetic learnerstend to be more “global” learners, inthat they are more comfortable with topdown,big picture to detail presentation. Itis theorized that this kind of learning relieson prior knowledge, personal experiencesor individual interests. <strong>The</strong>se also serveto engage the learner. <strong>The</strong> use of physicalthree- dimensional models and interactivityis very useful to these learners.As would be expected, visual/spatiallearners take in information best whenpresented in graphic form. This can be inthe form of illustration, graphics, diagram,models, movies, demonstrations and interactivemodalities. <strong>The</strong>y particularly do wellwith what educators call “graphic organizers,”such as maps, flow diagrams, timelinesand other visual organizing cues.Visual learners share some characteristicswith kinesthetic learners, in that they tendto think globally and top-down. <strong>The</strong> identi-<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 25
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wfying clues include responses to your explanationsas “I see” or similar.<strong>The</strong> number of visual/spatial learnershas increased in recent years. One theoryis that the many visual cues we seeeverywhere we turn—TV, computers, videogames, etc.—have reduced the need toimagine images from simply the writtenor spoken word. Since most of the populationare either visual learners or kinestheticlearners, it would be important foreducators, caregivers and attorneys tofocus their educational materials andexhibits on these two groups. Sincepedagogical literature tends to groupthem as far as educational techniquesare concerned, we will combine theminto the visual/spatial category.Visual/Spatial Learningin the CourtroomSince most people are either visual/spatial or kinesthetic learners, howcan we present information in a waythat will maximize the learning in apopulation with less-than-ideal healthliteracy? <strong>The</strong> research gives us someclues, and this generally supports whatwe have recognized in practice, butthere are some surprises:• When prior knowledge is low, text/verbal input alone is less effectivethan graphics alone; there is no differencebetween still and animatedgraphics in this group.• When the learner has a high level ofprior knowledge, animated graphicsare more effective in learningdescriptive facts, but still graphicsare better for learning proceduraltasks.• Younger learners preferred simplergraphics, while older learners preferredmore complex graphics—butthere is little correlation betweenpreference and performance.• Color is more effective across theboard.• Pictures and words must be consistentand confirm each other.• Verbal and visual metaphors arenot always effective.One of the most useful types ofexhibits is the timeline—a form of“graphic organizer” so helpful tovisual/spatial learners. Different casesFig. 1Fig. 2Fig. 3have different needs, but some frameworkor scaffolding in an attractive timelinegraphic can have one or more of the followingeffects:• Places the chronology of what happenedinto a time context• Demonstrate frequency of events• Shows compliance or non- compliance• Enforces patterns and sequences, usingcolor- keying• Engages the jury more than a long narrativethat may be confusing• Easily educates the visual/spatial learnerby giving him or her a time/spaceframework• Uses the combination of the visual andspoken information for verbal learners,taking advantage of multi- sensoryinput.As a visual/spatial learner myself, I usethese same tools in preparing casesfor trial, I will get large blank calendarsand as I go through the medicalrecords, I will make my noteson these calendars. In this way, Ican integrate the records of manyhealth care providers. As a resultof this very time consuming andtedious task, patterns or inconsistenciesemerge that would be harderto identify if not laid out in a visiblechronology. By mapping out thetreatment in this manner, a criticaltime frame may be identified andselected to make a trial exhibit tobring home that point in a memorableway to the jury.—tlWhat about presentation medium?Chanlin found different results in differentpopulation groups, but the onestrong theme in the literature is thatmultimedia, or the use of several presentationtypes together (e.g., visuals+ text + speech) are the most effectivewith all learners. <strong>The</strong> theory is thatthe multisensory input forces facilitatedneuron connections. In essence,the total is greater than the sum of theparts. <strong>The</strong> common- sense conclusionthat the addition of a kinesthetic input(taking notes) would further facilitatelearning is borne out by the research,showing increases in jury retention,attention and understanding. <strong>The</strong>same study also indicated that providingthe jurors with summaries ofexpert testimony in combination withnote- taking had a “synergistic effecton the quality of decision- making.”Chanlin, L.J., Animation to Teach Studentsof Different Knowledge Levels, JInstructional Psychology, 1998,25(3):166–75.In many jurisdictions or courtrooms,jurors are not allowed to take26 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>
notes and take advantage of that multisensorysynergy. We expect jurors whoare untrained in the subject matter of thetrial (medical malpractice, for example)to hear, understand, and remember termsthey have never heard before.We expect jurors to listen to explanationsand descriptions that may bechallenged on cross examination, andthen organize all the information in theirheads by memory! We attorneys cannotdo that—that is why we take hours andhours of time reviewing the case and therecords, hours and hours of time beingtaught the technical aspects of the caseby hired experts, multiple yellow padsfull of indecipherable notes and gallonsof coffee to get to the point where weunderstand the case. As I write this, mywife is currently serving on jury duty. Shecomes home every night complaining of aheadache because there are somany technical terms.Fig. 4—tlSensory synergy is becoming akey concept in education—andit has been clearly shown thatmulti- media, used properly, is atremendous boon to all learners.A PowerPoint presentation or ananimation can add enough noveltyto engage the learner, but itbecomes counter- productive if ithas distracting features, doesn’tmatch the spoken word or ispoorly organized. <strong>The</strong> literatureindicates that multi- media is bestwhen an interactive component isincorporated, but aside from notetaking,this is most likely impracticalin the courtroom.Fig. 5Animation—the newest additionto courtroom presentation—can be a double- edged sword. Itcertainly engages the learner, particularlywhen added as a novelcomponent, but research hasshown that it “cannot compensatefor knowledge deficiencies if thematerial to be learned or the animationitself it too complex.” Thiswould imply that in a below- basicor basic health literacy setting,it would be important to makeanimations simple and clear, andto supply pre- knowledge so thatyou can be sure that the content baselineis adequate for proper understanding.<strong>The</strong>re seems to be little difference betweencomplex and jazzy 3-D animation andmore didactic 2-D cel-like animation. It’sthe content, clarity and presentation thatmakes the difference for any learner presentedwith any combination of media.Fancy animations may be distracting andtake away from the message.Developing Content<strong>The</strong> presentation of information in thecourtroom is always verbal and sometimesvisual. Not counting the non- verbal cuesprojected by the parties, more and morecase- specific and content- explanatoryimages are being used. This is particularlytrue in the case of medical negligence litigationwhere the content is difficult and anaverage juror (reading level grades 8–9),extrapolating to the health literacy literaturecited above, would be primarily basicor below basic.Further extrapolating, it would be uselessto talk about “laparoscopic cholecystectomy”and “common bile duct ligation”and expect the typical juror—or even onewith better than average health literacy—to understand what you’re talking about.Even using the phrase “removing the gallbladder,”while a familiar phrase to mostpeople, is meaningless without knowingwhat a gallbladder is and where it islocated. This is complicated by the oversimplificationthat will undoubtedly be usedby the plaintiff. <strong>The</strong> following example is asimple explanation of a complex problemthat employed visual and verbal informationin the courtroom.Figure 1 shows the typical textbookimage of the gallbladder and related anatomy.<strong>The</strong> plaintiff will want thejury to think that the anatomy isas clear as a bell, and color- keyedto boot. This is compared with Fig.2, showing that in a patient withno history of gallbladder disease,there is a structure concealingthe external biliary tract, and ina person with a history of acute orchronic disease, as in Fig. 3, thereis inflammation and significantadhesion formation.<strong>The</strong> expert and defendant usethese to explain both the basicanatomy and the pathology. <strong>The</strong>images are sequential and onebuilds on the next, literally. Thisprogressive disclosure can be doneeither with overlays on a large, flatexhibit sitting on a tripod, or electronicallyas an animation. <strong>The</strong>next step would be to give a logicalcausation explanation.Figure 4 shows the surgicalappearance of both a typicalcholecystectomy after the infundibulumis dissected free. To allappearances, the plaintiff’s anatomywas completely normal(right). In reality, however, hadthe entire area been dissected,as in Fig. 5—definitely not thestandard of care—the true anatomicalanomaly would be seen,and the bile duct injury explained.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 27
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WHow Does the <strong>The</strong>orySupport the Practice?Knowledge of learning styles and the problemof health literacy means selecting yourjury with some tools that you may not haveconsidered. Most people are visual/spatiallearners who rely on visuals; all learnersbenefit from multi- media. <strong>The</strong>re are triggersyou can use in jury voir dire for cluesIf the health literacy levelis low, counsel must at leastraise it to a baseline levelto meet his or her goal.28 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>to your potential jurors, and you can nowbetter aim your testimony and supportmaterials to the jury you have rather thanthe jury you may want. Many people arebarely health literate, and this will meanworking to the lowest common denominatorand elevating the jury’s knowledge baseto a workable baseline.When Jack Kemp was running for president,he said, “I’m a dove. I believe inbeing heavily armed, but I’m a dove.”When I go to trial, I believe in being heavilyarmed. I want my arsenal stocked witha lot of different weapons. Some of thoseweapons include visual materials, and anacute awareness of both verbal and nonverbalcommunication.I defended an Erb’s palsy birth caseyears ago. <strong>The</strong> plaintiff’s attorney wasa very experienced veteran of the courtroom.He was very confident in his casealthough he seemed to rely on the simplefact that because the baby was bornwith an Erb’s palsy, the delivering doctormust have applied excessive tractionduring delivery. During jury selection Iwas surprised at the plaintiff’s attorney’sbrusque treatment of the jurors. AlthoughI was not thinking of it in these terms atthe time, the effect of some of my questionsat jury selection was to weed out jurorswho had poor health literacy. I asked,“If a baby is born with a nerve injury toan arm, do you think just based on thatthat the doctor is at fault?” Juror numberone responded, “Absolutely.” Ratherthan confront this juror myself, I used atechnique called workshopping. I askedjuror number two, “Mr. Smith, you justheard what Ms. Jones said, what do youthink?” He turned to Ms. Jones and said,“How can you say that? You know nothingabout the case?” Through this processI tried to select jurors who were ableto develop a more sophisticated understandingof what had occurred beforereaching a decision.Prior to trial, I had several very professionallyproduced graphics to depictthe birth process and the transit of thebaby down the birth canal. Some graphicsalso contained information about theincidence of Erb’s palsy after atraumaticc- sections.After jury selection, we were assignedto a judge who was sitting in a makeshiftcourtroom in a building some distancefrom the main courthouse. This gave acompletely different feel to the trial, withno grand old courtroom, high ceiling andchandeliers. I had a sense that if I usedall of my graphics it would seem somehowout of place. It would be like hangingthe Mona Lisa in the bathroom. I wentinto the trial heavily armed, but now Ifelt I needed to disarm a little otherwiseI might be seen as that “corporate lawyer”or—worse yet—that “lawyer forthe insurance company bankrolling thedefense against these poor people.”I only gave half-hearted responses tothe plaintiff’s objections to many of mygraphics but dug in my heels for the fewthat I thought were absolutely crucial.After having ruled against several, thejudge allowed me to use the few exhibitsthat I thought were critical.My plan was not to attack the credibilityof the parents if they testified in linewith their depositions; neither parent hadpreviously testified about any unusualoccurrences in the delivery room. <strong>The</strong>rewere no witnesses to say that the doctorapplied excessive force and therewas nothing in the record to make thatcase. <strong>The</strong>ir testimony was consistentwith their depositions, so I asked veryfew questions.When I did the direct of my client, heused the graphics to describe the birthprocess and how he delivered the babywith care. It was obvious he loved hisjob and was one with it, and his credibilitywas increased by turning him intoa teacher with the use of the graphics.My obstetrical expert was a youngdoctor. <strong>The</strong> very experienced plaintiff’sattorney tore him to shreds on crossexamination. <strong>The</strong>re was blood all overthe witness stand. After my expert andthe jury had left the courtroom, the judgelooked at me and said, “If you win thiscase, you should go to Atlantic City.”However, the plaintiff’s attorney wasattuned to the nuances of the courtroom.I overheard him ask his young associate,“Did I go too far?”Despite the plaintiff’s attorney’saggressive tactics, we got a defenseverdict. How much was the jury influencedby the plaintiff’s attorney’s grufftreatment of the jurors at jury selection orby his manhandling of my likeable youngexpert? How much of the outcome wasdue to selecting jurors with higher levelsof health literacy? How much was thejury influenced by my respectful treatmentof the parents? How much was dueto the careful visual presentation by thedefendant doctor, allowing his knowledgeand compassion to show? All ofthis played a role and the exact quantificationis not possible to assess. It ismy view that the necessary factor wasthe defendant doctor’s performance ondirect examination which demonstratedhis competence and professionalism.—tlConclusionRetrospective differential diagnosis ofthe jury’s verdict can help you to identifyand select future jurors who will possessreasonable health literacy, and allowyou to take advantage of the visual/spatiallearning skills of a significant portionof the population, as well as the powerfulnonverbal signals of professionalism, kindness,compassion and knowledge. <strong>The</strong> bottomline is that we, as trial lawyers, needto assess all of these issues more in preparingfor and trying a medical malpracticecase. After the verdict comes in and we tryto diagnose why the jury did what it did,hopefully we can point to a long differentialof factors that we helped create, leadingthe jury to a defense verdict.
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A W<strong>The</strong> NationalPractitioner Data BankBy J. Richard Mooreand J. Bart McNielHow RequiredReporting Can ImpactCase Resolution<strong>The</strong> potential effectsof NPDB reportingshould be explored atthe outset of litigationso that opportunitiesfor strategically wisesettlements will notbe squandered.Lawyers are accustomed to developing an assessment ofa case’s strengths and weaknesses, estimating a potentialverdict, and providing a projection of the likelihood of prevailingon the merits. <strong>For</strong> defense attorneys, providing anassessment of liability and damages tothe client and, in more cases than not,to a liability insurance carrier or thirdpartyadministrator, are key components ofthe defense. Similarly, defense lawyers areoften called upon to provide a settlementestimate and to make recommendations tothe client and the carrier about when a caseshould settle, and to identify when settlementpotential can be maximized and payoutcan be minimized.<strong>Defense</strong> attorneys occasionally encountertension between the client and theclient’s liability insurance carrier whenevaluating the case and developing settlementstrategy. On one end of the spectrumis the client who is wary of the litigationand desires settlement at any cost (so longas that cost is borne by the insurance carrier).This is often the situation when thelawyer’s assessment suggests a probabilitythat the case value approaches or exceedsliability insurance coverage limits. Conversely,a client may be frustrated by aninsurer’s interest in settling a case for whatthe insurer believes is a value well belowthe risk, where the client views any paymentas capitulation.Lawyers who defend physicians, dentists,nurses and other individual healthcare practitioners against patient careclaims are particularly likely to confrontthe latter scenario. While a health carepractitioner’s resistance to settlement maystem from a variety of factors—not least ofwhich may be a firm conviction that he orshe complied with all applicable standardsof care—one that looms large is the specterof reporting the settlement to the NationalPractitioner Data Bank (“NPDB”). Since1990, the NPDB has required reportingof several types of information, includingsettlements or judgments in medical malpracticeactions, that Congress deems pertinentto the competence of physicians,dentists and other licensed health care■ J. Richard Moore and J. Bart McNiel are partners with Alford, Clausen & McDonald, LLC, in Mobile, Alabama.Mr. Moore regularly speaks to industry groups on trial tactics in medical cases, electronic maintenanceof medical records and medical facility disaster preparedness. He is active in the <strong>DRI</strong> Medical Liabilityand Health Care Law Committee and its Long-Term Care/ALF Subcommittee. Mr. McNiel’s practice includesdefense of claims against medical providers, ambulance services and pharmaceutical companies, and headvises on compliance with HIPAA, CMS regulations and the MMSEA.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 29
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wprofessionals. That information is in turnmade available to hospitals, clinics, professionalreview committees and statelicensing boards for use in hiring, extendingpractice privileges, peer review and/or licensing of such providers. <strong>The</strong> availabilityof settlement information to a defendantpractitioner’s current and futureemployers, peer review committees, andPlaintiffs are notpermitted to querythe NPDB in medicalmalpractice claims againstindividual practitioners only.any institution to which he or she appliesfor privileges can chill any enthusiasm thepractitioner might have for settlement.In this article we present a summaryof the development of the laws and regulationscreating the NPDB, and a synopsisof its requirements and provisions.From there, we explore the practical problemspresented to the defendant, the defendant’sliability carrier, and defense counselby data bank reporting. Finally, we assessoptions for minimizing the harmful impactto the provider of reporting a settlement,and measures that can provide some protectionto defendant practitioners in casesthat can be settled for a reasonable figure.30 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Establishment and Operation of NPDBLegislation and Policy Rationale for NPDB<strong>The</strong> NPDB was created by the Health CareQuality Improvement Act of 1986 (“HC-QIA”), 42 U.S.C. §11101, in which Congresssought to address “increased occurrence ofmedical malpractice and the need to improvethe quality of medical care” acrossthe nation. 42 U.S.C §11101(1). Congress’sgoals included encouraging more consistentand effective peer review processes acrossjurisdictions and among health care institutions,and preventing nomadic “incompetentphysicians” from moving state to statein an effort to mask a history of poor care.42 U.S.C §§11101(2)–(5). <strong>The</strong> actual operationof the NPDB was established via federalregulation. See 45 C.F.R. Part 60.Current Structure of NPDBWhat Must Be ReportedMedical and Dental Malpractice PaymentsAny entity, including an insurance company,who makes a payment for the benefitof a physician, dentist or any other “healthcare practitioner” for settlement or partialsatisfaction of a settlement or judgmentfor medical malpractice is required toreport to the NPDB. 45 C.F.R. §60.7 (2006).“Health care practitioner” is defined inTitle 45, Part 60.3 of the Code of FederalRegulations as an “individual other thana physician or dentist, who is licensed orotherwise authorized by a State to providehealth care services.” <strong>The</strong> NPDB Guidebook,compiled by the Health Resourcesand Services Administration (“HRSA”),contains a list of “examples of other healthcare practitioners,” which, depending uponwhether licensed by a particular state, mayinclude chiropractors, counselors, emergencymedical technicians, nurses andnurse aides, physicians assistants, therapistsof all disciplines, medical technicians,acupuncturists, athletic trainers,midwives, naturopaths and perfusionists.National Practitioner Data Bank Guidebook,United States Department of Healthand Human Services, Publication No.HRSA-95-255, p. C-3 (2001).Required data in medical malpracticereports to the NPDB includes:• the amount of settlement or judgment• a description of the acts, omissions, injuriesor illnesses in the claim• classification of the acts or omissionsusing a reporting code established underthe regulations.45 C.F.R. §60.7(b)(3)(iv). <strong>The</strong> NPDB Guidebookprovides a recommended procedurefor compliance with medical malpracticepayment reporting requirements, includinga Medical Malpractice PaymentReport (MMPR) prepared by HRSA. Inaddition to collecting identification information,license numbers, background andhospital affiliations of the reporting subject,the form contains a space in which upto 4,000 characters may be entered detailinga “description of the judgment or settlementand any conditions, including termsof payment.” HRSA <strong>For</strong>m No. 2039001-02233.02.01. <strong>The</strong> form also contains spacesfor up to 4,000 characters to describe theclaimant’s admitting treatment diagnosisand any co- morbidities, up to 4,000 charactersfor the procedures performed onthe claimant, and up to 4,000 charactersdescribing the allegations and the allegedinjuries. Id.Licensure Actions by Boardsof Medical ExaminersState boards must also report to the databank any action “based on reasons relatingto a physician’s or dentist’s professionalcompetence or professional conduct,” includingrevocation, suspension or restrictionof license; any professional censure,reprimand or probation; or any actionunder which a physician or dentists surrendershis or her license. 45 C.F.R. §60.8(2006). General inquiries to a state boardthat do not result in action are not reportedto the NPDB. Id.Adverse Privilege ActionsActions impairing the professional privilegesof physicians, dentists and healthcare practitioners must also be reportedto the data bank. Those reporting requirementsfall under a two-tiered reporting system.“Health care entities” are required toreport to the state board of medical examinersany professional reviews of physicianor dentist privileges that affect a practitionerfor more than 30 days, or any surrenderof privileges accepted while a physicianor dentist is under investigation relating topossible incompetence or improper professionalconduct. 45 C.F.R. §60.9(a)(1).“Health care entities” are defined as hospitals;other entities that provide “healthcare services” (which are not specificallydefined) and engage in professional reviewactivity through formal peer review/qualityassurance processes; and any professionalsociety of physicians, dentists or other“heath care practitioners” that engages informal peer review/quality assurance processes.Part 60.9(a).Reporting by a health care entity to astate board may in turn trigger licensureactivity, which would then be reportable tothe data bank. In addition, the state boarditself must then report to the data bank theinformation regarding adverse privilegeactions. <strong>The</strong> state board must also report
any known instances of a health care entity’sfailure to report such adverse action tothe board. 45 C.F.R. §60.9(b).Who Can Access the NPDB<strong>The</strong> following may, and in some instancesmust, query the NPDB:• A hospital, regarding a physician, dentistor other health care professionalwho has clinical privileges at that hospital.Hospitals are required to query theNPDB when a health care professionalapplies for a position on its staff or forclinical privileges, and every two yearsfor professionals on staff or holding privileges.45 C.F.R. §60.10(a).• A physician, dentist or other health careprofessional, about him- or herself.• State boards licensing boards.• A plaintiff’s attorney, or pro se plaintiff,where a medical malpractice action isfiled against a hospital in a state or federalcourt or other adjudicative body,where the practitioner on whom theinformation is requested is named inthe action or claim and where the plaintiffcan provide independent proof thatthe hospital did not make the legallyrequired query under Part 60.10.Plaintiffs are not permitted to querythe NPDB in medical malpractice claimsagainst individual practitioners only. <strong>The</strong>NPDB may also be queried by analysts andresearchers in a manner that will not permitidentification of individual practitioners.45 C.F.R. §60.11(a)(7).Overlap with Other Reporting ObligationsHealth Care Integrity andProtection Data BankAn even broader range of practitionersand institutions are subject to reportingunder the Health Insurance Portabilityand Accountability Act (HIPAA), someof which overlaps with NPDB reporting.Enacted in 1996, HIPAA in part directedthe creation of the Healthcare Integrity andProtection Data Bank (HIPDB), which collectsinformation designed to inhibit Medicareand Medicaid reimbursement fraud.<strong>The</strong> following is reported to HIPDB:• Federal and state prosecutors mustreport criminal convictions against“health care providers, suppliers andpractitioners” that relate to health caredelivery or service. 45 C.F.R. §61.8.• Federal and state attorneys, along with“health plans,” must report civil judgments(like the NPDB), including butnot limited to medical malpractice judgments,against health care providers,RESPONDING TO YOUR NEEDSERI Quality and Servicesuppliers or practitioners that “relate” tohealth care delivery. Judgments must bereported even if appealed. 45 C.F.R. 61.9.A “health plan” includes any programor entity that provides health benefits,Why spend valuable hours of your staff’s time trying to locate the rightexpert? With over 30,000 areas of expertise in our registry, helping youfind the right expert is rarely a problem.EXPERTS ON EXPERTS ®HELP YOU NEED…WHEN YOU NEED IT SINCE 1979800-383-48571225 EAST SAMUEL AVE. • SUITE B • PEORIA HEIGHTS, IL 61616-6455Fax 888-815-2778 • www.expertresources.com<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 31
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wwhether directly or through insurance.45 C.F.R. §61.3.• Exclusion or disqualification of any providerfrom federal of state health careprograms must be reported, regardlessof underlying findings or appeal. 45C.F.R. §61.10.• A catch-all category requires reportingof any and all actions and decisions thatCourts have consistentlyfound no private rightof action againstreporting entities forfaulty NPDB reporting.relate to the delivery, payment or provisionof health care and requiring reportingfor health care providers, suppliersand practitioners. This broadly statedprovision may also be implicated byNPDB- reportable licensure and privilegeactivity. 45 C.F.R. §61.11.32 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Section 1921<strong>The</strong> NPBD has been further modifiedunder the Medicare and Medicaid Patientand Program Protection Act of 1987 andthe Omnibus Budget Reconciliation Actof 1990. Under the authority of these acts,Congress added an additional provision,known as Section 1921, to the Social SecurityAct. See 42 U.S.C. §1396r-2. Section1921 became effective March 1, <strong>2010</strong>. <strong>The</strong>section expands the scope of informationto be reported to the NPDB to includenegative licensure actions against organizationsand entities, and makes that informationavailable to federal or state agenciesadministering health care programs, Medicaidfraud units, and state and federalprosecutors.Section 1921 does not at this time requirereporting of malpractice payments madeon behalf of non- individual organizationsand entities. Further, the additional queriersunder Section 1921 listed above are notallowed access to medical malpractice paymentsor adverse clinical or society membershipactions. Fact Sheet on Section 1921,DHHS/HRSA, NPDB-00930.06.01, pp. 1–2,March <strong>2010</strong>.GAO Review of the NPDBIn 2000, a United States General AccountingOffice (GAO) report identified accuracyand management problems with theNPDB that called into question its effectiveness.<strong>The</strong> GAO report identified a significanterror rate in reporting accuracy, aswell as inefficient quality control and correctionprocesses. Government AccountabilityOffice, National Practitioner DataBank: Major Improvements Are Neededto Enhance Data Bank’s Reliability, No.01-030 at 21 (2000). In addition to routineerrors in reports, the GAO recited severalspecific examples where the purpose ofthe data bank was undermined, and practitionerswere prejudiced, by inaccuracyand inefficiency. Each instance involveda practitioner whose NPDB report containedinaccurate information; however,upon notification of the error, the reportsremained uncorrected or still accessible inthe NPDB, to the detriment of the practitioner.National Practitioner Data Bank at25–26. On the other hand, the GAO alsoconcluded that medical malpractice paymentswere woefully underreported, andthat even where settlements were reported,reporting entities nearly universally submittedincomplete information. <strong>The</strong> GAOnoted that 95 percent of the medical malpracticereports it sampled failed to identifywhether there had been a determinationthat the physician or dentist had compliedwith the standard of care. Id. at 21.In seeking to address these insufficiencies,the GAO focused not on practitionersprejudiced by inaccurate reporting, but onits conclusion that malpractice paymentswere underreported. It recommended thatinsurers be required to report the names ofboth corporations and individuals namedin medical malpractice settlements or judgments,instead of merely reporting thenames of the physicians. It also recommended“permitting” peer review organizations,as opposed to reporting entities,to determine which practitioners in medicalmalpractice actions should be reported.Id. at 11–12. Neither of these recommendationshas been incorporated into law todate.Practical Issues in SettlingMedical Liability CasesConcerns for Practitioners<strong>The</strong> natural concern for practitioners isthat any negative report in the NPDB willimpact the ability to change positions,move to another practice location, and/oracquire or maintain clinical privileges. Apractitioner subject to reporting for settlementof a medical malpractice claim islegitimately frustrated by a cloud on hisor her professional competence, which,as reflected in case law, is nearly impossibleto remove or contest. Courts have consistentlyfound no private right of actionagainst reporting entities for faulty NPDBreporting. See Hancock v. Blue Cross-BlueShield, 21 F.3d 373, 373–74 (10th Cir. 1994)and Caine v. Hardy, 715 F. Supp. 166, 170(S.D. Miss. 1989), rev’d on other grounds,905 F.2d 858 (5th Cir.), superseded by 943F.2d 1406 (5th Cir. 1991) (en banc) (affirmingthe district court), cert. denied, 503 U.S.936 (1992). Direct challenges to data bankreporting under the Administrative ProcedureAct have likewise been unsuccessful.See Simpkins v. Shalala, 999 F. Supp.106 (U.S. Dist. D.C. 1998) (rejecting physicianchallenge to database report on thegrounds that it was “arbitrary, capricious,an abuse of discretion, or otherwise not inaccordance with law”). Frustrated practitionershave also unsuccessfully pursuedprivate claims against hospitals and otherentities with NPDB reporting responsibilitiessounding in retaliatory discharge, defamationand other employment- relateddoctrines. E.g., Jenkins v. Methodist Hospitalsof Dallas, Inc., 478 F.3d 255 (5th Cir.2007), cert. denied, 552 U.S. 825 (2007)(summary judgment against physicianwho alleged racially discriminatory motivebehind reporting suspension to NPDB).<strong>The</strong>se cases demonstrate practitioners’antipathy toward reporting and the permanentimpact of reporting on the practitioner’scareer.Concerns for ProfessionalLiability CarriersCompliance with Reporting Requirements<strong>The</strong> medical liability carrier’s foremostconcern relative to the NPDB is compliance.As demonstrated in the 2000 GAOstudy, HRSA and other agencies monitorthe adequacy and completeness of med-
ical malpractice reporting, and the regulationsprovide for enforcement againstreporting entities via the DHHS Office ofInspector General. Reporting must occurwithin 30 days of the first payment, andeach failure to report can result in a fine ofup to $11,000.Impact on Exercise of Right toConsent to Settlement<strong>The</strong> NPDB can also impact an insurancecarrier where the medical liability policycontains a “consent- to- settle” clause, underwhich the insured practitioner has the rightto approve or reject settlement. While notuniversal, such clauses are not unusual inmedical liability policies. Courts have longheld that such clauses are enforceable andthat their breach entitles the practitionerto damage against the insurer. E.g., Brion v.Vigilant Ins. Co., 651 S.W.2d 183 (Mo. App.1983). Where the insurance policy containssuch a clause, the carrier can find itself ina situation in which a claim can be settledfor far less than the cost of continued litigation,but, due in no small part to theprospect of NPDB reporting, the insuredpractitioner will not authorize settlement.Impact on Insurer’s Duty of Good FaithEven where there is no “consent- to- settle”clause in the applicable policy, the requirementto report settlement payments to theNPBD potentially impacts an insurer’s dutyof good faith and fair dealing to the insuredpractitioner. Most jurisdictions holdthat insurance policies include an implicitduty of good faith on the part of the insuredwith respect to handling of claims and protectionof the insured’s interests. Generally,the duty of good faith obligates an insurancecarrier to act reasonably, to refrainfrom putting its own interests ahead of theinsured, and to protect the insured by settlinga covered claim when settlement canreasonably be accomplished within policylimits. Conventional wisdom amonginsurers is that settlement of a claim onthe insured’s behalf equals discharging theduty of good faith and fair dealing.Data bank reporting can upend this conventionalwisdom. Health care practitioners’interest in the preservation of theirprofessional reputations is directly threatenedby NPDB reporting of settlement payment.While settlement of a malpracticeclaim resolves the practitioner’s immediaterisk of financial liability, it can impairthe practitioner’s professional viabilityand options over the long term via NPDBreporting. Particularly where a claim issettled based on a cost- of- defense analysis—thatis, the insurer’s conclusion thatit can save money by paying a settlementrather than by continuing to fund litigationdefense costs—the insured practitionermay claim that the insurer put its owninterests ahead of the practitioner in decidingto settle.Practitioners insured under policies thatdo not contain a “consent- to- settle” provisionhave generally been unsuccessful inclaiming that settlement of a claim constitutedbad faith. E.g., Frankel v. St. Paul, 334N.J. Super. 353, 759 A.2d 869 (N.J. Super.2000) (insurer not liable for settling claimagainst dentist, where settlement resultedin increased liability insurance premiums);Mitchum v. Hudgens, 533 So. 2d 194 (Ala.1988) (insurer’s exclusive right under policyto settle claims is inconsistent withany obligation to seek the insured’s permissionbefore settling a claim); Shuster v.South Broward Hosp. Dist. Physicians’ Prof.Liab. Ins. Trust, 591 So. 2d 174 (Fla. 1992)(insurer not liable for failure to investigateclaims against physician which it unilaterallysettled).Similar claims have been broughtagainst liability insurers where a singlecarrier settled claims against multiple physiciansvia a single payment, then reportedto the NPDB based on the carrier’s internalallocation of liability. Such claims haveto date been successful. E.g., Babic v. PhysiciansProtective Trust Fund, 738 So. 2d 442(Fla. Dist. Ct. App. 1999) (physician whowas charged by his carrier with the entiresettlement on behalf of four physicians didnot state a claim for bad faith in challengingthe carrier’s decision and subsequentreport to NPDB).In Doe, M.D. v. South Carolina MedicalMalpractice Liability Jt. UnderwritingAss’n., 347 S.C. 642, 557 S.E.2d 670 (S.C.2001), a malpractice carrier insured multiplephysicians and caregivers arising outof the death of an intensive care patient.One caregiver offered testimony that suggestednegligence on Dr. Doe’s part. <strong>The</strong>claim was ultimately settled. After settlement,Dr. Doe and another defendantrequested that no portion of the settlementbe charged against their policies becausethey claimed immunity as “Good Samaritans.”557 S.E.2d at 673. After obtaininga legal opinion calling into question theapplication of the immunity as to Dr. Doe,the carrier concluded that one- seventh ofthe settlement would be charged againstDr. Doe’s policy, and reported the paymentunder Dr. Doe’s name to the NPDB. Id. Dr.Doe filed a lawsuit against the carrier seeking,among other relief, damages for breachof contract. Id. at 672.Consistent with the decisions in theFrankel, Mitchum and Shuster cases discussedabove, the South Carolina SupremeCourt in Doe concluded that Dr. Doe couldnot recover. Because at least one eyewitnesscaregiver testified to Dr. Doe’s possible negligence,because the carrier had obtaineda legal opinion suggesting that immunitydid not apply, and because the carrier hadcontractual authority to settle all claimsarising under the policy, there was insufficientevidence of bad faith associated withthe decision to charge Dr. Doe’s policy andreport to the NPDB.Significantly, however, the court agreedthat Dr. Doe could have recovered if hecould have shown that the decision regardingapportionment was done in bad faith,i.e., as a result of the carrier putting itsinterests ahead of his. Id. at 675. This suggeststhat courts may become more opento such claims as practitioners develop theargument that NPDB reporting threatenssubstantial impairment to the practitioner;and that insurers should take thatthreat into account in settling cases and inmaking decisions about how complex settlementswill be reported.Concerns for <strong>Defense</strong> CounselNPDB reporting requirements can exacerbatethe tension intrinsic to the “tripartite”relationship between a liability insurer, itsinsured, and the attorney engaged by theinsurer to defend the insured. <strong>The</strong> foregoingdiscussion demonstrates how thecompeting concerns of the insurer andthe insured can erupt into open conflict.Where the attorney is involved in makingsettlement recommendations and/or innegotiating settlement on behalf of a resistantclient, he or she can be swept into similarconflicts.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 33
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A W<strong>The</strong> case of Teague v. St. Paul, 10 So. 3d806 (La. App. 1 Cir. 2009) provides a cautionarytale. In Teague, a plastic surgeonwas alleged to have performed a procedurewithout informed consent. His carrierassigned the case to an attorney, whopromptly met with the surgeon, examinedthe available evidence and “expressed confidencein mounting a successful defense”Health care practitioners’interest in the preservation oftheir professional reputationsis directly threatenedby NPDB reporting ofsettlement payment.34 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>to the surgeon. 10 So. 3d at 812. <strong>The</strong> attorneythereafter assigned handling of the caseto another attorney at his firm. After fouryears of discovery, the case was set for trialand a deadline was set for the defendant tofile a jury bond. <strong>The</strong> surgeon’s attorneys didnot file the bond timely and waived the rightto trial by jury. <strong>The</strong>reafter, the attorneys increasedtheir assessment of the likelihoodof a plaintiff verdict and the likely verdictamount, based in part upon the observationthat the judge who would decide thecase was “notoriously plaintiff- oriented.” Id.<strong>The</strong> case was mediated and settled at mediation.<strong>The</strong> missed deadline, revised caseassessment, mediation and settlement werecommunicated to the surgeon for the firsttime on the afternoon after completion ofmediation. Id. at 813–14.<strong>The</strong> surgeon subsequently sued his attorneys,the law firm, and the insurance carrier.<strong>For</strong> reasons that were not clear fromthe reported decision, the insurance carrierwas dismissed before trial. <strong>The</strong> surgeonclaimed his lawyers had committed professionalmalpractice by failing to properlyinvestigate and defend the claim; failing tokeep him informed of significant developmentsaffecting his interests; negligentlyforfeiting his right to a jury trial; and conspiringto conceal the negligence by settlingthe claim without his involvement orapproval. <strong>The</strong> surgeon testified that he discoveredthe details surrounding these allegationsupon reviewing the NPDB reportregarding the payment and seeking to correcterrors in that reporting. Id. at 814, 827.<strong>The</strong> surgeon alleged that his primary injurywas “loss of reputation” as a result of thesettlement and data bank reporting. Id. <strong>The</strong>data bank report was the surgeon’s primaryevidence of damage to his reputation. Id.at 827. Nearly 10 years after the underlyingsuit was filed, the surgeon’s legal malpracticecase was tried to a jury. It resulted in averdict of $138,000. Id. at 815.After review by the Louisiana Court ofAppeals and the Louisiana Supreme Courtregarding whether the suit was timely filed,the merits of the case were finally reviewedand, nearly 14 years after the underlyingsuit was filed, the Louisiana Court ofAppeals issued its substantive opinion. Itreversed the judgment and rendered a verdictin favor of the defendant attorneys,holding that the insurance carrier had theexclusive contractual right to settle theclaim, irrespective of the acts or omissionsof the defense attorneys (which were in partacknowledged to have been not entirelyadequate); that the surgeon did not provethat the case was settled as a result of theattorneys’ failure to investigate the claim,communicate with the surgeon, or preservethe right to jury trial; and that under Louisianalaw and the facts of the case, therewas no basis for awarding general nonpecuniarydamages in the absence of actualout- of- pocket losses. Id., generally.If Teague provides a lesson to attorneysin circumstances in which the lawyers wereultimately cleared from legal liability (if notentirely exonerated), another recent decisionis more alarming for defense counsel.In the unreported decision Steinberg v.Grasso, 2007 WL 701689 (N.J. Super. A.D.2007), the Superior Court of New Jersey, AppellateDivision, reviewed summary judgmentin a legal malpractice action filed byan obstetrician against the attorney who defendedhim in a medical malpractice action.While preparing the obstetrician to testifyat trial, the defense attorney also had himexecute a consent- to- settle form, the termsof which acknowledged that any settlementwould be reported to the NPDB. <strong>The</strong> obstetriciantestified that the attorney told himthat the parties were discussing settlementvia a “high-low” agreement, and that if suchan agreement were executed and the obstetricianprevailed at trial, there would be noNPDB reporting obligation. According tothe obstetrician, the attorney did not informhim of the possibility of a straightforwardsettlement. Id. at 2. <strong>The</strong> day after theobstetrician executed the consent- to- settle,the case settled for a sum certain, and paymentwas reported to the NPDB. Id.<strong>The</strong> obstetrician sued his lawyer forfraud and legal malpractice, alleging thatthe lawyer had duped him into executingthe consent form by discussing a high-lowagreement, when the intention all alonghad been to settle for a sum certain. <strong>The</strong>trial court granted summary judgment, inpart based on the conclusion that becausethe obstetrician admitted that he could notprovide special compensatory damages,there was no basis for an award of any otherdamages. <strong>The</strong> appellate court reversedsummary judgment and remanded thecase for trial. It held that general damagesfor injury to reputation were permitted ina legal malpractice claim, and that on thefraud claim, the lack of evidence of “actualdamage” would not preclude the claimwhere the obstetrician can show “someloss, detriment or injury.” Id. at 9. <strong>The</strong> courtagreed that the reporting of the settlementto the NPDB in a case in which he shouldhave been provided a defense damaged theobstetrician’s reputation, noting:If a person falsely reported in a publicationthat [the obstetrician] committedmalpractice in treating a patient, thataccusation would constitute libel per sethat would entitle [the obstetrician] atleast to general damages in the absenceof proof of economic loss…. “[A] slanderwhich ascribes to another conduct…incompatible with the proper conduct ofhis lawful… profession is liable for slanderper se.” [citations omitted]. No differentresult should obtain where thedamage to [the obstetrician’s] reputationgrew out of a legal fraud by his attorney.We are satisfied that, if there was nomalpractice, the inclusion of his namein the National Practitioner Data Banka proximate result of the fraud damagedhis reputation and will continue to do soin the future.Id.
Taken together, the Doe and Steinbergdecisions demonstrate an emerging judicialawareness that the NPDB reportingrequirements create a unique interest on thepart of defendant practitioners in whethera case is settled and how it is reported. <strong>The</strong>Doe decision recognizes that an insurancecarrier must exercise good faith inthe internal allocation of responsibility forsettlement, and in NPDB reporting arisingout of such allocation. <strong>The</strong> Steinbergdecision recognizes a reputation interestimpacted by data bank reporting whichmay justify an award of damages even inthe absence of economic loss. To the extentthat these decisions constitute trends in thejudicial handling of disputes provoked byNPDB reporting, the importance of reportingissues for all involved—practitioners,insurers and defense attorneys—will continueto increase.Addressing Data Bank Concernsin Resolving Questionable CasesWhere liability is reasonably clear, databank reporting is less likely to be a barrierto settlement. NPBD more typicallybecomes an issue in cases where liabilityand defensibility are less clear, and wheresettlement potential involves an analysisof the potential for cost savings. <strong>The</strong> followingsuggestions are targeted to thosekinds of cases.Completeness of Reporting<strong>The</strong> most effective way to address NPDB reportingconcerns is for reporting entities toprovide accurate and complete information.As previously noted, HRSA’s recommendedMedical Malpractice Payment <strong>For</strong>m allowsentry of substantial detail regarding settlementand terms of payment, including liabilitydenial, condition of the patient onadmission, procedures performed, and theallegations regarding liability damages.<strong>The</strong> reporting entity may enter up to 16,000characters on these matters. A complete andaccurate summary can make clear the reportingentity’s conclusions about liability,whether there was any evidence of deviationfrom standards of care, and the extentto which settlement was based on cost savings.Such detail would be more beneficialto the practitioner in question than the simplereport that a certain amount was paidon a disputed claim. While the practitionerwill not be shielded from the availabilityof claim information to NPDB queriers,reporting that clearly confirms that settlementwas paid even though there wereviable defenses, and/or that the paymentrepresents a cost savings and not a conclusionregarding the practitioner’s dischargeof the standard of care, places the practitionerin a better position to explain thecircumstances of payment to peer revieworganizations, licensing entities or institutionsto which he or she applies for clinicalprivileges.Strengthening Liability Denialin Release Agreement<strong>The</strong> NPDB reporting requirement is notrelieved by artfully drafted settlementagreement language. However, inclusionof terms in the agreement that unequivocallyaffirm that there has been no determinationof any deviation from standardsof care may make a defendant practitionermore receptive. Consider the following:I, Plaintiff, hereby now agree andacknowledge that Defendant, M.D.,denies having engaged in any acts oromissions subjecting him to legal liabilityas alleged in this action; and,further, that based upon investigationand discovery accomplished to date,Defendant M.D. has not been provento have engaged in any such acts oromissions.This language does not require theplaintiff to make any acknowledgmentother than that the allegations have notbeen “proven” via verdict or judgment.On the other hand, it gives the practitioneran explicit concession that there hasbeen no “proof”—evidence, allegations,and opinions, perhaps, but no “proof”—of any deviation from standards of care.Alongside acknowledgment of the practitioner’sdenial and a payment of modestvalue, an agreement with such languagelends credence to the conclusion that settlementtruly was accomplished to eliminatefurther cost, and not based on therisk of adverse trial result. It is also somethingthat the practitioner can have inhis or her file or at his or her fingertips toshow an NPDB querier, in the event thatthe reported payment becomes a matter ofinterest in the course of licensure or applicationfor privilege.Settlement on Behalf ofCorporate Defendant OnlyIt is not uncommon for claims involvingboth individual and corporate defendantsto be settled via payment on behalfof the corporate defendant, with a voluntarydismissal of the individual defendant,who is not referred to on the settlementagreement. This is particularly commonwhere the practitioner and the corporatedefendant are insured with the same liabilitycarrier. <strong>The</strong> result is settlement withno NPDB reporting requirement.Where appropriate, the NPBD authorizesthis practice. Hospitals, clinics, grouppractices and other corporate providers arenot within the scope of practitioners forwhom medical malpractice payments mustbe reported. <strong>The</strong> NPDB Guidebook Medicalspecifically acknowledges that malpracticepayments made “solely for the benefit of acorporation such as a clinic, group practice,or hospital” are currently not reportable tothe NPDB. NPDB Guidebook, p. E-10.However, implementation of this tacticto avoid NPDB reporting should beapproached with caution. While paymentmade solely on behalf of a corporate provideris not reportable, payment for thebenefit of an entity that is comprised ofa sole practitioner is reportable, if thepayment was made by the entity or by aliability carrier (rather than by the solepractitioner out of personal funds, whichis not required to be reported). Id., p. E-10.This prevents a sole practitioner workingunder the protection of a corporate shell toescape the reporting requirements.An insurer who insures both a corporatedefendant and an individual practitionershould also exercise caution in seeking toaccomplish settlement in the name of thecorporation only. If the allegations againstthe two defendants involve claims of a distinctnature—for example, a claim that insuredhospital staff were negligent alongwith a claim that the insured surgeon whotreated the patient was medically negligent—thensettlement on behalf of the corporationonly, with a voluntary dismissal ofclaims against the surgeon, could suggestcollusion with the plaintiff to avoid reporting.Similarly, where the only claim againsta corporate defendant is based on vicariousliability for an individual practitio-Data Bank, continued on page 87<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 35
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WFacing Prosecutionand PrisonBy Heidi A. Barcusand Eric ShenWhen Does MedicalNegligence BecomeCriminal?Recklessness should bethe lowest culpable state ofmind for criminal medicalconduct, with civilliability as the preferredsystem for negligence.When should a health professional go to jail for providingmedical care? <strong>The</strong> indictment and prosecution of healthcare providers is everyday news. With greater frequency,state attorney generals are showing up unannounced atfacilities armed with badges and subpoenas.Practitioners are facing criminalprosecution and prison time is a very realpossibility for these providers. While somesuggest that health care providers shouldsimply obey the law and avoid performingany criminally negligent conduct, thisis easier said than done. <strong>The</strong> difficulty is indetermining at what point and under whatstandard the health care provider’s negligentconduct turns into a crime.<strong>The</strong> purpose of this article is to discussinstances in which negligent conductis criminal, the problems associated withprosecuting medical negligence, and thereasons why civil liability should ultimatelybe the sole legal system for resolving medicalnegligence.<strong>The</strong> Prosecution of Criminal MedicalNegligence Is a Growing Trend<strong>The</strong> prosecution of criminal medical negligencewas once a relatively uncommonoccurrence. Between 1809 and 1981, therewere only around 15 reported appellatecases. James A. Filkins, With No Evil Intent:<strong>The</strong> Criminal Prosecution of Physiciansfor Medical Negligence, 22 J. Legal Med.467, 472 (2001). Yet, the indication is thatthese types of cases are growing. <strong>The</strong>reare apparently no comprehensive statisticson the subject, but combined figures fromthree recent law review articles have identifiednearly 30 cases of criminal prosecutionagainst physicians between 1981 and2005. Diane E. Hoffmann, Physicians WhoBreak the Law, 53 St. Louis U. L.J. 1049,1082 (2009).<strong>The</strong> most well-known and publicizedrecent example of a physician accused ofcriminal medical negligence is Dr. ConradMurray, the personal physician of deceasedsinger Michael Jackson. Dr. Murray wasarrested and charged with involuntarymanslaughter in the death of Jackson. Heis alleged to have been grossly negligent inadministering an anesthetic called Propofolto Jackson, the consequences of which■ Heidi A. Barcus is a partner in the firm of London & Amburn, P.C., and focuses her practice in civil litigationincluding the defense of doctors, hospitals, and nursing homes. She is a member of the University ofTennessee Legal Clinic Advisory Board, the Hamilton Burnett American Inn of Court and <strong>DRI</strong>. She is a TennesseeBar Foundation fellow and Secretary of the Knoxville Bar Association. Eric Shen is a third-year studentat <strong>The</strong> University of Tennessee College of Law and is currently a law clerk at London & Amburn, P.C.36 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>
apparently led to his death. Propofol is adrug that is ordinarily administered ina hospital setting where medical equipmentcan monitor the patient’s condition,but Murray administered the drug at Jackson’sresidence. See, Daniel B. Wood, CaseAgainst Michael Jackson’s Doctor Centerson Gross Negligence, <strong>The</strong> Christian ScienceMonitor, Feb. 8, <strong>2010</strong>, http://www.csmonitor.com/USA/Society/<strong>2010</strong>/0208/Caseagainst-Michael-Jackson-s-doctor-centers-ongross-negligence.<strong>The</strong> criminal pursuit of health care professionalsis not limited to physicians.Currently, states across the country areprosecuting nurses and nursing assistantsfor neglect of elderly patients in nursinghomes. <strong>The</strong> concern and justification is toprotect one of the most vulnerable demographicsof the adult population fromharm. See, Abuse of Our Elders: How WeCan Stop It, 10–12 (United States Senate:Special Comm. on Aging <strong>July</strong> 18, 2007).<strong>The</strong>se recent examples demonstrate thatprosecution of criminal medical negligenceis a growing trend. With these increasingnumbers, there is a greater concern regardinghow medical negligence is applied inthe criminal system and the difficultiesthat are associated with applying thosestandards in a criminal setting.At What Point Does an Actof Negligence BecomeCriminal Conduct?<strong>The</strong>re is no clearly definable point at whicha health care provider’s negligence resultsin criminal culpability. Amy Cook, CriminalMedicine: When Malpractice Turnsto Manslaughter, Feb. 9, <strong>2010</strong>, http://crime.suite101.com/article.cfm/criminal-medicine.To cross the line from civil to criminalnegligence, there must be a “gross or flagrantdeviation from the standard of care.”In addition, the health care provider mustalso have a criminally culpable state ofmind. A health care provider charged withcriminal medical negligence does not necessarilycause intentional harm. Instead, anegligent state of mind involves a situationin which the provider “should have beenaware” of a “substantial and unjustifiablerisk” but was not. James A. Filkins, Criminalizationof Medical Negligence 507, 508,Legal Medicine 7th ed. (S. Sandy Sanbared., 2007) (footnote omitted).Dr. Filkins’ research suggested thatthere were particular patterns of physicianconduct that not only influenced the prosecutor’sdecision to file charges against thephysician, but these same patterns alsoinfluenced the trier of fact when determiningwhether that physician was criminallyculpable. Filkins, Criminalization ofMedical Negligence, supra, at 509; Filkins,With No Evil Intent: <strong>The</strong> Criminal Prosecutionof Physicians for Medical Negligence,supra, at 492. <strong>The</strong>se patterns of conductconsisted of physicians ignoring recurrencesof the same problems, failing to actin a timely manner, and the appearanceof improper motive, which involve suchactions as “practicing outside of one’s areaof expertise” or “attempting to cover up aclinical mistake.” Filkins, Criminalizationof Medical Negligence, supra, at 509.Using Dr. Conrad Murray as an example,the prosecution will only need to prove thathe should have been aware of the risks associatedwith administering Propofol outsideof a hospital setting, and not whether hehad actual knowledge of those risks. BethKaras and Ann O’Neill, What Is InvoluntaryManslaughter?, CNN, Feb. 9, <strong>2010</strong>,http://www.cnn.com/<strong>2010</strong>/CRIME/02/08/jackson.murray.involuntary.manslaughter/index.html. Legalexperts and health care professionals areeager to see what standards are relied onin this case and whether there will be any“‘new or interesting legal frameworks withrespect to affirmative defenses for physicians.’”Wood, Case Against Michael Jackson’sDoctor Centers on Gross Negligence,supra. Whether the trier of fact in Dr. Murray’scase will be influenced by any patternsof conduct in his prior treatment of Jacksonor other patients is an issue to watch.<strong>The</strong> Problems Associated withCriminal Medical Negligence<strong>The</strong>re are significant problems with theprosecution of health care providers includingthe disregard of standard of careand the concern that criminalizing acts ofmedical negligence fails to achieve the goalsof criminal law. Criminal jurors are likely tooverlook the objective standard of care. Inhis article, With No Evil Intent: <strong>The</strong> CriminalProsecution of Physicians for Medical Negligence,Dr. James A. Filkins researched ninecriminal medical negligence cases runningfrom 1981 to 1995. <strong>The</strong> results of these casesindicated that the standard of care in thesenegligence cases was an issue that was “difficultfor the lay trier of fact to comprehend,particularly when disputed by opposing experts.”Consequently, Dr. Filkins found thetrier of fact in these cases had the tendencyto overlook the objective standard of careand go straight to deciding whether “the defendantphysician possessed a guilty stateof mind.” James A. Filkins, With No Evil Intent:<strong>The</strong> Criminal Prosecution of Physiciansfor Medical Negligence, supra, at 491–92.While establishing the standard of careis an important element in theory, accordingto Dr. Filkins, in practice, the approachis often to go directly to the health careprovider’s state of mind. <strong>The</strong> concern isthat juries may place more weight on theissue of state of mind than the issue of thestandard of care. Id.Dr. Filkins’ research demonstrated thatjuries sometimes apply their own “internalor subjective standard” by trying to determinewhether the physician displayed genuineconcern toward his patient rather thanwhether the physician followed the appropriatestandard of care. Thus, a jury mayfind an accused physician guilty “even ifthe prosecution fails to establish causationor the standard of care” so long as the juryfinds that the physician was “irresponsibleor indifferent.” Filkins, Criminalization ofMedical Negligence, supra, at 509.<strong>The</strong> importance of establishing astandard of care is that it provides a guidelinefor the degree of care that a reasonableperson would exercise. In civil medicalnegligence cases, the jury must determinewhether the defendant acted as a reasonableperson in the same or similar circumstanceswould act. If not, only then can thejury find the defendant negligent. Whencriminal juries determine guilt withoutobjectively considering the appropriatestandard of care, arbitrary judgmentsresult.In her law review article, ProfessorDiane E. Hoffmann offers another reasonwhy criminal medical negligence shouldnot be applied to health care professionals.Diane E. Hoffmann, Physicians Who Breakthe Law, supra, at 1083–84 (2009). She specificallydiscusses the goals of deterrence,rehabilitation, and retribution, and analyzeshow each of those goals fails to applyin a criminal medical negligence action.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 37
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WProfessor Hoffmann rationalizes thatcriminal prosecution has little deterrenteffect because the physician’s actions inthese negligence cases are not intentional.Additionally, she discussed how criminalprosecution can create an “oppositionalculture” and “anti- deterrent effect” amongphysicians, who may group together andview such prosecutions as illegitimate. She<strong>The</strong> concern is that juriesmay place more weighton the issue of state ofmind than the issue ofthe standard of care.also observed that rehabilitation for physiciansin the form of mentoring and retrainingis unlikely to be achieved within thecriminal justice system. Finally, there isthe goal of retribution, or repayment forthe offense that was committed. To ProfessorHoffmann, retribution for a criminalaction is unjustified if the element ofintent is lacking. Hoffmann, PhysiciansWho Break the Law, supra, at 1084.<strong>The</strong>se problems illustrate that medicalnegligence as a criminal offense is one thatneither establishes a consistent standardwith which to prosecute nor fulfills theobjectives of criminal punishment. <strong>The</strong>refore,medical negligence should remain acivil matter.<strong>The</strong> Lowest Culpable State of Mind forCriminal Medical Conduct Should BeRaised to the Level of RecklessnessHealth care professionals should not begiven a free pass from criminal liabilityfor mistakes made in their treatment ofpatients. <strong>The</strong> American Medical Association(“AMA”) itself, though opposed tothe prosecution of medical negligence,concedes that reckless conduct should becriminally culpable. <strong>The</strong> consensus is thathealth care professionals should be prosecutedwhere their conduct is reckless.Recklessness is a gross deviation from thestandard of care. If the physician or nurse38 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>acted with a reckless state of mind, thenthe provider was “taking a substantial andunjustifiable risk, but consciously ignoredthe risk and continued the dangerous conduct.”Filkins, Criminalization of MedicalNegligence, supra, at 508.Negligence, on the other hand, occurswhen the health care provider was unawarethat he or she was taking a substantial risk.Recklessness should be criminally prosecuted.But, negligence should strictly beresolved in civil court. Negligence includespatient falls, bed sores, malnutrition, andother unintentional acts alleged in the traditionallong-term care case.Using Dr. Murray again as an example,the current criminal law dictates that thejury only has to find that Dr. Murray shouldhave known administering Propofol outsideof a hospital setting was a substantialand unjustifiable risk, and not whether hewas actually aware of the risk. Karas andO’Neill, What Is Involuntary Manslaughter?,supra.This should not be the standard. Dr.Murray’s knowledge of proper proceduremust be a factor in determining his criminalculpability. In this instance, a strongargument could still be made that Dr. Murray’sactions rise to the level of recklessness.One could try to show that, as a physician,he must have had knowledge that Propofolis usually administered in a hospital setting.If the prosecution can establish thathe had such knowledge, then it could alsodemonstrate that he disregarded the hazardsand decided to take the risks associatedwith administering Propofol in ahome setting.If the state can establish these facts,then Dr. Murray should face a criminaljury trial. This is a more effective standardbecause it takes into account the healthcare provider’s knowledge of existing protocol.Any standard short of actual knowledgeof the risk should be governed by thecivil system. This is especially true in thelong term care setting where nurses aretragically prosecuted for patient falls andother allegations of simple negligence. <strong>The</strong>government will argue that requiring thestandard is an attempt to exempt healthcare professionals from criminal negligence.Filkins, Criminalization of MedicalNegligence, supra, at 508 (footnoteomitted). However, applying the criminallegal system to medical negligenceis an excessive and ineffectual endeavorbecause it fails to consider the importanceof determining an objective standard ofcare and because it does not truly achievethe goals of criminal punishment. Accordingly,health care providers should onlyface criminal prosecution when their conductrises to the level of recklessness.Civil Liability Is the PreferableLegal System for ResolvingActs for Medical Negligence<strong>The</strong> preferable option is for actions of medicalnegligence to remain strictly a matterof civil liability. Civil liability for medicalnegligence is itself not a perfect system, butit provides redresses for civil wrongs thathave been committed.A civil claim for medical negligence providesthe plaintiff patient with the opportunityto receive compensation for injuries,and it gives the health care provider achance to reform conduct without theunnecessary punishment of prison.As compensation for injuries, plaintiffsare potentially entitled to economicand non- economic damages. Economicdamages enable the plaintiff to recoverfor objective monetary losses such as lostwages and medical expenses, while noneconomicdamages allow recovery for subjective,non- monetary losses such as painand suffering, loss of consortium, and lossof enjoyment of life. Ending the Confusion:Economic, Non- Economic and PunitiveDamages, Health Coalition on Liability andAccess, http://www.hcla.org/factsheets/2003-23-Damages.pdf. <strong>The</strong>se two categories of recoveryprovide the plaintiff with a wide-rangeof potential recoveries for negligent conduct.In many cases, juries may also assesspunitive damages as a means to punish thedefendant health care providers to preventsimilar future negligence.In addition to compensating the injuredpatient, there are non- monetary methodsof punishing negligent health care providersthat negate the need for a prison sentence.<strong>The</strong>se punishments are imposed bymedical and nursing boards. Each statemaintains its own medical board, whichis tasked with monitoring physician conductand investigating complaints receivedfrom the public. State nursing boards carryNegligence, continued on page 88
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A W<strong>The</strong> First WaveBy Chad P. BrouillardEmerging Trends inElectronic HealthRecord LiabilityWith new technologycomes the potential fornew risks and liabilitiesfor your clients.Given recent governmental incentives for medical practicesand institutions to implement electronic healthrecord software, much attention has focused on the efficienciesand technical advances of these new applications.In 2009, the American Recovery and ReinvestmentAct (ARRA), which included theHealth Information Technology for Economicand Clinical Health Act, becamelaw. <strong>The</strong> Health Information Technologyfor Economic and Clinical Health Act,also called the HITECH Act, appropriatednearly 20 billion stimulus dollars toencourage hospitals, doctors and otherhealth care professionals to develop andimplement electronic health record (EHR)systems. When health care practices installhealth care information technologies,sometimes they overlook the attendantrisks of implementing, using and storingEHRs, which have developed fairly recently.Due to the newness of EHRs, we still do notcompletely understand the risks that theymight bring. <strong>The</strong> first wave of legal consequencesfrom such a fundamental shiftin clinical documentation has begun toemerge. A host of new statutes and regulations,including the HITECH Act, now governthe functionality and substance of EHR■ Chad P. Brouillard is an associate at Foster & Eldridge LLP in Cambridge,Massachusetts. His practice focuses on medical liability, health care lawand health care technology law. He is the E- Discovery Liaison to <strong>DRI</strong>’s MedicalLiability and Health Care Law Committee. He also serves on the Board ofDirectors for the Massachusetts <strong>Defense</strong> Lawyers Association.systems, and the HITECH Act specificallyenhances data security rules under HIPAA.Courts have started to consider legal mattersof first impression involving EHRs, andour clients have become enmeshed in thesecases with greater frequency.As with most technological advances inthe medical field, EHRs carry new forms ofpotential risk and liability. This article willsketch some basic areas of medical liabilityinvolving EHRs and will suggest ways thatthese risks may impact medical providers’practices and, perhaps, the standardsof care. Also, from the health care law andmedical liability perspective, EHRs mark afundamental shift in how we use and collectelectronic medical evidence, as well aswhat we must think about when anticipatinghealth care litigation.My EHR Is Not the Same as Your EHRWhen implementing any new healthcare process, we can expect some confusionand chaos. <strong>For</strong> one, generally, definitionsinitially will differ until the fieldcomes to consensus about them. <strong>The</strong> term“electronic medical record,” for example,although technically distinct from an electronichealth record (EHR), is commonlyand confusingly used as a synonym for anEHR in the industry. <strong>For</strong> simplicity, this<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 39
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Warticle will use “EHR” as a general term forelectronic charting as used in the HITECHAct.Implementing new health-care relatedinformation- technology processes, however,is complicated further due to themultiplicity of EHR vendor solutions available—over200—and very little in the wayof standards. <strong>For</strong> years, the EHR field had<strong>The</strong> federal governmentseems to be creatingdemand for EHR systemsthat are certified orotherwise meet thisminimum, “meaningfuluse,” functionality criteria.been the metaphorical Wild West, with fewmandated guidelines about how a productfunctioned, communicated with otherproducts, or secured its data. Certifyingorganizations, such as the CertificationCommission for Healthcare InformationTechnology, endeavored to fill the gap bydeveloping some minimum standardsregarding functionality, security, andinteroperability of EHR systems. Suchefforts were limited—only applying if asoftware vendor sought to voluntarily seekcertification or a purchaser required certification.Also, various health-care relatedinformation- technology organizations,such as the American Health InformationManagement Association, have tried tobridge the gap of best practices related tosoftware implementation and use.In February 2009, the ARRA mandatedthe development of “meaningful use” criteriato ensure minimal functional andsecurity standards in EHR systems. <strong>For</strong> ahealth care provider to be eligible for stimulusfunds, a provider will have to demonstrate“meaningful use” of an EHR system.<strong>The</strong> federal government seems to be creatingdemand for EHR systems that are certifiedor otherwise meet this minimum,40 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>“meaningful use,” functionality criteria.On December 30, 2009, the first iterationof the “meaningful use” criteria was published,with further updates from the Centerfor Medicare and Medicaid Servicesto come. <strong>The</strong> “meaningful use” criteriaoutlined the technological objectives, features,and measures to gauge whether aparticular EHR system qualified under thestatute during Stage I implementation ofthe HITECH Act (2011). <strong>The</strong> current listincludes objectives such as using computerprovider order entry, drug- allergy checks,and e- prescribing, among many others.<strong>The</strong> important point about these developingEHR functional standards is thathealth care and medical liability attorneysneed to understand that an EHR system inone practice may not mean or do the samething in another practice. Until you becomefamiliar with the health-care informationtechnologyused in your client’s practice,you can make few assumptions about howa product functions, communicates withother products, or secures protected medicaldata. <strong>For</strong> that reason, counsel for healthcare providers often find that in defendingmedical liability and health care casesinvolving data stored in an EHR system,it has become increasingly important topartner with clients’ information technologyemployees or consultants to clarify thetechnical issues and interoperability associatedwith the specific software involved.Also, just because a medical office practiceis small, it does not mean that the practicewill employ an unsophisticated EHRsystem. Large institutions may share oreven mandate the use of particular EHRsoftware to best coordinate care amongaffiliated providers. A large institutionlikely chose EHR software that served itsown clinical and economic needs. A smallmedical provider might have adopted a verysophisticated EHR application, possiblywithout having the same level of resourcesto deal with technical problems than youwould expect in a large institution.In any event, it is clear that given healthcare providers’ growing obligations relatedto the use and storage of medical information,choosing the wrong EHR softwaremay create liability issues for our clients.Without technical, EHR- system guidelinesthat have been aligned to comply withhealth care regulations, e- discovery rules,and other laws, this liability will likely persistfor years to come.<strong>The</strong> Evolving Standards of Carefor Clinical Documentation<strong>The</strong> clinical world is in a state of massivetransition centered on electronicdocumentation. It would be easy to underestimatethis shift, to assume that it simplyinvolves copying existing paper chartingand “translating” it into a legible, electronicform. EHR software does not merelyput printed progress notes onto a computerscreen. It can store a person’s lifetime medicalhistory in one central repository. WithEHR software, a clinician can harvest apatient’s pertinent, clinical history fromprior encounters with other health careproviders and marshal them for presentuse. Critical lab data and vitals can triggerimmediate alerts to a clinician in realtime. EHR software automatically can flagcontraindicated medications, preventinga clinician from even prescribing particularmedicines. An office practice and medicalcenter a hundred miles away from oneanother can instantly share up-to-dateinformation on a mutual patient so that bythe time the patient has traveled from thepractice to the medical center, the medicalcenter has the latest office visit record in thepatient’s chart. Specialists from around theworld can now use health care technologyto collaborate on patient care, which previouslymight have been cost prohibitive.I cannot say enough about the potential,transformative benefits of this technology.More to the point, EHR is simply nota passive tablet on which to record medicaldata. EHR can actively coordinate the datadrawn from clinical care.What effect will health-care informationtechnologyadvances have on the standardsof care for clinical documentation? Anearly Oklahoma state court case, Johnsonv. Hillcrest Health Center, Inc., 70 P.3d 811(Okla. 2003), pondered the same questionseven years ago in a way that illuminatesthe present discussion. <strong>The</strong> case involveda motion for summary judgment broughtby the defendant, a hospital, in a medicalmalpractice case. <strong>The</strong> basic claim wasthat the hospital’s employees had negligentlyfailed to chart critical lab results inthe paper clinical record. <strong>The</strong> twist in thecase was that the information was reported
in the hospital’s electronic health record.Interestingly, the court in the Johnson casesuggested that what the average reasonableperson would conclude was the standardof care for clinical documentation practicesmay have shifted between 1997 and2003 given the then increasing supportand reliance on health-care informationtechnologyin the medical field.<strong>The</strong> health care industry has progressedmuch farther down the information technologytrack in <strong>2010</strong>. This is in large partdue to the economic incentives in the stimulusfunds and exemptions to the Stark Law,which governs Medicare and Medicaid physicianself- referrals. State and federal mandatesmay increasingly prompt informationtechnology reliance, as may economic penaltiesimposed on providers, scheduled tobegin in 2015, for not meaningfully usingEHR systems or other forms of health-careinformation- technologies. Once the mandatedeadlines have come and gone, by theend of this decade, or if most health careproviders and institutions have voluntarilyadopted EHRs for clinical documentation,then failing to use the documentation technologycould conceivably be offered as evidenceof a deviation from the standards ofcare for clinical documentation.It seems the standards of care for clinicaldocumentation may have come full circlesince the Johnson case. In 1997, an averageperson may have found that the standardsof care for clinical documentation requireddocumentation in a paper as opposed toelectronic form. In 2003, the court in Johnsonnoted that due to the emerging use ofEHRs the standard perhaps had shiftedtoward considering computer-based documentationas an equivalent substitute forpaper charting. In <strong>2010</strong>, given the advancesin health-care information- technology andgeneral reliance on it in the industry, wecertainly are approaching the other end ofthe spectrum, where electronic documentationmay be seen as most crucial.Once we do reach that point, it seemslogical that a liability inquiry will turnto how information technology has beenused by clinicians and whether that useitself comports with the standard of carefor maintaining and using medical records.Although actual case law may not exist onthese nitty- gritty, technical- clinical issuesat present, a great deal of ink has been spenton the risk management and health informationmanagement to describe the dangersof using templates, or copying andpasting information into an her system,providers sharing logins, providers modifyingor deleting electronic entries afterthe fact of treatment, and other user- relatedissues. <strong>For</strong> the most part, juries may end updeciding what sorts of EHR practices constitutereasonable, clinical standards ofcare for clinical documentation.<strong>The</strong> EHR as the Clinical“Source of Truth”Health care institutions do not operate inan entirely paper or electronic existence.Inevitable paper processes still persist inevery hospital system in the country. Mosthealth care institutions employ a hybridmodel in which both electronic and paperprocesses coexist. Making sure that healthcare providers query the correct electronicand paper sources to locate all necessaryclinical information certainly is challenging.Unfortunately, health care institutionsoften have and maintain more than twoconcurrent sources of medical information.Both systemic and user-based challengesmay prevent a clinician from accessing therelevant patient data when needed.System ErrorIf choosing an EHR software from the hundredsof vendors, which may or may notcomply with the various legal obligationsplaced on a provider, is itself a liability concern,then imagine a modern health careinstitution that maintains several EHR systems.<strong>For</strong> example, an Emergency Departmentmay have a unique system, Labor& Delivery another, and Radiology yetanother. Given the multiplicity of systems,it may take a great deal of technical effortto ensure that medical data in an electronicchart provides a uniform, “source oftruth” about a patient that all practitionerscan rely on in life or death medical situations.When technical means cannot cen-<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 41
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wtralize the information, the challenge thenbecomes training providers where to findparticular information.Human error only partially accountsfor the inability to use an EHR system as asingle source of truth. By design or due toimplementation, an EHR system may notoffer access to all possible data sources.Currently, it is not unheard of to find thatIt is not unheard of to findthat one proprietary EHRsystem cannot share datawith another in the samehealth care institution.one proprietary EHR system cannot sharedata with another in the same health careinstitution. Also, due to the low expenseassociated with data storage compared tothe expenses associated with storing paper,the potential amount of information thata system could store about the medicallife of one patient in one data source alonecould become staggering. <strong>For</strong> example, inthe current market, buying 1TB of storagespace (1,000 GB) costs under $100. Whenmultiple interoperable, EHR systems sharedata sources, the possible data volume multiplies.<strong>For</strong> a human user, contemplatingmanually searching this voluminous databecomes unimaginable. On the flip side, itis also a considerable technological task tocreate software solutions that can marshalall the relevant patient data from every datasource that may pertain to any given clinicalsituation, especially when those clinicalsituations may not be contemplated a prioriat the time of coding.Another technical issue concerns thedata integrity of stored information. Anyonewho has used a database may have hadexperience with corrupted or misplacedinformation. <strong>For</strong> example, legal billing systemsin a modern law office sometimes disruptdata due to database integrity issues. Itis very possible for the same thing to happento an EHR even with strict technicalcontrols in place. <strong>The</strong> practical effect is that42 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>an EHR system may provide erroneous orincomplete information on a patient to aphysician. As one author put it, “Otherwisehealthy patients are arriving at a provider’soffices to hear that they have diabetes,sleep apnea, or high blood pressure. Whenin actuality, doctors are reading the wrongrecords because master patient indexeswere compromised.” AHIMA Advantage,EHR Anxiety? HIM Is What the DoctorOrdered, Apr. <strong>2010</strong>.User ErrorA clinician can discover that keeping trackof which data repository stores the correctpieces of medical data can be challenging.Are the lab results returned electronicallyor on paper? Do the results populate in oneEHR or another? <strong>For</strong> this reason, liabilitycases now unsurprisingly may involve aclinician’s attempt to sort through datasources to find accurate clinical informationabout a patient. Absent a central technologyor process, clinicians must jugglevarious possible data repositories, hopingto find all pertinent information. Unfortunately,humans invariably err, especially intime- critical situations.<strong>The</strong> Breeden case involved just such a factpattern. In this case the plaintiff alleged thatan anesthesiologist failed to read nursingnotes in an electronic record system priorto administering anesthesia for a procedure.<strong>The</strong> notes contained information thatwould have contraindicated the administrationof the anesthesia. Breeden v. AnesthesiaWest, P.C., 656 N.W.2d 913 (Neb. 2003).<strong>The</strong> court held that the clinician retainedthe sole duty to read all the pertinent medicalinformation, whether contained in paperor electronic form: the clinician couldnot delegate that duty. In Breeden, however,the court had a much simpler casethan it might today. <strong>The</strong> anesthesiologisthad one EHR and one paper record to relyon, and the care timeframe was finite. <strong>Today</strong>,how would courts decide a physician’srelative duty to scour multiple data sourcesover a patient’s life now that the number ofsources begins to approach the limit of humanability to access and search them? Atsome point, the human inability to accessthe correct data sources becomes less a usererror and more a systems failure. Unfortunately,the courts and legislatures have notdefined the parameters of either.In fairness, some courts seem to placethe burden of locating accurate medicalinformation on potential plaintiffs. In anunreported case, for instance, a Californiacourt held that statute of limitations hadexpired for a medical malpractice action,and the plaintiff had been obliged to investigatethe source of his injury, includingrequesting his electronic health records.Dominguez v. Wickremasinghe, <strong>2010</strong> WL625840 (Cal. St. App. <strong>2010</strong>). From this case,we might infer that a patient’s constructiveknowledge of the cause of his or her injurymight begin once the relevant informationhad been recorded on paper or in an electronichealth record. This obligation wouldalso seem to put pressure on the plaintiffs’bar to investigate electronic sources.<strong>The</strong> EHR as the Legal“Source of Truth”<strong>Defense</strong> counsel for health care practitionersand institutions also increasingly needclarity about the “truthful source” of a patient’sclinical encounter. To start, a defenseattorney is usually not privy to the sameEHR information in the same format as aclient. When a client accesses an electronichealth record, he or she typically accesses itthrough a graphical interface, often in dashboardor window form, which permits accessto many sources of clinical informationat the same time. Once a pleading has beenfiled, defense counsel often receives a printcopy of the data contained in the EHR systemin a word- processed format, which doesnot capture the look or feel of the interfacethat a clinician originally had available tohim or her. Ask your clients and their inhousecounsel if they can provide you withaccess to the interface that your clients use,even if only temporarily, so that you canhave a feel for how the product that createdthe documentation looks and works.Be sure also to ask if any legal constraintsprevent your doing so, such as contractualterms with the vendor or HIPAA provisions.A print copy of an electronic medicalchart also may lack metadata or audit trailinformation. Metadata is typically definedas data about data. It is data that indicateshow and when a computer or applicationwas used and by which login. Every softwareapplication may have its own customizedmetadata, which in health care canindicate when a user had access to medical
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wand follow the Health and Human Servicestechnical and procedural guidelines for reporting.In addition, a data breach may fallunder the Federal Trade Commission’s RedFlag Rules (although currently an exemptionfor health care providers is being consideredin the legislature.) See Identity <strong>The</strong>ftRed Flags and Address Discrepancies Underthe Fair and Accurate Credit TransactionsUnder state and federallaw, a consumer may suea health provider if he orshe is damaged by a databreach involving protectedhealth information.Act of 2003, Final Rule, 72 Fed. Reg. 63,717(Nov. 9, 2007). To further complicate matters,most states now have data breach rulesthat sometimes have reporting obligationsthat conflict with the federal requirements.Liability does not end with data breachreporting. Under state and federal law, aconsumer may sue a health provider if he orshe is damaged by a data breach involvingprotected health information. Also, plaintiffshave employed traditional, commonlaw theories, such as breach of contractand negligent infliction of emotional distress.See Yath v. Fairview Clinics, N. P., 767N.W.2d 34 (Minn. Ct. App. 2009). A plaintiffs’bar niche area is currently developingto bring these suits. See Regan- Touhy v.Walgreen Co., 526 F.3d 641 (10th Cir. 2008)(involving an electronic discovery disputefor a claim of wrongful electronic disclosureof private health information by apharmacy employee).Expansion of Direct, Vicariousor Third-Party LiabilityAnother area of potential expanded liabilitycomes from medical institutions’increased obligations when they install,maintain or connect to an electronic healthrecords system and allow health providersand other institutions to have access to44 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>them. Obviously, the potential direct liabilitysprings from the obligation to usereasonable care when installing and maintainingthis software. If, for example, anEHR system is set up to import laboratoryreports from another EHR system withinthe institution, and the software corruptsimported data leading to insufficient followup on abnormal results, the institutioncould face potential, direct liability.<strong>The</strong> very act of providing an integratedelectronic health records system to cliniciansmay also increase vicarious liabilityfor the acts of independent providersif they use the system, potentially raisingthird-party claims. In many states, physiciansare not often directly employed byhealth care institutions but act as independentcontractors with privileges to practicein institutions. Despite the contractualrelationships, plaintiffs have argued thatemployment relationships exist under thecommon law between the institutions andclinicians. See Restatement (Second) ofAgency §220(2) (1958). Jurisdictions adoptingthe Restatement’s position employmultifactor tests to determine when anindependent contractor can be consideredan employee. Most germane to this discussionis whether providing an EHR systemconstitutes providing instrumentalities ofthe work or can constitute control over thedetails of a clinician’s work.<strong>The</strong> courts have not offered guidance yeton the first topic, but on the second, a federaldistrict court judge declined to findan employment relationship between theDepartment of Veterans Affairs and theUnited States of America and an independentcontractor physicians’ group based, inpart, on the physicians’ use of the Departmentof Veterans Affairs’ electronic healthrecords system. Gibbons v. Fronton, 533 F.Supp. 2d 449 (2008). Although a successfor these particular physicians, the plaintiff’sargument about the electronic healthrecords system was limited because thesoftware was used only to control follow- uptests, and the Department of VeteransAffairs maintained exclusive possessionover the health records. From that point ofview, the electronic health records systemwas not much different from paper recordsin terms of exclusivity of control. It is difficultto know what a court would do witha fully enabled EHR system with featuressuch as “order entry” and clinical decisionsupport making tools, software that interpretspatient details to suggest treatmentor interacts with clinicians as they exercisejudgment.Another interesting case tried to usea pharmacy’s participation in a statemandatedelectronic database as a groundfor expanding liability to third persons.Sanchez v. Wal-Mart, 221 P.3d 1276 (Nev.2009). <strong>The</strong> case involved a woman whoinstigated a car accident while under theinfluence of prescription drugs, resultingin the death of another motorist and theinjury of yet one other. <strong>The</strong> appellants sueda number of pharmacies that had filledmultiple prescriptions for the motorist whocaused the accident. Nevada has a statutoryscheme requiring the pharmacies inquestion to participate in a computerized,prescription- tracking system designed toidentify prescription drug abuse. Whilethe appeal was unsuccessful for a numberof reasons, one of which was that thepharmacies did not have direct access tothe database, it does again raise the fundamentalquestions, if health providers addnew data sources about patients to existingsources, does it create obligations to thepatients or others, and if so, when? In Sanchezthe issue was not so much the medicalstatus of the initial tortfeasor, the womanwho caused the accident, as it was her substanceabuse, which was dangerous to thirdparties. If such information is made availableto providers, plaintiffs may continue toclaim that knowledge of a patient’s dangerousnesscreates special obligations.Electronic Discovery ExposureIn November 2007, <strong>DRI</strong> first publishedmy article, “<strong>The</strong> Impact of E- Discovery inHealth Care,” discussing the likely effectthat e- discovery rules, as embodied in thethen-new Federal Rules of Civil Procedure,would have on the health care industry,especially given the growing use ofelectronic health records. Without repeatingthe material covered in that article,since November 2007, e- discovery law as itapplies to health care providers has developedfurther. In short, it is very clear thatthe e- discovery rules as embodied in theFederal Rules of Civil Procedure do applyto health care litigants.EHR Liability, continued on page 87
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WCoupling Evidentiaryand Procedural ToolsBy Thomas J. Hurney, Jr.,Rodney W. Stieger, Philip L.Willman and Angela E. PozzoDefendingNegligentCredentialing CasesBifurcation presents anopportunity to defusethe prejudice createdby the introduction of“other acts” evidence.Actions against hospitals asserting negligence in grantingmedical staff credentials and privileges to physicianshave been recognized since the seminal case Darling v.Charleston Community Memorial Hospital, 211 N.E.2d253, 257 (Ill. 1965), cert. denied, 383U.S. 946 (1965). Large jury verdicts haveresulted in these cases. See, Frigo v. SilverCross Hospital, 876 N.E.2d 697 (Ill. App. Ct.2007) ($7.775 million dollar verdict).Sometimes a plaintiff finds that includingthese direct claims against a hospital to amedical malpractice action attractive becauseit potentially broadens the evidenceadmissible at trial, forcing a defendantto defend not only its actions in the case,but also its reputation, and it also adds a“deep pocket” corporate defendant. Dependingon the state, statutory limitations■ Thomas J. Hurney, Jr., is the manager of,and Rodney W. Stieger is an associate in,the Litigation Group of Jackson Kelly PLLC inCharleston, West Virginia. Mr. Hurney is pastpresident of the <strong>Defense</strong> Trial Counsel of WestVirginia. Philip L. Willman is a principal, andAngela E. Pozzo is an associate, in the Medicaland Health Care Litigation Group of Moser& Marsalek, P.C.,in St. Louis. Mr.Willman is thechair of <strong>DRI</strong>’sMedical Liabilityand Health CareLaw Committee.on medical negligence cases may not applyto actions for negligent credentialing.Compare, Browning v. Burt, 613 N.E.2d 993(Ohio1993) (Ohio limitations did not apply)with Garland Community Hospital v. Rose,2004 WL 2480381 (Tex. 2004) (Texas reformact applied). It sometimes follows thatplaintiffs’ counsel, looking for opportunitiesto strengthen medical negligence cases,will initiate or investigate direct claimsagainst hospitals for negligence in the credentialingand oversight of physicians.Some commentators suggest credentialingactions against hospitals have surged.<strong>For</strong> instance, two commentators havewritten, “<strong>The</strong> number of negligent credentialingclaims filed in conjunction with traditionalmedical malpractice claims hasincreased significantly. Lawyers for plaintiffpatients view healthcare organizationsas having ‘deep pockets,’ particularly nowthat some physicians carry less malpracticeinsurance than in the past.” MichaelA. Chabraja and Monica C. Wehby, NegligentCredentialing: Hospital Must MonitorIts Doctors’ Qualifications, Surgical Activities,Bulletin (American Association ofNeurological Surgeons), Summer 2007, at38; Wayne J. Guglielmo, Negligent Credentialing:Is the Danger Growing? ModernMedicine, May 4, 2007.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 45
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WOne reason for this strategy is thatplaintiffs’ attorneys may view prevailingas difficult in jury trials of medical liabilityactions. Of medical liability casesthat proceed to jury verdicts, most statisticsshow that health care providers winaround 70 percent of the time. “Severalstudies indicate that a large number ofclaims brought to trial are very weak, inthe estimation of the defense insurers.<strong>The</strong> largest to date examined a study of976 malpractice verdicts… in which thereviewers found that 10 percent of claimsinvolved negligent care, 11 percent were tooclose to call, and 78 percent involved weakclaims. <strong>The</strong> strong claims were outnumberedroughly eight to one. Other studieshave shown a 4:1 or 5:1 ratio of weakclaims to legitimate ones, in the view ofdefense insurers.” Jonathan Glauser, AreJuries Biased Toward Physician Defendants?Emergency Medicine News, Oct. 2007,available at http://journals.lww.com/em-news/Fulltext/2007/10000/Are_Juries_Biased_Toward_Physician_Defendants_.29.aspx; See also, TomBaker, <strong>The</strong> Medical Malpractice Myth 898(Univ. of Chicago Press 2005). <strong>The</strong> NationalJudicial Center has estimated that plaintiffswon only 36.7 percent of cases in 2002–03.Plaintiffs’ attorneys understand these statistics:“Believe it or not, reputable triallawyers who specialize in litigating malpracticecases do not relish taking everycase to court. Why? Because ‘we’re likelyto lose….” Shirley Grace, <strong>The</strong> Law: TrialLawyers Tell All, <strong>The</strong> Advocate (Fla. BarTrial Lawyers Section), Spring 2009, http://www.flatls.org/index.php?option=com_rubberdoc&view=category&id=38&Itemid=60; then follow“Spring 2009” hyperlink.This article offers suggestions on dealingwith these lawsuits, particularly focusingon requesting bifurcation and dealing with“other acts” evidence when representinghospitals and other health care providers.<strong>The</strong> ProcessA hospital grants credentials and privilegesthrough a detailed process designed to ensurethat a physician has the background,education, training and skill to practicemedicine and perform procedures in thehospital. <strong>The</strong> Joint Commission defines credentialingas “the collection, verification,and assessment of information regardingthree critical parameters: current licensure;46 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>education and relevant training; and experience,ability, and current competence toperform the requested privilege(s). Verificationis sought to minimize the possibilityof granting privilege(s) based on the reviewof fraudulent documents.” <strong>The</strong> Joint CommissionAccreditation Manual, MS.06.01.03(2009). Credentialing is “the collection, verification,and assessment of information regardingthree critical parameters: currentlicensure; education and relevant training;and experience, ability, and current competenceto perform the requested privilege(s).Verification is sought to minimize the possibilityof granting privilege(s) based onthe review of fraudulent documents.” <strong>The</strong>Joint Commission Accreditation Manual,MS.06.01.03 (2009). See, Nancy E. Gregor,Credentialing Decisions: Keeping the HospitalOff Of the Target List, <strong>DRI</strong> Medical Liabilityand Health Care Law Seminar (coursematerials) (2009).This peer review process requires a physicianto submit information and a hospitalor health care organization to confirmthe information before the physician canpractice with the institution. All hospitalsmust complete this process because obtainingand keeping Joint Commission or othercertification depends on it, as does billingstate and federal governments and privateinsurers. See, Darling v. Charleston CommunityMemorial Hospital, 211 N.E.2d 253,257 (1965), cert. denied, 383 U.S. 946 (1965)(“<strong>The</strong> Standards for Hospital Accreditation,the state licensing regulations andthe defendant’s bylaws demonstrate thatthe medical profession and other responsibleauthorities regard it as both desirableand feasible that a hospital assume certainresponsibilities for the care of the patient.”)Negligent Credentialing andPrivileging: Cause of ActionCourts have recognized causes of actionagainst hospitals for negligence in performingthis Joint Accreditation process,finding that hospitals have a duty exercisecare in granting medical staff credentialsand privileges to physicians.In regard to staff privileges, a hospitalhas a direct duty to grant and to continuesuch privileges only to competentphysicians. A hospital is not an insurer ofthe skills of private physicians to whomstaff- privileges have been granted. Inorder to recover for a breach of this duty,a plaintiff injured by the negligence of astaff physician must demonstrate thatbut for the lack of care in the selection orthe retention of the physician, the physicianwould not have been granted staffprivileges, and the plaintiff would nothave been injured.Albain v. Flower Hospital, 553 N.E.2d 1038(Ohio 1990); see also, Johnson v. MisericordiaCommunity Hosp., 301 N.W. 2d 156(Wis. 1981); Ferguson v. Gonyaw, 236 N.W.2d 543 (Mich. Ct. App. 1976).Many courts, applying basic negligenceprinciples, have found a duty on the part ofhospitals to ensure that physicians allowedto practice are qualified and to reasonablymonitor their competence. One courtlumped credentialing and privilegingtogether, referring to credentialing as “thegranting or retention of a doctor’s hospitalprivileges.” St. Luke’s Episcopal Hosp. v.Agbor, 952 SW 2d 503 (Tex. 1997).While hospitals are liable for the acts oftheir agents and employees, they are typicallynot liable for the actions of physiciansprivately employed by patients just becausethey have medical staff privileges. Cross v.Trapp, 294 S.E.2d 446 (W. Va. 1982). However,this rule has myriad exceptions basedon principles of ostensible agency. In Albainv. Flower Hospital, 553 N.E.2d 1038 (Ohio1990), the Ohio Supreme Court stated:A hospital may, in narrowly defined situations,under the doctrine of agencyby estoppel, be held liable for the negligentacts of a physician to whom ithas granted staff privileges. In orderto establish such liability, a plaintiffmust show that: (1) the hospital maderepresentations leading the plaintiff tobelieve that the negligent physician wasoperating as an agent under the hospital’sauthority, and (2) the plaintiff wasthereby induced to rely upon the ostensibleagency relationship.Id. at 1040.Courts have applied principles of ostensibleagency to hold hospitals liable fornegligent emergency room physicians, Torrencev. Kusminsky, 408 S.E.2d 684 (W. Va.1991), Simmons v. Tuomey Regional MedicalCenter, 533 SE 2d 312 (S.C. 2000), fornegligent physicians providing services inwhich the patient had no choice, such asradiology and anesthesiology, Thomas v.
Raleigh General Hospital, 358 S.E.2d 222,225 (W. Va. 1987), and based on advertising.Dolen v. St. Mary’s Hospital, 506 S.E.2d624 (W. Va. 1998). See, Hardy v. Brantley,471 So. 2d 358 (Miss. 1985); Thomas J. Hurney,Jr., Hospital Liability in West Virginia,95 W. Va. L. Rev. 943 (1993); See generally,Annotation, Liability of Hospital or Sanatoriumfor Negligence of Physician or Surgeon,51 A.L.R.4th 235 §5 (1987).A grant of credentials and privileges providesan independent basis of liability, notdependent on an agency relationship. Onceprivileges have been granted, the hospitalmust take reasonable steps to ensure thesafety of its patients if it knows, or shouldknow, that a physician has exhibited a patternof incompetent behavior. Strubhart v.Perry Mem’l Hosp. Trust Auth., 903 P.2d263, 273 (Okla. 1995). Hospitals have beenfound liable for allowing “incompetent”or unqualified physicians to practice aspart of their medical staffs. See, R.K., M.D.v. Ramirez, 887 S.W.2d 836, 838–39 (Tex.1994) (known substance abuse by a physicianmay result in a hospital being foundnegligent); Strubhart v. Perry Mem’l Hosp.Trust Auth., 903 P.2d 263 (Okla. 1995) (physicianwith a pattern of incompetent behavior);Blanton v. Moses H. Cone Mem’l Hosp.,Inc., 354 S.E.2d 455 (N.C. 1987) (unqualifiedphysician allowed to perform surgery);Phelps v. Physicians Ins. Co. of Wisconsin,Inc., 744 N.W.2d 880 (Wis. 2007) (lack ofoversight over inexperienced physician);Longnecker v. Loyola Univ. Med. Ctr., 891N.E.2d 954 (Ill. 2008) (duty to train and supervisephysicians); Fletcher v. South PeninsulaHospital, 71 P.3d 833 (Alaska 2003).In Bost v. Riley, 262 SE 2d 391 (N.C. App1980), the court found North Carolina hospitalshad a duty to properly credential andsupervise physicians:Since all of the above duties which havebeen required of hospitals in North Carolinaare duties which flow directly fromthe hospital to the patient, we acknowledgethat a breach of any such duty maycorrectly be termed corporate negligence,and that our State recognizesthis as a basis for liability apart and distinctfrom respondeat superior. If, asour Supreme Court has stated, a patientat a modern- day hospital has the reasonableexpectation that the hospitalwill attempt to cure him, it seems axiomaticthat the hospital have the dutyassigned by the Darling Court to make areasonable effort to monitor and overseethe treatment which is prescribed andadministered by physicians practicingat the facility.In Schelling v. Humphrey, 916 N.E.2d1029 (2009), the Ohio Supreme Court statedthat hospitals have “a direct duty to grantand to continue staff privileges only to competentdoctors…. [and] a duty to remove ‘aknown incompetent.’” Id. at 1033. Discussingthe elements of a negligent credentialingclaim, the court stated:To prove a negligent- credentialingclaim, a plaintiff injured by the negligenceof a staff doctor must show thatbut for the lack of care in the selectionor retention of the doctor, the doctorwould not have been granted staff privilegesand the plaintiff would not havebeen injured.Id.To prove causation, then, a plaintiff mustdemonstrate that a physician committedmalpractice that injured the patient. Inother words, the malpractice of the physicianis the causal link between the hospital’snegligence in allowing the physician topractice and the injury to the patient. Absenta negligent act by the physician, a plaintiffcannot prove causation to establish thehospital’s negligence in granting credentialsor privileges. See Purcell v. Zimbelman, 500P.2d 335 (Ariz. App. 1972). (“We believe itreasonably probable to conclude that hadthe hospital taken some action against Dr.Purcell, whether in the form of suspension,remonstration, restriction or other means,the surgical procedure utilized in this casewould not have been undertaken by thedoctor and Mr. Zimbelman would not havebeen injured.”); Rodrigues v. Miriam Hosp.,623 A.2d 456 (Rhode Island 1993).Limiting the Admissibilityof “Other Acts” in NegligentCredentialing CasesA key tool in the briefcase of a lawyerdefending against a negligent credentialingclaim is the general inadmissibility inmedical negligence cases of a physician’s“other acts.” Rule 404(b) of the FederalRules of Evidence and its state counterpartsgenerally state that evidence of characterand “other acts” are not admissible toprove an “action in conformity therewith.”In medical negligence trials, Federal Ruleof Evidence 404(b) is typically the basisfor excluding evidence of other lawsuits,disciplinary actions, license suspensions,failure to pass certification examinationsand comparable evidence, including evidenceof a hospital’s credentialing process.Coupled with Rule 404(b) is Federal Ruleof Evidence 403, which states that a courtmay exclude evidence, even if relevant, “ifits probative value is substantially outweighedby the danger of unfair prejudice,confusion of the issues, or misleading thejury, or by considerations of undue delay,waste of time, or needless presentation ofcumulative evidence.” Courts often weighthe admissibility of evidence of “other acts”under both Rule 404(b) and Rule 403.Medical negligence cases may involve awide variety of potentially inflammatoryand prejudicial evidence that plaintiffs mayseek to admit against physicians or otherhealth care providers. However, as long as amedical negligence case stands alone, withoutbeing combined with a negligent credentialingor negligent supervision case,courts largely exclude “other acts” as irrelevantand inadmissible. <strong>The</strong> position thatdefense counsel should take is that themedical liability case against the physicianshould stand on its own merits, without thecollateral evidence of “other acts,” underthe authority of Federal Rules of Evidence404(b) and 403 or state equivalents, whenapplicable. In the sections that follow wediscuss the major areas of “other acts” thatplaintiffs have attempted to use to establishthe negligence of physicians in “standalone” medical negligence claims.Prior Civil ActionsIn Gray v. Allen, 677 S.E.2d 862, 867 (N.C.Ct. App. 2009), the court affirmed the trialcourt’s decision to exclude evidence of priorlawsuits against the defendant, a physician,in the plaintiff’s malpractice case.Citing Rule 404(b) of the North CarolinaRules of Evidence, the appellate court heldthat prior malpractice suits against thephysician were irrelevant to determiningwhether the physician had been negligentin the case at hand. Id. Moreover, the courtnoted that evidence of prior negligenceactions against the defendant threatenedsubstantial prejudice. Id.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 47
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WLikewise, in Lai v. Sagle, 818 A.2d 237(Md. 2003) the Maryland Court of Appealsreversed a malpractice award after theplaintiff’s counsel, in his opening statement,informed the jury that the defendantphysician had been sued five times for malpracticein another state, and the trial courtfailed to grant the defendant’s motion for amistrial. Under Maryland Rule of Evidence<strong>The</strong> medical liabilitycase against the physicianshould stand on its ownmerits, without the collateralevidence of “other acts.”404(b), the court found “the admission ofevidence of prior suits, instead of aiding thefact finder in its quest, tends to excite itsprejudice and mislead it.” Id. at 247.Failure to Pass a BoardCertification ExamIn Beis v. Dias, 859 S.W.2d 835 (Mo. Ct.App. 1993), a Missouri court held a physician’sinability to pass a certification licensureexamination did not make probablehis negligent performance of a specificprocedure. <strong>The</strong> plaintiffs had attemptedto connect the defendant’s “intellectualinability to pass medical test examinations”to the negligence alleged againsthim. <strong>The</strong> court ruled that evidence of thedefendant’s performance on the variousexaminations, even if logically relevant,had no probative force regarding the defendant’salleged negligence. Id. at 840.Felony ConvictionsA Missouri court held in Moran v. NorthCounty Neurosurgery, Inc., 714 S.W.2d 231(Mo. Ct. App. 1986), that a physician’sadmission that he had been convicted ofsome unidentified felonies was irrelevantto determining whether he had been negligentin treating a patient. Id. at 233.Substance Abuse and License SuspensionIn Taylor v. Cabell Huntington Hospital,48 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Inc., 208 W.Va. 128, 538 S.E.2d 719 (W.Va.2000). <strong>The</strong> court found, under West VirginiaRule of Evidence 404(b), that evidenceof a nurse’s prior substance abuse and herlicense suspension and probation had beenproperly excluded by the trial court. <strong>The</strong>court reasoned that evidence of the nurse’sprior Morphine addiction was irrelevant todetermining whether she had negligentlycombined two incompatible drugs.In King v. Ahrens, 16 F.3d 265 (8th Cir.1994), the court reasoned that courts mustview Federal Rule of Evidence 404(b) alongsidethe balancing requirements of FederalRule 403. <strong>The</strong> plaintiffs sought to introduceevidence of the physician’s past medicallicense suspension for overprescribingPercodan in a medical negligence case. <strong>The</strong>evidence was proffered to show that Dr.Ahrens, the defendant, had not innocentlyoverlooked the omission of Percodan fromthe medical chart, but rather that he intentionallytried to hide the prescription ofPercodan because of his past license suspensionfor overprescribing the drug. <strong>The</strong>plaintiffs argued that the prior license suspensionwas admissible under Federal Rule404(b), because it showed that Dr. Ahrenshad not made a “mistake” in failing to notecritical information in the medical chart.<strong>The</strong>ir theory was that Dr. Ahrens did notlist the Percodan in the chart because hehad been in trouble for overprescribing itbefore and wanted no record to show thathe was questionably prescribing it again.<strong>The</strong> ultimate issue at trial was whetherDr. Ahrens had provided negligent treatmentby failing to properly diagnose andhospitalize Mr. King, the plaintiffs’ relative,two days before his death. <strong>The</strong> pastlicense suspension was not directly relatedto the ultimate issue of negligence becausethe Percodan prescription was never indicatedas a cause of Mr. King’s death. Nevertheless,the plaintiffs argued that the pastlicense suspension tended to show that Dr.Ahrens would have had a reason to chooseinformation to record about a given case.<strong>The</strong>y further claimed that an intentionalomission assumed relevance to a person’scharacter, specifically, truthfulness. <strong>The</strong>refore,the license suspension had bearing towhether Dr. Ahrens had made a mistake orintentionally omitted Percodan from thechart or his credibility.<strong>The</strong> court found that the evidence “arguably”met the relevancy requirements ofboth Federal Rules 404(b) and 608(b).However, the court stated that further analysisof the probative value as opposed toits unfairly prejudicial effect under Rule403 was “integral” to ultimately determiningadmissibility. It noted that “the districtcourt “can and should exclude otherwiserelevant evidence ‘if its probative value issubstantially outweighed by the danger ofunfair prejudice….’” Evidence is unfairlyprejudicial for purposes of Rule 403 “whenit would influence the jury to decide thecase on an improper basis.” King v. Ahrens,16 F.3d at 269 (citations omitted).Applying Federal Rule 403, the courtconcluded that admitting the evidenceposed great danger that the jury might haveimproperly inferred that the doctor’s professionaljudgment and conduct must havebeen substandard solely because his licensehad been suspended in the past. “Given thedanger that this evidence might influencea jury to decide the case on an improperbasis and the great deference with whichwe reviewed this evidentiary ruling,” thecourt wrote, it found that the lower courthad not “abused its discretion in determiningthat the danger of prejudice outweighedthe probative value of the license suspension.”Id. at 270.In the same vein, in Maraziti v. Weber,185 Misc. 2d 624, 713 N.Y.S.2d 821 (Sup. Ct.Dutchess Co. 2000), a New York state courtconfronted whether a plaintiff suing a doctorfor medical malpractice could admitevidence of prior, unrelated, Department ofHealth, Office of Professional Misconduct(OPMC) disciplinary proceedings againsta defendant. In ruling the evidence inadmissible,the court explained that informationfrom reports of the OPMC unrelated tothe case would have marginal relevance,at best, but likely would unduly prejudicethe jury. <strong>The</strong> court concluded that the juryshould have the opportunity, or receiveimplicit encouragement, to assume that thefacts underlying one incident would necessarilygovern a finding about a subsequentincident, solely because the two eventswere substantively similar. To force the defendant“to justify any and all prior acts ofalleged medical misconduct regardless ofhow serious, trivial, or relevant they mightor might not be” would be fundamentallyunfair and distracting to the jury. Id.
More importantly, the court reasonedthat admitting that evidence would undulyprejudice the physician and threaten toconfuse or distract the jury, forcing thephysician to simultaneously defend againsttwo separate sets of claims and invitinga distracting “mini-trial” into the mainproceedings. Under those circumstances,whatever significance the evidence mighthave had was “substantially outweighed bythe danger of unfair prejudice, confusion ofthe issues, or misleading the jury,” whichwarranted excluding the evidence underevidentiary principles.Peer Review EvidenceA couple of Florida appellate decisionsshow the care courts exercised to preventplaintiffs from improperly injecting peerreview proceeding information into medicalnegligence actions. In Lingle v. Dion,776 So. 2d 1073 (Fla. Dist. Ct. App. 2001),the court reversed a verdict against a physicianafter the trial court had allowed crossexaminationof the physician, who hadbeen pro se, over whether his privileges hadbeen suspended by the hospital. <strong>The</strong> trialcourt erred in “in permitting testimony tobe presented concerning [the physician’s]peer review process, and… in instructingthe jury that the lack of staff privileges wasnegligence per se.”Similarly in Liberty Mutual InsuranceCo. v. Wolfson, 773 So. 2d 1272 (Fla. Dist.Ct. App. 2000), although strictly speakinga dispute between an insured and insurerrather than a medical liability case, a verdictwas reversed after defense counsel forthe insurer questioned a treating physicianfor the insured, in an attempt to impeachhim, about peer review and his suspendedprivileges. <strong>The</strong> court found error becausethe questioning had improperly attackedthe physician’s credibility and informationabout the peer review process was privilegedunder Florida Statute §766.101(5).Federal Rule of Evidence 404(b) does notalways preclude evidence of “other acts.” InMacsenti v. Becker, 237 F.3d 1223 (10th Cir.2001), the rule did not preclude admissionof a dentist’s drug use during the two weeksleading up to the medical care at issue. Inthat case a dental assistant testified thatapproximately 12 days before the event thatled to the suit, she had witnessed the defendantpassed out in a dental chair with anitrous oxide mask on his face. <strong>The</strong> dentistargued that the trial court only should haveadmitted evidence of events occurring onthe day of the plaintiff’s appointment, butthe Tenth Circuit found that the trial courthad not abused its discretion in finding thealleged drug relevant and had not undulyprejudiced the defendant. Id. at 1236–7.See also, Linton v. Davis, 887 N.E.2d 960(Ind. App. 2008) (“[W]e conclude that thelicensure status of a physician who givesan expert opinion is admissible to impeachthe doctor’s opinion. <strong>The</strong> Board’s specificfindings regarding the care of a particularpatient, however, are not admissible ina judicial proceeding.”).Using Federal Rule 404(b)or State Equivalents to LimitAdmissibility of “Other Acts” inNegligent Credentialing CasesLawyers defending negligent credentialingcases should use Federal Rule of Evidence404(b) or state equivalents to limitthe admissibility of the “other acts” of credentialedphysicians. <strong>The</strong> cases describedabove clearly indicated that courts are sensitiveto the prejudicial nature of physicians’and health care providers’ prior “badacts.” Evidence of a physician’s prior lawsuits,substance abuse, disciplinary actionsor felony convictions are highly inflammatoryif a plaintiff seeks to argue that thisevidence is in some way relevant to thealleged negligence in his or her specificcase. So, the position counsel in a negligentcredentialing case should take is thata court should not allow a plaintiff to circumventthe limits that rules of evidenceestablish in a “stand alone” medical liabilitycase by then allowing a plaintiff tointroduce that “other acts’ evidence in anegligent credentialing case. One commentatorhas succinctly described the issue:[N]egligent credentialing cases havemoved forward successfully, which hasnot only made hospitals nervous butdoctors as well. Certainly, because ofthem, physicians face a higher degree ofscrutiny, whichever side of the credentialingreview desk they find themselvessitting behind. And if they end up in acombined malpractice- negligent credentialingcase, they face an even grimmerprospect: defending themselvesagainst evidence that most courts wouldhave ruled out of bounds in a straightupmalpractice trial—prior malpracticeverdicts and settlements, past disciplinaryactions, and so forth. Unless themalpractice and negligent credentialingclaims are decoupled and tried separately,as some defense attorneys havesucceeded in doing, such evidence isvery much in bounds.Wayne J. Guglielmo, Negligent credentialing:Is the danger growing? Medical Economics,May 4, 2007.<strong>Defense</strong> counsel should prepare for aplaintiff ’s counsel to argue that “otheracts” evidence is admissible for purposesrelated to proving other elements of a claimagainst a hospital. Federal Rule of Evidence404(b) and similar state rules provide thebasis for admission of “other acts” evidence“for other purposes, such as proofof motive, opportunity, intent, preparation,plan, knowledge, identity, or absenceof mistake or accident,….” As a negligentcredentialing claim is based on a hospital’sknowledge or failure to obtain knowledgeof a physician’s shortcomings, “otheracts” evidence can loom large. <strong>For</strong> example,an Arizona appellate court affirmed theadmission of evidence of prior suits againsta physician because they were relevant toprove notice to the hospital. Purcell v. Zimbelman,500 P.2d 335 (Ariz. App. 1972).In Purcell v. Zimbelman the court wrote,“Since the negligence of the hospital waspredicated upon failure to perform its obligationto Zimbelman to see to it that onlyprofessionally competent persons were onits staff, it follows that its knowledge, actualor constructive, of Dr. Purcell’s shortcomings,was an essential element for considerationin determining whether or not thehospital exercised reasonable care or hadbeen guilty of negligence.” Id.<strong>The</strong> strongest and most effective positiondefense counsel can take to exclude evidenceof a physician’s “other acts” in a negligentcredentialing case is to couple Federal Ruleof Evidence 404(b) or state equivalents withbifurcation, discussed below.A Procedural Tool: RequestingBifurcation of a NegligentCredentialing ClaimEvidence of “other acts” in a negligent credentialingcase can create significant prejudicethat can overshadow the fundamental<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 49
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A W50 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>medical negligence issue that is at the coreof the action. As discussed above, a physician’snegligent act is the causal linkbetween the grant of credentials or privilegesand the patient’s injury.Bifurcation presents an opportunity todefuse this prejudice, fairly try the issue ofmedical negligence and lessen or eliminatethe bias presented by the evidence supportingthe claim of negligent credentialingand privileging. In Schelling v. Humphrey,916 N.E.2d 1029 (Ohio 2009), the SupremeCourt of Ohio faced a negligent credentialingclaim against a hospital, and the physicianinvolved did not participate in thetrial because he had declared bankruptcyand the trustee reached a settlement withthe plaintiffs.<strong>The</strong> hospital sought dismissal, arguingthat the plaintiffs could not sue the hospitalfor negligent credentialing for threereasons: (1) they must first, through either“adjudication or stipulation,” achieve a findingof fact that the physician had caused injuryto the patient at issue; (2) they could notsue for negligent credentialing because thephysician was not a party to the case; and(3) they no longer had a claim against thephysician. <strong>The</strong> question was, “when” must aplaintiff prove a defendant’s negligence? <strong>The</strong>Ohio Supreme Court held that the plaintiffscould pursue the negligent credentialing actionin the absence of the physician, provinghis malpractice as a causal element of theclaim against the hospital, even though thephysician was not a party to the case. Basedon the unusual fact pattern—the doctor’sbankruptcy and absence—the court foundthe impeded plaintiffs “should be permittedto prove that [the physician] committedmedical malpractice and that the allegedmalpractice caused the [patient’s] injury, asan element of their negligent credentialingclaim against the hospital.”<strong>The</strong> Schelling court, however, held thatbifurcating the medical negligence claimfrom the credentialing and privilegingclaim would avoid “the problem of juryconfusion or prejudice that may result fromadmitting evidence of prior acts of malpracticein a combined trial on both claims.Evidence of prior acts of malpractice by thedoctor may be relevant to a negligent credentialingclaim… but present the risk ofunfair prejudice in determining whetherthe doctor committed malpractice.” Moreover,if the jury found against the plaintiffsin the medical negligence action, the negligentcredentialing claim against the hospitalwould not have to proceed. See also,Dicks v. U.S. Health Corporation, 1996 WL263239 (Ohio Ct. App. 1996), appeal denied,77 Ohio St. 3d 1480, 673 N.E.2d 142 (1996).Two holdings in Schelling are significantto defending hospitals against claimsof negligent credentialing and privileging:(1) a plaintiff must prove negligence ofa physician as a causal element of a negligentcredentialing claim; and (2) the courtsshould bifurcate the medical negligenceclaim from the credentialing claim to “appropriately”determine malpractice “beforethe hospital must defend against therest of the negligent- credentialing claim.”Schelling v. Humphrey, 916 N.E.2d at 1037.If a physician is not a case party, as inSchelling, a hospital is required to defendthe underlying medical negligence action,regardless of bifurcation, however. Andif a court does bifurcate a trial, the courtshould permit the hospital to participatein all phases of the trial. See, Patterson v.Marshall, No. 2008-CA-000157, 2009 WL2341448 (Ky. Ct. App. <strong>July</strong> 31, 2009),Whether or not an allegedly negligentphysician is a party to an action, the bifurcationissue is extremely significant to theway an action is tried and to the potentiallyprejudicial effect of evidence supporting acredentialing and privileging allegation.<strong>The</strong> consensus among courts is thatdecisions about bifurcating these casesinvolve trial management, and as such, are“best left” to a trial court to decide. See,Larson v. Wasemiller, 738 N.W.2d 300, 313(Minn. 2007); Prissel v. Physicians Ins. Co.of Wisconsin, Inc., 269 Wis. 2d 541, 2004WI App 21, 674 N.W.2d 680 (Wis. Ct. App.2003), review denied, 273 Wis. 2d 655, 684N.W.2d 136 (Wis. Ct. App. 2004); Beavisex rel. Beavis v. Campbell County MemorialHosp., 2001 WY 32, 20 P.3d 508 (Wyo.2001); Neeble v. Sepulveda, 1999 WL 11710(Tex. App. Houston 1st Dist. 1999), reh’gdenied, 989 S.W. 390 (Tex. App. 1999); seealso, Talavera v. Arbit, 795 N.Y.S.2d 708(N.Y. App. Div. 2005) (affirming denial ofmotion to bifurcate where malpractice andnegligent credentialing claims were triedbefore different juries).In some jurisdictions, a court may decideto bifurcate a trial sua sponte. Andrewsv. Reynolds Memorial Hospital, Inc., 499S.E.2d 846 (W. Va. 1997). It follows thatdefense counsel should make a strong casefor bifurcation before a trial court as it willprove difficult to overturn an adverse rulingon appeal. Several cases offer guidanceabout how to convince a trial court thatbifurcation will avoid prejudice, expeditethe action and advance judicial economy.It goes without saying that most plaintiffs’counsel will vigorously oppose bifurcation.In Prissel v. Physicians Ins. Co. of Wisconsin,Inc., 269 Wis. 2d 541, 2003 WL22998133 (Wis. Ct. App. 2003), the courtindicated that courts deciding whether tobifurcate must consider the potential prejudiceto the parties, the complexity of theissues, the potential for jury confusion,and convenience, economy and delay. Ultimately,the court upheld the trial court’sdecision to bifurcate, noting that it would“shorten things up a lot, depending uponwhat the result is on the liability of the physician.”Id. at *4. Compare, Purcell v. Zimbelman,500 P.2d 335 (Ariz. Ct. App. 1972)(within discretion to deny severance). Similarly,in Beavis v. Campbell County MemorialHospital, 20 P.3d 508, 515 (Wyo. 2001),the Supreme Court of Wyoming addressedbifurcation under Rule 42(b) of the WyomingRules of Civil Procedure, whichstated, “<strong>The</strong> court, in furtherance of convenienceor to avoid prejudice, or when separatetrials will be conducive to expeditionand economy, may order a separate trial ofany claim… issue… or issues.” <strong>The</strong> Beaviscourt held that physician negligence combinedwith the standard of care instructionpresented a “distinct issue” for the jury toconsider. Id. Additionally, the court foundthat the physician negligence and the negligentcredentialing issues were not so interwoventhat bifurcating them denied theplaintiff a fair trial. Id. Rather, bifurcationmet the objectives of Wyoming Rule42, “to avoid prejudice (omitting potentiallyunfairly prejudicial evidence of [thephysician’s] qualifications and training)”and furthered “the general objectives… toassist in the just, speedy and inexpensivedetermination of litigation.” Id.In Neeble v. Sepulveda, 1999 WL 11710(Tex. App. 1999), reh’g denied, 989 S.W.390 (Tex. App. 1999), the court noted thata claim was properly severable if: “(1) thecontroversy involves more than one cause
of action; (2) the severed claim is one thatwould be the proper subject of a lawsuit ifindependently asserted; and (3) the severedclaim is not so interwoven with the remainingaction that they involve the same factsand issues.” Id. at *6. Likewise, the courtindicated the objective of severance was“to do justice, avoid prejudice, and furtherconvenience.” Id.<strong>The</strong> Neeble court noted that Rule 404(b)of Texas Rules of Evidence precluded aparty from using evidence of prior acts toprove that a person acted “in conformitywith the past conduct.” Id. Thus, prior malpracticesuits against the physician wereinadmissible in the malpractice portion ofthe trial, but admissible to prove negligentcredentialing against the hospital in thatportion of the trial. Id. Noting the undueprejudice that would result in trying theclaims simultaneously, the court affirmedthe trial court’s decision to bifurcate them.In Patterson v. Marshall, No. 2008-CA-000157, 2009 WL 2341448 (Ky. Ct. App.<strong>July</strong> 31, 2009), arising from a surgical malpracticeallegation, the court affirmed “trifurcation”:“<strong>The</strong> trial court ordered thatthe trial proceed in three stages before thesame jury. <strong>The</strong> medical negligence claimagainst Dr. Marshall would be tried first,including compensatory damages, withoutreference to the negligent credentialingclaim against Methodist Hospital. Ifthe jury found for the Pattersons, thenMethodist Hospital’s statute of limitationsdefense would be heard next. <strong>The</strong>n, if thedefense was not sustained, the negligentcredentialing claim would be tried.”<strong>The</strong> judge’s trial plan involved presentingthe issues to the same jury in threephases, and all parties were allowed toparticipate in each phase of the trial. <strong>The</strong>plaintiffs challenged the order allowingthe hospital to participate in the firststage, which involved the negligence claimagainst the physician.<strong>The</strong> trial court had also excluded all mattersregarding the physician’s employmenthistory, “including his loss of credentials atother hospitals and his credentialing files,”during the first phase, on the physician’smedical negligence, and denied the plaintiffs’motion to compel the hospital to producethe physician’s credentialing files andpeer review files.<strong>The</strong> appeals court, dealing with the challengeto the trial plan, stated that the trialcourt had properly exercised its discretion.As to the hospital’s participation in the firsttrial stage, the court stated:To prevent Methodist Hospital fromintroducing evidence of Dr. Marshall’scompliance with the standard of carewould have prevented Methodist Hospitalfrom defending itself against thenegligent credentialing claim under theprocedure utilized by the trial court.Moreover, review of voir dire belies thecontention that the jury was confusedby Methodist Hospital’s presence in thecase. <strong>The</strong> jury panel was informed thatthe case involved claims against bothDr. Marshall and Methodist Hospital.Counsel informed the jury that the trialwould occur in two phases and that thesame jury would hear both claims. <strong>The</strong>trial court did not abuse its discretionby allowing Methodist Hospital to participatein the medical negligence portionof the trial.On the trial court’s decision to excludeemployment and peer review evidence inthe first phase, the appeals court again heldthat the trial court had properly exerciseddiscretion, noting that<strong>The</strong> issue in the first phase of the trialwas whether Dr. Marshall deviatedfrom the standard of care in his postoperativetreatment of Claressia. <strong>The</strong>rewas no evidence that Dr. Marshall experiencedany disability during the timeperiod of Claressia’s treatment. <strong>The</strong> lossof Dr. Marshall’s privileges at two Alabamahospitals likewise had no bearingon his particular treatment of Claressia.<strong>The</strong> circumstances underlying Dr. Marshall’sprior loss of privileges would haveconfused the issues of medical negligenceand negligent credentialing. Dr.Marshall did not designate himself asan expert witness nor was he qualifiedas such. Dr. Marshall did not provideexpert opinion testimony. Dr. Marshallsimply related his factual observationsregarding the treatment of Claressia. <strong>The</strong>trial court did not abuse its discretion.Although its analysis was substantiallysimilar to decisions discussed above,at least one court has found bifurcationunnecessary. See, Corrigan v. MethodistHospital, 160 F.R.D. 55, 56 (E.D. Pa. 1995)(denying physicians’ motion to sever). InCorrigan, the court cited the followingthree factors that it considered in decidingwhether to bifurcate: (1) whether separatetrials would further the convenienceof the parties; (2) whether separate trialswould promote judicial economy; and (3)whether separate trials would avoid substantialprejudice to the parties. Id. (citingTri-R Sys. v. Friedman & Son, 94 F.R.D.726, 727 (D. Colo. 1982)) (holding the “merepossibility of some prejudice does not justifyseparate trials where such prejudice isnot substantial and there are strong countervailingconsiderations of economy”).Relying on federal authority, the courtnoted that federal courts generally orderseparate trials only when “clearly necessary,”and single trials “generally lessenthe delay expense, and inconvenience tothe parties and the courts.” Id. Despite theobvious evidentiary concerns—that evidenceof a physician’s prior malpracticeactions will “spill over” from a negligentcredentialing claim to an underlying malpracticeclaim—the court found only minimalpotential prejudice minimal. Id. at 58.Instead, the court held that a jury couldeasily differentiate the claims and issuingcautionary instructions to the jury couldeasily manage potential, lingering confusion.Id.When defending these cases, counselshould consider bifurcating both discoveryand trials. It makes sense to argueto bifurcate discovery, limiting the initialphase to the issues involved in themedical negligence claims. This approachwould focus discovery on the critical issuecommon to both claims—determiningwhether a physician has been negligent.It would also lessen credentialing discoveryexpense by postponing the need todepose those involved in the credentialingprocess, witnesses testifying on the physician’salleged defects and experts. In effect,stay the credentialing and privileging claimuntil the underlying malpractice case hasbeen resolved. If trying the underlying caseresults in a verdict for the plaintiff, then thesecond phase including discovery related tothe hospital claims, could commence.Splitting discovery, however, is ofteneasier said than done, particularly withtrial judges who hesitate to deny plaintiffsthe opportunity to advance their claims. InCredentialing, continued on page 91<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 51
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WTypical ComplicationsBy Brad W. Smith,W. Davis Fryeand Brad C. MoodyEnforcing ArbitrationAgreements in Long-Term Care LitigationPublic policyconsiderations, residentstatus as third-partybeneficiary, and FAAapplication are a few of thelegal arguments availableto compel arbitration.Although courts in many jurisdictions will enforce validand binding agreements to arbitrate between nursinghomes and their residents, it has become increasingly difficultto enforce an arbitration agreement when a contract■ W. Davis Frye and Bradley W. Smith areshareholders, and Brad C. Moody is anassociate, in the Jackson, Mississippi, officeof Baker, Donelson, Bearman, Caldwell &Berkowitz. Mr. Frye’s practice includes nursinghome litigation, medical negligenceclaims, and health care litigation. Mr. Smithhas experience defending professionalliability matters for physicians,hospitals and long-term care facilities.Mr. Moody’s practice focuseson health care and medical malpracticelitigation as well as commerciallitigation.was signed by someone other than the resident.An arbitration agreement’s enforceabilityis often complicated by the typicaladmissions process story. A family memberis riddled with guilt and anxiety aboutleaving a loved one in a nursing home. <strong>The</strong>admission paperwork is complicated andtedious, and the family member is distractedby concern for the resident whois confused by new surroundings and theblaring television of a new roommate. Afteran hour spent signing financial documents,the admission coordinator pushes an arbitrationagreement across the table andexplains that the optional agreement constitutesa waiver of the right to a jury trial.Not wanting to offend the nursing home’sstaff, the family member signs the agreementto avoid the embarrassment of askingthe meaning of the word “arbitration.”Six years later, the nursing home’s defenselawyer must petition a court to enforcethe arbitration agreement. However,at this time, the defense lawyer discoversthat the signing party did not have power ofattorney over the resident, no court authorizedthe signing party to act on behalf ofthe resident, no physician determined thatthe resident lacked the capacity to sign theagreement, and the forum specified in thearbitration agreement is no longer arbitratingmalpractice claims. Although this scenariomay result in a fast track to a trial byjury, the defense attorney can make somepractical arguments that may increase thelikelihood that a court will enforce theagreement and compel arbitration.<strong>The</strong> Legal Framework for EnforcingArbitration AgreementsBefore examining the practical argumentsthat may increase the likelihood that a courtwill enforce an arbitration agreement, it isimportant to understand the general frameworkfor enforcing arbitration agreements.Because arbitration provisions are contrac-52 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>
tual in nature their construction is a matterof contract interpretation. See, e.g., Seifertv. U.S. Home Corp., 750 So. 2d 633, 636(Fla. 1999). In many jurisdictions, to determinethe validity of a motion to compelarbitration, a court will analyze the factsto determine whether (1) a valid arbitrationagreement exists between the parties,(2) the parties’ dispute is within the scope ofthe arbitration agreement, and (3) the partyseeking to enforce an arbitration agreementhas waived the right to arbitrate. See, e.g.,Cmty. Care Ctr. of Vicksburg v. Mason, 966So. 2d 220, 225 (Miss. Ct. App. 2007); Blandex rel. Coker v. Health Care & RetirementCorp. of America, 927 So. 2d 252, 255 (Fla.Dist. Ct. App. 2006).When determining if a valid arbitrationagreement exists, courts will consider ordinaryprinciples of contract law to analyzewhether legal constraints external to theparties’ agreement foreclose arbitration ofthose claims. In re Kellogg Brown & Root,Inc., 166 S.W.3d 732, 738 (Tex. 2005). Inthis analysis, generally applicable contractdefenses, such as fraud, duress, and unconscionability,are frequently used to invalidatean arbitration agreement. See, e.g., Hillv. NHC Healthcare/Nashville, LLC, 2008WL 1901198, at *6 (Tenn. Ct. App. 2008).Additionally, whether a particular disputefalls within the scope of an arbitrationagreement depends wholly on the terms ofthe contract. Although courts will considerthe intent of the parties as manifested bythe terms of the contract and construe arbitrationagreements as broadly as the partiesobviously intended, they will likewisedeny a request for arbitration if the disputeis not contemplated by the terms of theagreement. Constantino v. Frechette, 897N.E. 2d 1262, 1265 (Mass. App. Ct. 2008).Finally, courts will consider whether anursing home has waived its right to arbitrateby failing to move timely to compel arbitrationor by actively participating in thelitigation process. See Pine Tree Villa, LLC v.Olson, 2009 WL 723034, at *2 (Ky. Ct. App.2009). In this analysis, courts will focus ona nursing home’s conduct before filing itsmotion to compel to determine whether itsactions, such as serving discovery or filingmotions without raising the right to arbitrate,are inconsistent with arbitration. SeeAlgayer v. Health Ctr. of Panama City, 866So. 2d 75, 77 (Fla. Dist. Ct. App. 2003).Framing the Public Policy ArgumentTo properly frame an argument in supportof arbitration, remember that public policyfavors arbitration as a means of dispute resolution.In fact, when analyzing arbitrationagreements between nursing homes andresidents, courts routinely cite the FederalArbitration Act (FAA) and the public policyfavoring arbitration. See, e.g., VicksburgPartners, LP v. Stephens, 911 So. 2d 507, 515(Miss. 2005), overruled on other grounds byCovenant Health & Rehab. of Picayune, LPv. Estate of Moulds ex rel. Braddock, 14 So.3d 695 (Miss. 2009).<strong>The</strong> FAA provides that “[a] written provisionin… a contract or transaction… tosettle by arbitration a controversy thereafterarising out of such contract… shall be valid,irrevocable and enforceable, save upon suchgrounds as exist at law or in equity for therevocation of any contract.” 9 U.S.C. §2(2006). In enacting the FAA, “Congress declareda national policy favoring arbitrationand withdrew the power of the statesto require a judicial forum for the resolutionof claims which the contracting partiesagreed to resolve by arbitration.” SouthlandCorp. v. Keating, 465 U.S. 1, 10 (1984). BecauseCongress derived its power to enactthe FAA from the Commerce Clause of theConstitution, the underlying admissionsagreement at issue must involve interstatecommerce for the FAA to apply. See TerminixInt’l, Inc. v. Rice, 904 So. 2d 1051, 1054(Miss. 2004). In many jurisdictions, it issettled that a nursing home admissionsagreement affects interstate commerce.See McGuffey Health & Rehab. Ctr. v. Gibson,864 So. 2d 1061, 1063 (Ala. 2003) (holdingthat “the [nursing home] admission[s]agreement had a substantial effect on interstatecommerce”); In re Nexion Health atHumble, Inc., 173 S.W.3d 67, 69 (Tex. 2005)(“because ‘commerce’ is broadly construed,the evidence of Medicare payments [to thefacility on the patient’s behalf] is sufficientto establish interstate commerce and theFAA’s application in this case”). In other jurisdictions,however, courts require an affidavitor witness testimony demonstratingthat the underlying transaction for nursinghome care between a nursing home and aresident involved interstate commerce. Thisevidence may include the fact that medicalsupplies are purchased out-of-state, nursinghome equipment is purchased from outof-statesuppliers, residents are from otherstates, nursing homes are almost completelycontrolled by federal regulations, and revenuecomes from federally funded Medicaidor Medicare. See, e.g., Owens v. Coosa ValleyHealth Care, Inc., 890 So. 2d 983, 987–88 (Ala. 2004).Regardless of the necessary proof, it isadvisable to establish that the FAA governsthe admissions agreement at issue to benefitfrom the clear, statutory pronouncementfavoring arbitration. In fact, the FAA hasbeen used successfully by defense attorneysto preempt state statutes that invalidatearbitration provisions in nursing homeadmission agreements. See, e.g., Fosler v.Midwest Care Center II, Inc., N.E.2d, <strong>2010</strong>WL 1286880, at *8 (Ill. App. Ct. <strong>2010</strong>).Furthermore, many jurisdictions haverecognized that policy has favored arbitrationand firmly embedded arbitration inboth federal and state law. After all, arbitrationprovides parties with an expeditiousand economical means of resolvinga dispute while, at the same time, unburdeningcrowded court dockets. In light ofthe strong presumption favoring arbitration,many courts have held that “all doubtsshould be resolved in its favor.” Hayes v.Oakridge Home, 908 N.E. 2d 408, 412 (Ohio2009). <strong>The</strong>refore, when arguing in favor ofan arbitration agreement, a defense attorneyshould emphasize the policy favoringarbitration and ask a court to “apply thepolicy of the FAA to ‘rigorously enforceagreements to arbitrate.’” <strong>For</strong>est Hill NursingCtr., Inc. v. McFarlan, 995 So. 2d 775,779 (Miss. Ct. App. 2008).<strong>The</strong> Resident as ThirdpartyBeneficiaryFrequently, family members admit theirloved ones to nursing homes and signadmission documents on behalf of the residentswho benefit from the nursing homes’services. Acknowledging this reality, courtsin some jurisdictions have enforced arbitrationagreements against non- signatoriesby determining that residents were thirdpartybeneficiaries of the arbitration agreements.See, e.g., Alterra Healthcare Corp. v.Estate of Linton ex rel. Graham, 953 So. 2d574, 579 (Fla. Dist. Ct. App. 2007).<strong>For</strong> example, in <strong>For</strong>est Hill Nursing Center,Inc. v. McFarlan, 995 So. 2d 775, 779(Miss. Ct. App. 2008), the plaintiff’s grand-<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 53
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wdaughter, as the “responsible party,” signedthe necessary paperwork to admit theplaintiff to a nursing home, including anadmission agreement, which contained anarbitration provision. <strong>The</strong> appellate courtspecifically held that an agency relationshiphad not existed between the plaintiffand her granddaughter, which wouldhave bound the plaintiff to the terms of theadmission agreement. However, the courtdetermined that the arbitration provisionwas enforceable because the plaintiff wasthe third-party beneficiary of the agreement.<strong>The</strong> admission agreement containedthe plaintiff’s name at the top of the agreementas the resident admitted to the nursinghome. Additionally, the language ofthe admission agreement referred to therights and responsibilities of both the residentand the responsible party. Finally, thecourt recognized that the benefits of residingin the nursing home flowed directly tothe plaintiff as a result of the admissionagreement. Based on these facts, the courtheld that the plaintiff was “an intendedthird-party beneficiary of the agreementbetween [the nursing home] and [the plaintiff’sgranddaughter]; thus, [the plaintiff]is bound by the terms of the contract, includingthe agreement to arbitrate any legaldisputes related to the contract.” Id. at 783.In the nursing home context, a defenseattorney can easily establish that an admissionagreement was executed for the resident’sbenefit. However, if an arbitrationagreement is separate and distinct fromthe admission agreement or if executingan arbitration provision has not been a preconditionto admission, courts have beenless likely to require arbitration under thethird-party beneficiary theory. Accordingto some courts, if executing an arbitrationagreement is not required as part ofthe consideration for a resident to receiveservices from a nursing home, the residentwould not benefit from it, and the residentwould not be deemed a third party beneficiaryof the agreement. Monticello Cmty.Care Ctr., LLC v. Estate of Martin ex rel.Peyton, 17 So. 3d 172, 179 (Miss. Ct. App.2009). See also Beverly Health & Rehab.Servs., Inc. v. Smith, S.W.3d , 2009WL 961056, at *3 (Ky. Ct. App. 2009) (holdingthat an arbitration agreement was notenforceable because it was not a preconditionto the admission of the resident and,54 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>therefore, the resident “derived no benefitfrom the arbitration agreement”).<strong>The</strong> Family Member asHealth Care SurrogateNine states have passed the Uniform Health-Care Decisions Act (UHCDA), which was introducedby the National Conference ofCommissioners on Uniform State Laws in1993. See A Few Facts About the UniformHealth-Care Decisions Act, http://www.nccusl.org/update/uniformact_ factsheets/uniformacts-fsuhcda.asp.Although a number of those statesmodified this uniform act before adoptingit, the majority of the statutes contain languagestating that a surrogate may makehealth care decisions on behalf of an incapacitatednursing home resident: “A surrogatemay make a health-care decision for apatient who is an adult or emancipated minorif the patient has been determined bythe primary physician to lack capacity andno agent or guardian has been appointedor the agent or guardian is not reasonablyavailable.” Unif. Health-Care DecisionsAct §5 (1993). Further, among states thatdid not adopt the uniform act, most havepassed legislation similarly vesting surrogateauthority in certain persons if a residentis incapacitated. See, e.g., Ariz. Rev.Stat. §36-3231; Cal. Health & SafetyCode §1418.8; Colo. Rev. Stat. §15-18.5-103, 104; Fla. Stat. Ann. §765.401; IdahoCode §39-4504; 755 Ill. Comp. Stat. 40/25;Ind. Code §16-36-1-5; La. Rev. Stat. Ann.§40:1299.53; S.C. Code Ann. §44-66-30;Tenn. Code Ann. §68-11-1801, et seq.; Tex.Health & Safety Code Ann. §313.004. Asa result, in some jurisdictions, defense attorneysmay use surrogacy statutes to enforcearbitration agreements signed on behalf ofincapacitated nursing home residents.However, the ability of health care surrogates,as defined by the UHCDA, to bindnursing home residents to arbitrationagreements has been successfully attackeddue to two factors. First, courts have classifiedarbitration agreements as somethingother than health care related decisions.See, e.g., Covenant Health & Rehab. of Picayune,L.P. v. Lambert, 984 So. 2d 283, 287(Miss. Ct. App. 2006); Lujan v. Life CareCenters of Am., 222 P.3d 970, 975 (Colo. Ct.App. 2009); In re Ledet, 2004 WL 2945699,at *4 (Tex. Civ. App. 2004). Second, in somecases nursing homes did not have evidencethat nursing home residents lacks capacity.See Grenada Living Ctr., LLC v. Coleman,961 So. 2d 33 (Miss. 2007); Barbee v. KindredHealthcare Operating, Inc., 2008 WL4615858, at *12 (Tenn. Ct. App. 2008).Unfortunately, courts have inconsistentlyclassified arbitration agreementsas “health-care decisions.” <strong>For</strong> instance, aCalifornia court held that signing an arbitrationagreement while admitting a familymember to a nursing home was not ahealth care decision under a Californiastatute authorizing a family member tomake health care decisions for incapacitatedpatients. Flores v. Evergreen at SanDiego, LLC, 55 Cal. Rptr. 3d 823, 832 (Cal.Ct. App. 2007). In contrast, Mississippi lawholds that the act of executing an arbitrationagreement is a “health-care decision”if “the arbitration provision was an essentialpart of the consideration for the receiptof ‘health care.’” Miss. Care Ctr. of Greenville,LLC v. Hinyub, 975 So. 2d 211, 218(Miss. 2008). Stated differently, if executingan arbitration agreement is a preconditionto admission, the courts of Mississippi willconsider it a health care decision. However,if a health care surrogate is not required tosign an arbitration agreement to admit aresident to a nursing home, the agreementto arbitrate is not a “healthcare decision.”Id. Of course, this “take it or leave it” arbitrationagreement is a contract of adhesion,and a nursing home must take special precautionsto avoid a finding from a court ofprocedural unconscionability.In addition a resident’s mental capacityat the time of admission is critical to establishinga health care surrogate’s authority.Under the UHCDA, a resident cannot havea health care surrogate unless he or she is“determined by the primary physician tolack capacity.” See Unif. Health Care DecisionsAct §5(a) (1993). See also AlaskaStat. §13.52.030; Del. Code Ann. tit. 16,§2507; Me. Rev. Stat. Ann. tit. 18-A, §5-805; Miss. Code Ann. §41-41-211; N.M.Stat. Ann. §24-7A-5, 11; Wyo. Stat. Ann.§35-22-406. “Capacity” is defined as “anindividual’s ability to understand the significantbenefits, risks, and alternatives toproposed health care and to make and communicatea health care decision.” See Unif.Health-Care Decisions Act §1(3) (1993). Asa result, some courts have denied enforcementof arbitration agreements if a family
member signed the agreement on behalf ofa resident if the resident’s primary physicianfailed to determine the resident’s capacity.Hinyub, 975 So. 2d at 218. See also<strong>For</strong>est Hill Nursing Ctr., Inc. v. McFarlan,995 So. 2d 775, 780 (Miss. Ct. App. 2008)(holding that the Unif. Health Care DecisionsAct may not be used to bind a nursinghome resident to an arbitration agreementwithout evidence that a physician had determinedthat the resident was incapacitated);Barbee, 2008 WL 4615858, at *12 (same).Finally, to enforce an arbitration agreementthrough the UHCDA, the appropriatefamily member must have signed theagreement to arbitrate. According to theuniform act, a resident may “designate anyindividual to act as a surrogate by personallyinforming the supervising health careprovider.” See Unif. Health Care DecisionsAct §5(a) (1993). Absent a designation,or if a designee is not reasonably available,“any member of the following classesof the patient’s family who is reasonablyavailable, in descending order of priority,may act as surrogate: (a) the spouse, unlesslegally separated; (b) an adult child; (c) aparent; or (d) an adult brother or sister.” Id.at §5(b). If none of these individuals is “reasonablyavailable,” then “an adult who hasexhibited special care and concern for thepatient, who is familiar with the patient’spersonal values, and who is reasonablyavailable may act as surrogate.” Id. Basedon these requirements, if a spouse, adultchild, parent, or adult sibling is unavailableto sign an arbitration agreement as anincapacitated resident’s surrogate, a nursinghome must document the relationshipof the person signing the arbitration agreementon behalf of the resident. Otherwise,courts generally will not enforce the agreement.See Compere’s Nursing Home, Inc. v.Estate of Farish ex rel. Lewis, 982 So. 2d382, 384 (Miss. 2008) (holding that a resident’snephew did not meet the statutoryrequirements of a health care surrogatebecause no evidence had been presentedthat he exhibited special care and concernfor the resident or that he was familiar withthe resident’s personal values).••••• <strong>The</strong> <strong>DRI</strong> <strong>Defense</strong> Library Series<strong>DRI</strong> <strong>Defense</strong>Practitioner’s Guide toMedicare SecondaryPayer IssuesChicago, I linoisDealing with UnavailableDesignated <strong>For</strong>umsMany arbitration agreements include provisionsdesignating a particular organization,such as the National Arbitration<strong>For</strong>um (NAF) or the American ArbitrationAssociation (AAA), as the requisiteforum for arbitration proceeding. However,the NAF announced in <strong>July</strong> 2009 thatit would no longer administer these arbitrations.See National Arbitration <strong>For</strong>umto Cease Administering All Consumer Arbitrationsin Response to Mounting Legal andLegislative Challenges, National Arbitration<strong>For</strong>um, <strong>July</strong> 19, 2009, http://www.adrforum.com/newsroom.aspx?itemID=1528. Likewise,the AAA no longer administers arbitrationproceedings involving disputes betweennursing homes and their residents. SeeHealthcare Policy Statement, AmericanArbitration Association, http://www.adr.org/sp.asp?id=32192.Even so, some courts have enforcedarbitration agreements that require usingforums that are no longer available. Inthose cases, courts sometimes will enforcearbitration agreements after using boilerplate,severability clauses frequentlyincluded in arbitration agreements to severparticular, contractually required forumsfrom the agreements. Fellerman v. Am.Retirement Corp., <strong>2010</strong> WL 1780406, at *5(E.D. Va. <strong>2010</strong>); Broughsville v. OHECC,LLC, 2005 WL 3483777, at *7 (Ohio Ct. App.2005). In other cases, courts have invokedprovisions of the FAA to substitute arbitratorsnamed in agreements. More specifically,9 U.S.C. §5 allows courts to appointsubstitute arbitrators if “for any [] reasonthere shall be a lapse in the naming of anarbitrator….” In accordance with that statutoryprovision, courts have ordered partiesto arbitrate disputes after appointingsubstitute arbitrators. See Jones v. GGNSCPierre, LLC, <strong>2010</strong> WL 427648, at **5–6 (D.S.D. <strong>2010</strong>); Jones Estate of Eckstein v. LifeCare Centers of Am., Inc., 623 F. Supp. 2d1235, 1238 (E.D. Wash. 2009).In contrast, some courts have invalidatedarbitration agreements outrightbecause they required that either the NA<strong>For</strong> AAA serve as the administrators. SeeRanzy v. Extra Cash of Tex., <strong>2010</strong> WL936471, at *5 (S.D. Tex. <strong>2010</strong>) (refusing toenforce an arbitration agreement requiringthe use of the NAF); Covenant Health& Rehab. of Picayune, LP v. Moulds, 14So. 3d 695, 708 (Miss. 2009) (holding thatan arbitration agreement was unenforceablebecause it required use of the AAA toadministrator the arbitration proceedings).In those decisions, courts determined thatthe choice of a forum was an integral partof the agreement and that the unavailabilityof the forum frustrated the purpose ofthe arbitration contract.Preparing for a Claim ofUnconscionabilityIn an effort to avoid arbitration agreements,plaintiffs frequently raise unconscionabilityas a defense. Although courtsoften recognize that arbitration agreementsare not per se unconscionable, a court mayfind unconscionability under general contractprinciples, invalidating an arbitrationagreement without offending the FAA. <strong>For</strong>that reason, a defense attorney must pre-<strong>DRI</strong> <strong>Defense</strong> Practitioner’s Guide toMedicare Secondary Payer IssuesExclusive publication offered to <strong>DRI</strong> members only.This resource is designed to assist defense attorneys and their clients inunderstanding the complex and sometimes confusing laws, regulations,guidelines and practices governing Medicare Secondary Payerissues and Mandatory Insurer Reporting. It was written by attorneyswith broad experience in dealing with MSP matters, and will be updated periodically.Available for purchase at www.dri.org at just $75 for an annual subscription.Non- subscription CDs are also available for purchase for $50. Note: You mustlogin to your member account to purchase this subscription online.Please contact <strong>DRI</strong> Customer Serviceat 312.795.1101 to order additional copiesfor your clients.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 55
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wpare to address both procedural and substantiveunconscionability when moving toenforce an arbitration agreement.Procedural UnconscionabilityWith an arbitration agreement, a plaintiff’scounsel may prove procedural unconscionabilityby demonstrating that the familymember who signed the arbitration agreementlacked knowledge or voluntariness.In analyzing this defense, courts considerwhether an arbitration provision was presentedin inconspicuous print and whetheran agreement was drafted in complex orlegalistic terms that are difficult for a layperson to understand. See, e.g., Shotts v. OPWinter Haven, Inc., 988 So. 2d 639, 641–42(Fla. Dist. Ct. App. 2008) (finding an arbitrationprovision valid when it has beenworded clearly and separated and conspicuousfrom other admission documents).Courts also consider whether a disparityexists in the sophistication or bargainingpower of the parties and whether the individualsigning the agreement lacked opportunityto study the contract and inquireabout its terms. See Romano ex rel. Romanov. Manor Care, Inc., 861 So. 2d 59, 63–64(Fla. Dist. Ct. App. 2003) (finding an arbitrationprovision invalid since both thehusband and resident were elderly andthe defense failed to show that the husbandhad the legal training to understandagreement); c.f. Hayes v. Oakridge Home,908 N.E.2d 408, 413–14 (Ohio 2009) (findingan arbitration agreement was not procedurallyunconscionable solely becausethe resident was 95 years old). Additionally,courts frequently consider whetherthe family member executing the agreementwas granted the opportunity to seeklegal counsel, whether signing the agreementwas a precondition to admission, andwhether the contract could be rescinded.See, e.g., Small v. HCF of Perrysburg, Inc.,823 N.E.2d 19, 24 (Ohio Ct. App. 2004)(finding an agreement invalid when thewife executed it without an attorney present);Prieto v. Healthcare and RetirementCorp. of America, 919 So. 2d 531, 533 (Fla.Dist. Ct. App. 2005) (finding an agreementprocedurally unconscionable when a signaturewas required to complete admissionprocess); Miller v. Cotter, 863 N.E.2d 537,546–47 (Mass. 2007) (finding an agreementenforceable when it explicitly was56 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>not a condition of admission); see Estate ofMooring v. Kindred Nursing Ctrs., 2009 WL130184, at *4 (Tenn. Ct. App. 2009) (findingthat an arbitration agreement was nota contract of adhesion when it provided athirty- day rescission period).Procedural unconscionability is mostapparent in contracts of adhesion when anadmission agreement containing an arbitrationprovision is presented on a “take itor leave it” basis. However, an arbitrationagreement that is included in a contractof adhesion should not, by itself, renderthe agreement procedurally unconscionable.Before invalidating a non-negotiablearbitration agreement, a court mustfind that the weaker party, frequently thefamily member, was prevented by marketfactors, timing, or other pressures fromcontracting with another nursing home onmore favorable terms.At the same time, a court may havequalms about enforcing an arbitrationagreement signed by a family member onbehalf of a resident if the arbitration provisionis not a precondition to admission.Importantly, therefore, make an arbitrationprovision easy to understand and print thearbitration provision in bold, large, typefaceso it is easily discernable. Additionally,because most family members feel pressurewhen admitting a resident to a longtermcare facility, a nursing home shouldconsider adding language to an arbitrationagreement that, if a resident or a familymember does not agree to arbitrate, thefacility will assist the resident with findingalternate placement. In this manner,the nursing home can defend itself againsta claim that the arbitration provision wasincluded in a contract of adhesion at atime when the resident or his or her familywas prevented from negotiating betterterms with another provider due to marketpressures.Substantive UnconscionabilityPlaintiffs’ counsel often attempt to provesubstantive unconscionability by arguingthat the terms of an arbitration agreementare unfair or oppressive. Primaryindicators of substantive unconscionabilityinclude contract terms that limit damagesor eligible claims and terms that waiveliability. See Covenant Health & Rehabilitationof Picayune, LP v. Estate of Moulds,ex rel Braddock, 14 So. 3d 695, 702 (Miss.2009) (finding an arbitration agreementsubstantively unconscionable when theprovision awarded all costs to the otherparty if one party failed to comply witharbitration procedures); <strong>For</strong>tune v. CastleNursing Homes, Inc., 843 N.E.2d 1216,1220–21 (Ohio Ct. App. 2005) (invalidatingas substantively unconscionable a loserpaysprovision since it would have a stiflingeffect).When reviewing a contract for substantiveunconscionability, courts examine theagreement to determine whether abusiveterms exist that violate the expectationsof, or cause gross disparity between, thecontracting parties. Courts generally findsubstantive unconscionability when anagreement provides an award of attorneyfees to the prevailing party or limits or barscertain damages. See Prieto, 919 So. 2d at533 (finding substantively unconscionablean agreement limiting non- economic damagesand barring punitive damages andattorneys’ fees); But see Hayes, 908 N.E. 2dat 415 (enforcing an agreement in which apunitive damage waiver applied to a residentsince the nursing home also waiveda statutory right to seek costs and attorneys’fees and seek dismissal). If abusiveor restrictive terms exist in an arbitrationagreement, a practitioner should argue thatthe court may sever these provisions fromthe agreement so that the overall purposeof the contract—arbitrating a resident’sclaims against a nursing home—may beeffectuated.ConclusionIt is becoming increasingly difficult fornursing homes to enforce arbitration agreementsthat are signed by someone otherthan a competent resident. However, courtshave enforced these agreements based ona range of legal arguments, including thatpublic policy favors arbitration, the FederalArbitration Act applies, a resident benefitsfrom an agreement as a third party, and asurrogacy statute supports arbitration. Aprudent practitioner will raise as many ofthe applicable arguments as possible whenmoving to enforce an arbitration agreementthat was never signed by a nursinghome resident to assist a nursing home toreap the benefits of arbitration and avoidthe risk associated with a jury trial.
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A WStaying Out of theRabbit HoleBy John Zen Jacksonand Ann Marie Vaurio<strong>The</strong> Entanglementsof Altered MedicalRecordsO, what a tangled webwe weave,When first wepractise to deceive!Sir Walter Scott,Marmion, Canto XVIIRisk management professionals and medical liabilitydefense counsel consistently utter a mantra regarding theimportance of keeping medical records and documentation.A good medical record is key to a good medicaldefense in malpractice litigation. Gooddocumentation provides a durable, contemporaneousrecord of what happened interms of history, examination, assessment,and treatment. It also provides a frameworkfor the retrospective evaluation of thehealth care professional’s judgment, a riskbenefitanalysis, and the patient’s participationin and consent to the treatment plan.Even when a decision- making error resultsin an adverse outcome, there is substantialempirical support that if the reasoningis articulated and the justification for anintervention appears reasonable, the casecan be successfully defended.While the aphorism “if it isn’t writtendown, it didn’t happen” at first appearsgrounded in common sense, it is nonethelessan overstatement. Unfortunately, thenotion that an unrecorded event will beassumed to have not occurred has pressuredphysicians and other health careprofessionals to engage in problematicand dangerous behavior—altering medicalrecords. To speak of “altering” recordsimplies inappropriate tampering. As wewill discuss below, some circumstancesmight warrant adding to or correcting anentry in a medical chart. But even thosetypes of alterations or corrections can createserious problems in a medical malpracticecase. <strong>Defense</strong> counsel can havean important role in helping physicians torecognize distinctions and avoid potentiallegal problems.<strong>The</strong> alteration of medical records cantake many forms. It can consist of addingtruthful information at a later dateor placing inaccurate information into achart after the fact. A record may be datedto make it appear that it had been writtenat an earlier time. Substitute pages may becreated. A record may be destroyed. <strong>The</strong>reare a variety of legal entanglements thatmay follow this behavior. None of themare good.Discovery of altered records can occurin a variety of ways. Copies of medicalrecords are often made for insurance orreimbursement purposes and distributed■ John Zen Jackson is a member of the <strong>DRI</strong> Medical Liability and Health Care Law Committee. He is certifiedby the Supreme Court of New Jersey as a civil trial attorney and is a principal of the health care law firmof Kalison, McBride, Jackson & Robertson, P.C., in Warren, New Jersey. Ann Marie Vaurio is special counselto the firm.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 57
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wbefore a lawsuit is even contemplated, andthese copies can surface after a lawsuithas been filed and the altered documentshave been produced in discovery. Documentexaminers can inspect paper andink, using sophisticated electronic equipmentto determine the age of the ink andthe paper and sometimes finding that thematerials were not even available when aRecord tamperingcomplicates a successfuldefense of a malpracticecase and raises questionsabout the quality of carethat a physician rendered.chart entry was supposedly made. <strong>For</strong>ensicexperts readily detect changes made tomedical records kept on computer disks.In New Jersey and elsewhere alteringa medical record can constitute a criminalact and violate several, different laws.<strong>The</strong> criminal statutes generally focus onfraudulent and purposeful conduct. <strong>For</strong>instance, in New Jersey a person commitsthe offense of tampering with evidencewhen he or she alters, destroys, conceals,or removes any record or document “withpurpose to impair its verity or availability,”believing that an official proceeding—whichincludes a judicial proceedingsuch as a lawsuit—is pending or is aboutto be started. N.J.S.A. 2C:28-6. One statutespecifically addressing medical recordsstates that the alteration must be done “inorder to deceive or mislead any person asto information, including, but not limitedto, a diagnosis, test, medication, treatmentor medical or psychological history,concerning the patient.” N.J.S.A. 2C:21-4.1. See also State v. Amabile, 2006 N.J.Super. Unpub. Lexis 116, 2006 WL 853199(N.J. Super. Ct. App. Div. 2006) (optometristfalsified patient records to defraudinsurance companies). Health care claimsfraud sometimes involves medical recordsalteration. N.J.S.A. 2C:21-4.3. When false58 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>records are used in connection with reimbursementclaims, the provisions of theInsurance Fraud Prevention Act may beinvoked. N.J.S.A. 17:33-1. This provides fortreble damages and civil monetary penalties,as well as the assessment of attorneys’fees and costs. In addition, the FederalFalse Claims Act, 31 U.S.C. §3729(a)(1)(B)and (G), and the recently enacted New JerseyFalse Claims Act, N.J.S.A. 2A:32C-3(b),may be triggered when false records andgovernmental sources of reimbursementare involved. <strong>The</strong>se also provide for theenhanced recovery of treble damages andcivil monetary penalties for each violation.Criminal conviction, especially a convictioninvolving the practice of medicine,places a physician’s licensure at risk.N.J.S.A. 45:1-21(f). But even without criminalentanglement, this type of conductalone can result in disciplinary proceedingsand licensure action by a state’s boardof medical examiners. In 1976, a surgeonin New Jersey was charged with murderingpatients with curare. <strong>The</strong> deaths hadoccurred nearly a decade before. Althoughthe surgeon was acquitted of the criminalcharges, his New Jersey license was revoked.<strong>The</strong> board of medical examiners found thathe had made false entries in operative reportsfor the purpose of self- protection.At the time, the board had no regulationsspecifically dealing with record keeping. Itconcluded that the surgeon’s false entriesdemonstrated a lack of the good moralcharacter required for continued licensure.<strong>The</strong> revocation was upheld on appeal to thecourt. In re Jascalaveich, 442 A.2d 635 (N.J.Super. Ct. App. Div. 1982). In its opinion theappellate court emphasized that the physiciantampered with the integrity of a patient’smedical records:We are persuaded that a physician’s dutyto a patient cannot but encompass his affirmativeobligation to maintain the integrity,accuracy, truth and reliability ofthe patient’s medical record. His obligationin this regard is no less compellingthan his duties respecting diagnosis andtreatment of the patient since the medicalcommunity must, of necessity, beable to rely on those records in the continuingand future care of that patient.Obviously, the rendering of that care isprejudiced by anything in those recordswhich is false, misleading or inaccurate.We hold, therefore, that deliberate falsificationby a physician of his patient’s medicalrecord, particularly when the reasontherefor is to protect his own interests atthe expense of his patient’s, must be regardedas gross malpractice endangeringthe health or life of his patient.Id. at 645.<strong>The</strong> New Jersey State Board of MedicalExaminers now has a regulation explicitlyrequiring practitioners to maintain “accurate”and “contemporaneous” records.N.J.A.C. 13:35-6.5. This regulatory requirementhas periodically been a source of disciplinaryaction. See, e.g., In re Perera, 2009N.J. Super. Unpub. Lexis 930, 2009 WL874471 (N.J. Super. Ct. App. Div. 2009). Seealso In re Zahl, 895 A.2d 437 (N.J. 2006).In addition to impacting a medical malpracticecase, altered records can becomethe basis for a claim for the tort of spoliationfor fraudulent concealment if thealterations deprived a patient of proof for aclaim for improper treatment. Rosenblitt v.Zimmerman, 766 A.2d 749 (2001). <strong>The</strong> spoliationclaim may expose a medical practitionerto punitive damages.Finding and exposing an alteration inmedical records is a significant and dramaticevent in litigation, especially in connectionwith medical malpractice claims.Unsurprisingly, this so-called “badgeof fraud” can drastically affect witnesscredibility.Record tampering complicates a successfuldefense of a malpractice case andraises questions about the quality of carethat a physician rendered. Indeed, it mayplace a physician’s presumed defense withan insurance- assigned attorney in jeopardy.Some professional liability insurancepolicies contain provisions that would voidcoverage if there had been records alterations.Compare Eastern Dentists Ins. Co. v.Lindsay, 2004 Mass. Super. Lexis 345, 2004WL 2004778 (Mass. Super. Ct. 2004) withEastern Dentists Ins. Co. v. Jones, 74 Pa.D&C 4th 244, 2005 Phila. Ct. Com. Pl. Lexis305 (Pa. C.P. 2005). Given that malpracticecoverage is mandatory, it is unclear,if an insurer of New Jersey physicians canrescind coverage once a physician submitsan insurance claim. In any event, aninsurer will not very likely renew coveragewhen it must pay to settle a case because aphysician altered a record.
Deliberate falsification unfortunatelydoes occur. One particularly egregious exampleinvolved the death of a young psychiatricpatient who was placed in a seclusionroom in a highly agitated and psychoticstate. A few hours later she was found in thein the room with her head wedged betweenthe side rail and the mattress of her bed,unconscious, with no pulse, blood pressure,or respiratory function. During a periodof nearly four hours no staff memberentered the patient’s room or had any personalcontact with her to assess her mentalcondition or alleviate her agitation. A fewdays after the patient was injured, the directorof nursing at the hospital ordered theentire staff who had written in her chart torewrite and change the hospital records pertainingto the care that the patient receivedon the morning of her death. <strong>The</strong> originalrecords were surreptitiously removed fromthe chart and “revised” records were substitutedwithout the knowledge of the hospitaladministration, explicitly violating hospitalpolicy. <strong>The</strong> substituted records conflictedwith other records and the testimony of staffmembers on duty that morning about theiractual observations. <strong>The</strong> revised recordscame to light after the lawsuit was filedwhen a nurse unconnected with the psychiatricunit brought to the attention of thehospital administration that she had beenforced to rewrite a note. As stated by thecourt on appeal, “<strong>The</strong> trial court instructedthe jury without objection that they couldconsider the substitution of the records asa circumstance indicating the defendant’sconsciousness of negligence.” Pisel v. StamfordHospital, 430 A.2d 1, 6 (Conn. 1980).In the leading New Jersey case, Rosenblittv. Zimmerman, 766 A.2d 749 (N.J. 2001),the New Jersey Supreme Court began itsopinion by stating that “[t]his case involvesa physician who deliberately destroyed andaltered medical records in anticipation of apatient’s malpractice lawsuit against him.”<strong>The</strong> physician had delayed responding to arecord request, altered some records, anddestroyed others. Because the patient had“by happenstance” obtained a set of unalteredrecords before filing the lawsuit, thecourt concluded that an action for spoliationand fraudulent concealment wasimpermissible because the patient still hadaccess to unaltered records to establish themalpractice claim. However, the court thendiscussed using evidence of alteration toaffect the jury’s credibility determinationsregarding the defendant. It stated:Absent extraordinary circumstances,evidence of intentional alteration ordestruction of medical records by a physicianaccused of malpractice shouldnot be excluded under N.J.R.E. 403 [asunduly prejudicial]. <strong>The</strong> mere fact that“evidence is shrouded with unsavoryimplications is no reason for exclusionwhen it is a significant part of the proof.”<strong>The</strong> defendant in Rosenblitt had admittedaltering the record in an effort by counselto exclude this evidence by making it“immaterial,” but the court rejected thetactic. A plaintiff’s attorney may not alwayshave such direct proof of spoliation conduct;however, if a plaintiff’s attorney presentsmore than a speculative allegation ofalteration, a court probably will not bar himor her from raising the issue and presentingit to a jury. A judge likely will tell the jurythat the alteration of medical records isadmissible as evidence of a defendant’s ownbelief that the actual records do not supporthis or her defense, and if it finds thatthe physician altered the medical recordswith the intent to deceive or mislead, thejury may infer that the alteration of therecords in this case occurred because thedefendant believed that the original recordwould have been unfavorable in the trialof the matter. New Jersey Model Civil JuryCharge 5.50H (<strong>July</strong> 2002).More recently, a woman sued her internistfor failing to diagnose a vascularmalformation in her head. Gonzalez v.Agarwal, 2006 N.J. Super. Unpub. Lexis803, 2006 WL 158641 (N.J. Super. Ct. App.Div. 2006), cert. denied, 186 N.J. 604, 897A.2d 1059 (2006). She had sought treatmentfrom the internist for several monthsand complained repeatedly and increasinglyabout headaches. <strong>The</strong> patient eventuallywent to an Emergency Room, hada CT scan of the head, and lapsed into acoma, emerging with significant deficit.One of the plaintiff’s experts raised questionsabout whether the defendant hadaltered his records; however, that expertwas not permitted to testify about alterationon the ground that this was outsideof his area of expertise. <strong>The</strong> alterationinvolved eliminating all reference to headachesin the office chart.At the trial, the defendant testified thathe had not altered his records. This testimonywas offered both in response to questioningby his defense counsel and duringcross- examination by the plaintiff’s attorney.<strong>The</strong> jury returned a verdict in favorof the patient. On appeal, the defendantclaimed that the trial court had erred inpermitting the plaintiff’s counsel to questionthe defendant concerning the authenticityor alteration of his records in theabsence of proof supporting such an allegation.<strong>The</strong> appeals court rejected this andother arguments made by defendant and affirmedthe decision, noting that the accuracyof the defendant’s records was a criticalissue in the case, and the plaintiff was entitledto explore the issue: “<strong>The</strong>re was morethan a speculative basis to raise questionsabout the records.” <strong>The</strong> plaintiff had producednumerous witnesses to corroborateher testimony that she consistently complainedof headaches during the time thatshe sought treatment from the defendant.Moreover, the plaintiff’s expert testimonyregarding the course of treatment and theinformation supplied to him about the patient’scomplaints supported an inferencethat defendant’s treatment records wereincomplete and that those omissions likelyconcerned the plaintiff’s headache complaints.Lastly, it noted that the testimonyof the plaintiff’s husband concerning thedefendant’s refusal to produce the recordsdespite repeated requests also supported aninference that the records, when eventuallyproduced, had been altered.Deliberate, indeed criminal, falsificationof medical records is one thing. Simply put,it is wrong. However, some alterations areintended to record truthful facts or observationsthat had simply been omitted ininitially preparing records. You shouldcounsel your health care professional clientsthat they must resist making thesealterations unless they also observe certaindevices intended to distinguish deliberatefalsification from truthful clarification,discussed more below. Physicians sometimestry to cover up pure errors in judgmentthat are not negligent and wouldnot subject them to recovery of damages.But the appearance of a cover-up is devastatingin court. Changing a record mayrequire a physician to settle a case even ifno negligence has occurred. Once the accu-<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 59
M E D I C A L L I A B I L I T Y A N D H E A LT H C A R E L A Wracy of a record is challenged, the integrityof the entire documented medical treatmenthistory becomes suspect. In a closecase in which a jury is unable to determinewhether a defendant should be heldliable for malpractice, the suggestion thatthe medical record may have been alteredto protect the guilty benefits the plaintiff.Significantly, the New Jersey State BoardCustom and habitevidence is important andcan be quite persuasive.of Medical Examiners’ regulation permitscorrections or additions to an existingrecord “provided that each change is clearlyidentified as such, dated and initialed bythe licensee.” <strong>The</strong> timing, as well as thecontent of a correction or addition mustbe evaluated as it could easily be viewed asself- serving. However, legitimate correctionsor additions can be made without thestigma of a “badge of fraud.”Drawing from the law of evidence isimportant when counseling clients on thepotential traps involved in altered medicalrecords, including the broad categoryof circumstantial evidence and inferences.As noted above, New Jersey State Boardof Medical Examiners’ record- keeping regulationexplicitly permits “additions/corrections”as long as each change is “clearlyidentified as such” with the date and initialsof the person making the change. Toensure that legitimate changes are “clearlyidentified as such,” heath care professionalsmust specifically do some things and specificallyavoid doing other things.In correcting an error or clarifying aprior note, it is important that the changeor addition is accurate and true to avoidhaving the change misinterpreted orviewed as an effort to conceal. In additionto noting the current date and the writer’sinitials, indicate what prompted thechange or addition, such as proofreadingof transcribed dictation or a conversationthat supplemented a patient’s history. Explainingwhy the entry is out of sequencein a chart is also helpful. When the new60 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>entry significantly changes the originalinformation, the original entry should notbe removed. Moreover, rather than squeezinga change into an existing entry, the personmaking the change should cross out theerroneous entry with a single line so thatthe original record is still legible and adda cross- reference to the location of the correctionin the medical chart. Avoid writingover earlier entries.It may be appropriate to prepare a detailedaddendum note. However, physiciansneed to exercise caution with addendumdocuments. Even if accurate and legitimate,an addendum may appear suspicious andself- serving. This is especially true whenit includes more examination details andlengthier entries regarding treatment, discussion,or advice than the original portionsof the same medical record. Whenprepared after several months have passed,an opponent may question whether a physicianaccurately recalled and recorded thefacts in the addendum. If prepared afterreceiving notice of probable litigation, suspicionsabout accuracy generally increaseeven more.Once involved in a lawsuit, however,defense counsel and a physician shouldprepare a detailed addendum—not to beincluded in the medical record, but for useby the physician with defense counsel. Preparinga lengthy note or memo detailing arecollection can fall within the frameworkof “work product”—materials prepared inanticipation of litigation. Hannan v. St. Joseph’sHosp. & Medical Center, 722 A.2d971, 975 (N.J. Super. Ct. App. Div. 1999).Although best initiated at the direction ofthe attorney defending the case, a physiciancan record and maintain his or her thoughtsapart from a medical chart with a likelihoodof protection from discovery. A physicianshould turn over these notes to defensecounsel, bringing them within the scope ofattorney- client communications, which areprivileged and not discoverable except invery limited extraordinary circumstances.<strong>The</strong> physician should turn over the originalto the attorney, and the physician should notkeep a copy for later review. <strong>Defense</strong> counselwill determine all subsequent review ofan addendum document.<strong>The</strong> attorney should control use of anaddendum to maintain the confidentialityof the document. In some cases it might beappropriate to disclose and produce thesenotes so that they can be used directly. Butan attorney can use the document to helpprepare the physician as a witness withoutactually showing it to him or her to avoidthe requirement to produce it as havingbeen used by the witness to refresh recollectionof past events. <strong>The</strong> communicationbetween attorney and client is privileged.<strong>The</strong> adage that if something “is notwritten down, it didn’t happen” does havesome support in a rule of evidence that isan exception to the general rule excludinghearsay. Evidence that something isnot included in a record kept in accordancewith regular practices of a businessor organization is admissible whenoffered to prove the nonoccurrence of thematter. N.J.R.E. 803(c)(7). See also Fed. R.Evid. 803(7). Plaintiffs want to use this rulebecause with the proper evidentiary foundationunder the rule a defendant’s failureto have and produce documents or recordscould establish that the defendant neveractually performed certain examinations,and if the defendant failed to properlyexamine a patient, the jury could determinethat the defendant was negligent andhad not exercised the proper duty of care inthe circumstances.This evidence rule requires, however,that the unrecorded information must beof a kind of which a written or other recordwas regularly made and preserved. That isto say, unless it is the regular practice tomake and preserve a record of something,the evidence principle does not apply. Toprove regular practice, plaintiffs mustdemonstrate that the records were kept insuch a way that the condition would havebeen noted had it been identified. Accordingly,plaintiffs are required to demonstratethat it was the regular practice of thedefendant to keep records of such inspectionsor examinations. See generally Hoffnerv. Ocean County Mall, 2005 N.J. Super.Unpub. Lexis 532, 2005 WL 3071524 (N.J.Super. Ct. App. Div. 2005), cert. denied, 893A.2d 722 (N.J. 2006). A plaintiff might providethe foundation for the application ofthis rule through a defendant physician’stestimony. However, the defendant shouldnot readily acknowledge that something isimportant and that it is custom and habitto write down important things.Altered Records, continued on page 89
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P R O F E S S I O N A L L I A B I L I T YFrom the ChairBy Matthew S. MarroneGrowing Strong withBig Plansfor theFuture<strong>The</strong> roots of ourcommittee areplanted firmly in thedefense of traditionalprofessional classes:lawyers, accountantsand insurance agents,to name just a few.62 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>■ Matthew S. Marrone is a partner in the Philadelphia office of Lucas and Cavalier, LLC. An experienced trial and appellate lawyer,he specializes in the defense of all professional classes against errors and omissions claims, and represents insurance carriersin complex coverage matters. Mr. Marrone has lectured and written extensively on professional liability issues for variousindustry groups and publications.
By the time you are reading this, the Professional Liability Committeewill be right in the middle of one of its busiest and most excitingyears in recent history. We will likely have surpassed 800 membersfor the first time ever, and hopefully will be rapidly approaching 900members or more. Our members are writing,speaking, and contributing to the overall progressof both the committee and <strong>DRI</strong> at unprecedentedlevels. Where to begin?We are fresh off our participation in the <strong>2010</strong>Insurance Coverage and Claims Institute (ICCI),where we presented a dedicated professional liabilityprogram track—a first for our committee.Our members helped educate approximately 400 attendeeson topics including insurance agent/brokerliability, legal malpractice of defense counsel, technologyerrors and omissions, and social media. <strong>The</strong>ICCI program was a huge success by all accounts,with many folks saying it was the best <strong>DRI</strong> programthey have ever attended. We hope to have this outstandingopportunity once again in 2011.In October the committee will be very busy atthe Annual Meeting in San Diego. We will be presentinga fascinating and timely seminar during theAnnual Meeting’s general session titled “Who Letthe Data Out?” This panel discussion will explorethe world of data breach and technology errors andomissions, examine a real world data breach fromthe perspective of a company’s general counsel, addresspotential liability from the perspective of outsidedefense counsel, and overview the managementof data breach risk from an insurance standpoint.<strong>Defense</strong> lawyers will be particularly interested inthe ethical and professional liability concerns ofallowing unauthorized access to confidential clientinformation. <strong>The</strong> panel will be moderated byCommittee Vice Chair Dan Meyer, and will includelongtime steering committee member Shari ClaireLewis. <strong>The</strong> panel will also feature David Molitano,Vice President of Technology E&O for OneBeaconProfessional Partners, and Robert Robinson, VicePresident and General Counsel for BancTec, Inc.You will not want to miss this program.While technology errors and omissions are currentlyhot topics in the professional liability industry,the roots of our committee are planted firmly inthe defense of more traditional professional classes:lawyers, accountants and insurance agents to namejust a few. At our committee business meeting atthe Annual Meeting in San Diego, steering committeemember Rinat B. Klier-Erlich and her partnerFredric W. Trester will be presenting a highlyrelevant program about the types of claims madeand damages sought against real estate professionals—anothertraditional class our members oftenrepresent. With the real estate market still verymuch in flux, professionals throughout the chainare exposed to E&O claims: real estate brokers,mortgage brokers, appraisers, escrow officers, andeven attorneys. This program is sure to appeal to abroad range of our committee members.On another programming front, we are activelyplanning our committee’s first webinar, which wehope to have scheduled before the end of the year,and expect to follow it up with a series of webinarsthroughout 2011. Stay tuned for details of what weexpect to be cutting edge programs.Our committee has always produced prolific authors,and under the stewardship of PublicationsChair Ted Eberspacher we have never had so manyopportunities for our members to be published. Ourquarterly newsletter is going strong, and we alsonow contribute a feature article for <strong>The</strong> Voice ona quarterly basis. Along with this month’s editionof <strong>For</strong> <strong>The</strong> <strong>Defense</strong>, we will be publishing anothergroup of articles in the January 2011 edition as well.In this month’s issue, Scott Braun and JennaBuda, as well as Shari Claire Lewis, offer articlesaddressing the attorney- client privilege in therespective contexts of retained coverage counseland in-house corporate counsel. As lawyers, we canall benefit from learning more about the attorneyclientprivilege, and its application in variousnuanced settings. In other articles, Jeffrey Jamesdiscusses the use of expert testimony in legal malpracticecases, and Susan Wassell addresses legalmalpractice claims arising from multiple defendantlitigation. As you might imagine, the defense oflegal malpractice claims has always been a primaryfocus of our committee, and we thank the authorsfor contributing these informative articles.<strong>The</strong> Professional Liability Committee is growing,its members are dedicated, and the leadershipis strong. We have big plans for the rest of the yearand well beyond. If you are interested in the area ofprofessional liability defense and want to be a partof our dynamic group, I encourage you to join us.Opportunities for education, networking, and professionaldevelopment abound. Please contact medirectly if you would like to get involved. I look forwardto seeing you all in San Diego!<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 63
P R O F E S S I O N A L L I A B I L I T YPrivilege and WorkProduct IssuesBy Scott D. Braunand Jenna L. BudaInsurers’Retention ofOutside CounselWhile courts routinelycategorize claiminvestigation and analysisby outside counselas ordinary businessfunctions, you can stilltake measures to establishelements of privilege inyour communications.In most cases, in-house claims professionals, some ofwhom may be lawyers, adjust insurance claims. However,insurers also retain outside counsel to manage complex orhigh- exposure claims. In these situations, in addition tofunctioning in the traditional manner byproviding legal advice, an outside counselmay wear several hats, serving as claimsadjuster, investigator and coverage counsel.This lawyer may investigate the facts ofa particular claim or series of claims; evaluatepotential liability and damages; formulateclaim- handling or trial strategy;and make reserve recommendations. Insome cases, this lawyer may evaluate thepotential for coverage litigation with aninsured or “bad-faith” exposure. Accordingly,whether communications and materialsprepared by the outside lawyer haveattorney- client privilege or work productdoctrine protection becomes paramount.As detailed below, the specific role playedby the lawyer is of principal importance indisputes over the production of communicationsprepared by an outside counsel.While the law regarding the role ofcounsel in other business contexts is generallywell settled, determining how theattorney- client privilege or work productdoctrine applies to protect communicationswith an attorney and attorney workproduct in the insurance context is not soclear. As one court has said:In the insurance context, the question ofwhether a communication falls withinthe attorney- client privilege can oftenbe a difficult one because of the investigatorynature of the insurance business.<strong>The</strong> line between what constitutesclaim handling and the rendition oflegal advice is often more cloudy thancrystalline.HSS Enterprises, LLC v. AMCO Ins. Co., 2008U.S. Dist. Lexis 11841 (W.D. Wash. 2008).This article will address the generalrules regarding the attorney- client privilegeand work product doctrine and theirapplication to outside counsel retainedby an insurance company, not as defensecounsel, but to assist in investigating oradjusting a claim. As detailed below, mostcourts have determined that communicationsand materials prepared by outside■ Scott D. Braun is a shareholder and Jenna L. Buda is an associate in the Chicago office of Johnson & Bell,Ltd. Mr. Braun focuses his practice in counseling domestic and foreign insurers on a wide range of issuesfrom claims handling to litigation. He serves on <strong>DRI</strong>’s Professional Liability Committee Steering Committee.Ms. Buda concentrates her practice in insurance coverage and litigation with an emphasis in representing domesticand international insurers and reinsurers with respect to their North American risk exposures.64 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>
counsel in the role of a “claims handler”are not privileged because an insurancecompany is in the business of investigatingclaims. In other words, certain communicationsor materials prepared by a lawyerare not privileged simply because a lawyercreated them. However, communicationsand materials containing legal advice orcreated in anticipation of litigation remainprivileged. We will also address the interestsunderlying the rules governing discoveryin federal and state courts, whichcourts generally construe broadly, generallypromoting the fullest possible disclosureof information, and rules regardingprivilege, which courts generally construenarrowly, as they can “obstruct the searchfor the truth.” In re Grand Jury Investigation,599 F.2d 1224, 1235 (3d Cir. 1979).<strong>The</strong> Role of Outside CounselIt is well settled that an attorney may actin a capacity other than that of an attorney.U.S. v. Davis, 636 F.2d 1028, 1044 (5thCir. 1981). In the insurance context, insurersoften retain outside counsel to servemany roles, including acting as a claimsadjustor, a claim process supervisor, ora claim investigation monitor. Harper v.Auto- Owners Ins. Co., 138 F.R.D. 655, 671(S.D. Ind. 1991). Further, an outside counsel’srole can range from directing defensecounsel how to handle a specific claim toadvising the company on coverage issues.Outside counsel handle claims for manyreasons, including expertise, experience,geographic location, or something as simpleas workload of the in-house claims staff.Privilege and how it is applied to communicationsand materials prepared byoutside counsel usually becomes an issuein the event of litigation with an insured.In that situation, an insured seeks productionof materials prepared by outside counselin discovery, and the insurer asserts thatthe materials are protected from disclosurebecause of the attorney- client privilege orthe work- product doctrine. Most often, atrial judge will decide whether the materialsat issue have protection or an insurermust produce them after an in camerainspection. In determining whether aninsurer will produce disputed materials,the judge will balance the interests of thediscovery rules of most states, requiringproduction of anything relevant to anyissue and the case, with the rules regardingprivilege, mandating that the judge construethe privilege narrowly. Some communicationsand materials are easily classifiedas protected by privilege and withheld fromproduction. With others, it is easy to determinethat privilege does not apply, and aninsurer must produce the materials. Stillother materials may contain both privilegedand non- privileged information.Because an insurer is in the business ofevaluating and adjusting insurance claimsand making coverage determinations shortof litigation, an insured frequently willargue that neither the attorney- client privilegenor the work product doctrine shieldscommunications or documents preparedby outside counsel that would have beencreated in the normal course by an insurerin adjusting a claim.General RulesOver time, the courts have developed somegeneral rules about the privileges affordedattorneys when representing clients toserve the public interests of the law.Attorney-Client Privilege<strong>The</strong> attorney- client privilege is the oldestprivilege recognized at common law.Upjohn Co. v. United States, 449 U.S. 383,389 (1981). Case law generally providesthat the attorney- client privilege protectsconfidential communications by a clientto an attorney acting as a legal adviserand the advice furnished by the lawyer inthe course of representing the client. <strong>The</strong>privilege applies not only to communicationsmade by a client to a lawyer, but alsoto communications from the lawyer to theclient. Schwimmer v. U.S., 232 F.2d 855 (8thCir.), cert. denied, 352 U.S. 833 (1956). <strong>The</strong>privilege also extends to written materialsreflecting the substance of an attorneyclientcommunication. Green v. IRS, 556 F.Supp. 79, 85 (N.D. Ind. 1982). <strong>The</strong> purpose ofthe privilege is to encourage full and frankcommunication between lawyers and theirclients and to promote the broader publicinterests in the observation of law and theadministration of justice. Upjohn at 389.Specifically, the courts have determinedthat a lawyer’s ability to provide soundlegal advice depends on obtaining completeand full information from a client, whichrequires alleviating the client’s fear.<strong>The</strong> elements of the attorney- client privilegeare as follows: “(1) Where legal adviceof any kind is sought; (2) from a professionallegal advisor in his capacity as such;(3) the communications relating to thatpurpose; (4) are made in confidence; (5)by the client; (6) are at his instance permanentlyprotected; (7) from disclosure byhimself or by the legal advisor; (8) except<strong>The</strong> privilege maynot protect legal adviceif it was “incidental” toa business purpose.if the protection is waived.” U.S. v. El PasoCo., 682 F.2d 530, 539 n.9 (5th Cir. 1982)(citing 8 J. Wigmore on Evidence §2292at 554 (J. McNaughton rev. 1961). Significantly,the privilege does not protect communicationsregarding underlying factsbut only the legal advice regarding facts.Upjohn at 389. Further, the privilege maynot protect legal advice if it was “incidental”to a business purpose. United States v.International Business Machines, 66 F.R.D.206 (S.D.N.Y. 1974).Work Product Doctrine<strong>The</strong> work product doctrine protects fromdiscovery documents and tangible thingsprepared in anticipation of litigation by orfor a party, or by or for that party’s representative.U.S.A. v. Patrick J. Roxworthy, 457F.3d 590 (6th Cir. 2006) (citing the Fed. R.Civ. Proc. 26 (b) (3)). <strong>The</strong> doctrine is “distinctand broader than the attorney- clientprivilege.” Hickman v. Taylor, 329 U.S. 495,508 (1947). <strong>The</strong> purpose of the doctrine is“to preserve a zone of privacy in which alawyer can prepare and develop legal theoriesand strategy ‘with an eye toward’ litigationfree from unnecessary intrusion by hisadversaries.” United States v. Adlman, 134F.3d 1194, 1196 (2d Cir. 1998) (citing, Hickmanv. Taylor, 329 U.S. 495 (1947)).In applying the doctrine, courts considerthe nature of the document for whichprotection is sought, as well as the factssurrounding its creation and distribution.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 65
P R O F E S S I O N A L L I A B I L I T YMartin v. Bally’s Park Place Hotel & Casino,983 F.2d 1252, 1260 (3d Cir. 1993). Aswith the attorney- client privilege, the partyasserting the work product doctrine bearsthe burden of establishing that the documentshe or she seeks to protect were prepared“in anticipation of litigation.” In rePowerhouse Licensing, LLC, 441 F. 3d 467(6th Cir. 2006).Courts follow differentstandards for determiningwhether a document is“prepared in anticipationof litigation.”Courts follow different standards fordetermining whether a document is “preparedin anticipation of litigation.” Somecourts follow a “because of” test, findingthat a document is protected if it was“prepared or obtained because of the prospectof litigation.” United States v. Adlman(Adlman II), 134 F.3d 1194, 1202 (2dCir. 1998); Binks Mfg. Co. v. Nat’l PrestonIndus., Inc., 709 F.2d 1109, 1119 (7th Cir.1983); In re Grand Jury Proceedings, 604F.2d 798, 803 (3d Cir. 1979). Other courtsfollow a narrower, “primary motivation,”or “primary purpose,” test for determiningthe applicability of work product protection,under which documents are deemedto have been prepared in anticipation of litigationwhen the “primary motivating purposebehind the creation of the documentwas to aid in possible future litigation.”United States v. El Paso Co., 682 F.2d 530,542 (5th Cir. 1982). In October, 2009, theUnited States Court of Appeals for the FirstCircuit applied an alternate test. Applyingthis test, only documents “prepared for”litigation would have work product protection.United States v. Textron, Inc., 577 F.3d21 (1st Cir. 2009).Broad Discovery Scope andPrivilege ApplicationFederal Rule of Civil Procedure 26(b)(1)sets forth a very broad scope of discovery:66 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>any matter, not privileged, which is relevantto the subject matter involved inthe pending action…. <strong>The</strong> informationneed not be admissible at the trial if theinformation sought appears reasonablycalculated to lead to the discovery ofadmissible evidence.It is a well- settled principle that courtswill accord broad and liberal treatmentto the discovery rules in accordance withtheir purpose. Hickman v. Taylor, 329 U.S.495, 501, 507 (1947). Under the federalrules, discovery is meant to enable litigantsto obtain the fullest possible knowledge ofthe issues and facts before trial. Id. at 500.However, the attorney- client privilegeand work product doctrine do limit thedisclosure Fed. R. Civ. P. 26(b)(1) parameters.Courts have recognized that the assertionof a privilege obstructs the search forthe truth and must be “strictly confinedwithin the narrowest possible limits.” In reGrand Jury Investigation, 599 F.2d at 1235(quoting 8 Wigmore on Evidence §2291 at545 (1961)). Consequently, the party claimingthe privilege bears the burden of provingthat it applies to the communicationat issue. Hickman v. Taylor, 329 U.S. 295,506 (1947); United States v. Landorg, 591F.2d 36, 38 (9th Cir. 1978); Hodges Grant &Kauffmann v. U.S. Gov., 768 F.2d 719 (5thCir. 1985).Application of the Attorney-Client Privilege and Work ProductDoctrine to Outside CounselBased on the general rules discussed above,in most cases, communications between alawyer and a client are protected from disclosure.<strong>The</strong>re are, of course, exceptions toevery rule. How the attorney- client privilegeand work product doctrine apply tocommunications between an insurer andoutside counsel retained by the insureroffer good examples.Documents prepared in the ordinarycourse of business are generally not consideredto have been created in anticipationof litigation and are not covered bythe work product doctrine. Further, a documentproduced in the ordinary course ofbusiness is not protected from disclosuremerely because it was sent to an attorney.Simon v. G.D. Searle & Co., 816 F.2d 397,403 (8th Cir. 1987). Crucially, as discussedin greater detail below, these general principlesare especially relevant in the insurancecontext. As one court put it:Application of the work product rule toinsurer investigative documents is one ofthe most difficult and often- litigated discoveryissues because it is the very natureof an insurer’s business to investigateevents which, either directly or indirectly,or as a consequence of the insurers’decisions, often result in litigation.Stout v. Illinois Farmers Ins. Co., 150 F.R.D.594, 597, (1993).Typically, after an insurance companyhires outside counsel but before coveragelitigation begins, the attorney’s role is similarto that of a claims adjuster. He or shewill investigate and analyze claims and determinewhether the insurance companyshould make a payment. Courts routinelycategorize this work as an insurance company’sordinary business functions, as opposedto legal work. Harper v. Auto- Owners,Inc. Co., 138 F.R.D. 655 (S.D. Ind. 1991). Similarly,courts have rejected an insurer’s argumentsthat communications from an outsidelawyer should have protection because theoutside lawyer performed an “enhanced”investigation or handled the claim in anonroutine manner that differed from theinsurer’s normal claims- handling process.Further, many courts have held that aninsurance company may not insulate itselffrom discovery by hiring an attorney to conductordinary claims investigations. To theextent that an attorney acts as a claims adjuster,claims process supervisor, or claimsinvestigation monitor, and not as a legal advisor,the attorney- client privilege does notapply. Mission National Ins. Co. v. Lilly, 112F.R.D. 160, 163 (D. Minn. 1986); First AviationServices Inc. v. Gulf Ins. Co., 205 F.R.D.65 (Conn. 2001). <strong>The</strong> majority of courts haveheld that if a layman could have just as easilyhandled a matter as a lawyer, the privilegewould not apply to that matter. MerrinJewelry Co v. St. Paul Fire & Marine Ins. Co.,49 F.R.D. 54 (S.D.N.Y. 1970).Illustrative CasesIn First Aviation, the plaintiffs, two aviationcompanies and two individuals,sought damages under a directors’ & officers’liability and company reimbursementinsurance policy issued by Gulf. First AviationServices Inc. v. Gulf Ins. Co., 205 F.R.D.65 (Conn. 2001). In particular, they sought
defense and settlement costs incurred in athird-party lawsuit alleging wrongful termination,breach of contract, and bad faith.In the course of the coverage dispute,the plaintiffs moved to compel productionof all claims documents created by Gulf’soutside attorneys, as well as all claims andunderwriting manuals and interpretivedocuments. <strong>The</strong> plaintiffs asserted thatGulf retained its outside attorneys to investigateand make coverage determinationsabout their D & O claim. <strong>The</strong>y contendedthat this task is normally performed by aninsurance company’s claims department,and thus the claims- handling documentswere not protected by the attorney- clientprivilege. Gulf responded that its outsideattorneys served as legal advisors and,thus, their communications were entitledto attorney- client privilege protection.<strong>The</strong> court explained that the attorneyclientprivilege does not, in fact, generallyprotect all transactions that involve an attorneyand a client, nor can all the factsknown by a party have immunity from discoverysimply because the party told themto an attorney. Id. at 68 (citing ReichholdChemicals, Inc. v. Hartford Accident & IndemnityCo., 2000 Conn. Super. Lexis 2164,2000 WL 1227306 (Conn. Super. Aug. 15,2000)). <strong>The</strong> court further stated that onlycommunications between client and attorneywhen made in confidence for the purposeof seeking or giving legal advice areprivileged. Id. Finally, the court held that arequest that an attorney obtain informationfrom outside sources is not privileged. Id.In making its ultimate ruling granting theplaintiffs’ motion to compel, the court reliedon the testimony of Gulf’s own expertwitness who testified that Gulf’s outside attorneysfunctioned as claims handlers andprimarily made business decisions.Overall, courts have held that theattorney- client privilege cannot become amechanism for avoiding disclosure of documentsthrough an assertion of privilege.On similar grounds, a court will not affordwork product protection to documents in aclaim file that were prepared for an insurancecompany as part of its ordinary courseof business, even if these documents wereprepared by an attorney. Courts have recognizedthat consultations between an insurancecompany and its attorneys during aninvestigation “is an important factor whichgenerally weighs in favor of” a court findingthat the work product doctrine protects documents.Burr v. United Farm Bureau Mut.Ins. Co., 560 N.E. 2d 1250, 1254 (Ind. Ct.App. 1990). However, more often than not,courts rule that documents prepared for aninsurer prior to a coverage determination donot have work product protection becausethey have been prepared in the ordinarycourse of the insurer’s business. Pete Rinaldi’sFast Foods, Inc. v. Great American Ins.Cos., 123 F.R.D. 198, 202 (M.D.N.C. 1988).Other courts have looked at the date onwhich documents were created and whetherat that time a lawsuit was likely. Fontaine v.Sunflower Beef Carrier, Inc., 87 F.R.D. 89,93 (E.D. Mo. 1980). Still other courts haveadopted a case-by-case analysis. Schmidt v.California State Automobile Association, 127F.R.D. 182, 184 (D. Nev. 1989).To summarize, documents preparedafter an insurance company retains outsidecounsel are not necessarily protectedby the work product doctrine in cases inwhich the insurance company continuesto investigate claims without denying coverage.<strong>The</strong> retention of outside counseldoes not alone indicate a decision to litigatea claim. Accordingly, insurance companieshave a difficult time claiming, priorto denying coverage, that documents preparedin the context of investigations enjoyprotection because they were prepared inanticipation of litigation. This is becausean investigation of a claim often continueseven after outside counsel is retained.Cutrale Citrus Juices USA, Inc. v. ZurichAmerican Ins. Group, 2004 U.S. Dist. Lexis22487 (M.D. Fla. 2004), illustrates onecourt’s interpretation of the work productdoctrine in the insurance context. In thatcase, the plaintiff, Cutrale, sued Zurich forbreach of two insurance contracts. Duringthe course of the litigation, the plaintifffiled a motion to compel production ofall claim file documents, including investigativematerials. Zurich asserted that thedocuments were protected because theywere prepared in anticipation of litigatingthe plaintiff’s bad-faith claim; however,it agreed to submit the documents tothe court for an in camera inspection priorto the hearing on the plaintiff’s motion.Among other things, the plaintiff arguedat the hearing that if the documents wereprepared in the normal course of business,they were not protected under the workproduct doctrine, and the defendant mustproduce them. <strong>The</strong> court held that whileno bright line rule in the insurance contextseparated documents produced underthe work product privilege from documentsproduced in the ordinary course ofbusiness, a claim coverage denial date isthe proper date after which an insurer cananticipate litigation with relative certaintyand, thus, documents generated after thatdate would have work product protection.Id. Indeed, a number of courts have agreed.See, e.g., Ring v. Commercial Union Ins.Co., 159 F.R.D. 653, 656 (M.D.N.C. 1995)(stating that “in general, only documentsaccumulated after the claim denial will beprepared in anticipation of litigation”). Specifically,the Cutrale Citrus court found thatall documents considered responsive to theplaintiff’s production request in the claimsfile dated before November 11, 1999, thedate of Zurich’s denial, did not have workproduct protection, and Zurich must producethem. Cutrale Citrus Juices USA, Inc. v.Zurich American Ins. Group, 2004 U.S. Dist.Lexis 22487 (M.D. Fla. 2004).In rare cases, courts have held that documentsprepared by attorneys for insurancecompanies were protected by bothattorney- client privilege and the workproduct doctrine, extending those protectionsto documents prepared during thecourse of an investigation. <strong>For</strong> instance, theUnited States Court of Appeals for the FifthCircuit upheld a protective order issued fordocuments prepared by an insurance company’sattorneys during the course of theinvestigation of a claim. Dunn v. State FarmFire & Casualty Co., 927 F.2d 869 (5th Cir.1991). In Dunn, State Farm insured Mollieand Melvin Dunn’s home and it contents.<strong>The</strong> Dunns separated, and, shortlyafter, a fire burned their house. <strong>The</strong> firedepartment suspected arson, and, a fewdays after the fire, Mr. Dunn confessed tosetting the fire intentionally. Mrs. Dunnfiled a claim with State Farm based on herinterest in the house and her share of itscontents. After conducting an investigation,State Farm denied Mrs. Dunn’s claimsbased on alleged misrepresentations andsuspicions that she had been complicit inthe arson. Mrs. Dunn filed a bad-faith suit,and the trial court found in favor of StateOutside Counsel, continued on page 88<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 67
P R O F E S S I O N A L L I A B I L I T YIt DependsBy Shari Claire Lewis<strong>The</strong> Ins and Outs ofAttorney-Corporate-Client PrivilegeBased on educatedpredictions, we mustadvise our clients as tothe steps they can take, atthe time communicationstake place, to avoidwaiver should litigationoccur at a later date.Picture three conference rooms at the corporate headquartersof Any Corporation, Inc. In the first, outside counsel ismeeting with the company’s CEO and general counsel todiscuss acquisition of a competitor’s business. Next door,an assistant in-house counsel is attending ameeting called by the company’s risk managerand IT personnel. Across the hall, thehead of Human Resources is conducting individualinterviews of three employees whowitnessed an incident that occurred in thecompany’s manufacturing plant. <strong>The</strong> interviewsare being conducted at the request,but in the absence of, insurance- appointeddefense counsel. Each meeting results in aninternal memorandum summarizing whatoccurred. <strong>The</strong> question, “Which conversationsand resultant memoranda will haveprivileged status if an adverse party seeksdisclosure of their contents in later litigation?”<strong>The</strong> answer, “It depends.”Clients often assume that all communicationinvolving a lawyer is privilegedand, conversely, that the absence of a lawyer’sdirect participation in a communicationis fatal to a privilege claim. However,attorney- corporate- client privilege and itscousin, the work product doctrine, requirenuanced analyses. In its seminal decisionon attorney- corporate- client privilege, theSupreme Court stated, “We decline to laydown a broad rule or series of rules to governall conceivable future questions in thisarea, even were we able to do so…. Whilesuch a ‘case-by-case’ basis may to someslight extent undermine desirable certaintyin the boundaries of the attorney- clientprivilege, it obeys the spirit of the Rules.”Upjohn v. United States, 449 U.S. 383, 396(1980) (interpreting Fed. R. Evid. 501).<strong>The</strong> uncertainty is exacerbated by oftencontradictory state and federal laws that maygovern attorney- corporate- client privilegedepending on where a lawsuit is filed. Withthe ever- widening geographic presence ofcorporations, corporate counsel may havedifficulty meaningfully predicting the scopeof the privilege in future litigation in an unknownforum. While each state recognizesattorney- client privilege, the details differ—and, as we all know, the devil is in the detailsThus, those of us who counsel corporationsmust respond “it depends” to our clients’inquires. We must advise as to thesteps, based on educated predictions, that68 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>■ Shari Claire Lewis is a partner in Uniondale, New York, office of Rivkin Radler LLP, in the firm’s Professional Liability and ProductLiability Practice Groups. Ms. Lewis’ practice, at the intersection of law and technology, includes matters involving attorneyand other professional liability, medical device and product liability, and computer and Internet litigation. She is the webcast chairfor <strong>DRI</strong>’s Professional Liability Committee.
clients may take at the time that communicationtakes place to maintain the privilegeshould litigation occur at a later date.Elements of Attorney-Client PrivilegeBroadly speaking, the four essential elementsof attorney- client privilege are that1. <strong>The</strong> person asserting the privilege wasor sought to become the client of theattorney;2. <strong>The</strong> communication was to a lawyer orhis subordinate, and the communicationwas made to that person acting in thatcapacity;3. <strong>The</strong> communication concerned a factthat was communicated to the attorneyby the client, without a non- clientpresent, for purposes of securing a legalopinion, legal services, or assistance ina legal proceeding and not for the purposeof committing a crime or tort; and4. <strong>The</strong> privilege has been claimed and notwaived by the client.See Gergacz, Attorney- Corporate ClientPrivilege §3.03:3-6 (3rd ed. 2001) (emphasisadded).<strong>The</strong> privilege extends only to the communicationitself and not to the underlyingfacts. See, e.g., Brigham & Women’s Hosp.,Inc. v. Teva Pharms. USA, Inc., <strong>2010</strong> U.S.Dist. Lexis 31573, at *14, (D. Del. Mar. 31,<strong>2010</strong>). A fact does not become undiscoverablemerely because it was communicatedto counsel within the attorney- client relationship.It simply must be discovered fromother sources.<strong>For</strong> example, the California SupremeCourt recently reversed an order directingdisclosure of portions of a corporate counsel’sopinion letter in which only the factualrecitations were disclosed, and everythingelse was redacted. Costco Wholesale Corporationv. <strong>The</strong> Superior Court of California,47 Cal. 4th 725 (Cal. 2009). <strong>The</strong> court heldthat it was the transmission of a communicationas part of rendering legal advice,not the communication’s content, that protectedthe entire document.<strong>The</strong> third element, above, includes the“crime-fraud exception.” Attorney- clientprivilege does not extend to communicationsadvising a client how to accomplishan illegal act. However, to trigger the exceptionmerely allege that a crime was committed,lest a mere tactical allegation defeatthe attorney- client privilege. Also, advisinga client about how to defend against allegationsthat the client committed a crimeor fraud is not subject to the exception,remaining privileged, as everyone is entitledto obtain legal defense advice.Attorney-Client PrivilegeApplied to CorporationsCorporations, as individuals, have the benefitof the attorney- client privilege. However,its application to attorney- corporate- clientcommunications is complex. As a fictionalentity, a corporation cannot, in and ofitself, act, speak, have knowledge of facts,or perform any deed necessary to invokethe attorney- client privilege. Accordingly,the attorney- corporate- client privilegerequires a factual inquiry into case- specificcircumstances, such as a speaker’s and anattorney’s relationships to a corporation,a communication’s topic and substance,and whether the communication has beentreated by a corporation as confidential.Under federal law, the attorneycorporate-client privilege must satisfy theessential elements described above and asecond set of criteria, culled from Upjohnand its progeny. To successfully invokethe attorney- corporate- client privilege, inaddition to the four elements describedabove, a corporation must establish that1. <strong>The</strong> communication was made by a corporateemployee to corporate counselupon order of superiors so that the corporationcould obtain legal advice;2. <strong>The</strong> information that corporate counselneeded to formulate legal advicewas not otherwise available to top- levelmanagement;3. <strong>The</strong> information communicated by theemployee was within the scope of theemployee’s corporate duties;4. <strong>The</strong> employee was aware that the reasonfor communication with counsel was sothat the corporation could obtain legaladvice;5. <strong>The</strong> employee was ordered to keep thecommunication confidential, and it waskept confidential; and6. <strong>The</strong> identity and resources of the opposingparty lead to the conclusion that anoverwhelming public policy need willnot be allowed to vitiate the privilege.See Gergacz, Attorney- Corporate ClientPrivilege §3.03:3-6–3-7, §3.91:3-163 (3rded. 2001).<strong>The</strong> Corporate Attorney as Legal Counsel<strong>The</strong> sine qua non of attorney- corporateclientprivilege is that an attorney act in hisor her capacity as counsel when the communicationoccurs. In today’s corporate environment,attorneys frequently have multipleroles. <strong>For</strong> example, general counsel may siton a company’s board of directors and participate,in that capacity, in nonlegal, businesscommunication. In his or her dualfunction, counsel may also engage withcorporate employees on a daily basis on awide variety of topics. Nevertheless, communicationsare not magically imbued withattorney- client privilege simply because aparticipant is admitted to the bar. Pragmatically,it is sometimes difficult to establisha clear demarcation between roles, sothe attorney- corporate communication mayhave a “blended” legal and business purpose.Although attorney- corporate- client privilegeextends to communications involvingboth in-house and outside counsel, in reality,courts scrutinize communications within-house counsel more carefully than thosewith outside counsel for several reasons. Outsidecounsel are often presumed to have beenretained because of their legal expertise toprovide specific legal services. On the otherhand, in-house counsel often wear manyhats in a company. Frequently an in-housecounsel has greater awareness of the businessinterest of the company than outsidecounsel. and primarily serves those interests.Also courts have been somewhat concernedthat corporations may try to use the merepresence of in-house counsel to cloak nonconfidentialcommunications in secrecy.Analytically, it may prove useful to askwhether communications involving inhousecounsel (1) are privileged becausein-house counsel has provided legal servicesto the corporation; (2) are privilegedbecause in-house counsel has served as thecorporate speaker in communications withthe outside counsel that enable the corporationto obtain legal advise; or (3) are notprivileged because, despite having a legallicense, in-house counsel has communicatedwith the directors, shareholders, amanagement team, or fellow employees, ina nonlegal capacity or for a purpose otherthan providing legal services.Communicating with a Corporate Client<strong>The</strong> attorney- corporate- client relationship<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 69
P R O F E S S I O N A L L I A B I L I T Yis between an attorney and a corporation,not the corporation’s board of directors,shareholders, or employees. <strong>The</strong> privilegeremains with the corporation despite achange in corporate structure, ownership,or control. <strong>The</strong>refore the person who decideswhether to assert or waive the privilege maynot have participated in the attorney- clientcommunication or have a relationship withCommunications arenot magically imbued withattorney- client privilegesimply because a participantis admitted to the bar.70 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>the actual person who communicated withan attorney on behalf of the corporation’sbehalf. Nevertheless, a corporation cannotcommunicate without human facilitators.Accordingly, counsel’s communicationswith the corporation’s human constituentswill have attorney- client privilege protectionif they meet the requisite criteria.Further, the corporation, not the actual corporatecommunicator, maintains the rightto assert or waive the privilege.<strong>The</strong> parameters of the attorneycorporate-client privilege create the mostacute problem when counsel, acting ascounsel, conducts an internal investigationfor the purpose of rendering legal advice,in which the interests of the corporationand the individual actor may diverge. <strong>For</strong>example, counsel may investigate fraud ordefalcation charges within the corporationby interviewing corporate insiders, in thecourse of which the insiders may divulgeinculpatory information. Nevertheless, itis the corporation’s prerogative to waive itsattorney- client privilege for those communicationsdespite the possible criminal orcivil exposure to the person who conveyedthe information.In some circumstances an attorney mayhave an attorney- client relationship withboth the corporation and the corporatespeaker. Importantly, however, a corporatespeaker should not assume dual representationexists, nor should an attorney implythat he or she represents both the individualand corporation if dual representationdoes not truly exist.WaiverIndividuals control their own speech andacts. <strong>The</strong>refore, to a large extent, they alsocontrol their own destiny when it comes towaiving the attorney- client privilege. Corporateclients, by nature, may have lesscontrol. Even when a corporation has a“corporate policy” to protect confidentialcommunications, unauthorized statementsmay sometimes slip through the cracks.Additionally, regulatory or filing requirementssometimes oblige corporations todisclose otherwise privileged informationto government entities, shareholders, andauditors.Waiver is the other side of the privilegepolicycoin. <strong>The</strong> purpose of the attorneyclientprivilege is to encourage fullcommunication between client and attorneyso that a client can receive counsel’sfully educated advice. However, the privilegeat time deprives an adversary of highlyrelevant information, which would havebeen discoverable had it not been conveyedwithin the sanctity of the attorney- client relationship.To prevent inequity, a corporationmay not selectively invoke the privilegeso that it only applies to certain communicationson a subject or only for certain purposes.From this concern for inequity comesthe well-worn axiom that the privilege is intendedas a “shield,” not as a “sword.”It is, of course, up to a client to decidewhether to deliberately waive a privilege—for example, by testifying about the substanceof a communication, distributingthe communication beyond the attorneycorporate-client circle, or incorporating thecommunication into a publicly availabledocument. Our job is to advise our clientsabout the potential risks that emanate fromwaivers, as well as their potential scope, sothat they can make educated choices.Sometimes a corporate client accidentallycan waive the attorney- corporate clientprivilege. <strong>For</strong> example, in litigation, acorporation may seek to justify actions ittook as based upon the advice of counsel.Under that circumstance, a corporationputs an attorney communication “at issue,”and a court may permit an adversary furtherinquiry beyond the initial, limited disclosureby the corporation. <strong>Defense</strong> counselshould carefully advise their corporate clientsabout an “at issue” waiver with greatparticularity when proposing a litigationstrategy that could lead to such a result.Sometimes waiver may result if, despitea communication’s origination within anattorney- client relationship, a corporationceases to treat it as privileged. Examplescould include filing a privileged documentin a general file, available to employeeswho would have no interest in the subjectmatter, or sharing privileged material withindividuals deemed beyond the attorneycorporate-client relationship parameters,such as corporate employees who mayhave interests that diverge from those ofthe corporation.Sometimes, if a privileged communication“escapes,” becoming public, the escapewill serve as a waiver, even if it wasinadvertent or unintentional. Unintentionaldisclosure can occur in a variety of circumstances,such as inadvertent production ofprivileged material in discovery, carelesstreatment of privileged documents in apublic space, or unauthorized employee, orex- employee, discussion of privileged materialin person, in writing, or online. Somecourts determine whether a waiver has occurredbased on the reasonableness of a corporation’sefforts to maintain the privilegeand to promptly identify and ameliorate arelease mistake. Others, recognizing thatwhen something becomes generally known,it cannot be “un-known,” consider the damagedone and deem the privilege waived.Work Product Doctrine Distinguished<strong>The</strong> work product doctrine is distinct fromattorney- client privilege, but they are oftenraised in tandem. <strong>The</strong>ir protections are notcoextensive, therefore, you should presentarguments about them independently.Briefly, the work product doctrine protectsdocuments prepared by an attorney inanticipation of, or in the course of, actuallitigation, for the purpose of analyzing andpreparing a client’s case. <strong>The</strong> attorney ownsthe work product privilege. Sandra T.E. v.South Berwyn School District 100, 2009 U.S.App. Lexis 28983 (7th Cir. Feb. 24, 2009).As codified in Fed. R. Civ. P. 26(b)(3)(A),documents and tangible things preparedby a party or its representative in antici-
pation of litigation or for use at trial maynot be discovered, unless they would beotherwise discoverable, and the adversaryseeking disclosure can demonstrate “substantialneed for the materials to prepareits case and cannot, without undue hardship,obtain their substantial equivalent byother means.” By definition, work productprotection extends beyond attorneys to anyqualifying document prepared by a partyor its representative.<strong>The</strong> dual purpose of the work productdoctrine is to protect an attorney’s thoughtprocesses and mental impressions and preventa lazy adversary from obtaining thebenefit of the work performed by a morediligent adversary. See Gergacz, Attorney-Corporate Client Privilege §7.04:7-5–7-6,§7.10:7-12N7-13 (3rd ed. 2001). Accordingly,even if an adversary meets its burden ofsubstantial need, Fed. R. Civ. P. 26(b)(3)(B) requires that a court must protectagainst disclosure of the attorney’s “mentalimpressions, conclusions, opinions, orlegal theories….”As with attorney- client privilege, courtsmore carefully scrutinize the application ofwork product protection to in-house counsel’swork than to outside counsel work. Inhousecounsel’s multiple roles weakens theassumption that in-house counsel’s documentswere prepared in anticipation of litigation,rather than in another capacity. SeeGergacz, Attorney- Corporate Client Privilege§7.20:7-27–7-26 (3rd ed. 2001).Recent DevelopmentsA recent Supreme Court decision about appellatereview of adverse privilege orders,the 2008 amending of the Federal Rulesof Evidence, and a change to Fed. R. Civ.P. 26(b)(5)(B) are important for counsel tounderstand when considering the attorneycorporate-client privilege.Appellate Review of AdversePrivilege OrdersRecently, the Supreme Court reaffirmed“the importance of the attorney- client privilege,which ‘is one of the oldest recognizedprivileges for confidential communications.’”Mohawk Industries, Inc. v. NormanCarpenter, 130 S. Ct. 599, 606 (Oct. 5, 2009)(citing Swidler & Berlin v. United States, 524U.S. 399, 403 (1998)). It stated, “By assuringconfidentiality, the privilege encouragesclients to make ‘full and frank’ disclosureto their attorneys, who are then betterable to provide candid advice and effectiverepresentation.” Mohawk Industries, 130S. Ct. at 606 (citing Upjohn, 499 U.S. at 389(1981)). Elaborating further, the SupremeCourt wrote, “This in turn, serves ‘broaderpublic interests in the observance of lawand administration of justice.’” Id. Despitethis ostensibly enthusiastic endorsement ofthe policy rationales for the attorney- clientprivilege, the Supreme Court’s decisionfunctionally relegated it in favor of efficientjudicial administration.In Mohawk Industries, the SupremeCourt addressed a conflict among the circuitsabout whether a litigant could immediatelyappeal an adverse ruling concerningthe attorney- client privilege under the“collateral- order doctrine.” <strong>The</strong> Court concludedthat a litigant could not because thedisclosure of arguably privileged materialcould be adequately redressed on appeal ofthe final judgment, at which time the courtcould exclude the material from a retrialof the case.In the underlying case, defendant Carpenterclaimed that he had been wrongfullydischarged as a result of an email thathe sent to a Mohawk human resources employee,alleging that Mohawk employedundocumented workers, and his refusal torecant that claim during his meeting withMohawk’s counsel concerning an unrelatedclass action that alleged that the companyhired undocumented workers to artificiallydeflate prevailing wages. In the class action,Mohawk disclosed facts concerning Carpenter’stermination, including the resultof Mohawk’s lawyer’s investigation, demonstratingthat Carpenter had been fired becausehe had, himself, attempted to hire anundocumented worker, as well as the company’sconclusion that Carpenter’s claimswere “pure fiction.” Carpenter sought discoveryin his wrongful termination litigationconcerning his meeting with Mohawk’scounsel and the company’s termination de-MICHAEL B. BUCKLEY(<strong>For</strong>merly of Buckley & Fudge, P.A.)A.V. Rated by Martindale Hubbell(Also “Of Counsel” to Fowler White Burnett, P.A., Miami, Fl.)AndLAUREN STITT CURTIS(<strong>For</strong>merly of Buckley & Fudge, P.A.)A.V. Rated by Martindale HubbellARE VERY PROUD TO ANNOUNCE THE FORMATION OF THEIR NEW FIRM,240 First Avenue SouthSuite 200St. Petersburg, FL 33701Tel: 727-822-4800Fax: 727-488-4855BUCKLEY & CURTIS, P.A.And225 BroadwaySuite 2600New York, NY 10007Tel: 212-514-7400Fax: 212-514-7404<strong>The</strong> Firm Has Significant Experience Handling a Wide Variety of Litigation in State andFederal Courts throughout the States of Florida and New York, with Emphasis on ComplexCommercial Litigation, Commercial Torts and Fraud, Aviation, Construction Defect,Insurance Coverage, Bad Faith/Excess Liability, Medical Malpractice, Products Liability,Debt Collection Practices-Related Litigation and Employment Practices-Related Matters<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 71
P R O F E S S I O N A L L I A B I L I T Ycision. Mohawk claimed that the documentswere privileged. <strong>The</strong> district court agreedwith the Carpenter’s assertion that Mohawkhad waived the privilege through its disclosurein the class action. <strong>The</strong> district courtdeclined to certify its decision for interlocutoryappeal, but, recognizing the seriousimpact of its waiver finding, stayed discoverywhile Mohawk Industries sought otherNotably missing from Fed.R. Evid. 502 is a definitiverule about “selective waiver.”72 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>avenues of review. A collateral order appealto the Eleventh Circuit was dismissed forlack of jurisdiction, and the Supreme Courtaccepted the case.<strong>The</strong> Supreme Court concluded thatorders that deny attorney- client privilegeprotection should not be immediatelyappealable under the collateral- order rule.<strong>The</strong> Court found that the efficient administrationof justice through the single appealrule, outweighed the “burden” that litigantsfaced when their rights were only“imperfectly reparable” on appeal. <strong>The</strong>Court rejected the argument by Mohawkthat since the attorney- client privilege proscribesdisclosure, and not just the useof material at trial, appeal after the finaljudgment was no remedy at all. <strong>The</strong> Courtopined that deferring appeal would not“chill” open communication between clientsand their counsel, which is the privilege’spurpose. Accordingly, the Courtstated that the “breadth of the privilegeand the narrowness of its exceptions willthus tend to exert much greater influenceon the conduct of clients and counsel thanthe small risk that the law be misapplied,”although the Court acknowledged that itmight have decided to the contrary if facedwith some evidence of gross misapplicationof the privilege in the lower courts.<strong>The</strong> Court enumerated other avenuesfor immediate review that it believed werefeasible if a litigant confronted a “particularlyinjurious or novel privilege ruling.”First, a litigant could apply for an interlocutoryappeal if “the issue addressed a controllingquestion of law, the resolution ofwhich will advance termination of the litigation.”Alternatively, the court recommendedthat the aggrieved party simplydefy the court order and refuse disclosure,incurring court- imposed sanctions, suchas an adverse inference, preclusion fromoffering evidence on the subject, struckpleadings, or a finding of contempt. Sanctionswould then permit “a party to obtainpost- judgment review without having toreveal its privileged information” as, undermany circumstances, contempt findingsand other punitive rulings, would beimmediately appealable, as would the underlyingorder. Indeed, the Court stated,“<strong>The</strong>se established mechanisms for appellatereview not only provide assurances toclients and counsel about the security oftheir confidential communications, theyalso go a long way toward addressing Mohawk’sconcern that, absent collateral orderappeals of adverse attorney- client privilege,some litigants may, experience severe hardship.”Mohawk Industries, 130 U.S. at 608.It is unclear, however, that deliberatelycourting severe repercussions will alleviatethe hardship imposed on a party forced tochoose between waiving its attorney- clientprivilege or defying a court’s orders, bothbad alternatives.In jurisdictions that do not permit immediateinterlocutory appeals of privilegerulings, eventual reversal of an adverse privilegeruling may be a pyrrhic victory, at best.Unless a court stays discovery, the contentsof the privileged communications will bemade known to the corporation’s adversary,and potentially, the public at large, even ifthat adversary later cannot use it at a retrial.In this writer’s opinion, it borders on flippantto suggest that parties should simplydefy court orders to invite extreme sanctionsin hopes that a reviewing court will overlooktheir willful refusal to participate in discoveryand reverse the underlying ruling onprivilege. Moreover, encouraging parties todefy court orders does not seem to serve theinterests of efficient judicial administration,which is the policy elevated over attorneyclientprivilege in Mohawk Industries.Fed. R. Evid. 502 and WaiverIn 2008, the Federal Rules of Evidence wereamended to add Rule 502 limiting the inadvertentwaiver of attorney- client privilegeand work product protection in the courseof federal litigation. <strong>The</strong> committee noteto the amendment indicates that it hadtwo major purposes, which the committeehoped would facilitate predictable, uniformstandards that parties could rely on todetermine the consequences of disclosure.First, the rule intended to resolve “longstandingdisputes” in the courts aboutwhen disclosure of attorney- client protectedmaterial would result in subjectmatter waiver. Second, the rule intendedto respond to “widespread complaint” ofskyrocketing litigation costs incurred toidentify and segregate privileged materialin light of mandatory disclosure ande- discovery. See Fed. R. Evid. 502 CommitteeNote (citing Hobson v. City of Baltimore,232 F.R.D. 228, 224 (D. Md. 2005) (electronicdiscovery may encompass “millionsof documents” and to insist upon “recordby-record pre- production privilege review,on pain of subject matter waiver, wouldimpose upon parties costs of productionthat bear no proportionality to what is atstake in the litigation”)).Although Fed. R. Evid. 502 does notaddress the substantive law of privilege orwaiver, it significantly changes the conceptof waiver and inadvertent disclosure,which affects both federal and state practice.Before counseling your corporate clients,you should carefully review it, if youhave not already.<strong>The</strong> rule addresses disclosure made ina federal proceeding, or significantly, to afederal office or agency. A waiver both ofprivilege and protection, extends to undisclosedcommunications or informationin a separate federal or state proceedingonly if (1) the waiver is intentional; (2) thedisclosed and undisclosed informationconcern the same subject matter; and (3)the disclosed and undisclosed information“ought in fairness to be considered”together. See Fed. R. Evid. 502(a). Conversely,inadvertent disclosure will notinvoke a waiver of privilege in either federalor state proceedings when (1) the disclosureis inadvertent; (2) the holder of theprivilege took reasonable steps to preventdisclosure; and (3) the holder took reasonablesteps to rectify the error. See Fed. R.Evid. 502(b).<strong>The</strong> rule provides that disclosure in astate proceeding will not act as a waiver
in a federal proceeding if the disclosurewould not waive privilege or protectioneither under federal law or under the lawof the state where the disclosure occurred.See Fed. R. Evid. 502(c).<strong>The</strong> rule applies to both federal andstate proceedings by providing that a courtorder or an agreement by the parties thatis incorporated into an order, will preventwaiver in any ensuing federal or state proceedingand that the rule controls waiver instate proceedings and federal court mandatedarbitration, notwithstanding if statelaw otherwise constitutes the substantivelaw of privilege. See Fed. R. Evid. 502(d)–(f). See also Fed. R. Evid. 501. Finally, therule provides broad, general definitions ofattorney- client privilege and work productprotection consistent with existing legalprinciples. Fed. R. Evid. 502(g).Notably missing from Fed. R. Evid. 502is a definitive rule about “selective waiver.”Selective waiver permits a corporation tocooperate with the government by providingprivileged communications, such ascommunications about an internal investigation,without risk that an adversarywill later have the ability to discover thematerial in litigation. However, deemingthe issue too controversial, the AdvisoryCommittee deleted the original selectivewaiver provision from the rule. See SelectiveWaiver Absent From New FRE 502, FederalEvidence Review, Sept. 23, 2008, http://federalevidence.com/print/177.Codification of “Claw Back” AgreementsAnother amendment designed to respondto the burden of e- discovery in a fast-paced,legal environment was the change madeto Fed. R. Civ. P. 26(b)(5)(B) on handlingprivileged material that is inadvertentlyproduced. <strong>The</strong> provision codifies the recommendationby many that parties agreeto a mechanism through which they returninadvertently produced privileged materialto the producing party. See, e.g., <strong>The</strong> SedonaPrinciples, 2007 Annotated Version, §10(a): 156–160. As noted, by the Sedona Conference,however, Fed. R. Civ. P. 26(b)(5)(B) only provides a mechanism to identifyand return mistakenly produced privilegedmaterial, but it does not address waiver. <strong>For</strong>that, federal practitioners should resort toFed. R. Evid. 502 orders or so- orderedagreements.In practice, both Fed. R. Evid. 502 andFed. R. Civ. P. 26(b)(5)(b) may take someof the sting out of inadvertent disclosure,which results from the modern disclosureburden and the velocity with whichit occurs. Although, they cannot put the“genie back in the bottle,” these rules dobring some predictability to some waiverissues across different forums and geographicalboundaries.Is the Privilege in Retreat?Some believe that the attorney- corporateclient privilege has been eroded broadly.See, e.g., William R. McLucas, HowardM. Shapiro & Julie J. Song, <strong>The</strong> Decline ofthe Attorney- Client Privilege in the CorporateSetting, 96 J. Crim. L. & Criminology621 (2006); Association of CorporateCounsel, Executive Summary, Survey: Isthe Attorney- Client Privilege Under Attack,Apr. 6, 2005, available at http://www.abanet.org/buslaw/attorneyclient/publichearing20050421/testimony/hackett1.pdf; <strong>The</strong> Decline of theAttorney- Client Privilege in the CorporateContext, Survey Results (Association ofCorporate Counsel Nov. 2005), http://www.acc.com/legalresources/surveys/index.cfm; thenfollow “3”; then follow “<strong>The</strong> Decline of theAttorney- Client Privilege.”<strong>The</strong> decline has been attributed to manyfactors. <strong>For</strong> one, the first decade of thetwenty- first century witnessed some of theworst corporate scandals in American history.In response, many Americans haveconfused a corporation’s right to confidentiallegal counsel with the public need forcorporate transparency. <strong>The</strong> accompanyingpresumption has been that a corporationwould not assert privilege for communicationswith its counsel if it had nothingto hide.Also, new corporate regulations, suchas Sarbanes- Oxley and augmented auditingrequirements, have imposed new disclosurerequirements, which often applyto privileged communication. At thesame time, government investigators haveincreasingly, and according to some, tooaggressively required corporations to waivethe privilege as terms of agreement withthe government.<strong>The</strong> unpredictability erodes the abilityof corporations to confidently rely on privilegeassertion. <strong>The</strong> cost of voluminous, fastpacede- discovery may cause a corporationinadvertently to disclosure privilegedmaterial, which can require a corporationto conduct a cost- benefit analysis to determineif fighting for privilege protection isworthwhile, sometimes even when a communicationclearly was intended as confidential,and therefore, privileged. Indeed,some corporations resolve to pay in terroremsettlements in civil litigation ratherthan risk an adverse ruling and publicationof privileged material.ConclusionPrivileged communication assists corporationsto obtain meaningful legal adviceon a variety of topics, including preventingcorporate malfeasance from occurringor continuing. Maximizing privilegeprotection is particularly acute when inhousecounsel is involved. Although thesuggestions about measures that you andyour clients can implement to try to preserveattorney- corporate- client privilege isnot exhaustive, they offer a starting point.• Identify attorney- client communicationsas such, at the outset, and make sure thatevery communication participant knowsthat these communications fall in thatcategory. If communicating verbally, anattorney should advise others with whomhe or she communicates that he or she isthe corporation’s attorney and speakingin that capacity. Label written communication“attorney- client communication—privileged.”If privilege originateswith in-house counsel, clearly define inhousecounsel’s legal role.• An adversary may discover e-mails,tweets, blogs or other electronic media;therefore, they are subject to the sameprivilege rules that apply to traditionalcommunications. Corporations maywish to develop social media policiesthat limit employees’ use of social mediain the workplace and prohibit employeesfrom making unauthorized statementsabout corporate policies or other issuesin their personal blogs or other personalsocial media forums.• Handle all communication in a way thatdemonstrates that an attorney, or client,initially intended the communicationas confidential, and as such, privileged,and that a reasonable effort was madeto maintain the privilege. If communi-Waiver, continued on page 91<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 73
P R O F E S S I O N A L L I A B I L I T YWhen Is It Needed?By Jeffrey M. JamesExpert Testimony inLegal MalpracticeCasesWith increasingfrequency, plaintiffsare attempting tobypass the proceduralhurdle requiringexpert testimony byasking the court toapply the “commonsense exception.”At some point in every legal malpractice case, a defenseattorney expects to receive a disclosure of the plaintiff’sexpert witnesses and the witnesses’ opinions. Often, this isthe stage of the litigation when the issues are clearly out-lined, and the defense is told exactly “whatwent wrong.”But what happens when a plaintiff’s attorneydoes not disclose a liability expert? Aslawyers, we tend to think that a jury, usuallyconsisting of laypersons, cannot determinethe standard of care that an attorneyshould have followed when the alleged malpracticeoccurred. Does a plaintiff’s attorneyabsolutely have to present expert witness testimonyat trial to get the case to the jury?Oddly enough, sometimes the answer is no.This article will examine the currentstate of the law and answer the followingquestion: Under which circumstances isexpert testimony optional in a legal malpracticelawsuit, rather than mandatory?<strong>The</strong> answer to this question is important inanalyzing a case’s susceptibility to a summaryjudgment or a directed verdict at trial.• An employment relationship existedbetween the plaintiff as a client and thedefendant as his or her attorney;• This relationship created a duty, and theattorney breached that duty when representingthe client;• <strong>The</strong> client suffered damages that wereproximately caused by the attorney’sbreach of the duty.Larson & Larson, P.A. v. TSE Industries,Inc., 22 So. 3d 36, 39 (Fla. Dist. Ct. App.2009).<strong>The</strong> first element of a malpracticeclaim—the employment relationship—generally is not established by expert testimony.Rather, it is usually established bythe existence of a retainer agreement or, atleast, the plaintiff’s testimony that he or shebelieved that the defendant was representinghim or her.<strong>The</strong> Elements of Legal MalpracticeGenerally, at a trial, a plaintiff must provethe following elements to establish a claimfor legal malpractice:<strong>The</strong> Use of Expert TestimonyA plaintiff generally employs an expertwitness to address the second element ofa malpractice claim—an attorney’s breach74 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>■ Jeffrey M. James is a shareholder with the law firm of Banker Lopez Gassler P.A. in Tampa, Florida. His practice focuses onproducts liability, professional malpractice, and other litigation. Mr. James is admitted to practice in all state and federal courts inFlorida. He is AV-rated with Martindale- Hubbell and was included as a Rising Star in 2009 by Florida Super Lawyers magazine.Mr. James is a member of <strong>DRI</strong> and its Professional Liability Committee.
of a duty, which is normally defined asthe applicable standard of care. This actuallyentails a two-step process. First, anexpert witness must describe the standardof care for practitioners under the samecircumstances as a defendant’s. Next, aplaintiff’s expert must explain to the factfinderwhy the attorney’s actions failed tomeet the standard of care. Teltschik v. Williams& Jensen, PLLC, F. Supp. 2d, <strong>2010</strong>WL 481312, at *13 (D.D.C. <strong>2010</strong>) (holdingthat “expert testimony most often is necessaryto establish the applicable standardof care and breach thereof in legal malpracticeclaims”); Pereira v. Thompson,217 P.3d 236, 247 (Or. Ct. App. 2009) (“Toprove that breach, a jury often requiresexpert evidence setting forth the appropriatestandard of care owed by a reasonableattorney and how the defendant failed touphold that standard”).What Is the Standard of Care?Since the expert first explains the standardof care to a jury before establishing howhe or she breached it, identifying thatstandard of care is important in each particularcase. Sometimes a statute prescribesthe standard of care, clearly explaining thestandard an expert must consider in determiningwhether an attorney breached it.In Alabama, for example, the legislaturehas specified that a plaintiff suing a legalservice provider has the burden of provingthat the provider breached the applicablestandard of care in Ala. Code §6-5-580.Subsection (1) of the statute even definesthe standard of care as “such reasonablecare and skill and diligence as other similarlysituated legal service providers in thesame general line of practice in the samegeneral area ordinarily have and exercisein a like case.” Subsection (2) elaboratesfurther, stating that if an attorney publishesthe fact that he or she is certifiedas a specialist in a particular area of law,the applicable standard of care in a claimfor damages resulting from the practice ofthat specialty is the reasonable care, skilland diligence displayed by other attorneyswith the same specialty. This suggests thatan expert employed by a plaintiff to renderan opinion that a defendant breached theapplicable standard of care in representingthe plaintiff would practice in the samespecialty or area of law as the defendant.Some states without statutes outliningthe standard of care in legal malpracticeclaims nevertheless provide guidancethrough specialized jury instructions. Connecticutcivil courts employ a very detailedinstruction laying out the three elementsof a malpractice claim. Conn. Civ. JuryInstruction 3.8-5. <strong>The</strong> instruction providesan excellent explanation of the issuesthat a jury must determine in laymen’sterms. It also specifically explains the purposeof expert testimony:Malpractice is really professional negligence.Because jurors are probably unfamiliarwith legal procedures, methods,and strategies, you obviously cannot beexpected to know the demands of properlegal representation. It is for this reasonthat expert testimony is required todefine the standard of care or the dutyowing from the lawyer to his client,whether that duty has been breached,and whether that breach of duty causedthe damages the plaintiff claims, so thatyou can reasonably and logically concludewhat the proper standard of professionalcare was, whether or not it wasviolated, and whether that violation wasa legal cause of harm to the plaintiff.Though the instruction informs the jurythat the purpose of expert testimony is toestablish the standard of care owed by alawyer to his or her client, the instructionalso defines the applicable standard of care:“<strong>The</strong> test in this case for determining whatconstitutes sufficient knowledge, skill, anddiligence on the part of the defendant isthat which attorneys ordinarily have andexercise in similar cases. That means thatthe law does not expect from an attorneythe utmost care and skill obtainable orknown to the profession.”Certainly, Connecticut’s jury instructionis one of the most detailed and descriptiveinstructions on legal malpractice. Moreoften, pattern legal malpractice instructionstend to restate a court’s definition ofthe standard of care, as in Alaska, or simplyrepeat the standard definition of negligence,as in Florida. Compare AlaskaCivil Pattern Jury Instruction 8.10(“An attorney is negligent in the representationof a client if the attorney failsto use the skill prudence and diligencethat other attorneys commonly possessand would exercise under similar circumstances.”)with Florida Standard (Civil)Jury Instruction 402.5 (“Negligence isthe failure to use reasonable care. Reasonablecare on the part of [an attorney] is thecare that a reasonably careful [attorney]would use under like circumstances. Negligenceis doing something that a reasonablycareful [attorney] would not do under likecircumstances or failing to do somethingthat a reasonably careful [attorney] woulddo under like circumstances”).On the other end of the spectrum,many states do not have either a statuteor jury instruction outlining the applicablestandard of care. Courts in these statesgenerally will exercise discretion in decidingthe type of expert testimony to allowin a trial, and if it is required. Most likelya trial court will use the standard definitionof negligence in an instruction for ajury, unless an attorney requests a specialinstruction based on the testimony in evidence,and the court grants that request.When Is Expert TestimonyUnnecessary?What happens, though, when a plaintiffseeks to proceed to trial without intendingto offer expert testimony regarding thestandard of care and the defendant’s breachof that standard? Interestingly enough, experttestimony is not always necessary to establishthat an attorney breached a standardof care. At first blush, this seems counterintuitive.How will a jury, consisting of laypersons,identify the appropriate standard ofcare for an attorney in a particular situation?<strong>The</strong> Common Sense ExceptionCourts in jurisdictions across the countryhave held that if an attorney’s breachis so clear that even a layperson can determinethat it fails to meet the appropriatestandard of care, a court may permita plaintiff to proceed to trial without presentingexpert testimony to establish therequisite standard of care or that an attorneybreached the standard. This is oftencalled the “common sense exception,”though different jurisdictions use differentterms to describe it. See, e.g., Keeneyv. Osborne, S.W.3d, <strong>2010</strong> WL 743671, *4(Ky. Ct. App. Mar. 5, <strong>2010</strong>) (“sufficientlyapparent”); Davis v. Enget, 779 N.W.2d 126,129 (N.D. <strong>2010</strong>) (“egregious and obvious”);Byrne v. Grasso, 985 A.2d 1064, 1067 (Conn.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 75
P R O F E S S I O N A L L I A B I L I T YApp. Ct. 2009) (“obvious and gross want ofcare”); Storey v. Leonas, 904 N.E.2d 229,238 (Ind. Ct. App. 2009) (“grossly apparent”);Bowman v. Doherty, 686 P.2d 112,120 (Kan. 1984) (“clear and obvious”);Hughes v. Malone, 247 S.E.2d 107, 111(Ga.Ct. App. 1978) (“clear and palpable”).Whatever the name for the commonsense exception in your jurisdiction, it isExpert testimony isnot always necessary toestablish that an attorneybreached a standard of care.essential that you realize that it may comeup even in malpractice cases that do notpresent “sufficiently apparent” negligence.Because judges determine whether theexception applies on a case-by-case basis,you cannot definitively rule out the issueat the outset when a former client asserts aclaim. In practice, the fact that courts usebroad, flexible terms, such as “sufficientlyapparent” and “common sense,” provideslittle guidance about when and how courtswill apply the exception. <strong>The</strong> variabilityof legal malpractice claims amplifies theunpredictability. As practitioners in thisfield know, every case is unique in someway, so you always face a chance that acourt will apply the common sense exceptionin a legal malpractice case.Because the terminology used to describethe common sense exception is often vague,defense attorneys should understand thesituations in which courts have applied theexception and held that an attorney’s conductwas so negligent that the breach of thestandard of care was clear enough to renderexpert testimony unnecessary. Courtsand commentators usually point to an instancein which an attorney failed to meeta statute of limitations deadline as the prototypicalexample of clear negligence. To besure, laypersons likely can understand thatan attorney missed a deadline that compromisedhis or her former client’s ability to suesomeone or some entity without an expertwitness explaining it to them. Generally,76 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>however, juries do not hear these cases veryoften because the parties settled them early,unless the damages issues are contested.In reality, therefore, the most importantquestion is, how can we make sense of the“common sense” exception? Though courtshave noted that the exception should onlyapply in “rare and exceptional” cases, Fontainev. Steen, 759 N.W.2d 672, 677 (Minn.Ct. App. 2009), numerous courts in jurisdictionsaround the country have appliedthe exception in numerous cases in a varietyof situations. Based on a review of caselaw, the situations in which courts haveapplied the common sense exception generallyfell into three categories: (1) failureto file; (2) failure to communicate; and (3)failure to follow instructions. However, asthe cases discussed below illustrate, legalmalpractice cases often involve more thanone of these three situations, which createsmore reason for a court to find an apparentbreach of the standard of care.Failure to FileVarious courts have held that if an attorneyfailed to file a critical pleading or otherdocument that damaged a client’s rights,such an act of omission clearly breachedthe standard of care. As mentioned above,the most egregious example of this type ofbreach is if an attorney has failed to file acomplaint within the applicable statute oflimitations period. Courts have also foundthat when an attorney failed to file a responseto a complaint, which led to a defaultjudgment against his or her former client,the attorney breached the standard of care.See, e.g., McGrath v. Everest Nat. Ins. Co., 668F. Supp. 2d 1085, 1116–17 (N.D. Ind. 2009).However, other types of documents fallwithin this category as well. In Valentine v.Watters, 896 So. 2d 385 (Ala. 2004), a formerclient sued her attorney for failing to filethe necessary registration papers to have theclient included in a class action lawsuit regardingbreast implant defects. <strong>The</strong> evidencesuggested that the defendant had (1) misrepresentedhis past experience with breast implantclass action litigation; (2) failed to filetimely registration papers so that the clientwould be included in the class; and (3) repeatedlytold the client that he had in factsent in the papers, but the court clerk hadmisplaced them. <strong>The</strong> late filing by the attorneycaused the client to be classified as a “lateregistrant” in the class action, which meantthat she was not entitled to the same level ofbenefits as a “current registrant.” <strong>The</strong> trialcourt entered a summary judgment for thedefendant when the plaintiff did not produceexpert testimony about whether the defendant’sconduct constituted a breach of thestandard of care.On appeal, the Supreme Court of Alabamareversed the summary judgment,holding that whether the former clientwould have prevailed in the class actionwas a question within the understandingof the jury. Id. at 394. <strong>The</strong> court likenedthe situation to an attorney violating astatute of limitations time frame. Id. Interestingly,the court also held that expert testimonywas not required to establish thatthe defendant had breached the applicablestandard of care in misrepresenting hisqualifications to the former client. Id. at394–95. In Valentine, the defendant’s circumstancereally fell within two commonsense exception situations. He initiatedhis problems by failing to file the properpaperwork with the court, and then hecompounded them by failing to communicatetruthfully with his client, which is discussedfurther in the next section.Failure to CommunicateNext, courts are likely to find an apparentbreach of the standard of care whena client is harmed by an attorney’s failureto communicate fully and honestlywith the client. One such situation is a failureto discuss settlement offers with a client.In Joos v. Auto- Owners Insurance Co.,288 N.W.2d 443 (Mich. App. 1979), thecourt reversed a dismissal that was basedon the plaintiff’s failure to produce experttestimony. In that case, the former client,Avery, was sued by various people injuredin an automobile accident that Avery allegedlycaused. Avery’s automobile insurancecompany hired the defendant, the attorney,to represent Avery in the case. All claimantssettled prior to trial except for Joos.Joos had offered to settle her claim withAvery within her remaining policy limitson several occasions, but the evidenceshowed that the attorney never communicatedthose offers to Avery or her insurancecompany. Avery did not become awareof the offers until the first day of trial. Atthat point, the defendant told Avery that
he did not have the authority to settle forthe amount requested. On the followingday, the defendant advised Avery that hehad received authority to settle. Despite theclient’s willingness to settle, the defendantrefused to do so because he thought hecould “beat the case.” Id. at 444. <strong>The</strong> juryreturned a verdict for Joos in the amountof $65,000, exclusive of interest and costs.Avery and Joos, who had been assigneda portion of Avery’s claim, sued the defendantfor legal malpractice. <strong>The</strong> trialcourt dismissed the claim for failure tointroduce expert testimony that the defendanthad breach the standard of care bynot communicating the pretrial settlementoffers and failing to settle the case when hehad authority to do so. <strong>The</strong> appellate courtreversed, holding that “an attorney has, asa matter of law, a duty to disclose and discusswith his or her client good faith offersto settle.” Id. at 445. In addition, the courtfound that it was within the knowledge ofa layperson “to recognize” that “the failureof an attorney to disclose such informationis a breach of the applicable standardof care.” Id.In Joos, again, the facts demonstrate thecoexistence of two situations in a singlecase in which courts apply the “commonsense” exception: failure to communicateand failure to follow instructions. <strong>The</strong>attorney also probably exacerbated hisproblem by intentionally failing to communicateand following instructions to settle,explaining that he could win if the caseif he made it to the jury.Failure to Follow InstructionsFinally, courts usually do not requireexpert testimony if an attorney failed tofollow the express instructions of a client tothe client’s detriment. <strong>For</strong> example, in Joos,the attorney failed to settle a claim after hisclient told him to do so. Another case illustratingthis situation was Jarnagin v. Terry,807 S.W.2d 190 (Mo. App. 1991). In Jarnagin,the defendant represented a client in adivorce proceeding. <strong>The</strong> evidence at trialshowed that the client had instructed theattorney to include as a term of the divisionof the marital property, and to securethe judgment of the court, that the client’shusband solely undertake a particular maritaldebt. <strong>The</strong> evidence also proved that theattorney had agreed to this instruction andyet failed to follow it, leading to the damagesincurred by the client. <strong>The</strong> trial court,however, directed a verdict for the attorneybased on a lack of expert testimony.<strong>The</strong> appellate court approached the issuein an interesting way. Instead of analyzingit through the lens of the common senseexception, the court focused on the attorney’sduty as an agent of the client to findthat the breach was contractual rather thanbased in tort. Id. at 194. <strong>The</strong> court stated,“<strong>The</strong> ground of the action is not that theclient was damaged by the lack of legalexpertise of the lawyer, but that the lawyerdid not follow the direction of the client,so that expert testimony is not neededto prove that the agent committed a breachof duty to the principal.” Id. Other courtshave also made this distinction while stillapplying the common sense exception. SeeAsphalt Engineers, Inc. v. Galusha, 770 P.2d1180, 1181–82 (Ariz. App. 1989); Olfe v. Gordon,286 N.W.2d 573, 577–78 (Wis. 1980).As these cases illustrate, very often if acourt holds that expert testimony is unnecessaryto establish a breach of the applicablestandard of care, the defendant has,through multiple acts, damaged the client’srights. While simply failing to file,failing to communicate or failing to followa client’s instructions may each alonesufficiently prompt a court to apply thecommon sense exception, an attorneydefending a malpractice claim involvingmore than one of these negligent acts mustcertainly prepare for a former client suingan attorney to make this argument at thesummary judgment stage or at trial.Unique Rulings Relating to theNeed for Expert TestimonySometimes when a court rules on whethera plaintiff needs expert testimony to establishthe standard of care or establish abreach of a duty, it leads to a unique ruling.<strong>For</strong> instance, in one recent federal courtopinion in California, the court outlinedfor the parties the conduct that would fallbelow the standard of care in that particularcase. In Ito v. Brighton/Shaw, Inc., 2009WL 2960836 (E.D. Cal. Sept. 11, 2009), thecourt, on a motion for reconsideration, reiteratedits previous ruling that the plaintiffcould proceed to trial against the defendantwithout expert testimony if he could establishone of three “foundational facts.” Id. at*2. Though this opinion appears to be anoutlier, it could help you to secure a compromiseon the common sense exceptionif it seems likely that a former client willinvoke the exception.In Yates v. Brown, <strong>2010</strong> WL 58924 (OhioCt. App. Jan. 11, <strong>2010</strong>), the court suggestedthat expert testimony was necessary inthis legal malpractice claim to determinecausation and apportion fault because itinvolved multiple attorneys. <strong>The</strong> former clientsasserted that the actions of an attorneyother than the defendant may have causedsome of the damages attributed to the defendant.In responding to the defendant’smotion for summary judgment, the formerclients did not limit their argumentsto the actions of the defendant. <strong>The</strong> appellatecourt upheld summary judgmentfor the defendant, stating, “When multipleattorneys were involved in the underlyingrepresentation, and when the plaintiffshave alleged negligent representation bymore than one attorney, the trial courtdid not err by concluding that expert testimonywas necessary to establish a primafacie case of legal malpractice in regard toan individual attorney. In fact, expert testimonywould be critical under these circumstancesto determining causation andeither parsing or eliminating liability.” Id.at *5. This language suggests that if the formerclients had directed accusations solelyagainst the defendant, expert testimonymay not have been required.ConclusionIn most legal malpractice cases across thecountry, a court—either by statute or byprecedent—will require a plaintiff to offeran expert witness to testify to establish thestandard of care applicable to the defendantand whether the defendant breached it. Withincreasing frequency, however, plaintiffshave bypassed this procedural hurdle byarguing to a court that the standard of careand the breach were so obvious that even alayperson can comprehend them withoutthe benefit of expert testimony. In those situations,a defense attorney must know thetype of conduct to which courts will applythe common sense exception. Identifyingthis conduct will allow you to have an argumentready to combat the exception when aplaintiff’s attorney invokes it. Clearly, thatis a matter of common sense.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 77
P R O F E S S I O N A L L I A B I L I T YLegal MalpracticeBy Susan E. WassellClaims Arisingfrom Multiple-Defendant LitigationJoint representation canhave notable advantages,but poor representationcan have devastatingramifications—professionally, financially,and emotionally.Black’s Law Dictionary (1983) defines legal malpracticeas the “failure of an attorney to use such skill, prudence,and diligence as lawyers of ordinary skill and capacitycommonly possess and exercise in performanceof tasks which they undertake, and whensuch failure proximately causes damages itgives rise to an action in tort.” Legal malpracticecan be the “elephant in the room,”a risk that we all know exists but that wetry to ignore. It goes without saying thatan attorney never actively seeks to commitmalpractice, but given that lawyersare sued for malpractice, it is time that the“elephant” was acknowledged, understood,and avoided.<strong>The</strong> elements of legal malpractice arefairly straightforward. <strong>The</strong> circumstancesunder which the malpractice is committedare another matter. <strong>The</strong>y are so broadand varied that we could spend countlesshours evaluating and discussing the topic.This article will focus on one particularsource of malpractice claims: handling, orpossibly mishandling, multiple- defendantrepresentation. This article will providegeneral guidelines for avoiding malpracticewhen working with multipledefendants.Advantages and Disadvantages ofRepresenting Multiple Defendants<strong>The</strong> specific advantages of representingmultiple defendants in a lawsuit varywith the circumstances. Often, the advantagesinclude the ability to present a jointdefensestrategy and the cost- effectivenessachieved when multiple clients hire oneattorney or firm to represent all of them. Ajoint- defense strategy inherently necessitatesthat the defendants cooperate, jointlyanalyze the issues, and exchange integralinformation in a protected environment.It also can prevent a plaintiff from “dividingand conquering” defendants. Anotherpotential advantage is that it prevents defendantsfrom attacking each other, whichdistracts a jury from the weaknesses in aplaintiff’s claims.Interestingly, the advantages canbecome disadvantages. In particular, cooperatingand openly exchanging informationhave disadvantages. A joint defensecan raise conflicts of interest as a matter78 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>■ Susan E. Wassell is an associate with Fain Anderson VanDerhoef, PLLC, in Seattle. Her practice focuses on the defense ofcomplex litigation, including claims of medical and other professional liability, products liability, general civil litigation matters andpersonal injury. Ms. Wassell has several years of legal experience and has nursing and hospital risk management experience aswell. <strong>The</strong> author would like to acknowledge Erin H. Hammond, also an associate with Fain Anderson VanDerhoef, PLLC, in Seattle,for her contributions to this article.
of law, conflicts of interest among the defendantsfrom misaligned defenses, andconfidentiality issues, particularly relatedto attorney- client privilege. <strong>For</strong> example,because of the free flow of information in ajoint- defense scenario, if defendant 1 sayssomething to the attorney, the attorneycan, and possibly must, disclose that informationto defendant 2, and the reverse istrue. As a result, the parties may feel nervousabout disclosing potentially relevantinformation to an attorney. It could alsoresult in animosity among the defendants,depending on the information’s character.In states that have comparative fault laws,a joint defense might also prevent one defendantfrom requesting an allocation offault to another defendant, which has consequencesif one defendant has a muchstronger defense than the other.In light of the advantages and potentialdisadvantages, poorly representing thesedefendants can have devastating ramifications—professionally,financially, andemotionally. As such, it is important tounderstand how to avoid the pitfalls of representingmultiple defendants and the legalmalpractice lawsuits that it can generate.Elements of Legal MalpracticeWhile the elements of legal malpracticeclaims are fairly simple, court interpretationof each element has been quite complex.Although the elements to prove legalmalpractice vary slightly from state-tostate,a plaintiff in a legal malpractice casemust prove (1) the existence of an attorneyclientrelationship; (2) a duty owed to theclient; (3) a breach of the duty owed to theclient; and (4) proximately caused damages.Each of these elements requires individualand joint evaluation in a legalmalpractice claim. <strong>For</strong> instance, if noattorney- client relationship existed, someonecould not sue for legal malpractice. <strong>For</strong>the purposes of this article, assume that anattorney- client relationship is not at issue.Duty and Breach of Duty<strong>For</strong> a plaintiff’s legal malpractice suit to succeed,he or she must demonstrate that anattorney breached a duty that the attorneyhad been obligated to perform. Professionalnegligence implicates a duty of care, whilea breach of fiduciary duty implicates a dutyof loyalty and honesty. Pereira v. Thompson,230 Or. App. 640, 653 (2009) (citing Dan B.Dobbs, <strong>The</strong> Law of Torts §487, 1392 (2000)).In a legal negligence claim, as opposedto an ethics complaint, a plaintiff mustdemonstrate that an attorney failed to adequatelyperform the duty of care, which isthe duty “to act as a reasonably competentattorney in protecting and defending the interestsof the client.” Pereira, 230 Or. App.at 654 (citing Onita Pacific Corp. v. Trusteesof Bronson, 315 Or. 149, 160, 843 P.2d 890(1992)); see also Stonewall Corp. v. ConestogaTitle Ins. Co., <strong>2010</strong> U.S. Dist. Lexis 1107, 13–14 (S.D.N.Y. Jan 7, <strong>2010</strong>) (citing Achtman v.Kirby, McInerney & Squire, LLP, 464 F.3d328, 337 (2d Cir. 2006) (quoting Grago v.Robertson, 49 A.D.2d 645, 370 N.Y.S. 2d255 (N.Y. 1975)). Common examples of circumstancesfor which an attorney may beheld liable include “ignorance of the rulesof practice, failure to comply with conditionsprecedent to suit, or… neglect to prosecuteor defend an action.” Stonewall Corp.v. Conestoga Title Ins. Co., <strong>2010</strong> U.S. Dist.Lexis 1107, 13–14 (S.D.N.Y. Jan 7, <strong>2010</strong>) (citingHatfield v. Herz, 109 F. Supp. 2d 174, 180(S.D.N.Y. 2000) (quoting Bernstein v. Oppenheim& Co., 160 A.D.2d 428, 554 N.Y.S.2d 487, 489–90 (1st Dep’t 1990)). Typically,proving breach of the duty of care requiresexpert testimony. It must set forth the appropriatestandard of care owed by a reasonableattorney and must also explain howthe attorney allegedly failed to uphold thatstandard. Pereira, 230 Or. App. at 654 (citingOnita Pacific Corp. v. Trustees of Bronson,315 Or. 149, 160, 843 P.2d 890 (1992)).That said, some jurisdictions allow aplaintiff to pursue a breach of fiduciaryduty claim. This claim alleges that an attorneyowes a client a duty of loyalty, goodfaith, and fair dealing, and the attorneybreached this duty. In this instance, theparty claiming the breach “must plead andprove the breach, and must show that thebreach caused an identifiable loss or resultedin injury to the party.” Id. at 654–55(citing Lindland v. United Business Investments,298 Or. 318, 327, 693 P.2d 20 (1984)).A plaintiff can establish breach of the dutyof loyalty by proof that an attorney had aconflict of interest or had been self- dealing.Id. It is incumbent upon an attorney to defendagainst these types of claims by showingfull disclosure or some other defense. Id.It is well established that an attorneydoes not have a duty to ensure or guaranteethe most favorable outcome possible,and an attorney is never bound to exerciseextraordinary diligence, or act beyondthe knowledge, skill, and ability ordinarilypossessed by members of the legal profession.Simko v. Blake, 448 Mich. 648, 656(Mich. 1995). See also Kellos v. Sawilowsky,254 Ga. 4, 5 (Ga. 1985). Furthermore, mereerrors in judgment by a lawyer are not generallygrounds for a malpractice action ifthe attorney acted in good faith and exercisedreasonable care, skill, and diligence.Simko, 448 Mich. at 658 (citing Baker v.Beal, 225 N.W.2d 106, 112 (Iowa 1975));Rorrer v. Cooke, 313 N.C. 338, 340–42, 329S.E.2d 355 (N.C. 1985); Stonewall Corp.v. Conestoga Title Ins. Co., <strong>2010</strong> U.S. Dist.Lexis 1107, 13–14 (S.D.N.Y. Jan 7, <strong>2010</strong>) (citingRosner v. Paley, 65 N.Y.2d 736, 481 N.E.2d 553, 554, 492 N.Y.S.2d 13 (N.Y. 1985)).Damages and Proximate CauseIf a plaintiff establishes a duty existed anda breach happened, a plaintiff still will notsucceed in a legal malpractice case unlesshe or she can prove that he or she sufferedloss, and if so, he or she still must provethat he or she suffered ascertainable loss.See Kirk v. Heppt, 2009 U.S. Dist. Lexis80989, 24–25 (S.D.N.Y. Sept. 3, 2009) (citingWeil, Gotshal & Manges, LLP v. FashionBoutique of Short Hills, Inc., 10 A.D.3d 267,780 N.Y.S.2d 593, 596 (App. Div. 2004)).A plaintiff must also show that but for anattorney’s breach of duty, he or she wouldhave prevailed in the underlying actionor would not have sustained a loss. Thisis the “case within a case” idea. Nobile v.Schwartz, 265 F. Supp. 2d 282, 289 (S.D.N.Y.2003); Davis v. Klein, 88 N.Y.2d 1008, 1009–10, 648 N.Y.S.2d 871, 671 N.E.2d 1268 (N.Y.1996); Ashton v. Scotman, 260 A.D.2d 332,686 N.Y.S.2d 322 (N.Y. App. Div. 1999).As explained by one court, “<strong>The</strong> causationrequirement is a high bar to attorneymalpractice liability and seeks to insure atight causal relationship exists between theclaimed injuries and the alleged malpractice.”Kirk v. Heppt, 2009 U.S. Dist. Lexis80989, 24–25 (S.D.N.Y. Sept. 1, 2009) (citingFlutie Bros. LLC v. Hayes, No. 04 Civ. 4187(DAB), 2006 U.S. Dist. Lexis 31379, 2006WL 1379594, at *5 (S.D.N.Y. May 18, 2006)).Determining whether a negligent actor omission proximately caused an injury<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 79
P R O F E S S I O N A L L I A B I L I T YA lawyer has a duty tocommunicate with his orher client and breachingthat duty creates asituation in which a legalmalpractice suit may arise.necessitates determining whether the injurywas a natural and probable consequencethat should have been foreseen.Hedrick v. Tabbert, 722 N.E.2d 1269, 1273(Ind. Ct. App. 2000) (citing Johnson v. Owens,639 N.E. 2d, 1016, 1023 (Ind. Ct. App.1994)). Establishing legal malpractice alsorequires a reasonable connection betweenan attorney’s conduct and the negative consequencesthat a plaintiff suffered. Id. (citingTipmont Rural Elec. Membership Corp.v. Fischer, 697 N.E.2d 83, 87 (Ind. Ct. App.1998)). If a reasonably unforeseeable, intervening,independent, force brought aboutthe harmful consequences, the interveningcause may serve to break the chain of causation,curtailing an attorney’s liability. Id.(citing Best Homes, Inc. v. Rainwater, 714N.E.2d 702, 706 (Ind. Ct. App. 1999)).Avoiding Legal MalpracticeWith the legal malpractice framework inmind, the question becomes how an attorneycan avoid an accusation of legal malpracticealtogether.Model Rules of Professional ConductIn addition to knowing the substantivelaw in your practice area and acting withdiligence, the American Bar AssociationModel Rules of Professional Conduct provideguidance on acceptable legal practice.<strong>The</strong> Model Rules of Professional Conduct,adopted by the ABA House of Delegates in1983, serve as the model for the ethics rulesof most states. <strong>The</strong> rules provide informationon how to practice ethically when representingmultiple defendants. Althoughthis article will discuss Model Rules ofProfessional Conduct and the associated80 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Comments, it is important that each attorneybecome familiar with his or her ownstate rules and should abide by those, asrequired.<strong>The</strong> primary Model Rules related torepresenting multiple defendants are: 1.2,“Scope of Representation and Allocation ofAuthority Between Client and Lawyer”; 1.4,“Communication”; 1.6, “Confidentiality ofInformation”; 1.7, “Conflict of Interest: CurrentClients”; 1.8, “Conflict of Interest: CurrentClients: Specific Rules”; 1.9, “Duties to<strong>For</strong>mer Clients”; and 1.16, “Declining orTerminating Representation.”Model Rule 1.2Model Rule 1.2(a) states, in part, “Subject toparagraphs (c) and (d), a lawyer shall abideby a client’s decisions concerning the objectivesof representation and, as required byModel Rule 1.4, shall consult with the clientas to the means by which they are to bepursued. A lawyer may take such action onbehalf of the client as is impliedly authorizedto carry out the representation. Alawyer shall abide by a client’s decisionwhether to settle a matter.”<strong>The</strong> comment to this rule explains thatthe purpose of paragraph (a) is to assign tothe client the ultimate authority to “determinethe purposes to be served by legalrepresentation, within the limits imposedby law and the lawyer’s professional obligations.”Model Rules of Prof’l ConductR. 1.2 cmt. <strong>For</strong> example, a client mustdecide whether to settle a civil matter. Toensure that a client’s purposes are served,you must communicate with the client sothat you understand the client’s goals. Alawyer has a duty to communicate with hisor her client and breaching that duty createsa situation in which a legal malpracticesuit may arise. Notably, the Model Rulesdo not recommend how a lawyer wouldresolve disagreements that may arise ifa lawyer and a client disagree about howbest to accomplish the client’s objectives;however, an attorney can always withdrawfrom or a client can discharge an attorneyfrom representation. See Model Rules ofProf’l Conduct R. 1.16.Model Rule 1.2(c) states, “A lawyer maylimit the scope of the representation ifthe limitation is reasonable under the circumstancesand the client gives informedconsent.”<strong>The</strong> comment addressing Model Rule1.2(c) explains that an attorney and clientmay agree to limit the scope of services thatthe attorney will provide. <strong>The</strong> commentstates, “When a lawyer has been retainedby an insurer to represent an insured, forexample, the representation may be limitedto matters related to the insurance coverage.”Model Rules of Prof’l ConductR. 1.2 cmt. Limited representation maybe appropriate when a client has limitedobjectives in seeking representation or limitedmeans with which to accomplish theobjectives. Importantly, however, the limitationmust be reasonable under the circumstances,and an attorney must secureinformed consent. It is also vital that anagreement does not exempt a lawyer fromthe duty to provide competent representation.Assuming a limited scope of representationthat is reasonable, an attorneyshould strongly consider obtaining writteninformed consent regarding this scopeof representation. Among other benefits, allparties can use this document as a sourceof information throughout litigation, aswell as an evidentiary source for an attorneyif a legal malpractice claim is initiated.Model Rule 1.4Model Rule 1.4(a) states, “A lawyer shall:(1) promptly inform the client of any decisionor circumstance with respect to whichthe client’s informed consent, as defined inRule 1.0(e), is required by these Rules; (2)reasonably consult with the client aboutthe means by which the client’s objectivesare to be accomplished; (3) keep the clientreasonably informed about the status ofthe matter; (4) promptly comply with reasonablerequests for information; and (5)consult with the client about any relevantlimitation on the lawyer’s conduct whenthe lawyer knows that the client expectsassistance not permitted by the Rules ofProfessional Conduct or other law.” Paragraph(b) states, “A lawyer shall explaina matter to the extent reasonably necessaryto permit the client to make informeddecisions regarding the representation.”Model Rules of Prof’l Conduct R. 1.4.<strong>The</strong> comment to this rule states that“reasonable communication between thelawyer and the client is necessary for theclient to effectively participate in the representation.”Model Rules of Prof’l Con-
duct R. 1.4 cmt. As previously mentioned,attorneys have a duty to communicate withtheir clients. Attorneys must learn a client’sgoals and determine the appropriatemeans to accomplish those goals. <strong>The</strong> commentfurther states, “<strong>The</strong> client should havesufficient information to participate intelligentlyin decisions concerning the objectivesof the representation and the meansby which they are to be pursued, to theextent the client is willing and able to doso…. <strong>The</strong> guiding principle is that the lawyershould fulfill reasonable client expectationsfor information consistent with theduty to act in the client’s best interests, andthe client’s overall requirements as to thecharacter of representation.” Id. Failing toadequately communicate with a client canmake an attorney vulnerable to a legal malpracticeclaim.Model Rule 1.6Model Rule 1.6, paragraph (a) states, inpart, “A lawyer shall not reveal informationrelating to the representation of a clientunless the client gives informed consent…”<strong>The</strong> comment to this rule states that therule governs the disclosure by a lawyer ofinformation related to the representation ofa client during the lawyer’s representationof the client, and “A fundamental principlein the client- lawyer relationship is that, inthe absence of the client’s informed consent,the lawyer must not reveal informationrelating to the representation…. Thiscontributes to the trust that is the hallmarkof the client- lawyer relationship.” ModelRules of Prof’l Conduct R. 1.6 cmt.This confidentiality originates with theattorney- client privilege, the work productdoctrine, and the rule of confidentialityestablished in professional ethics.Of note, Model Rule 1.6 becomes a potentialsource of contention when representingmultiple defendants. Attorney- clientprivilege does not protect communicationsbetween the defendants and an attorneywhen the attorney jointly representsthem. <strong>The</strong>refore, as previously stated, ifdefendant 1 discusses something with theattorney, then the attorney can, and sometimesmust, disclose that to defendant 2,and the reverse is true.Model Rule 1.7Model Rule 1.7(a) states, “Except as providedin paragraph (b), a lawyer shall notrepresent a client if the representation involvesa concurrent conflict of interest. Aconcurrent conflict of interest exists if: (1)the representation of one client will be directlyadverse to another client; or (2) thereis a significant risk that the representationof one or more clients will be materiallylimited by the lawyer’s responsibilities toanother client, a former client or a third personor by a personal interest of the lawyer.”Model Rule 1.7(b) states, “Notwithstandingthe existence of a concurrent conflict ofinterest under paragraph (a), a lawyer mayrepresent a client if: (1) the lawyer reasonablybelieves that the lawyer will be able toprovide competent and diligent representationto each affected client; (2) the representationis not prohibited by law; (3) therepresentation does not involve the assertionof a claim by one client against anotherclient represented by the lawyer in the samelitigation or other proceeding before a tribunal;and (4) each affected client givesinformed consent, confirmed in writing.”<strong>The</strong> comment to Model Rule 1.7 is extensiveand warrants independent review byan attorney. <strong>The</strong> comment points out thatconflicts of interest may exist before an attorneyundertakes representation, in whichcase the representation must not ensue unlessan attorney obtains informed consent,but it may also arise after representation hasbeen undertaken, in which case an attorneyusually must withdraw from representationunless he or she obtains informed consent.If conflicts of interest arise after representationhas been undertaken, the questionof whether a lawyer may continue to representany of the clients is determined bythe attorney’s ability to comply with dutiesowed to a former client and ability to representthe remaining clients, given the dutiesowed to the former client. See ModelRules of Prof’l Conduct R. 1.9.<strong>The</strong> comment to Model Rule 1.7 alsodiscusses prohibited representations.Although attorneys can overcome someconflicts by obtaining client consent, someconflicts cannot be overcome by attorneys.“Consentability” is “typically determinedby considering whether the interestsof the clients will be adequately protectedif the clients are permitted to give theirinformed consent to representation burdenedby a conflict of interest.” ModelRules of Prof’l Conduct R. 1.7 cmt.Informed consent is defined under ModelRule 1.0(e) as “the agreement by a personto a proposed course of conduct after thelawyer has communicated adequate informationand explanation about the materialrisks of and reasonably available alternativesto the proposed course of conduct.”When an attorney will represent multipleclients in a single matter, the informationcommunicated to clients must include theimplications of the common representation,including possible effects on loyalty, confidentiality,the attorney- client privilege, andthe advantages and risks involved. ModelRules of Prof’l Conduct R. 1.7 cmt. Infurther discussing the representation ofmultiple parties, the comment to ModelRule 1.7 advises, “In considering whetherto represent multiple clients in the samematter, a lawyer should be mindful that ifthe common representation fails becausethe potentially adverse interests cannot bereconciled, the result can be additional cost,embarrassment and recrimination.”<strong>The</strong> comment to ABA Model Rule 1.7 alsodiscusses the importance of obtaining writtenconsent from clients. It states, in part,“<strong>The</strong> requirement of a writing does not supplantthe need in most cases for the lawyerto talk with the client, to explain the risksand advantages, if any, of representationburdened with a conflict of interest, as wellas reasonably available alternatives, and toafford the client a reasonable opportunityto consider the risks and alternatives andto raise questions and concerns. Rather, thewriting is required in order to impress uponclients the seriousness of the decision theclient is being asked to make and to avoiddisputes or ambiguities that might later occurin the absence of a writing.”Model Rule 1.8Model Rule 1.8(g) states, “A lawyer whorepresents two or more clients shall notparticipate in making an aggregate settlementof the claims of or against the clients,or in a criminal case an aggregated agreementas to guilty or nolo contendere pleas,unless each client gives informed consent,in a writing signed by the client. <strong>The</strong>lawyer’s disclosure shall include the existenceand nature of all the claims or pleasinvolved and of the participation of eachperson in the settlement.”<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 81
P R O F E S S I O N A L L I A B I L I T Y<strong>The</strong> comment to this rule points outthat “[d]ifferences in willingness to makeor accept an offer of settlement are amongthe risks of common representation of multipleclients by a single lawyer.” ModelRules of Prof’l Conduct R. 1.8 cmt. <strong>The</strong>reader should recall that Model Rule 1.7indicates that settlement is one of the risksthat should an attorney should discuss withWhen an attorney willrepresent multiple clientsin a single matter, theinformation communicatedto clients must includethe implications of thecommon representation.a client when obtaining informed consent,and Model Rule 1.2 protects each client’sright to have the final say in accepting orrejecting a settlement offer.82 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Model Rule 1.9Model Rule 1.9(a) states, “A lawyer who hasformerly represented a client in a mattershall not thereafter represent another personin the same or a substantially relatedmatter in which that person’s interests arematerially adverse to the interests of theformer client unless the former client givesinformed consent, confirmed in writing.”Paragraph (b) states, “A lawyer shall notknowingly represent a person in the sameor a substantially related matter in whicha firm with which the lawyer formerly wasassociated had previously represented aclient (1) whose interests are materiallyadverse to that person; and (2) about whomthe lawyer had acquired information protectedby Rules 1.6 and 1.9(c) that is materialto the matter, unless the former clientgives informed consent, confirmed in writing.”Model Rules of Prof’l ConductR. 1.9. Paragraph (c) states, “A lawyer whohas formerly represented a client in a matteror whose present or former firm has formerlyrepresented a client in a matter shallnot thereafter: (1) use information relatingto the representation to the disadvantageof the former client except as these ruleswould permit or require with respect to aclient, or when the information has becomegenerally known; or (2) reveal informationrelating to the representation except asthese rules would permit or require withrespect to a client.” Id.<strong>The</strong> comment to Model Rule 1.9 discussesthe continuing duties that an attorneyowes to a client after the relationshipterminates, particularly with respect toconfidentiality and conflicts of interest.Regarding the representation of multipledefendants, if an attorney withdraws or aclient terminates the relationship, how toproceed in representing the remaining clientor clients becomes a significant issue.A lawyer who has represented multiple clientsin a matter may not represent one ofthe clients against the others in the “sameor substantially related matter after a disputearose among the clients in the matter,unless all affected clients given informedconsent.” Model Rules of Prof’l ConductR. 1.9 cmt.Model Rule 1.16Model Rule 1.16(a) states, in part, “a lawyershall not represent a client or, where representationhas commenced, shall withdrawfrom the representation of a client if:(1) the representation will result in violationof the rules of professional conduct orother law;…”<strong>The</strong> comment to Model Rule 1.16 statesthat a “lawyer should not accept representationin a matter unless it can be performedcompetently, promptly, withoutimproper conflict of interest and to completion.”A client may discharge a lawyerat any time, with or without cause, and alawyer may withdraw or may be forced towithdraw from representation in some circumstances,including if the representationwill violate the Model Rules of ProfessionalConduct. A lawyer has the option to withdrawif he or she can accomplish withdrawalwithout adversely affecting a client’smaterial interests.Joint-Representation AgreementBeyond actually understanding the ethicalrules that guide an attorney’s practicewhen representing multiple defendants,another way to prevent a legal malpracticeclaim involves drafting and executinga joint- representation agreement that capturesthe elements of the ethical rules. Aquality agreement would cover the guidelinesaddressed in the Model Rules regardingcommunication, informed consent,conflict of interest, and termination ofrepresentation.Before an attorney and prospective clientsdraft and execute a joint- representationagreement, they must openly communicate,discussing currently existing conflicts,legal or factual, and the attorneyshould explain these conflicts so that clientswill easily understand them. An attorneyshould also discuss potential conflictswith clients. Discuss each client’s goals,potential defense theories, if known, andwhether clients would consider a settlement.If clients will consider settlement asan agreeable option, talk about the risksassociated with settling, particularly whathappens when defendants cannot agree onactual settlement terms. In general, jointrepresentationrisks may include the breakdownof settlement discussions betweenthe plaintiff and the defendants, the developmentof a conflict of interest betweenthe jointly represented defendants, and thepotential withdrawal of the attorney due tothe conflict of interest.An effective joint- representation agreementreally depends on effectively communicatingwith your clients before theysign the agreement. It requires more thansending a letter explaining the risks andbenefits to clients involved in multipledefendantrepresentation. Rather, beforeexecuting a joint- representation agreement,an attorney should hold a discussion,perhaps more than one, during which theattorney makes the clients aware of theiroptions for representation and the risksand benefits associated with the options.Further, clients should have the opportunityto seek outside counsel for guidanceon whether joint representation will offerthem the best legal defense.And, clients should sign a jointrepresentationagreement, not merelyreceive it or acknowledge it. If an attorneydoes not include a conflict of interestwaiver as part of a joint- representationMultiple, continued on page 89
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W R I T E R S ’ C O R N E RSimplicity, Faking, and GeniusTips for Writing about Technicaland Scientific TopicsBy Mary Massaron RossAny intelligent fool canmake things bigger, morecomplex, and more violent.It takes a touchof genius—and a lot ofcourage—to move inthe opposite direction.Albert Einstein, http://rescomp.stanford.edu/~cheshire/EinsteinQuotes.htmln Mary Massaron Ross heads the appellate practice group at Plunkett & Cooney,P.C., in Detroit and is <strong>DRI</strong>’s Second Vice President. She is a fellow in the AmericanAcademy of Appellate Lawyers, a past chair of the <strong>DRI</strong> Appellate Advocacy Committee,and a past chair of the ABA Appellate Judges Conference Council of AppellateLawyers. She has handled hundreds of appeals in state courts, including inMichigan, Indiana, Ohio, and California, and in federal courts, including over a hundredappeals in the Sixth Circuit Court of Appeals. Writers’ Corner, continued on pageof America v. Wells Fargo Bank N.A., 374 F.3d 521 (7th9084 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Brilliant thinkers have the capacity to make complexideas simple. But poor legal writers are prone tothe opposite. As with the “intelligent fools” that Einsteindescribed, many lawyers continue to file briefsfilled with needless jargon, esoteric language, and convolutedsentences so that the poor reader is set adriftin a sea of dense and unintelligible prose.What lawyers need to cultivate is the “touchof genius” to make the complex simple. JudgePosner, known for his genius, fine prose, andoccasionally acerbic comments about the lawyerswho appear before him, recently offereda reminder to lawyers about the need to makecomplex technical and scientific ideas understandable.Judge Posner pointed out that thecapable lawyers, who were well versed in thearcane aspects of reinsurance law that wereimplicated in an appeal, had failed to explainthese legal concepts in a way that a generalistjudge would readily understand. His comments offer alesson in the importance of using common, ordinarylanguage:A note, finally, on advocacy in this court. <strong>The</strong> lawyers’oral arguments were excellent. But their briefs,although well written and professionally competent,were difficult for us judges to understand because ofthe density of the reinsurance jargon in them.Indiana Lumbermens Mut. Ins. Co. v. ReinsuranceResults, Inc., 513 F.3d 652, 658 (7th Cir. 2008). Good writersthink about their audience and its knowledge aboutthe topics that they plan to write about:<strong>The</strong>re is nothing wrong with a specialized vocabulary—foruse by specialists. Federal district and circuitjudges, however, with the partial exception of thejudges of the court of appeals for the Federal Circuit(which is semi- specialized), are generalists. We hearvery few cases involving reinsurance, and cannot possiblyachieve expertise in reinsurance practices exceptby the happenstance of having practiced in that areabefore becoming a judge, as none of us has. Lawyersshould understand the judges’ limited knowledgeof specialized fields and choose their vocabularyaccordingly.Id. Judge Posner pointed out that “Every esoteric termused by the reinsurance industry has a counterpart inordinary English, as we hope this opinion has demonstrated.”Id. He urged advocates to save the court’s timeby doing “the translations from reinsurance into everydayEnglish themselves.” Indiana Lumbermens Mut.Ins. Co. v. Reinsurance Results, Inc., 513 F.3d 652, 658(7th Cir. 2008).Good writers need to translate technical or scientificterms into everyday English. Schopenhaur lamented,“Men should use common words to say uncommonthings, but they do the opposite.” Arthur Schopenhauer,<strong>The</strong> Writer’s Chapbook: A Compendium of Fact, Opinion,Wit, and Advice from the Twentieth Century’s PreeminentWriters, 191 (George Plimpton, ed., Modern Library1999). That lament, that people fail to use common wordswhen talking about uncommon things, could be appliedto many poorly written briefs. When both the words andthe “things” are uncommon, the reader will struggle tounderstand. <strong>The</strong> best approach is to follow Judge Posner’smodel, and avoid jargon. Judge Posner used common,ordinary words in understandable, declarativesentences. Rather than filling his opinion with uncommon,reinsurance terminology, Judge Posner employedcommon, ordinary language in Indiana LumbermensMut. Ins. Co., as well as in other cases, to convey complex,technical ideas in a simple and readily understandablemanner. Advocates would do well to study theseopinions for insight into how to accomplish this. See, e.g.,Movitz v. First Nat. Bank of Chicago, 148 F.3d 760 (7thCir. 1998) (explaining the distinction between loss causationand transaction causation in a complex commercialcase); U.S. v. Hatfield, 591 F.3d 945 (7th Cir. <strong>2010</strong>)(discussing causation in the law and the confusion in thelaw regarding its meaning); Travelers Cas. and Sur. Co.
T H I N K G L O B A L LYFive Tips for Preventing ProblemsSupply Chain Issues in the Global EraBy Christopher G. Campbell and Laura T. VogelSupply chains can be fragile. This is especially truein today’s global economy. In the past, the supply chainfor a mid-sized manufacturer might stretch from Michiganto Missouri. <strong>Today</strong>, a similarly sized U.S. manufacturer’ssupply chain could easily include companiesbased in China, Taiwan, Mexico, and India, among others.That additional complexity leads to additional risk.In one of the most well-known books on globalization,<strong>The</strong> World is Flat, Thomas Friedman describes withawe how the supply chain for a single Dell computerinvolves hundreds of component part suppliers basedin more than a dozen countries. A business consultantreads the passage with an appreciation of the efficienciescreated by outsourcing work to low cost providers.One of the authors of this column read that passage witha thought that regularly passes through the minds ofdefense counsel when asked to review a business or manufacturingproposal: What if something goes wrong?As we all know, in the years since 2005 when Friedmanfirst published <strong>The</strong> World is Flat, things have gonewrong from time to time. Not with Dell necessarily, butwith other manufacturers and other products, fromtoys, to drugs, to drywall. <strong>The</strong> purpose of this column isto briefly highlight and summarize one cautionary taleand to describe briefly five tips that manufacturers canemploy to prevent similar problems in the future. If youfind this helpful, then please attend <strong>DRI</strong>’s Annual Meetingin San Diego this October, where we will provide amore detailed presentation on these issues as part of theInternational Law Committee’s breakout session.A Cautionary TaleBefore diving into this example, we should preface ourremarks by stating that our information comes largelyfrom publicly available reports and that we are notapportioning blame or fault to any party. Perhaps thebest-known example of a supply chain problem withlong- lasting consequences for manufacturers occurredin 2007, when a U.S. toy manufacturer announced therecall of nearly half a million toy cars because a Chinesesupplier had allegedly painted the toys with leadpaint. <strong>The</strong> alleged culprit was a painting company basedin rural China that had entered into a subcontract withthe original Chinese supplier and had decided, unbeknownstto the U.S. manufacturer, to use lead paint onthe toys. As in the United States, China does not permitthe use of lead paint for children’s products, but theChinese authorities appear to enforce the standard lessrigorously than authorities in the United States. Almostimmediately after the initial recall, lead paint concernscaused other U.S. manufacturers to issue recalls for morethan a million toys, including toy trains, toy ovens, dolls,and others.As with most product recalls, litigation followed andwill continue into the foreseeable future. Legislationalso followed. Coming at the end of the George W. Bushadministration, the massive recall of Chinese- madetoys and other products led the president and Congressto pass the Consumer Product Safety Improvement Actof 2008, which mandates new and stricter standards forchildren’s and other products.Five TipsAs the example above illustrates, problems with a globalsupply chain can harm U.S. manufacturers, which areoften held accountable by the public. It is for that reasonthat we offer the following five tips.1. Know the RisksThis probably goes without saying, but we will say it anyway.Each industry is different, and each part of the globehas its own inherent risks. <strong>For</strong> instance, U.S. manufacturersthat rely on supply chain partners in certain parts ofIndia may be more vulnerable to political upheaval or terroristattacks than those manufactures who rely on supplychain partners in a different part of the world. Othercountries may have a reputation for cutting corners whenit comes to quality control. Whatever the industry andwhatever the part of the world, the key is to investigatewhich risks are most likely to affect your supply chainand then to develop a strategy to mitigate those risks.n Christopher G. Campbell is a partner in DLA Piper’s Atlanta, Georgia office, wherehe specializes in complex litigation, including product liability defense. Mr. Campbellalso regularly provides advice to international and domestic clients on a varietyof issues, including better ways to safeguard their international supply chains. 2. Impose Clear StandardsLaura T. Vogel is an associate at DLA Piper, also in its Atlanta office, who specializesin product liability defense. Both are members of <strong>DRI</strong>’s International Law Comticularlywhen dealing with foreign companies thatClarity is critical. Clear standards are important, parmittee,which Mr. Campbell also serves as publications chair. Think Globally, continued on page 90<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 85
D E F E N S E E T H I C S A N D P R O F E S S I O N A L I S MProtecting Personal InformationWhat You Don’t Know CouldHurt You and OthersBy Diane M. Saundersn Diane M. Saunders is a partner with Morgan, Brown & Joy, LLP, a Boston- basedboutique specializing in representing employers in labor and employment mattersin New England and across the United States. She is a member of <strong>DRI</strong>’s Lawyers’ • Install automatic encryption on all laptops and wire-Professionalism and Ethics and Employment Law Committees. Ethics, continued on page 9186 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Massachusetts recently joined over 40 other stateswith comprehensive legislation requiring all entitiesthat store the personal information, such as Social Security,driver’s license, credit, and bank account numbers,of Massachusetts residents, to take appropriate steps toprotect that information, including the developing writtensecurity policies. <strong>The</strong> impetus behind this legislationhas been the large-scale data security breaches thathave captured headlines nationwide, involving companiessuch as Citibank, TJX, and Hannaford Supermarkets.While it may seem as if only large banks andretailers are prone to data security breach risks, attorneysare as well.Law firms and corporate legal departments store notonly the personal information of their employees, but oftenthat of their clients, witnesses, and others connectedto cases. In employment and tort cases, for example, legalfiles very often contain paper and electronic copies ofpersonnel, medical, payroll, and other records containingthe personal information not only of plaintiffs, but alsoof other individuals connected to cases. <strong>The</strong> personal informationstored in connection with class actions, particularlywage and hour class actions, is often voluminous.Indeed, because of the frequency with which legal pleadingscontain personal information, many courts have prohibitedits inclusion in court filings.Unfortunately, because of the wide and varied waysin which attorneys store personal information in theirpractices, they must do more than simply rely on their ITproviders to implement measures to avoid potential datasecurity breaches via their computer systems. Rather,attorneys need to take part in creating plans to ensurethat they inadvertently do not engage in data securitybreaches through their practices.Step One—Conduct an Audit of the PersonalInformation that Your Organization Stores<strong>The</strong> first step to creating a data security plan is to figureout what type of personal information your organizationstores and where it is stored. Among the questions youshould ask during an audit are:• Are paper files containing personal information everleft on the desks of attorneys, paralegals, or other staffmembers?• Does personal information leave the work site withattorneys or paralegals?• Do attorneys or paralegals copy all or portions of casefiles containing personal information onto thumbdrives or onto their home computers?• Do they access electronic case files containing personalinformation remotely via the internet or transmitthem to others through unencrypted e-mail?• Do they remove from the office all or portions of paperfiles containing unredacted documents with personalinformation?• What happens to extra copies of material containingpersonal information—are these documents shreddedor simply thrown in the trash?• Do any third-party vendors, payroll companies andexpert witnesses, for instance, receive and store personalinformation on your behalf?Step Two—Develop a Plan to Protect the PersonalInformation that Your Organization StoresOnce you know the “what” and “where” of the personalinformation that your organization stores, you shoulddevelop a plan to ensure that you are adequately protectingthat information from an inadvertent, data securitybreach. Your plan should take into account the variedways in which your company stores personal information—paper,electronic files, e-mail, third-party vendors—andshould include measures to protect each one.Some of the most important measures that you shouldconsider implementing include the following:• Institute a data destruction policy to limit the amountof personal information that your organization storesand require the appropriate destruction of documentscontaining personal information;• Ensure that all computers used by attorneys, paralegals,and staff members have up-to-date firewalls,virus, malware, and spyware protection;
Data Bank, from page 35ner’s negligence, settlement on behalf of theentity only may appear suspicious. Suspicionmay be further heightened if the partieshave formally denied that the corporatedefendant is vicariously liable for the individualpractitioner’s alleged malpractice.Expense Reimbursement<strong>The</strong> NPDB Guidebook identifies a categoryof payments as “loss adjustment expenses,”or LAEs, made for expenses incurred bythe claimant other than those in compensationof injuries, such as attorney’s fees,billable hours, expert witness fees, anddeposition costs. NPDB Guidebook, p. E-10.<strong>The</strong>se expenses should be reported to theNPDB only if they are included in a medicalmalpractice payment, and should beitemized in the description section of thereport form. Id. at E-12. If LAEs are notincluded in the medical malpractice paymentamount, they are not required to bereported to the NPDB. Id. If a payment ismade only for LAEs, then the payment isnot required to be reported at all. http://www.npdb-hipdb.hrsa.gov/faq-Reporting.html.As a practical matter, this means thatif a claim can be resolved by the reimbursementof some or all of a claimant’sclaim- related costs, and not merely in generalconsideration of the release of a medicalmalpractice claim, such payment isnot required to be reported to the NPDB.Claims where resolution along these linescan be accomplished will be rare, but thisprovides a legitimate avenue for resolutionof a truly “nuisance- value” claim withoutNPDB reporting.ConclusionEvery professional liability claim involvesan attack on the discharge of the defendant’sprofessional talents, skills and obligations.<strong>For</strong> the defendant, such claimsare not about “mere negligence,” but aboutwhether the defendant deserves to bedeemed a professional. In medical mal-practice actions, the impact of this attackis heightened by the prospect of NPDBreporting, and the reality that a settlementwill not provide full and final resolutionof the claim, but will hang an albatrossaround the practitioner’s neck for the restof his or her career.<strong>For</strong> those of us who seek to assist practitionersand liability carriers in making fullyinformed decisions about claim values, trialand settlement, an understanding of theNPDB is vital. Exploration of the impact ofNPDB reporting should be accomplished atthe outset of the litigation, so that opportunitiesfor strategically wise settlement willnot be squandered, and so that both thedefense attorney and the insurance carriercan adequately discharge their duties to thepractitioner. With this, as with every aspectof trial and litigation defense, assisting clientsand insurers in seeing around cornersand preparing for developments can onlyimprove the defense, and, accordingly, thequality of service.EHR Liability, from page 44Importantly, the rules have never containedan exception for the health care industry;they apply equally to all litigants.<strong>The</strong> case law has since demonstrated thatthe law will not treat health care institutionsany differently than any other litigant whendeciding e- discovery disputes. See Cason-Merenda v. Detroit Medical Center, No. 06-15601, 2008 WL 2714239 (E.D. Mich. 2008)(denying e- discovery cost- shifting motionon behalf of two health system subsidiariesin antitrust class action lawsuit resultingin burden placed solely on health system);see United Med. Supply Co. Inc. v. UnitedStates, No. 03-289C, 77 Fed. Cl. 257 (Fed.Cl. 2007) (sanctioning the government forfailure to have medical treatment facilitiespreserve e- discovery); Regan- Touhy v. WalgreenCo., 526 F.3d 641 (10th Cir. 2008) (upholdingthe district court’s determinationthe e- discovery obligations met by provider,without producing audit trail for who hadviewed electronic record as opposed to conductedtransactions). <strong>The</strong> amended ruleshave been applied to parties regardless of industryor whether or not they are preparedfor or have been accustomed to e- discovery.<strong>The</strong> rules have been applied to large businesses,small businesses, and even individuals.See Teague v. Target, No. 3:06CV191,WL 2007 1041191 (W.D.N.C. Apr. 4, 2007)(sanctioning an individual plaintiff with aspoliation charge for failure to preserve alaptop). Thus, health care institutions thatbasically have not prepared to respond toe- discovery requests remain increasinglyvulnerable to both monetary and discoverysanctions over time.Relative inexperience with e- discoveryis not health care’s only problem. ManyEHR systems, which generate an enormousamount of electronic data, wereimplemented before the e- discovery ruleswent into effect, probably without consideringimpending e- discovery obligations.As such, unlike many other industries,health care providers are probably uniquelyexposed because they may lack the expertiseand proper tools to meet the potentiallyimmense discovery obligations thattheir revolutionary systems create. At present,health care institutions are still especiallyvulnerable to e- discovery requestsdue to failures to identify, locate, and produceall relevant data, failures to retain orstore data, and failures to preserve data inits original form once a litigation hold hasbeen issued, particularly in actively usedor live EHR databases. It is relatively easyunder federal law to accidentally spoil electronicevidence, therefore, a medical institutionor practice that has never beforefaced electronic evidence may need to routinelyuse technology consultants.ConclusionAlthough EHRs have now achieved mainstream,clinical adoption, EHR- related liabilitytrends have not developed fully. Atthis early point, we can discern some potentialliability areas. In an early EHR implementationstage, source of truth issues andexpansion of liability issues may arise. Inusing EHR systems, the evolving standardsof care for clinical documentation andwork-arounds pose risks. Security as mandatedby data breach laws or retention andstorage issues involving e- discovery liabilityand data integrity have also emergedas important areas. Also, from a healthcare law and medical liability perspective,defense counsel must become extremelyattuned to the conceptual and practicaldifferences at play in most electronic heathdocumentation systems. When in doubt,seek technical assistance from within oreven outside an institution, otherwise youmay miss a great deal of information tohelp your client’s case.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 87
Negligence, from page 38the equivalent duty of protecting the publicfrom the negligent conduct of licensednurses. Investigations from these boardscan lead to punishments that include reprimands,suspension or revocation of license,or probation. Alternatively, the medical ornursing board can also choose to focus itsattention on re- educating and retrainingthe health care provider, a remedy not feasiblewithin the confines of a prison cell. See,Protecting the Public: How State MedicalBoards Regulate and Discipline Physicians,http://www.fsmb.org/smb_protecting_public.html,and National Council of State Boards ofNursing, https://www.ncsbn.org/163.htm.Negligent conduct is not excusable, butthe strenuous working conditions thathealth care professionals must endure eachday has led to a nursing shortage. In 2007,<strong>The</strong> American Health Care Association(“AHCA”) estimated a need for 109,900health care personnel to “fill vacant nursingpositions at nursing facilities across theUnited States.” 2007 AHCA Survey: NursingStaff Vacancy and Turnover in NursingFacilities, 4 (American Health CareAss’n Dep’t of Research <strong>July</strong> 21, 2008).<strong>The</strong>se vacancies consisted of positions forregistered nurses (“RNs”), licensed practicalnurses (“LPNs”), and certified nursingassistants (“CNAs”).With fewer nurses to attend to large volumesof patients, mistakes are bound tooccur even when these health care providersperform to the best of their abilities.Bringing criminal charges against awell- intentioned nurse can only discouragethose interested in entering the nursingprofession. Additionally, the possibilityof criminal charges may make it more difficultfor nurses to be frank about these unintentionalerrors they made. An inabilityto examine mistakes or errors places allpatients at risk. See, Criminalization ofNurses for Unintentional Errors, WisconsinNurses Association, available at http://www.wisconsinnurses.org/media/WNA_Position_Paper_Criminal_Neglect.pdf. <strong>The</strong> focus should be onproviding these professionals with the opportunityto learn from their mistakes, notto punish them with criminal sanctions.ConclusionCriminal punishment for medical negligentconduct is a growing trend. Studies of thesecases indicate that the triers of fact tend toplace a greater emphasis on the defendant’ssubjective state of mind. <strong>The</strong> concern is thata jury may render a “guilty” judgment withoutconsidering whether the health careprovider’s conduct fell within the objectivestandard of care. Moreover, the criminalizationof medical negligence fails to servethe three goals of criminal law. Criminalculpability for health care providers shouldbe limited to instances of recklessness. Providerswho are reckless will be criminallypunished for undertaking actions in whichthey were aware of the risks.Ultimately, civil liability is the preferredmethod for settling issues of negligent conduct.It provides the patient with the opportunityto recover for his or her injuries andmedical expenses. Additionally, medicaland nursing boards already have existingprocedures for punishment and reform,all of which supersede the necessity of aprison sentence. With these existing civilliabilities and sanctions, the focus shouldbe on rehabilitating these health care providersto prevent them from repeating thesame mistakes, and not imprisoning themfor unintentional error.88 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>Outside Counsel, from page 67Farm. Mrs. Dunn appealed a partial summaryjudgment order, as well as a protectiveorder for State Farm’s attorneys’ files.Regarding the protective order, Mrs. Dunnclaimed that the attorney- client privilegedid not apply because the attorneys hadcreated the documents that she soughtwhen they had been acting as investigators,rather than as attorneys.<strong>The</strong> Dunn court relied on the MississippiRules of Evidence, as well as a MississippiSupreme Court case, and the standard thatthe attorney- client privilege relates to andcovers all information that a client receivedfrom his or her attorney in his or her professionalcapacity and in the course of representationof the client. Id. at 875 (citingBarnes v. State, 460 So. 2d 126, 131 (Miss.1984)). <strong>The</strong> court noted that privilege protectiondid not require that a communicationcontain purely legal analysis or advice.Dunn v. State Farm Fire & Casualty Co.,927 F.2d 869, 875 (5th Cir. 1991). Instead,if a communication between a lawyer andclient would facilitate rendering legal servicesor advice, that communication wouldbecome privileged. Id.<strong>The</strong> Dunn court held that the attorneyclientprivilege protected the documentsthat Mrs. Dunn sought. Id. <strong>The</strong> courtextended the privilege to all communicationsbetween State Farm and the outsidecounsel that it had retained. Id. Furthermore,the court held that “<strong>The</strong> privilege isnot waived if the attorneys perform investigativetasks provided that the investigativetasks are related to the rendition of legalservices.” Id.ConclusionSo, what are outside attorneys working forinsurance companies to do? Court decisionsplace overriding importance on therole that an outside attorney fulfills. Asdetailed above, courts regard whetheran outside lawyer provides legal advice,rather than simply fulfilling a claims handlingrole, as critically important. Whenan outside lawyer has a “mixed” role, seeingto withhold documents from productionbased on the attorney- client privilegeor work- product doctrine becomes difficult.However, outside counsel can takecertain precautions to strengthen an argumentthat a court should not require a clientto produce a document when retainedby insurance companies.Although you may lose the battle, particularlywith investigative facts and materialsif you have prepared them whenretained as outside counsel before an insurancecompany has made a definitive decisionon coverage for a claim, you can stilltake measures to establish elements ofthe attorney- client privilege in your communicationswith insurers as clients. <strong>For</strong>example, identify yourself as your client’sattorney in all communications with them.State that the purpose of the communicationis to provide legal advice and clearlyclassify legal opinions and mental impressionsas such in your written analyses. Statethat documents prepared for your clientare privileged, attorney- client communications.Finally, exercise care, only sendingcommunications to a client, avoiding additionalor unnecessary recipients.
Multiple, from page 82agreement, then he or she should draft oneseparately and execute that as well. Thiswritten agreement will become a sourceupon which all parties may rely throughoutlitigation in discussing case strategy andexpectations. <strong>The</strong> language in the agreementmay also provide evidence for anattorney should legal malpractice issuesarise during or after representation.Consultation with ProfessionalMalpractice AttorneyJust as it is important to fully discusswith clients the potential risks and benefitsinvolved in joint- representation, itis equally important that an attorney feelcomfortable undertaking those same risksand benefits. In some instances an attorneymay have questions or concerns aboutengaging in a joint- representation. If anattorney does not understand if undertakingrepresentation of a joint defensein a particular case is permissible, youshould consider consulting with a localattorney who specializes in professionalmalpractice or legal ethics issues. Afterfully discussing the specifics of a case,the specialist can offer advice on proceedingwith the representation. Often, thisattorney will assist you to draft a jointrepresentationagreement. Just as multipledefendants do not have a legal obligationto retain the same counsel, counsel doesnot have an obligation to represent multipledefendants.Conclusion<strong>The</strong> goal of this article has been to providethe reader with a framework withinwhich to consider actions and strategieswhen potential joint- representation arises.Joint- representation can have notableadvantages, but if you do not take carein representing multiple defendants, theramifications can prove devastating. <strong>The</strong>“elephant in the room,” though avoidable,becomes much more prominent whenattorneys are unaware of its power or forceand do not take steps to protect themselvesfrom it.Altered Records, from page 60Custom and habit evidence is importantand can be quite persuasive. Even though awitness does not have a specific recollectionand even though something was not writtendown, a witness can testify about the likelyoccurrence of an event on a specific occasionif a person acted in conformity with ahabit or routine practice. <strong>For</strong> example, indefending a claim for lack of informed consentto a hysterectomy, a gynecologist wasallowed to testify about his regular habitof discussing the nature of the surgery togetherwith its risks and benefits. Reaves v.Mandell, 507 A.2d 807, 810 (N.J. Super. Ct.Law Div. 1986). Accord, Velazquez v. Portadin,729 A.2d 1041, 1052 (N.J. Super. Ct.App. Div. 1999), rev’d on other grounds, 751A.2d 102 (N.J. 2000). Although the physiciandid not recall the specifics of the conversationwith this patient, he presentedevidence of similar circumstances “manytimes” before rather than an isolated occurrence,thus providing a foundation forthe admission of this evidence. <strong>The</strong> jury wasinstructed that it was to determine whatweight and value to give to this testimony.A jury’s acceptance of this evidenceoften depends on the perceived credibilityof the witness—the physician—describinga custom and habit. It is precisely thatcredibility that is called into question andat risk when an altered records issue arisesin a malpractice case.Custom and habit evidence is circumstantialevidence. Circumstantial evidenceis indirect evidence. It involves an inferentialprocess that establishes facts through aprocess of deductive reasoning, sometimesdrawing an inference from an inference.Circumstantial evidence falls within twocategories: (1) certain—that from whichthe conclusion in question necessarily follows,and (2) uncertain—that from whichthe conclusion does not necessarily follow,but is probable only, and is obtained by aprocess of reasoning. In civil cases, a jurydecides in favor of the party on whose sidethe evidence preponderates, according tothe reasonable probability of truth. Mereguess or conjecture cannot substitute forlegal proof, but it is difficult to mark withprecision the line that separates a just andreasonable inference from mere conjectureor surmise. Generally, to sufficiently differentiateconjecture from circumstantialevidence, the claimed conclusion from theoffered fact must be a probable or a moreprobable hypothesis, compared with thepossibility of other hypotheses.Because aspects of an incompletely documentedexamination may be deduced fromother entries, defense counsel must reviewthe circumstantial evidence and assess itspersuasiveness. An extremely simple exampleillustrates this concept. Nowherein a chart is it “written down” that a bloodpressure cuff was applied to a patient’s arm.However, an entry of 140/75 is in the record.Probably, that conclusion and resultingentry was reached through applicationof a cuff and a witness could reasonablytestify to having done so. Take a more nuancedillustration. A medical record for alawsuit involving a surgical sponge allegedlyleft in a patient where the nurses reporteda “correct” sponge count does nothave any written entry indicating that thesurgeon inspected an area of the abdomenbefore closure, but nonetheless records theplacement of a Jackson- Pratt drain just beforeclosure. This written fact leads to inferencesregarding what the surgeon did toplace the drain and to the inference that thearea of the abdomen must have been manuallyprobed by the surgeon’s hand.This analytical process can be hardwork. When defending a medical malpracticecase, an attorney needs to testthe inferences against other evidence andarguments. Although this process cannotprovide a complete substitute for a missingmedical entry and may not overcome specific,problematic entries in a chart, it offersa way of proving probable facts without thenegative effect and consequences of belatedlyaltering a record to insert a true fact.<strong>The</strong> quotation at the top of this articleis from Sir Walter Scott’s long poem,Marmion. It describes a web woven by aspider. It traps flies with its stickiness, andthe more they wriggle to escape, the morethey become entangled in the web. Thisfamous passage warns that the liar spinsand weaves his or her own trap withoutrealizing that this has been done until heor she becomes caught in it. Mixing metaphors,unless physicians avoid this trap andpreserve the integrity of medical recordsand themselves, they may fall down a rabbithole and fail to find a way out.<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 89
Writers’ Corner, from page 84Cir. 2004) (deciding commercial and bankingissues under provisions of the UniformCommercial Code).<strong>The</strong> best advocates have a genius formaking the complicated simpler. <strong>The</strong>worst advocates, can muddle even themost straightforward topics: “Mediocreminds… move toward muddlement.”Bryan A. Garner, Garner on Language andWriting: Selected Essays and Speeches, 612(ABA 2009). Lawyers argue about the scientificprinciples involved in a challenge toa drug or medical device, the statistical evidencesupporting or refuting a class actionemployment discrimination case, and thecomplexities of market analysis or accountingfor an antitrust or commercial case.Legal disputes turn on principles of engineering,physics, medicine, toxicology, andother bodies of knowledge that are unfamiliarto most of us. <strong>Today</strong>’s increasinglyspecialized lawyers can advocate poorlyif they forget that the judges before whomthey appear do not have a similar knowledgebase.Simplicity can also clarify and illuminatethe weakness in an opponent’s argument.Hemingway insisted, “If a manwrites clearly enough any one can see ifhe fakes.” Ernest Hemingway, Death in theAfternoon, in Ernest Hemingway on Writing(Larry W. Phillips, ed., Touchstone1999). But advocates file briefs that exhibit“muddlement” all too often. When a briefis badly written, a court may not readilyperceive that the opposing party hasfaked. Fundamental flaws in your opponent’sposition may become obscured in acloud of technical jargon. When an opposingparty writes a confusing or misleadingbrief on unfamiliar and difficult topics, abusy appellate or trial court judge can easilymiss the shortcomings in the argument.An effective advocate clarifies the backgroundconcepts to illuminate their meaningand application in general, and theirrelationship to the issues in a case. <strong>The</strong>advocate translates arcane or esotericterms into common language for a court.Following Einstein’s sage advice, “Makeeverything as simple as possible, but notsimpler,” the advocate must write a briefthat is “as simple as possible, but not simpler.”Albert Einstein, http://www.brainyquote.com/quotes/quotes/a/alberteins103652.html. Ifan advocate does this, a court can quicklyjudge whether one side or the other isfaking an argument—because whetherthe argument is grounded in fact and lawbecomes readily perceptible. It is no longercovered by an impenetrable jungle of denseterminology or buried in a plethora of complicated,scientific or technical concepts.As long as judges remain generalists,the system’s ability to reach correct decisionsdepends on the efficacy of the mechanismthat helps judges acquire necessarytechnical or scientific information as partof their decision- making process. In ouradversarial litigation system, this mechanismis ordinarily the parties’ advocacy.And the advocates can best educate a courtin written briefs. One federal appellatecourt explained that “<strong>The</strong> aim of the judgesis not to exercise expertise or decide technicalquestions, but simply to gain sufficientbackground orientation.” Ethyl Corp.v. Environmental Protection Agency, 541F.2d 1, 69 (D.C. Cir. 1976).Not everyone is a genius of Einstein’scaliber, but everyone can translate jargonso that a brief will present complicatedand arcane but necessary information intocommon language. Taking the time andeffort to translate key ideas and informationinto ordinary common language canand will help an advocate present a client’scase. It often does more. It helps an advocatesharpen an argument because it forcesthe advocate to think through complexissues in a clear and cogent way. As BryanGarner cautions, advocates should avoid“muddlement.” Take time to translate thecomplex into the simple in every piece ofwriting that you present to a court. Doingso may not earn you the label of “genius,”but it will certainly enhance your likelihoodof success, and your status as an effectivelegal writer. <strong>The</strong> next time you write abrief, read it at least once to find the technical,scientific, or legal terms of art andtranslate them into common, ordinarylanguage. Make your discussion as simpleas possible. You will have improved yourchances of success—and the judges whoread the brief will thank you for the effort.Think Globally, from page 85may not be accustomed to U.S. regulatoryrequirements. To ensure understanding,a U.S. manufacturer should make sure itcommunicates its production standards toits supply chain partners in a way that isclear and consistent, and we also suggestthat a manufacturer repeat this messageat every opportunity. In some countries,standards may be viewed merely as suggestionsunless the message is brought hometime and again that each product producedmust satisfy a manufacturer’s requirement.3. Test, Test, TestRonald Reagan is known for popularizingthe old Russian saying, “Trust butverify.” That is precisely the position that90 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>U.S. manufacturers should take regardingglobal supply chain partners. While thisdoes not suggest that U.S. manufacturersshould be held liable for manufacturingdefects of supply chain members oversees,we propose a regular practice of testingthe quality of products received from overseassuppliers to verify whether those clearstandards mentioned above are met.4. Plan for the WorstHaving a plan in place when supply chainissues arise can allow manufacturers toquickly regain control of a situation. Thisplan should address the needs of the business,regulatory and compliance issues,and litigation exposure. Just as we practiceda fire drill as school children, a manufacturershould dust off the plan every sooften and walk through it, even if nothinghas occurred, to ensure that it continues tofit current needs.5. Protect YourselfContracting with suppliers offers clientsmultiple opportunities for protection.Along with testing and qualitycontrol requirements, these contractscould also include indemnification agreements,insurance coverage requirements,a choice-of-law provision, or a choice-ofvenueprovision.We hope you have found these tips helpful,and we hope to see you at <strong>DRI</strong>’s AnnualMeeting in San Diego this October.
Credentialing, from page 51contrast, the argument to bifurcate a trial,however, is very compelling because of thedanger of prejudice to the hospital and thespecter of reversible error. Managing a trialin two phases, as mentioned above, doesnot take more time than otherwise since acase against a hospital can start immediatelyafter a verdict favoring a plaintiff. Itsaves time, in fact, because a defense verdictobviates the need for a trial altogether.ConclusionCounsel defending negligent credentialingclaims should couple the power of FederalRule of Evidence 404(b) or similar staterules with the power of bifurcation. Yourargument for bifurcation is strong becauseplaintiffs can introduce evidence of “otheracts” once they have cleared the causationhurdle of proving negligence, in thesecond, negligent credentialing phase ofa trial. And, a trial court should find yourargument persuasive that it will not haveto skirt the traditional protection FederalRule 404(b) or equivalent state rules provideto “other acts” evidence, knowing thatplaintiffs can introduce that evidence lateron, without prejudicing a jury on the “standalone” medical liability claim. One tool, theevidentiary rule or bifurcation, is unlikelyto succeed without the other. A sound strategyis to find a way to use both.Ethics, from page 86less systems, and ensure that all e-mailsand attachments containing personalinformation are encrypted;• Require that all computers, laptops,PDAs, and home computers be protectedwith complex passwords and automaticlocking when they are not in use for areasonable period of time;• Store files containing personal informationin a secure cabinet and prohibitattorneys, paralegals, and staff from leavingthem out in the open on their desks;• Redact personal information from allpaper files sent by mail or removed fromthe office;• Require third-party vendors to take adequatesteps to protect personal informationthrough language in a writtenagreement; and• Consider reducing your plan to writingand providing training on the requirementsof the plan.While it may seem a daunting and timeconsumingtask to create a security plan, itis really just good, common sense. Attorneysare expected by their clients to guardthe confidential information with whichthey are entrusted, and the same shouldbe true of personal information. With theadvent of state laws mandating the protectionof personal information and imposinglegal consequences for failing to doso, attorneys who take the time to createa security plan can avoid not only embarrassingthemselves and jeopardizing theirrelationships with their clients, but alsolegal liability as well.Waiver, from page 73cating verbally, do not communicate inthe presence of third parties or discussa communication’s content with thirdparties. Likewise, judicially share writtencommunications only with employeeswho need to know their contents dueto their corporate roles.• In preserving privilege, the role of acorporate employee participant is asimportant as that of the lawyer. Counselshould share privileged communicationswith corporate directors, in theirformal company roles only, not in theirindividual capacities.• A corporation may develop and enforcedocument preservation policies thatsecure potentially privileged materialsfrom casual access by unauthorizedemployees.• A corporation may develop internal“protocols” about who may officiallyspeak on behalf of the corporation onmatters of controversy.• Counsel who provides both legal andbusiness advice should consider maintainingseparate legal and business filesfor all work matters. In-house counsel especiallyshould try to delineate in whatcapacity he or she provides advice orservices in each matter, and whether thatadvice is of a legal or business nature.• Counsel should become familiar withattorney- client privilege standards andcase precedent in each state in which acorporation has a substantial presenceand advise the corporation to meet thetoughest standard.• Counsel should assess privilege issuesas soon as litigation is contemplated.Counsel may wish to explore agreementsor orders as contemplated by Fed. R.Civ. P. 26(b)(5)(B) and Fed. R. Evid. 502at the earliest litigation stage. Rememberthat you must obtain either a courtorder or “so ordered” agreement to bindabsent third parties.• Counsel should carefully consider andadvise about the possible waiver issuesthat may result from following a proposedlitigation strategy. While thismost commonly arises in connectionwith “at issue” defenses, other strategiescould also impact whether a corporation’sproposed strategy will result ina privilege waiver.• An extremely aggressive, adversarialposture on attorney- client privilege andwaiver against an adversary could workagainst a corporation. In other words,people in glass houses should not throwstones.• When a corporation needs to conduct aninternal investigation, consider forminga “special corporate investigation team”to which counsel could report and whichcould act on recommendations withoutdisclosing privileged information to apotential target of the investigation.• A corporation should consider thepotential consequences of decisions towaive privilege in a governmental investigationso that it can make educatedassessments of the risks involved andthe potential impact it may have on subsequentactions.And now, back to Any Corporation, Inc.,and its attorney- client privilege issues:<strong>The</strong> correct answer about which of thosecommunications are subject to attorneycorporate-client privilege protection is allof them, or none of them, or most accurately,it depends!<strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong> n 91
A D V O C AT E S A N D N E W M E M B E R SEach month, <strong>DRI</strong> welcomes new members from the United States and Canada and abroad. Some of these newmembers have been recommended by current members actively involved in advancing goals shared by <strong>DRI</strong>. Anyindividual who recommends a new member is recognized as an “Advocate” for <strong>DRI</strong>.AdvocatesDouglas K. Burrell, Atlanta, GAAnn M. Byrd, Atlanta, GAKaren G. Crutchfield,Knoxville, TNPeter M. Cummins, Louisville, KYCalvin W. Fowler, Jr.,Richmond, VAJohn C. Garde, Newark, NJStanley E. Graham, Nashville, TNJohn H. Huston, Chicago, ILToyja E. Kelley, Baltimore, MDJoshua Edward Mackey,Millbrook, NYTodd S. Manuel,Baton Rouge, LAPaul A. Miller, Birmingham, ALGerald B. Murphy, Billings, MTDebra M. Perry, Newark, NJWilliam E. Pipkin, Jr., Mobile, ALJohn P. Scott, Jr.,Birmingham, ALFrank A. Silane, Los Angeles, CAIrma Reboso Solares, Miami, FLJames W. Stevenson, Jr.,Chicago, ILKevin R. Tully, New Orleans, LALisa Anastasia Wade,Atlanta, GADaniel A. Webb, New Orleans, LAMark D. Wilcox, Chicago, ILMichael A. Wozniak,Champaign, ILLois H. Yamaguchi, Honolulu, HINew MembersAlabamaRobert C. Thomas, Jr., AlabasterMatthew David Conn,BirminghamMichael G. Green II, BirminghamMary Blanche N. Hankey,BirminghamJohn W. Hargrove, BirminghamAndrew D. Perreault,BirminghamJeremiah James Rogers,BirminghamLee H. Stewart, BirminghamMickey J. Voss, BirminghamA. Grady Williams IV, MobileT. Grant Sexton, Jr.,MontgomeryArizonaAlexandra G. Gormley, PhoenixLonnie J. Williams, Jr., PhoenixCaliforniaAntoinette P. Hewitt, IrvineHartford O. Brown,Los AngelesScott D. Cunningham,Los AngelesAnthony Daye, Los AngelesN. Denise Taylor, Los AngelesJames L. Mink, OaklandSara G. Noel, OaklandRandy Wilson, OaklandNatalie Vance, SacramentoJonathan A. Braunstein,San FranciscoEdward R. Fitzgerald,San FranciscoCarter Ott, San FranciscoL. Julius M. Turman,San FranciscoKeasara M. Williams,San FranciscoDenise J. Serra, Walnut CreekColoradoJodanna L. Haskins, DenverCristin J. Mack, DenverMarta Jucha, Greenwood VillageDelawarePeter S. Murphy, WilmingtonDistrict of ColumbiaMark A. Perry, WashingtonFloridaSamuel S. Lewis, Coral GablesJack D. Luks, <strong>For</strong>t LauderdaleMegan L. Logan, JacksonvilleDonald A. Blackwell, MiamiJason Patrick Kairalla, MiamiChristopher R. Fay, OrlandoAmy L. Christiansen,Saint PetersburgChristina M. Fears, TampaJuan Carlos Garcia, TampaGeorgiaLauren B. Bell, AtlantaErnessa Brawley, AtlantaRobert D. Brunson, AtlantaR. Clifton Merrell, AtlantaBrett A. Miller, AtlantaLacey Ourso, AtlantaTiffany C. Sellers, AtlantaMatthew B. Stoddard, AtlantaCara E. Weiner, AtlantaLucas A. Westby, AtlantaHawaiiStephen M. Tannenbaum,HonoluluIllinoisDaniel P. Wurl, ChampaignDon Carrillo, ChicagoLisa M. Crawford, ChicagoShannon M. Dunne,ChicagoAndrew Marc Fernandez,ChicagoKyra E. Flores, ChicagoMaria C. Granjean, ChicagoMatthew James Hammer,ChicagoMichael C. Holy, ChicagoCatherine M. Levine, ChicagoKim Marie Mathers-Heffeman,ChicagoIsaac Ramiah Melton, ChicagoSean J. O’Reilly, ChicagoErica N. Rogina, ChicagoDevlin J. Schoop, ChicagoJoshua S. Singewald, ChicagoAlana Zusis, ChicagoHolly C. Whitlock, Crystal LakeTara Weibusch-Kuchar,EdwardsvilleMartin D. Kennelly, WaukeganJennifer M. Anderson,WheatonMegan <strong>The</strong>rese Hughes,WheatonIndianaDennis P. Stolle, IndianapolisIowaParsa Fattahi, CoralvilleEdward J. Rose, DavenportThomas J. Joensen,Des MoinesKansasRobert J. Wonnell, Kansas CityKentuckyCarla De La Barra Helstrom,LouisvilleLouisianaKurt A. Offner, KennerMary M. Hamilton, LafayetteElizabeth Sconzert, MandevilleWilliam L. Brockman, MetairieJulie Kammer, MetairieAdrejia L. Boutte, New OrleansJohnny Domiano, Jr.,New OrleansNicole C. Palmisano,New OrleansJames D. Prescott III,New OrleansMarylandCraig Robert Haughton,BaltimoreMatthew R. Schroll, BaltimoreMassachusettsJose P. Sierra, MarlboroughMaria Hickey Jacobson,WorcesterMinnesotaBryan R. Browning,MinneapolisCally Kjellberg, Saint CloudMississippiJacob Oakman Malatesta,GreenvilleGeorge C. Gunn IV, JacksonAnne Harlan Latino, JacksonBradley K. Overcash, JacksonMissouriMarcos A. Barbosa, Kansas CityElizabeth S. Silker, Saint LouisSandra J. Wunderlich,Saint LouisMontanaEmily Jones, BillingsNebraskaRichard C. Grabow, LincolnNevadaJacqueline A. Gilbert,Las VegasDavid B. Sanders, Las VegasNew JerseyFrancis V. Cook, LawrencevilleSara F. Merin, NewarkSonia M. Valdes, WarrenNew MexicoHarriett J. Hickman,AlbuquerqueJeannie Hunt, AlbuquerqueRegina Y. Moss, AlbuquerqueLorena Olmos de Madalena,AlbuquerqueNew YorkLeigh J. Katz, BrooklynThomas J. Sheehan, BuffaloLisa J. Black, HawthorneLisa M. Rolle, HawthorneCheryl P. Vollweiler, HawthorneHenninger S. Bullock, New YorkJustin Farrell, New YorkSharon Marie Mills, New YorkMichael J. Morris, New YorkWilliam H. Voth, New YorkFrank P. Izzo, PoughkeepsieRik A. Bachman, White PlainsJoseph C. Baiocco,White PlainsOhioJames P. Myers, ClevelandSara L. Rose, PickeringtonOregonJean Ohman Back, PortlandPennsylvaniaTracey McDevitt Hagan,PhiladelphiaMichele R. Punturi, PhiladelphiaJonathan S. Ziss, PhiladelphiaThomas B. Anderson, PittsburghLars Benecke, PittsburghRalph W. Waechter, WexfordRhode IslandKaty A. Hynes, ProvidenceRichard G. Whalen, WarwickSouth CarolinaMatthew E. Brown, CharlestonJohn P. Workman, GreenvilleTennesseeJesse D. Nelson, JacksonKristin M. Cabage, KnoxvilleMichael L. Haynie, NashvilleJohn J. Park, NashvilleSarah Hardison Reisner,NashvilleGary Rubenstein, NashvilleBilly Duane Willis, NashvilleTexasChristopher C. Ege, AustinMarJuana Bush Williams,BeaumontMark E. Callender, HoustonKaran Cummings Ciotti,HoustonPatrick Kenneth Allen Elkins,HoustonLeslee N. Haas, HoustonJames H. Nye, HoustonLaura Stehr Peters, HoustonOscar H. Lopez, McAllenVirginiaDane B. Jaques, McLeanGregory William Klein, NorfolkJoseph R. Pope, RichmondSusan Childers North,WilliamsburgDavid E. Sella-Villa, WilliamsburgWashingtonDonald F. Austin, SeattleRichard Lynn Mount, SpokaneWest VirginiaKameron T. Miller, CharlestonWisconsinThomas C. Ewing, MilwaukeeJoshua Stubbins, MilwaukeeCanadaOntarioMichael Courneyea, Toronto92 n <strong>For</strong> <strong>The</strong> <strong>Defense</strong> n <strong>July</strong> <strong>2010</strong>
EXPERT SPEAKERSINCLUDINGLEADING PRACTITIONERSINDUSTRY EXPERTSGOVERNMENTAL AUTHORITIESTopics will includeCrisis Management: How to preparefor a Congressional hearing, CoastGuard investigation and EPAdebarmentEngineering and technical analysis ofan oil rig and the coming regulationsState and federal venue implications onAG and governmental actionsStrategy from the plaintiff’s perspectiveand business to business litigation<strong>The</strong> offshore energy insurance market:What “Oil Spill FinancialResponsibility” (OSFR) is required?What does history tell us? How do thechanges in the law and politicallandscape since Valdez impactcurrent spills?Internal investigations, companyaudits, state oil rig inspectionsand criminal indictmentsOIL SPILLLITIGATION ANDEMERGING ISSUESSEMINARAUGUST 12–13, <strong>2010</strong>THE HOUSTONIAN HOTEL, CLUB & SPAHOUSTON, TEXASTo register or for more information,call 312.795.1101 orvisit www.dri.org