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Homeland Insurance Company of New York v. Goldstein

United States District Court, District of Wyoming

April 30, 2019

HOMELAND INSURANCE COMPANY OF NEW YORK, Plaintiff,
v.
SCOTT J. GOLDSTEIN, on behalf of Powell Valley Healthcare Inc, Defendant, AND
v.
HOMELAND INSURANCE COMPANY OF NEW YORK and LEXINGTON INSURANCE COMPANY, Counter-Defendants.

          ORDER ON PLAINTIFF'S MOTION TO COMPEL

          Mark L. Carman United States Magistrate Judge.

         This matter comes before this Court upon Plaintiff's Motion to Compel [Doc. 119]. Plaintiff Homeland Insurance Company of New York ("Homeland") brought the underlying case seeking a declaratory judgment as to its obligations under the insurance policy it issued to Defendant Powell Valley Healthcare ("Powell")[1] [Doc. 1 p. 2]. During the period in which Homeland insured Powell, Powell was sued multiple times for negligent care provided by its Dr.

         Jeffrey Hansen ("Dr. Hansen"). Id. Homeland claims that it has no duty to defend or indemnify Powell because Powell was aware of Dr. Hansen's poor treatment prior to the insurance policy's inception [Doc. 120 pp. 2-3].

         Homeland now moves to compel the production of documents detailing Powell's awareness of any problems related to Dr. Hansen's care prior to the issuance of Homeland's insurance policy, and to compel Powell to supplement and expand their discovery responses [Doc. 119]. Powell has refused to produce these documents and supplement their discovery, arguing the requested information is protected under various privileges and are disproportionate to the needs of the case [Doc. 124].

         A. Standard of Review

         The Federal Rules of Civil Procedure allow parties to

obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.

Fed.R.Civ.P. 26(b)(1).

         This Court has "broad discretion to control and limit discovery." Teton Mill Work Sales v. Schlossberg, 2007 WL 9657995, at *2 (D. Wyo. June 22, 2007). The party resisting disclosure bears the burden of proving privilege. Greenwood v. Wierdsma, 741 P.2d 1079, 1089 (Wyo. 1987). The party seeking disclosure has the burden to demonstrate entitlement to the records when disclosure withheld pursuant to W.S. § 35-2-610(a)(ix). This motion addresses the application of statutory privileges and disclosure restrictions as enacted by Wyoming. Federal Rules of Evidence 501 addresses the application of privileges in Federal Courts. That rule reads:

         Rule 501. Privilege in General

         The common law-as interpreted by the United States courts in the light of reason and experience-governs a claim of privilege unless and of the following provided otherwise:

• The United States Constitution;
• A federal statute; or
• Rules prescribed by the Supreme Court.

         But in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.

         The 1974 advisory committee notes recognize that state privilege law applies in diversity jurisdiction cases, but that federal privilege law controls in cases or claims arising under federal law. This Court's jurisdiction in this matter is based upon diversity of citizenship and as such Wyoming privilege law controls. Wyoming has enacted a series of statutes addressing hospital and physician quality assurance and improvement which limits disclosure of records. Plaintiffs have invoked these provisions herein and each must be addressed.

         A. Peer Review Privilege

         Powell has withheld some documents on the basis they are protected by peer review privilege [Doc. 124 pp. 4-8]. Wyoming law protects:

All reports, findings, proceedings and data of the professional standard review organizations is confidential and privileged, and is not subject to discovery or introduction into evidence in any civil action, and no person who is in attendance at a meeting of the organization shall be permitted or required to testify in any civil action as to any evidence or other matters produced or presented during the proceedings of the organization or as to any findings, recommendations, evaluations, opinions or other actions of the organization or any members thereof. However, information, documents or other records otherwise available from original sources are not to be construed as immune from discovery or use in any civil action merely because they were presented during proceedings of the organization, nor should any person who testifies before the organization or who is a member of the organization be prevented from testifying as to matters within his knowledge, but that witness cannot be asked about his testimony before the organization or opinions formed by him as a result of proceedings of the organization.

W.S. §35-17-105.

         The Wyoming peer review statute was passed in March 1981. Laws 1981, ch. 107, § 1. Its passage came amidst a nationwide push to strengthen protections for peer review materials in hospitals, culminating with The Health Care Quality Improvement Act of 1986 (42 U.S.C.A. §§ 11111(a)(1)), which granted "immunity to professional review committees" and their members. George E. Newton II, Maintaining the Balance: Reconciling the Social and Judicial Costs of Medical Peer Review Protection, 52 Ala.L.Rev. 723, 732 (2001). Among the goals of the HCQIA was to combat the "increasing occurrence of medical malpractice" and "improve the quality of medical care" while addressing the "national need to restrict the ability of incompetent physicians to move from State to State without disclosure or discovery of the physician's previous damaging or incompetent performance." Susan O. Scheutzow, State Medical Peer Review: High Cost but No Benefit-Is It Time for A Change?, 25 Am. J.L. & Med. 7, 18 (1999).

         Today, nearly every state has a peer review privilege, reflecting a nationwide desire to curtail medical malpractice. Daniel M. III Mulholland; Phil Zarone, Waiver of the Peer Review Privilege: A Survey of the Law, 49 S.D. L.Rev. 424, 426 (2004). Medical peer review allows doctors to evaluate their colleague's work for compliance with industry standards. Christopher S. Morter, Note, The Health Care Quality Improvement Act of 1986: Will Physicians Find Peer Review More Inviting?, 74 Va.L.Rev. 1115, 1117 (1988). Having doctors evaluate their peer's performance is sensible given they are already familiar with the standards and regularly observe their colleagues in action. Newton II, supra at 723-25; Michael D. ...


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