Washington State Supreme Court Limits Attorney-Client Communications with Employed Healthcare Practitioners

Vol. 10 No. 9

AuthorOn January 23, 2014, the Washington State Supreme Court (“Court”) decided a case with significant implications for Washington healthcare providers that employ physicians (or other healthcare practitioners) and the attorneys who represent those organizations. The conflict that can arise in medical malpractice cases between a defendant’s interest in preparing an effective defense by interviewing its employees, as protected by the attorney-client privilege, and a patient-plaintiff’s interest in maintaining confidentiality of unrelated sensitive health information, as protected by the physician-patient privilege, came to a head in Youngs v. Peacehealth.1 Attempting to balance these competing interests, the Court adopted a new rule limiting healthcare providers’ attorneys’ ex parte interviews with employed physicians, allowing such contact only so far as they directly relate to the events surrounding a patient-plaintiff’s injury.2 While several other states prohibit defense attorneys’ ex parte communications with non-party, employed treating physicians,3 Washington is the first to consider the implications of the U.S.  Supreme Court’s decision in Upjohn Co. v. United States.4  Attorneys in other states should take note. Youngs is likely to give rise to new challenges regarding the balance of these interests under similar state laws.

Background
Youngs is the consolidation of two cases involving the same common fact pattern: a patient sued a hospital for medical malpractice based on the conduct of its physician-employees, but did not name all of the practitioners involved in the patient’s treatment as parties.5 To prepare a defense, as well as to investigate potential patient safety issues, the hospital’s attorneys intended to interview these physicians. However, early in the lawsuit the patient-plaintiff sought an order from the trial court barring the hospital and its attorneys from speaking to nonparty providers involved in the plaintiff’s care.6 The two cases were certified to the Court for a decision as to whether each hospital’s right to have its attorneys engage in confidential discussions with its employee-physicians about the events leading to the litigation is superseded by the patient’s right to ensure the physicians do not divulge other embarrassing or potentially damaging information.7

To understand the Court’s holding, some background is necessary. In Washington, like in many states, the physician-patient privilege is statutorily defined: a physician may not, without consent of his or her patient, “be examined in a civil action as to any information acquired in attending such patient, which was necessary to enable him or her to prescribe or act for the patient.”8 Ninety days after filing an action for personal injuries or wrongful death, however, the patient is deemed to have waived the physician-patient privilege “as to all physicians or conditions, subject to such limitations as a court may impose.”9 Once a patient puts his or her treatment at issue by filing suit, his or her interest in privacy is no longer paramount; this waiver permits a defendant to adequately prepare a defense. However, procedural limitations may limit how a defendant may communicate with a patient-plaintiff’s treating physicians.10

The Loudon Rule Bars Ex Parte Communications
Since the Court’s 1998 holding in Loudon v. Mhyre,11 defense counsel may not speak to a plaintiff’s treating physicians about care provided to the patient outside the presence of the patient-plaintiff or counselthe primary rationale being that the best way for a patient-plaintiff to ensure physicians do not disclose information not directly related to the litigation is to allow the patient-plaintiff’s counsel to supervise the discussions.12  The Loudon rule is intended to protect patient-plaintiffs “who may have suffered injury due to the defendants’ negligence [from suffering] the additional injury of a privacy invasion implicating the most intimate details about their bodies and health.”13 It prevents a treating physician from discussing a patient-plaintiff’s pre-existing conditions or recovery, even when it may be relevant to damages.14 Although courts across the nation have split as to whether defense attorneys are prohibited from engaging in informal, ex parte communications with a patient-plantiff’s nonparty treating physicians, in Washington the Loudon rule prohibits such communications.

Conflict between the Attorney-Client Privilege and the Loudon Rule
In cases such as Youngs, however, the interests safeguarded by the Loudon rule are not the only ones at issue. An organization’s attorney must be allowed to fully develop the facts essential to proper representation by talking to the organization’s employees with relevant information. Employees at any level of an organization’s hierarchy may be the only sources of information relevant to the legal advice and might also “embroil the corporation in serious legal difficulties.”15 Therefore, the United States Supreme Court held in Upjohn Co. v. United States that the attorney-client privilege, the “oldest of the privileges for confidential communications known to the common law,” may extend to an organization’s attorney’s communication with employees at all levels of an organization.16 Taken alone, Upjohn would appear to permit a hospital’s attorney to engage in ex parte discussions with any of its employed providers, including nonparty treating physicians, to investigate claims and prepare for litigation.

Resolving the Conflict with the Modified Upjohn Test
Finding the interests of the defendant-organization and the patient-plaintiff in direct conflict, the Washington State Supreme Court decided that the Loudon rule “must yield where it would infringe on the [attorney-client] privilege as properly construed [under Upjohn]”17 but only to the extent necessary to enable an organization’s attorney to “‘determine what happened’ to trigger the litigation.”18 The Court therefore adopted the Upjohn test: Defense counsel may engage in confidential communications with a patient-plaintiff’s treating physician only when the communication:

  • Meets the general prerequisites for application of the attorney-client privilege;
  • Is with a physician or another practitioner who has direct knowledge of the event or events triggering the litigation; and
  • Concerns only the facts of the alleged negligent incident.19

According to this test, a healthcare organization’s counsel may interview employed nonparty treating providers, but may not engage in confidential communications regarding matters or events other than those giving rise to the alleged injury. The modified Upjohn test thus provides defense counsel with a narrow exception to the Loudon rule. 

The Court went on to address communications between hospital employees and quality improvement committees. The Court rejected the defendant-hospitals’ arguments that application of the Loudon rule unfairly burdened a hospital’s ability to fulfill its quality improvement obligations.  To the contrary, the Court held that members of quality improvement committees must be screened from defense counsel in actions against the hospital for negligence or malpractice.

The Court’s decision in Youngs was by a narrow 5-4 margin. The dissent would have gone further to interpret Loudon to create an absolute bar on confidential communication between the provider’s attorney and the provider’s employed physicians.20 According to the dissent, the unique nature of the physician-patient relationship demands that a nonparty treating physician not be treated like any other witness, and other available discovery techniques would be adequate to ensure that defense counsel could obtain the information it needs.

Conclusion
Youngs dramatically circumscribes the scope of what Washington healthcare providers’ attorneys can and cannot do, so it remains to be seen how workable this modification to the Upjohn test is in practice. Defense attorneys and physicians are likely to have difficulty complying with the limitations presented by the modified Upjohn test, while patient-plaintiffs will be limited by the attorney-client privilege from inquiring into the content of a physician’s ex parte communications with defense attorneys. Patient-plaintiffs therefore cannot be assured that defendants have complied with the new restrictions. In any case, Washington healthcare providers and their attorneys should carefully review how they approach the defense of negligence claims involving employed practitioners.

Youngs also has potentially wider implications. Physician employment is continuing to grow.21  In those states that prohibit ex parte communications between defense attorneys and a patient-plaintiff’s nonparty, treating physician, the conflict between the attorney-client privilege, as addressed by Upjohn, and the physician-patient privilege is likely to arise.

***

1

Youngs v. Peacehealth,316 P.3d 1035 (Wash. 2014)

2

Id.

3

See, e.g., Alyward v. Settecase, 948 N.E.2d 769 (Ill. App. 2011) (prohibiting ex parte communications with a plaintiff's treating physician whose actions are not a potential basis for the hospital's liability).

4

See, e.g., Alyward v. Settecase, 948 N.E.2d 769 (Ill. App. 2011) (prohibiting ex parte communications with a plaintiff's treating physician whose actions are not a potential basis for the hospital's liability).

5

Id. at 1039-40.

6

Id.

7

Id. at 1041.

8

Wash. Rev. Code § 5.60.060(4).

9

Wash. Rev. Code § 5.60.060(4)(b).

10

Youngs,316 P.3d at 1039.

11

Loudon v. Mhyre, 756 P.2d 138 (Wash. 1988).          

12

Youngs,316 P.3d at 1042.

13

Id. at 1039.

14

Id. (citing Loudon, 756 P.2d 138).

15

Id. at 1043 (internal quotation marks and citation omitted).

16

Upjohn, 449 U.S.at 389.

17

Youngs, 316 P.3dat 1043.

18

Id. at 1045 (quoting Upjohn, 449 U.S. at 392).

19

Id.

20

Id. at 1049 (concurring in part, dissenting in part opinion).

21

See Ann S. O’Malley et al., Rising Hospital Employment of Physicians: Better Quality, Higher Costs?, Ctr. for Studying Health Sys. Change (Issue Brief No. 136, Aug. 2011); see also Carol K. Kane & David W. Emmons, “New Data on Physician Practice Arrangements: Private Practice Remains Strong Despite Shifts Toward Hospital Employment,” Am. Med. Ass’n (2013), available at http://www.ama-assn.org/resources/doc/health-policy/prp-physician-practice-arrangements.pdf.

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