April 20, 2011 Article

Proving Positional Bias

How much discovery should be permitted of an expert witness’s financial interests?

by Anthony F. Della Pelle and Richard P. De Angelis Jr.

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Typically, in eminent domain and real estate tax appeal litigation, the bulk of the evidence to establish the value of a property is presented through expert witnesses. Appraisers, engineers, and planners are often called upon by the property owner and condemning authority or taxing authority to present evidence that will assist the fact finder in determining a property’s value, whether it is just compensation in a condemnation case or fair market value for real property taxation.

Property value litigation is no different than any other type of litigation where experts are used in that expert opinions are fair game for attack by the opposing side in discovery and certainly at trial. This gives rise to the question: To what extent are the individual experts who proffer those opinions subject to review beyond their work-related actions in a particular case? In other words, how far may opposing counsel go to prove the “positional bias” of an adverse party’s expert witness?

State courts have been confronted with this question in the context of discovery motions involving the discovery of potential positional bias through a non-party expert witness’s financial records and matter-specific information. However, while the state courts acknowledge the importance of balancing important discovery rights against the privacy rights of expert witnesses, there has not been a uniform approach to handling requests for such information from experts. Thus, all lawyers, and especially condemnation and tax appeal attorneys who handle cases that are so dependent on expert testimony, should be mindful of the scope of expert discovery in their state. In addition, counsel would be well advised to consider the extent to which their experts may be susceptible to positional bias attack.

Varying State Court Approaches to Expert Discovery

Recently, the Appellate Division of the New Jersey Superior Court overturned a trial court and ruled that an expert’s financial records are not subject to disclosure. In Gensollen v. Pareja, 416 N.J. Super. 585, 2010 N.J. Super. LEXIS 218 (N.J. Super. App. Div. 2010), the defendants’ counsel objected to the document request. During his deposition, the defendants’ expert physician testified that well over 95 percent of his litigation work was for defendants. Thereafter, the plaintiff filed a motion to compel; the physician cross-moved for a protective order. The trial court granted the plaintiff’s motion and denied the physician’s motion. The Appellate Division granted leave to appeal to consider the extent to which a party could inquire into an expert’s finances and litigation history in gathering information in an attempt to prove at trial the expert’s positional bias. Gensollen, 2010 N.J. Super. LEXIS 218, at *1. The Appellate Division reversed the trial court judge’s order because the request was both burdensome and harassing. Id.at *7–9.

The New Jersey court acknowledged that a litigant is entitled to explore, through discovery, the potential for positional bias but ruled that such discovery is “neither limitless nor may it continue unceasingly until the expert cries ‘uncle’ and concedes positional bias.” Id. at *7. Discovery should stop “once the expert provides information that would permit the requesting party to argue to a fact-finder that the expert is a ‘professional witness’ or ‘hired gun’ who mostly offers opinions that largely seek to vindicate a particular position.” Id.at *7–8. The court concluded that “in ruling on similar discovery requests, trial judges must recognize that licensed professionals do not surrender their privacy rights when hired to render an expert opinion for monetary consideration.” Id. at *8.

The New Jersey appellate court also stated its agreement with the Florida Supreme Court in Elkins v. Syken, 672 So. 2d 517 (Fla. 1996), which held:

[A]n overly burdensome, expensive discovery process will cause many qualified experts, including those who testify only on an occasional basis, to refrain from participating in the process, particularly if they have the perception that the process could invade their personal privacy. [Excessive discovery into an expert’s finances or into other extraneous matters] could have a chilling effect on the ability to obtain doctors willing to testify and could cause future trials to consist of many days of questioning on the collateral issue of expert bias rather than on the true issues of liability and damages.

The New Jersey Appellate Division held that the scope of discovery in this regard should focus on the particular financial arrangements between the party and its witness, the extent to which an expert renders opinions for plaintiffs and defendants, and the portion of time the expert devotes to litigation. The court, again relying on Syken, concluded that an expert’s tax records and business records should be produced only “upon the most unusual or compelling circumstances.” Gensollen, 2010 N.J. Super. LEXIS 218, at *9.

In Syken, the Florida Supreme Court reviewed an appellate court decision concerning the appropriate scope of discovery necessary to impeach an expert medical witness. Syken involved a personal injury action in which the petitioners sought substantial personal financial information from the medical expert witnesses for defensive purposes. The trial court ordered the experts to produce personal tax records and confidential information on unrelated patients. The appellate court reversed and outlined eight specific criteria to be followed in discovery disputes involving financial information from opposing medical experts. Syken, 672 So. 2d at 521. The Syken criteria allow a party opponent to probe an expert (through oral or written deposition) as to his or her work generally and litigation work, whether such work is on behalf of plaintiffs or defendants. The eight criteria approved in Syken are as follows:

  1. The medical expert may be deposed either orally or by written deposition.
  2. The expert may be asked as to the pending case, what he or she has been hired to do and what the compensation is to be.
  3. The expert may be asked what expert work he or she generally does. Is the work performed for the plaintiffs, defendants, or some percentage of each?
  4. The expert may be asked to give an approximation of the portion of their professional time or work devoted to service as an expert. This can be a fair estimate of some reasonable and truthful component of that work, such as hours expended, or percentage of income earned from that source, or the approximate number of [independent medical examinations] that he or she performs in one year. The expert need not answer how much money he or she earns as an expert or how much the expert’s total annual income is.
  5. The expert may be required to identify specifically each case in which he or she has actually testified, whether by deposition or at trial, going back a reasonable period of time, which is normally three years. A longer period of time may be inquired into under some circumstances.
  6. The production of the expert’s business records, files, and 1099’s may be ordered produced only upon the most unusual or compelling circumstance.
  7. The patient’s privacy must be observed.
  8. An expert may not be compelled to compile or produce nonexistent documents.

Syken, 672 So. 2d at 521 (quoting Syken v. Elkins, 644 So. 2d 539, 546 (Fla. Dist. Ct. App. 1994)).

The Florida Supreme Court held that “[t]he production of the expert’s business records, files, and 1099’s [sic] may be ordered produced upon the most unusual or compelling circumstances.” Id. at 521 (emphasis added). The decision of the Florida high court was a departure from earlier decisions:

Decisions in this field have gone too far in permitting burdensome inquiry into the financial affairs of physicians, providing information which “serves only to emphasize in unnecessary detail that which would be apparent to the jury on the simplest cross-examination: that certain doctors are consistently chosen by a particular side in personal injury cases to testify on its respective behalf.”

Id. (quoting Syken v. Elkins, 644 So. 2d at 546 (Fla. Dist. Ct. App. 1994) (citing LeJuene v. Aikin, 624 So. 2d 788, 790 (Fla. Dist. Ct. App. 1993) (Schwartz, C.J., specially concurring)).

Syken has been reviewed in other jurisdictions, and although it has provided guidance, it has not been universally accepted. For example, the Supreme Court of Kentucky provided some criticism of the Syken opinion in Primm v. Isaac, 127 S.W.3d 630 (Ky. 2004). In Primm, the issue was whether a doctor appearing as an expert could be compelled to produce his income tax records and other financial documents for use as possible impeachment evidence at trial. Primm was the third in a string of cases confronting Kentucky courts concerning the extent to which a party may discover and prove positional bias of an adverse party’s expert witness. In Metropolitan Property & Casualty Insurance Co. v. Overstreet, 103 S.W.3d 31 (Ky. 2003), the court determined that a jury could find that a witness who derives a substantial percentage of his annual income from examinations for the defense “might be tempted to slant his testimony to suit his employer.” Therefore, the court extended pretrial discovery and admission into evidence of the number of examinations and evaluations performed by the expert doctor on behalf of employers, insurance companies, and other defendants in the previous 12 months as compared with the number of patients seen for treatment purposes during the same period; the expert’s charge for each examination; and the expert’s charge for each deposition given as a result of an examination. Id.at 44.

Following Overstreet, the Kentucky Supreme Court in Primm found that a doctor’s bias from financial gain was generally discoverable. Primm, 127 S.W.3d at 634. The court held that “an expert can be questioned not only as to the percentage of income attributable to [medical examinations] and other litigation-related services, but also the total amount of income derived from such activities.” Id. at 637. While the Kentucky court agreed with the Florida court that the expert’s gross income, billing practices, and other financial information should not be subject to routine disclosure, it did hold that its ruling was not intended to preclude discovery of a non-party witness’s financial documents and that the production of such information should be compelled upon a finding that the witness was not forthcoming about the information. Id.Thus, Primm expanded the scope of available discovery to include more specific information from the expert, but the Kentucky court, in a veiled criticism of the holding in Syken, held that its opinion would afford the same protections to experts that were of concern to the Florida Supreme Court. Id.at 639.

Pennsylvania also permits discovery of income information when testing the potential positional bias of an expert witness. In Cooper v. Schoffstall, 905 A.2d 482 (Pa. 2006), the Pennsylvania Supreme Court approved the use of interrogatories to inquire as to the following:

[a] the approximate amount of compensation received and expected in the pending case; [b] the character of the witnesses’ litigation-related activities, and, in particular, the approximate percentage devoted to specific types of litigation and/or work on behalf of a particular litigant, class of litigant, attorney, and/or attorney organization; [c] the number of examinations, investigations, or inquiries performed in a given year, for up to the past three years; [d] the number of instances in which the witness has provided testimony within the same period; [e] the approximate portion of the witness’s overall professional work devoted to litigation-related services; and [f] the approximate amount of income each year, for up to the past three years, garnered from the performance of such services.

Id. at 495.

The Pennsylvania court recognized that some jurisdictions, specifically Florida with the Syken decision, have limited discovery of an expert’s financial information, but held that “this limited aspect of income information is within the fair scope of relevance on the question of potential favoritism.” Id.

In Cooper, the physician expert relied on Zamsky v. Public Parking Authority of Pittsburgh, 105 A.2d 335 (Pa.1954), in arguing that to the extent the discovery request sought information related to payments made by persons or firms unrelated to the parties, counsel, or the insurer involved in the case, it exceeded the bounds of permissible discovery. See Cooper, 905 A.2d at 485. It is interesting that Zamsky was a condemnation case, in which the court held that it was error to question the condemning authority’s expert witness concerning fees that he had received over a five-year period for services rendered in connection with the acquisition of other parcels. See id.

The Pennsylvania court in Cooper distinguished Zamsky by noting that the earlier case relied on prior decisions that approved inquiries concerning the fees expert witnesses earned for testifying in the case at trial, but that those decisions did not address fees earned for similar testimony in other cases. See Cooper,905 A.2d at 493 (citing Zamsky, 105 A.2d at 336). The court in Cooper also observed that Zamsky recognized that the issue was one of first impression, which it resolved by stating simply that “[t]he earnings of the expert witness from other services performed for the defendant were a purely collateral matter and the testimony thereon was not admissible to affect his credibility.” Id. The court in Cooper noted that there is no mention in Zamsky of the matter of potential favoritism or any consideration of the professional witness phenomenon at issue in the later case. Id.The court reasoned that “[g]iven that there is little depth in Zamsky’s treatment, we do not regard it as the type of decision that should greatly constrain future consideration and/or adjustment, particularly across the broader range of cases.” Id. Thus, it appears that the decision in Cooper would be binding in a Pennsylvania condemnation case today.

As can be seen from the review of the controlling cases in the few jurisdictions that have considered this issue, there appears to be no uniform rule. Whether an expert’s personal financial information is subject to discovery will depend on the jurisdiction in which the expert is called to testify. How jurisdictions resolve this issue could impact eminent domain and real estate tax appeal litigation because both practices rely heavily on expert opinions to establish a property’s value. Counsel need to be prepared to deal with the procedural aspects of seeking or opposing such discovery.

Limiting Exposure in a Positional Bias Attack in Condemnation Cases and Tax Appeals

In addition to knowing how a court might resolve a discovery dispute concerning access to an expert’s financial information, counsel should consider whether his or her witness is vulnerable to attack for positional bias. It is not uncommon, for example, to see the same appraisers working for condemning authorities over and over again. Likewise, counsel for property owners may be drawn to use an appraiser who is typically employed by property owners in eminent domain litigation. The same is true in property tax appeal litigation.

Discovery of an expert’s financial records may not seem as attractive if it is clear from the expert’s initial report that he or she is not a “hired gun” for a particular side but, rather, has been employed by both property owners and governmental entities alike. To avoid expensive motion practice concerning expert discovery and positional bias, counsel would be well advised to consider an expert witness with experience relevant to the assignment as opposed to the party. For example, in a condemnation action, counsel for a property owner should consider the appraiser’s knowledge and experience in valuing a particular type of property, for example, gas stations or automobile dealerships, or a specific geographic area, for example, a suburban township or downtown urban area, regardless of whom the appraiser may have worked for in those previous assignments. Not only does this limit the basis for a “positional bias” attack, but also it may lead the fact finder to lend greater credibility to the witness in light of his or her particularized knowledge.

The following hypothetical better illustrates the point: In a condemnation action in which the condemning authority is a county acquiring a property for a transportation project, counsel for the property owner may want to consider an appraiser who has been or is currently engaged by the municipality in which the property is located. (The scope of such work could be for property tax appeals, property acquisitions, whether voluntary or by condemnation.) Regardless of the scope of that engagement, it shows that the appraiser is one who is hired by both governmental entities and property owners and also has experience in that particular municipality. Another option is to use an appraiser who has, in the past, been retained by the county to appraise properties in connection with other projects. Still a third option may be to find an appraiser who has worked for both the condemning authority and the municipality in which the property is located.

In the foregoing hypothetical, a positional bias attack would seem senseless as would any attempt to prove positional bias through discovery of the expert’s financial information and documents.

Conclusion

Whether an expert’s personal financial information is subject to discovery will depend on the jurisdiction in which the expert is called to testify. Aside from being prepared to deal with the procedural aspects of seeking or opposing such discovery, counsel should consider not only whether his or her witness is vulnerable to attack for positional bias, but also whether an individual with broader experience may better serve the client’s interests.

Keywords: litigation, real estate, discovery, expert witnesses, positional bias, property value litigation

Anthony F. Della Pelle is a partner, and Richard P. De Angelis Jr. is an associate, at McKirdy & Riskin, P.A., in Morristown, NJ.


Copyright © 2011, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).