Barber v. Sedgwick Claims Management Services, Inc., No. 3:2014cv27349 - Document 87 (S.D.W. Va. 2015)
Court Description: MEMORANDUM OPINION and ORDER granting 58 OBJECTION AND MOTION by James Heslep to Quash Subpoena; granting in part and denying in part 61 MOTION by Family Dollar Stores, Inc. to Quash, or Modify, Plaintiff's Third-Party Subpoena, as more fully set forth herein. Signed by Magistrate Judge Cheryl A. Eifert on 10/16/2015. (cc: counsel of record, including counsel for Family Dollar Stores, Inc. and James Heslep) (jsa)
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Barber v. Sedgwick Claims Management Services, Inc. Doc. 87 IN TH E U N ITED STATES D ISTRICT COU RT FOR TH E SOU TH ERN D ISTRICT OF W EST VIRGIN IA H U N TIN GTON D IVISION JILL C. BARBER, Plain tiff, v. Cas e N o .: 3 :14 -cv-2 73 4 9 SED GW ICK CLAIMS MAN AGEMEN T SERVICES, IN C., D e fe n d an t. MEMORAN D U M OPIN ION an d ORD ER Pending before the Court are J am es Heslep, Esquire, Steptoe & J ohnson PLLC’s Objection and Motion to Quash, (ECF No. 58), and Fam ily Dollar Stores, Inc.’s Motion to Quash, or Modify, Plaintiff’s Third-Party Subpoena, (ECF No. 61). Plaintiff has filed responses to both m otions, and the m ovants have replied. Therefore, the motions are fully briefed and ready for resolution. The undersigned does not find it necessary to have a hearing on the m otions. For the reasons that follow, the Court GRAN TS the Motion to Quash the subpoena served on Mr. Heslep and GRAN TS, in p art, and D EN IES, in p art, the m otion to quash or m odify the subpoena served on Fam ily Dollar Stores, Inc. I. In tro d u ctio n This civil action involves allegations of com m on law fraud and outrageous conduct related to the adm inistration of a workers’ com pensation claim filed by Plaintiff. Plaintiff asserts that on Septem ber 24, 20 12, while acting within in the scope of her em ploym ent with Fam ily Dollar Stores, Inc. (“Fam ily Dollar”), she was bitten by a brown 1 Dockets.Justia.com recluse spider. The spider bite caused a non-healing wound on Plaintiff’s right forearm , which plagued her for over a year and required significant treatment. Plaintiff claim s that the defendant, a third-party claim s adm inistrator working for Fam ily Dollar, intentionally m ishandled Plaintiff’s workers’ com pensation claim , using deceptive and fraudulent tactics, deliberately delaying reasonable m edical care for her wound, and m aliciously denying her entitlem ent to tem porary total disability benefits. Plaintiff recently served two subpoenas to produce docum ents; one was served on J am es Heslep, an attorney with Steptoe & J ohnson, PLLC, who acted as counsel for Fam ily Dollar in Plaintiff’s workers’ com pensation proceeding, and the other subpoena was served on Fam ily Dollar. (ECF No. 58-1 at 4-8; ECF No. 61-2 at 1-6). The subpoena directed to Mr. Heslep requests the production of six categories of docum ents, all of which would have been collected or created secondary to Mr. Heslep’s representation of Fam ily Dollar in Plaintiff’s adm inistrative action. The subpoena served on Fam ily Dollar requests the production of eleven categories of docum ents, som e of which are specific to Plaintiff and som e that m ore generally apply to Fam ily Dollar’s claim s adm inistration process and relationship to the defendant. II. D is cu s s io n A. Mr. H e s le p ’s Su bp o e n a Mr. Heslep objects to producing any of the docum ents identified in the subpoena on the basis that they constitute his attorney work product or his privileged attorney/ client com m unications. Mr. Heslep provided a privilege log, which lists and describes the responsive docum ents in his possession. A review of the privilege log substantiates that the docum ents withheld are privileged and protected. Plaintiff does not dispute Mr. Heslep’s contention that the docum ents are 2 attorney work product and confidential attorney/ client com m unications. Instead, Plaintiff argues that the docum ents are not protected from discovery because they fall within the crim e-fraud exception. The parties agree as to the relevant law governing their dispute, but they disagree as to whether Plaintiff has dem onstrated an adequate factual foundation to trigger in cam era review of the docum ents pursuant to the crim efraud exception. “The crim e-fraud exception operates to rem ove the privilege attaching to com m unications between a client and his or her counsel that were m ade in furtherance of a fraudulent or crim inal schem e.” State ex re. Allstate Ins. Co. v. Madden, 60 1 S.E.2d 25, 36 (W.Va. 20 0 4) (citing United States v. Zolin, 491 U.S. 554, 10 9 S.Ct. 2619, 10 5 L.Ed.2d 469 (1989)). In addition, the crim e-fraud exception m ay “nullify the protections afforded by the work product doctrine.” Id. (citing State ex rel. Medical Assurance of W est Virginia, Inc. v. Recht, 583 S.E.2d 80 , 95 (20 0 3)). “It is im portant to note, though, that the crim e or fraud exception is traditionally a narrow one. In this m anner, only a crim e or a fraud upon the court will suffice to overcom e the attorney-client privilege. Thus, when the fraud alleged bespeaks of tortious fraudulent conduct, rather than a true fraud upon the court, the crim e or fraud exception does not operate to com pel disclosure of the privileged com m unications.” Kessel v. Leavitt, 20 4 W. Va. 95, 183, 511 S.E.2d 720 , 80 8 (1998) (citing 1 Cleckley, § 5– 4(E)(6)(a), at 579 (3d ed. 1994)). In determ ining whether the exception applies and docum ents should be disclosed, the court m ust conduct a two-step analysis. At all tim es, the party asserting the crim e-fraud exception carries the burden of establishing its applicability. Madden, 60 1 S.E.2d at 39. This burden is initially m et with a ‘“showing of a factual basis adequate to support a good faith belief by a reasonable person,’ that in cam era review of the 3 m aterials m ay reveal evidence to establish the claim that the crim e-fraud exception applies.” United States v. Zolin, 491 U.S. 554, 572, 10 9 S.Ct. 2619, 10 5 L.Ed.2d 469 (1989) (internal citation om itted). Once the requisite showing is m ade by the asserting party, the court m ust decide whether to conduct an in cam era review of the allegedly privileged and protected docum ents to determ ine if the exception indeed applies. Id. The decision to perform such a review rests within the sound discretion of the court; however, “the court should m ake that decision in light of the facts and circum stances of the particular case, including, am ong other things, the volum e of m aterials the district court has been asked to review, the relative im portance to the case of the alleged privileged inform ation, and the likelihood that the evidence produced through in cam era review, together with other available evidence then before the court, will establish that the crime-fraud exception does apply.” Id. Obviously, if the asserting party fails to convince the court that in cam era review is necessary, the analysis ends there. However, if the requisite factual showing is m ade, and the court decides to conduct an in cam era review, the second step is for the court to determ ine if the docum ents reveal evidence establishing application of the exception. Here, Plaintiff does not m eet her initial burden to provide a factual basis sufficient to justify in cam era review of Mr. Heslep’s privileged docum ents. Although Plaintiff verifies certain factual allegations, the facts established do not lead to an objective, good faith belief that Mr. Heslep’s docum ents will contain evidence supporting the crim e-fraud exception. In other words, Plaintiff shows the existence of various facts pertaining to her workers’ com pensation claim , but does not construct a bridge leading from those facts to the conclusion that Mr. Heslep was probably retained, knowingly or unknowingly, to further a crim e or fraud. Plaintiff alleges the following 4 facts supporting her assertion that the crim e-fraud exception should overcom e the attorney/ client privilege and attorney work product protection that attach to Mr. Heslep’s records: 1. On May 2, 20 13, Plaintiff’s treating physician suggested that Plaintiff receive hyperbaric oxygen therapy (“HBT”) to speed wound healing at the site of her brown recluse spider bite. 2. Defendant’s em ployee, Iryna Slotylo, refused to approve paym ent for HBT after receiving a report prepared by her consultant, Dr. Glenn D. Ham ilton, indicating that HBT was not m edically necessary. (ECF No. 58-1 at 9-10 ). 3. Dr. Ham ilton’s report contained num erous errors; the m ost im portant of which was his incorrect belief that Plaintiff used tobacco, alcohol, and illicit drugs. According to Dr. Ham ilton, these “high risk co-m orbidities” prevented would healing. (Id. at 10 ). 4. Ms. Slotylo knew that Dr. Ham ilton’s report contained these errors, because Ms. Slotylo had Plaintiff’s m edical records. 5. On Decem ber 17, 20 13, another one of Plaintiff’s treating physicians, a wound specialist, requested urgent approval from Ms. Slotylo, authorizing Plaintiff to consult with the Mayo Clinic to confirm or rule out the condition of pyoderm a gangrenosum . According to the physician, pathology results from a punch biopsy of Plaintiff’s wound site supported a diagnosis of pyoderm a gangrenosum as the cause of Plaintiff’s continuing wound com plications. (ECF No. 63-8 at 2). 6. On March 4, 20 14, Ms. Slotylo belatedly authorized the Mayo Clinic consultation. Prior to doing so, however, Ms. Slotylo engaged the services of another consultant, Dr. Chuanhang J in, an Associate Professor at West Virginia University’s 5 Departm ent of Occupational Medicine. Dr. J in also suspected that Plaintiff suffered from pyoderm a gangrenosum and felt that this diagnosis needed to be investigated. Dr. J in wrote a letter to Ms. Slotylo on February 24, 20 14, suggesting that the Mayo Clinic consultation be conducted prom ptly, so that Plaintiff could receive the proper diagnosis and treatm ent. Dr. J in further advised that pyoderm a gangrenosum was an autoim m une disorder, and was not caused by the alleged spider bite. (ECF No. 63-11 at 4-5). 7. On March 7, 20 14, Plaintiff hired a lawyer to represent her in the workers’ com pensation proceeding. The attorney subsequently notified Ms. Slotylo and Mr. Heslep that Plaintiff had already been evaluated at the Mayo Clinic in J anuary, and the Mayo Clinic had concluded that Plaintiff did not have pyoderm a gangrenosum . Plaintiff’s lawyer advised that he expected a final report from the Mayo Clinic in a few days, but in the m eantim e, he sent Ms. Slotylo and Mr. Heslep som e prelim inary docum ents from the Mayo Clinic and som e m edical articles suggesting a connection between a brown recluse spider bite and pyoderm a gangrenosum . (ECF No. 63-14 at 214). 8. Unbeknownst to Plaintiff or her counsel, while waiting for the final reports from the Mayo Clinic, the defendant requested a supplem ental report from Dr. J in. 9. On the afternoon of March 20 , 20 14, via electronic m ail, Plaintiff’s counsel forwarded to Ms. Slotylo and Mr. Heslep the final reports from the Mayo Clinic, confirm ing the Clinic’s belief that Plaintiff did not have pyoderm a gangrenosum ; thereby, supporting her claim that the spider bite received during her em ploym ent with Fam ily Dollar was the likely cause of the non-healing wound on her forearm . In light of the findings, Plaintiff’s counsel requested authorization for additional treatm ents of Plaintiff’s wound. (ECF No. 63-15). 6 10 . The following day, Ms. Slotylo sent a letter to Plaintiff denying her claim for tem porary total disability benefits on the basis of Dr. J in’s supplem ental report, which was prepared March 18, 20 14. In the report, Dr. J in opined that Plaintiff’s wound issues were related to pyoderm a gangrenosum , and were not related to the alleged brown recluse spider bite. (ECF No. 63-16). Although the supplem ental report indicated that it was based upon a review of additional records, Plaintiff alleges that she subpoenaed docum ents from the m edical referral service that arranged Dr. J in’s expert review and found no evidence that records were provided to Dr. J in after the first set was sent to her. 11. During the relevant tim e fram e, Mr. Heslep was involved in the claim process and had m ultiple com m unications with Fam ily Dollar and the defendant regarding Plaintiff’s workers’ com pensation claim . In light of these facts, Plaintiff argues that the denial of HBT therapy was based on a patently erroneous report, and the denial of tem porary total disability benefits was an outrageous decision, based on fabricated opinions that Ms. Slotylo quickly obtained in an effort to resolve the claim before receiving the Mayo Clinic’s results, which she knew would plainly contradict her denial decision. Although Plaintiff claim s that the defendant’s acts constitute “clear badges of fraud,” (ECF No. 63 at 16), none of the m aterials supplied by Plaintiff dem onstrates that the defendant or Family Dollar involved Mr. Heslep in m aking “a false statem ent or statem ents of m aterial fact or law to a third person or the court for personal advantage.” Madden, 60 2 S.E.2d at 473 (citing Recht, 583 S.E.2d at 96). Plaintiff speculates that Ms. Slotylo obtained “false” opinions from consultants in order to provide her a reason to deny Plaintiff’s legitim ate dem ands. However, Plaintiff fails to produce any deposition testim ony from Dr. Ham ilton, Dr. J in, 7 or Ms. Slotylo supporting that inference. Sim ilarly, Plaintiff produces no testim ony, letters, or e-m ails reflecting efforts by Ms. Slotylo or Mr. Heslep to influence the consultants’ opinions, or encourage them to rush to judgm ent. Moreover, there is no evidence that false or m isleading reports were ever subm itted to the court in the adm inistrative proceeding. Although Plaintiff “presum es” that Mr. Heslep reviewed her m edical records, and “m ay have reviewed or com m ented about the m edical record” in connection with Dr. Ham ilton’s report, and could have discussed the consultants’ opinions with Ms. Slotylo, Plaintiff sim ply provides no concrete evidence to corroborate her beliefs. Indeed, Plaintiff fails to produce any evidence suggesting that Ms. Slotylo had som ething to gain by denying Plaintiff’s claim , which is a valid question given that Ms. Slotylo worked for a third-party adm inistrator, not for the insurer. As an exam ple of the type of factual foundation justifying in cam era review of privileged docum ents under the crim e-fraud exception, the undersigned points to Mt. Haw ley Ins. Co. v. Felm an Production, Inc., 271 F.R.D. 125 (S.D.W.Va. 20 10 ). In Mt. Haw ley Ins. Co., the party asserting the crim e-fraud exception produced e-m ail exchanges between Felm an Production, Inc.’s (“Felm an”) Hum an Resources Manager, its attorneys, and a third party operations m anager, which discussed how to best create after-the-fact docum ents that would validate an insurance claim . Id. at 137. Included in the e-m ail exchange was a com m ent by the Hum an Resources Manager that Felm an did not have sales contracts to substantiate the claim . Consequently, the Manager had asked custom ers to “back date” such contracts. The Manager then asked counsel for advice on what docum ents he should create to effectively support the claim . Id. The e-m ail exchange in Mt. Haw ley Ins. Co. provided prim a facie evidence of Felm an’s intention to perpetuate a fraud, and its solicitation of counsel to assist it in that endeavor. In 8 contrast, in this case there is only conjecture, which is insufficient to warrant in cam era review of privileged and protected docum ents. The undersigned will not invade the attorney/ client privilege or attorney work product protection on supposition alone. 1 B. Fam ily D o llar’s Su bp o e n a 1. D o cu m e n ts re gard in g co m m u n icatio n s w ith th e d e fe n d an t ( cate go ry 1 d o cu m e n ts ) The first category of docum ents sought in the subpoena are all those reflecting contacts between Fam ily Dollar and the defendant related to Plaintiff’s workers’ com pensation claim . Fam ily Dollar objects on the basis of burdensom eness. In response, Plaintiff agrees to narrow the search by lim iting the request to the “business e-m ails of Fam ily Dollar em ployees whose em ail addresses end with ‘@fam ilydollar.com .’” (ECF No. 69 at 4). In its reply, Fam ily Dollar continues to assert burdensom eness, although it does not provide the Court with any verified support for that assertion. Federal Rule of Civil Procedure 45(d) sets forth the protections available to a person subject to or affected by a subpoena. In particular, Rule 45(d)(3) outlines when a court m ust quash or m odify a subpoena, when it m ay do so, and when the court m ay direct compliance under specified conditions. In the context of discovery, “Rule 45 adopts the standards codified in Rule 26 which allows for the discovery of any m atter ‘not privileged, that is relevant to the claim or defense of any party’ when the discovery request ‘appears reasonably calculated to lead to the discovery of adm issible evidence.’” Schaaf v. Sm ithKline Beecham Corp., 233 F.R.D. 451, 453 (E.D.N.C. 20 0 5). As such, the 1 To the extent Plaintiff contends that copies of m edical records in Mr. Heslep’s possession are not privileged or protected, the undersigned disagrees. The records that Mr. Heslep chose to collect, review, and m aintain reflect that which his client shared with him and that which he otherwise decided to obtain in order to fulfill his duty to his client. Consequently, in this situation, Mr. Heslep’s selection of m edical records necessarily constitutes the fruit of attorney/ client com m unications and/ or work product. 9 sam e lim itations to discovery requests found in Rule 26 should be applied to a subpoena served pursuant to Rule 45. See, e.g., HDSherer LLC v. Natural Molecular Testing Corp, 292 F.R.D. 30 5, 30 8 (D.S.C. 20 13) (“Rule 45 does not list irrelevance or overbreadth as reasons for quashing a subpoena. However, the scope of discovery allowed under a subpoena is the sam e as the scope of discovery allowed under Rule 26.”) (citing Cook v. How ard, 484 Fed.Appx. 80 5, 812 (4th Cir. Aug. 24, 20 12) (“Although Rule 45(c) sets forth additional grounds on which a subpoena against a third party m ay be quashed[,] ... those factors are co-extensive with the general rules governing all discovery that are set forth in Rule 26.”)). For good cause shown under Rule 26(c), the court m ay restrict or prohibit discovery that seeks relevant inform ation when necessary to protect a person or party from annoyance, em barrassm ent, oppression, or undue burden or expense. Fed. R. Civ. P. 26(c). ). To succeed under the “good cause” standard of Rule 26(c), a party m oving to resist discovery on the grounds of burdensom eness and oppression m ust do m ore to carry its burden than m ake conclusory and unsubstantiated allegations. Convertino v . United States Departm ent of Justice, 565 F. Supp.2d 10 , 14 (D.D.C. 20 0 8) (the court will only consider an unduly burdensom e objection when the objecting party dem onstrates how discovery is overly broad, burdensom e, and oppressive by subm itting affidavits or other evidence revealing the nature of the burden); Cory v. Aztec Steel Building, Inc., 225 F.R.D. 667, 672 (D.Kan.20 0 5) (the party opposing discovery on the ground of burdensom eness m ust subm it detailed facts regarding the anticipated tim e and expense involved in responding to the discovery which justifies the objection); Bank of Mongolia v. M & P Global Financial Services, Inc., 258 F.R.D. 514, 519 (S.D.Fla.20 0 9) (“A party objecting m ust explain the specific and particular way in which a request is 10 vague, overly broad, or unduly burdensom e. In addition, claim s of undue burden should be supported by a statem ent (generally an affidavit) with specific inform ation dem onstrating how the request is overly burdensom e”). As with any dem and to lim it a docum ent production, whether m ade under Rule 26 or Rule 45, the burden of proof rests with the objecting party to establish that “the challenged production should not be perm itted.” HDSherer LLC, 292 F.R.D. at 30 8 (citing Finley v. Trent, 955 F.Supp. 642, 648 (N.D.W.Va.1997)). In addition, Rule 26(b)(2)(C) requires the court, on m otion or on its own, to lim it the frequency and extent of discovery, when (1) “the discovery sought is unreasonably cum ulative or duplicative;” (2) the discovery “can be obtained from som e other source that is m ore convenient, less burdensom e, or less expensive;” (3) “the party seeking the discovery has already had am ple opportunity to collect the requested inform ation by discovery in the action;” or (4) “the burden or expense of the proposed discovery outweigh its likely benefit, considering the needs of the case, the am ount in controversy, the parties’ resources, the im portance of the issues at stake in the action, and the im portance of the discovery in resolving the issues.” Fed. R. Civ. P. 26(b)(2)(C)(i)-(iii). This rule “cautions that all perm issible discovery m ust be m easured against the yardstick of proportionality.” Ly nn v. Monarch Recovery Managem ent, Inc., 285 F.R.D. 350 , 355 (D. Md. 20 12) (quoting Victor Stanley , Inc. v. Creative Pipe, Inc., 269 F.R.D. 497, 523 (D. Md. 20 10 )). To insure that discovery is sufficient, yet reasonable, district courts have “substantial latitude to fashion protective orders.” Seattle Tim es Co. v. Rhinehart, 467 U.S. 20 , 36, 10 4 S.Ct. 2199, 81 L.Ed.2d 17 (1984). Given that Fam ily Dollar has not supplied a verified factual basis for its claim of burdensom eness (such as affidavits from Fam ily Dollar’s inform ation technology 11 specialist), the undersigned D EN IES its request to quash the portion of the subpoena seeking category 1 docum ents. Nevertheless, taking into consideration the statem ents of the parties, and the proportionality analysis, the Court m odifies the subpoena to lim it the scope of Fam ily Dollar’s search for responsive e-m ails. Accordingly, Fam ily Dollar is ORD ERED to search the e-m ail accounts of its ten (10 ) em ployees m ost likely to have com m unicated with the defendant regarding Plaintiff’s workers’ com pensation claim . 2. D o cu m e n ts re gard in g co m m u n ica tio n s ( cate go ry 2 d o cu m e n ts ) w ith Mr. H e s le p The docum ents sought by Plaintiff in category 2 of the subpoena include privileged com m unications with Mr. Heslep and Mr. Heslep’s work product. For the reasons stated above, the Court GRAN TS Fam ily Dollar’s m otion to quash this portion of the subpoena. 3. Co n tract d o cu m e n ts be tw e e n Fam ily D o llar an d th e d e fe n d an t ( cate go ry 4 d o cu m e n ts ) Fam ily Dollar objects on the basis that its contract docum ents are proprietary and confidential. Moreover, Fam ily Dollar contends that the docum ents are not relevant to the issues in dispute. To the contrary, the undersigned finds that the term s of the contract between Fam ily Dollar and the defendant are relevant for som e of the very reasons set forth by Plaintiff. (ECF No. 69 at 15). Plaintiff agrees to the entry of a protective order to guard the confidential and proprietary aspects of the contract docum ents. Therefore, the Court D EN IES Fam ily Dollar’s m otion to quash the portion of the subpoena seeking its contract documents. Fam ily Dollar shall produce contract docum ents for the relevant tim e fram e. The parties shall tender an executed copy of the protective order on the Court’s website for entry, and the contract docum ents shall be subject to that order. 12 4. W ritte n p o licie s p e rtain in g to th e d e fe n d an t ( cate go ry 5 d o cu m e n ts ) Fam ily Dollar objects on the basis of relevance and confidentiality. To the extent Plaintiff seeks policies governing entities other than the defendant, the Court agrees that the request is overly broad and requires the production of irrelevant inform ation. However, the policies governing the defendant’s adm inistration of claim s for Fam ily Dollar are relevant to Plaintiff’s com plaint in that she attacks the m anner in which defendant adm inistered her workers’ com pensation claim . Accordingly, the Court GRAN TS Fam ily Dollar’s request to m odify this category of docum ents and ORD ERS Fam ily Dollar to produce those policies pertaining to the defendant’s adm inistration of claim s on behalf of Fam ily Dollar during the relevant tim e period. The policies will be subject to the protective order to alleviate Fam ily Dollar’s concern regarding their proprietary and confidential nature. 5. Cate go rie s 3 , 7, 8 , an d 10 d o cu m e n ts Fam ily Dollar does not object to the production of these docum ents. Accordingly, to the extent they have not yet been produced, Fam ily Dollar is ORD ERED to produce them . 6. Cate go rie s 6 an d 9 d o cu m e n ts Plaintiff has agreed to withdraw her request for these docum ents. Therefore, Fam ily Dollar’s m otion to quash these categories is GRAN TED . 7. D e fe n d an t’s liability in s u ran ce p o licy co ve rin g e rro rs an d o m is s io n s ( cate go ry 11 d o cu m e n ts ) The undersigned agrees with Fam ily Dollar that this request is m ore properly directed to the defendant. Consequently, the Court GRAN TS Fam ily Dollar’s m otion to quash the portion of the subpoena seeking the defendant’s insurance policies and 13 declaration pages. The Clerk is instructed to provide a copy of this Order to counsel of record, including counsel for Fam ily Dollar Stores, Inc. and J am es Heslep. EN TERED : October 16, 20 15 14
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