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Illinois Appellate Court Decision in Wrongful Death Case Creates Adverse New Precedent for Handling Discovery Requests in Med Mal Cases

In Illinois, the First District Appellate Court in the Fifth Division addressed the question of whether or not a self-insured hospital is exempt from producing its self-insurance documents during the course of discovery. The underlying wrongful death case was filed in Cook County, Illinois by the Administrator of the Estate of a hospital patient who had suffered a cardiopulmonary arrest and had died after undergoing medical procedures at the defendant hospital.

During discovery, the plaintiff requested the production of the hospital's insurance policies. The hospital responded that there was no insurance policy to produce because the hospital was a self-insured entity. The trial court judge issued several orders requiring the hospital to produce the applicable insurance policies, as well as a protective order which required that any insurance policies produced by the hospital would remain strictly confidential and be used solely for the litigation at issue. The hospital responded by producing a trust agreement which was apparently 99% blank. 

The plaintiff then filed a motion to compel against the hospital, seeking compliance with the trial court's prior orders and sanctions against the hospital. On June 7, 2016, the trial court entered an order requiring the hospital to produce the trust document for an in camera inspection by June 14th. A hearing was held during which the hospital represented that it previously disclosed there was $12.5 million in coverage pursuant to a self-insured retention and trust. The hospital refused to produce documentation related to the trust agreement and asked the trial court to hold it in "friendly contempt" for the purpose of taking this discovery issue up on appeal. The trial court held the hospital in friendly contempt and imposed a $100 fine.

The hospital made three main arguments on appeal:(1) "[i]nsurance documents are not discoverable in a tort action not involving insurance coverage because the insurance documents lack relevance to the claims advanced;" (2) the hospital's trust agreement is a confidential financial document as opposed to an insurance document which meant that the trial court abused its discretion in ordering its production; and (3) the hospital's actions were not contemptuous of the trial court's authority. Under Illinois law, the standard of review for a contempt order is abuse of discretion. 

As to the hospital's first argument, the Appellate Court noted that the issue of discoverability is distinct from admissibility and that a trial court has wide latitude in ruling on discovery matters. The Appellate Court further noted that the hospital failed to cite any case, statute or rule that explicitly exempted it from production of its insurance-related documents. 

In regard to the defendant hospital's second argument, the Appellate Court found that an entity's self-insured trust agreement is more akin to an insurance document than other types of confidential financial documents. In reaching this conclusion, the Appellate Court pointed to the hospital's own disclosure of $12.5 million in self-insurance at the June 14, 2016 hearing as evidence that the self-insured trust agreement was more like an insurance document. The Appellate Court also noted that the trial court's June 7, 2016 order was only for the hospital to produce the documentation via an in camera inspection to the trial court, as opposed to producing the documentation to the plaintiff.

Finally, the Appellate Court agreed that the hospital's refusal to produce documents was not contemptuous of the trial court's authority, but was made in good faith based on sound legal arguments for purposes of effectuating an interlocutory appeal. As a result, the Appellate Court vacated the part of the trial court's June 14, 2016 order finding the hospital in contempt and assessing a monetary penalty. 

The dissent countered that the self-insured retention and trust agreement was not the same as an insurance policy, did not exist for the benefit of injured parties such as the plaintiff and contained confidential and trade-secret information that was not relevant to the wrongful death action.

This case is particularly significant for medical malpractice defense attorneys in Illinois because it sets a precedent that is contrary to how many have been handling discovery requests for decades. As noted by the dissenting opinion, "I know of no court that has allowed the production of a self-insured trust by a hospital, municipality or large corporation before judgment" has been entered. Illinois defense counsel that have been able to block the production of self-insurance trust agreements in the past should expect to deal with motions to compel and orders requiring production unless this case is reversed or distinguished.

The case is Anthony Brown v. Advocate Health & Hosps. Corp., 2017 IL App (1st) 161918-U, 2017 Ill. App. Unpub. LEXIS 585 (September 15, 2017).

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