Barsema v. Susong

• Decision Date: 10 March 1988
• Docket Number: No. CV-87-0031-PR,CV-87-0031-PR
• Citation: 751 P.2d 969,156 Ariz. 309
• Parties: James BARSEMA and Debra Barsema, Plaintiffs/Appellants, v. William A. SUSONG and Jane Doe Susong, husband and wife; Phoenix Gynecologists, Ltd., a corporation; Richard A. Thompson and Jane Doe Thompson, husband and wife; St. Joseph's Hospital and Medical Center, a corporation; Black Corporation 1 through 10, and John Doe and Jane Doe, husband and wife 1 through 10, Defendants/Appellees.
• Court: Arizona Supreme Court

Page 969

751 P.2d 969

156 Ariz. 309

James BARSEMA and Debra Barsema, Plaintiffs/Appellants, v. William A. SUSONG and Jane Doe Susong, husband and wife; Phoenix Gynecologists, Ltd., a corporation; Richard A. Thompson and Jane Doe Thompson, husband and wife; St. Joseph's Hospital and Medical Center, a corporation; Black Corporation 1 through 10, and John Doe and Jane Doe, husband and wife 1 through 10, Defendants/Appellees.

No. CV-87-0031-PR.

Supreme Court of Arizona, In Banc.

March 10, 1988.

Treon & Warnicke, P.A. by Monte M. Simpson, JoJene E. Mills, Mark T. Palin, Phoenix, and Thompson, Dalton & DeRose by Jerry B. DeRose, Globe, for plaintiffs/appellants.

Teilborg, Sanders & Parks, P.C. by Frank A. Parks, James W. Kaucher, Scott

H. Houston, Phoenix, for defendants/appellees.

Langerman, Begam, Lewis and Marks by Amy G. Langerman, and Leslie E. O'Hara, Phoenix, for amicus curiae Arizona Trial Lawyers Ass'n.

FELDMAN, Vice Chief Justice.

James and Debra Barsema (plaintiffs) petition us to review a decision of the court of appeals. We granted review to determine whether A.R.S. § 12-569 can be constitutionally applied to limit the cross-examination of an expert witness on issues pertaining to possible bias and prejudice. See Rule 23, Ariz.R.Civ.App.P., 17A A.R.S. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3) and A.R.S. § 12-120.24.

FACTS

Plaintiffs brought a malpractice action against William Susong, M.D. (defendant). Mutual Insurance Company of Arizona (MICA) provided malpractice coverage for the claim. One of defendant's expert witnesses was William Crisp, M.D., allegedly a MICA shareholder and insured. Dr. Crisp was a vice president and member of MICA's board of directors. Although he was not salaried, Dr. Crisp was compensated for the duties he performed for MICA. According to Dr. Crisp, his duties as a board member included trying to keep premiums low. Basing his ruling on A.R.S. § 12-569, the trial judge granted defendant's motion in limine to preclude plaintiffs from mentioning MICA or the fact that Dr. Crisp was involved with MICA and/or any of its committees. So far as the jury knew, Dr. Crisp was an impartial, independent expert testifying that defendant had not fallen below the applicable standard of care in treating plaintiff Debra Barsema.

The trial judge entered judgment on a verdict for defendant and plaintiffs appealed. The court of appeals held A.R.S. § 12-569 unconstitutional ¹ and found the trial judge erred in prohibiting plaintiffs from cross-examining Dr. Crisp regarding his employment relationship with MICA. Barsema v. Susong, 156 Ariz. 304, 307, 308, 751 P.2d 964, 967, 968 (App.1986). Nevertheless, the court affirmed the judgment for defendant, holding that plaintiffs had failed to demonstrate that the error was prejudicial. Id. at 308, 751 P.2d at 968.

THE STATUTE

1. Scope

The relevant portions of § 12-569 provide:

During the trial of a medical malpractice action ... evidence that ... any witness ... has been or is covered by a professional liability insurance policy issued by a health care insurer established pursuant to [A.R.S. §§ 20-1721 to -1724] or that such ... witness has a financial interest in the operation of such a health care insurer arising as a result of the ownership of stock, a policy or policies of insurance, notes, including contributed surplus notes, any other evidence of indebtedness or otherwise, shall not be received in evidence for any purpose.

(Emphasis added.)

In holding that the trial court erred, the court of appeals found "[e]vidence of Dr. Crisp's bias, interest, and agency would clearly have been admissible under Rule 411," Ariz.R.Evid., 17A A.R.S. ² 156 Ariz. at 307, 751 P.2d at 967. ³ Because the court determined the evidence was "clearly inadmissible under [A.R.S. § 12-569]," it found, inter alia, that the statute could not be reconciled with Rule 411 and therefore was unconstitutional. 156 Ariz. at 307, 751 P.2d at 967.

In oral argument before this court, defendant all but conceded that the statute would be unconstitutional if interpreted to forbid the admission of Dr. Crisp's employment relationship with MICA. Were such a prohibition explicit in the statute, we would not hesitate to agree with the court of appeals that it was facially invalid for the reasons set forth in that court's opinion. Defendant now argues that it is not necessary to interpret § 12-569 so broadly. The statute does not by its terms forbid cross-examination of a defense expert in order to establish that he is an officer, director or employee of the insurance carrier that indemnifies the defendant for the loss arising from the subject of the litigation. Defendant's concern, instead, turns to the admissibility of evidence that the witness and the party share a common insurer.

2. Correlation of A.R.S. § 12-569 and Rule 411

The court of appeals did not consider the statute's constitutionality if given a limited construction, as defendant now urges it should be, so that it forbids only an attempt by plaintiffs to establish that Dr. Crisp was covered by the same insurance carrier as defendant. Defendant contends that the statute may be upheld insofar as it forbids evidence that a defense expert might be biased simply because he or she was insured by the same company as defendant. Because MICA was organized in response to the alleged malpractice crisis in 1974-75 ⁴ many Arizona doctors are insured by it. Defendant fears, therefore, that absent A.R.S. § 12-569, ⁵ plaintiffs' counsel could often interject the issue of insurance when cross-examining defense experts who had the same insurance carrier as defendant. This could be done on the theory that the expert was biased because any verdict against defendant might affect insurance premiums charged Arizona doctors, including the particular witness. We do not believe defendant's fears are well founded.

The interjection of insurance is prejudicial in negligence cases primarily because it may affect the findings of some jurors on the questions of liability and damages, when it is not relevant to either. Muehlebach v. Mercer Mortuary & Chapel, 93 Ariz. 60, 62, 378 P.2d 741, 743 (1963). For this reason, it was our general rule for many years that any mention that defendant had liability insurance mandated either a mistrial or a new trial. Michael v. Cole, 122 Ariz. 450, 452, 595 P.2d 995, 997 (1979) (citing Blue Bar Taxicab & Transfer Co. v. Hudspeth, 25 Ariz. 287, 216 P. 246 (1923)). This court has also recognized, however, that the existence of liability insurance should be admitted when relevant to prove a disputed fact. See, e.g., Arizona Cotton Oil Co. v. Thompson, 30 Ariz. 204, 211, 245 P. 673, 675-76 (1926); Arizona-Hercules Copper Co. v. Crenshaw, 21 Ariz. 15, 27, 184 P. 996, 1000-01 (1919). Even in Hudspeth, the case that announced Arizona's nondisclosure rule, the court qualified its grant of a new trial by stating that the information about insurance was not relevant to "any legitimate" issue. 25 Ariz. at 296, 216 P. at 249. Furthermore, in Muehlebach this court narrowed the Hudspeth rule by finding that a trial judge should not grant a new trial or mistrial upon the mere mention of insurance unless defendant could demonstrate prejudice. 93 Ariz. at 65, 378 P.2d at 744.

These common law principles have been codified in Rule 411:

Evidence that a person was or was not insured against liability is not admissible upon the issue whether he acted negligently or otherwise wrongfully. This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.

(Emphasis added.) Rule 411 appears in that section of the rules dealing with evidence that shares the common attribute of ordinarily having little or no relevancy but substantial capacity for creating prejudice. This section includes subsequent remedial measures, offers of compromise, defendant's offers to pay expenses caused by his conduct, and offers to plead guilty. See Rules 407 through 410. However, these rules all share the common exception that allows admission of such "dangerous" evidence when offered for a purpose other than the least relevant and most prejudicial purpose: that of affecting the jury's findings on liability and damages. See, e.g., Readenour v. Marion Power Shovel, 149 Ariz. 442, 447-48, 719 P.2d 1058, 1063-64 (1986) (Rule 407 does not require the exclusion of evidence of remedial measures when offered for another purpose).

Even when the evidence has a relevant purpose, the rules provide further protection from prejudice. Evidence relevant to one issue, such as bias, but prejudicial to another, may be admitted only if it passes the "threshold of Rule 403, which permits the trial judge to exclude relevant evidence where the probative value is 'substantially outweighed' by any of a variety of factors, including 'danger of unfair prejudice.' " Id. at 449, 719 P.2d at 1065.

3. Application to Cases Where Defendant and Witness Have a Common Insurer

Given the currently raging debate over the relationship between malpractice cases and malpractice insurance, we think it certain that in every jury there will be at least one member who has heard of malpractice insurance. See M. UDALL & J. LIVERMORE, ARIZONA PRACTICE: LAW OF EVIDENCE § 91 (2d ed. 1982). But even acknowledging that most jurors may surmise that defendant is insured, the introduction of evidence on the subject tends to emphasize something that is usually irrelevant and that may have an adverse effect on the quality of the jury's deliberations and conclusions. As noted in the previous section, the Rules of Evidence are adequate in addressing this problem. Therefore, we do not accept defendant's implicit hypothesis that absent A.R.S. § 12-569 plaintiffs would always be free to show bias by cross-examining a defense expert to prove that he and defe...