Gocial v. Independence Blue Cross

• Decision Date: 24 June 2003
• Citation: 827 A.2d 1216
• Parties: Benjamin GOCIAL, M.D., Jacqueline N. Gutman, M.D. and Dean E. Burget, Jr., M.D., on behalf of themselves individually and all others similarly situated, Appellants, v. INDEPENDENCE BLUE CROSS and Keystone Health Plan East, Inc., Appellees.
• Court: Pennsylvania Superior Court

827 A.2d 1216

Benjamin GOCIAL, M.D., Jacqueline N. Gutman, M.D. and Dean E. Burget, Jr., M.D., on behalf of themselves individually and all others similarly situated, Appellants, v. INDEPENDENCE BLUE CROSS and Keystone Health Plan East, Inc., Appellees.

Superior Court of Pennsylvania.

Argued February 5, 2003.

Filed June 24, 2003.

David H. Weinstein, Philadelphia, for appellants.

David L. Comerford, Philadelphia, for appellees.

Before: ORIE MELVIN, BOWES and BECK, JJ.

OPINION BY BECK, J.

¶ 1 In this appeal from a discovery order in the context of class action certification, we examine the nature of the documents that are discoverable from the plaintiffs where defendants claim a conflict of interest exists pursuant to Pa.R.Civ.P. 1709.

¶ 2 The trial court required plaintiffs-appellants to turn over certain documents to appellees. We reverse and remand with instructions.

Facts and Procedural History

¶ 3 The trial court opinion sets out the basis upon which the Complaint in this case was filed:

This case involves a proposed class action by plaintiffs, Benjamin Gocial, M.D. ("Dr. Gocial"), Jacqueline N. Gutman, M.D. (Dr. Gutman) and Dean E. Burget Jr., M.D. ("Dr. Burget"), [the plaintiffs] named health care providers, against defendants, Independence Blue Cross ("IBC") and Keystone Health Plan East, Inc. ("Keystone") [the defendants] asserting that defendants engaged in the practice of arbitrarily and unilaterally denying reimbursement for or reducing payment of medical expense claims for surgical services, products and procedures in violation of provider agreements with defendants. Defendants' alleged misconduct purportedly included the use of computerized cost containment programs which resulted in the denial of payment for medical services rendered to patients and submitted for reimbursement.

Trial Court Opinion, 6/20/02, at 1-2.

¶ 4 The plaintiffs filed their initial Complaint in December of 2000, followed by a First Amended Complaint and a Second Amended Complaint. The defendants filed an Answer in November of 2001 and the plaintiffs thereafter filed a Motion for Class Certification. During the discovery process the defendants filed a series of notices of subpoena. One of the notices was directed to the law firm Wade, Goldstein, Landau & Abruzzo, P.C. (Wade Goldstein).¹ The subpoena sought: 1) all documents related to this case; 2) all documents, including fee agreements and referral agreements, related to this case and any other action against IBC between Wade Goldstein and other named firms and attorneys; and 3) all agreements or contracts related to this case between Wade Goldstein and the plaintiffs.²

¶ 5 The plaintiffs objected to the subpoenas and asserted protection from disclosure based on attorney-client privilege and attorney work-product privilege.³ The defendants responded by filing a motion to strike the objections and the trial court held hearings on the issue. The parties' filings and the hearings revealed the following. Bruce Goldstein (Attorney Goldstein), named partner at Wade Goldstein, is married to Dr. Gutman, one of the three doctors presented as putative class representatives in the plaintiffs' initial Motion for Class Certification. Although Attorney Goldstein has never entered his appearance in this case, he represented the plaintiffs at some point in the case and entered into contingent fee agreements with a named plaintiff, Dr. Burget, and another doctor.⁴ These two contingent fee agreements were attached to a privilege log, prepared by Wade Goldstein, that was created at the trial court's request when the plaintiffs objected to the subpoena. The log sets out a series of documents in Wade Goldstein's possession relating to the discovery request.

¶ 6 The defendants believe they are entitled to all documents from Wade Goldstein because the documents establish Attorney Goldstein's involvement in this case or other cases against IBC. According to the defendants, Attorney Goldstein's involvement in the case, when combined with his marital relationship with Dr. Gutman, represents a conflict of interest that precludes the court from certifying the class.

¶ 7 The plaintiffs assert that Wade Goldstein is required to turn over only those documents that reveal a fee agreement or referral agreement between the firm and the named plaintiffs. According to the plaintiffs, they have always been willing to turn over these limited documents and in fact have done so by attaching the two contingent fee agreements to the privilege log. The plaintiffs claim that all of the other documents listed on the privilege log are not relevant to the conflict of interest issue raised by the defendants and, further, are protected by privilege.

¶ 8 On June 20, 2002, three days after the final hearing on this issue, the trial court entered an order commanding the plaintiffs to "produce all documents referenced on the log submitted by Wade, Goldstein... within 10 days." On June 27, 2002, the plaintiffs filed an Amended Motion for Class Certification in which they requested that only Dr. Burget, not Drs. Gocial or Gutman, be named as class representative. On July 1, 2002, the plaintiffs filed a Notice of Appeal from the June 20th order. The plaintiffs also filed an Affidavit executed by Attorney Goldstein, who asserted that neither he nor his firm had any financial interest in this case or any right to a fee or other form of compensation in connection with this case.

¶ 9 In their Statement of Matters Complained of on Appeal, the plaintiffs assert that the trial court erred in ordering production of all documents referenced on the privilege log because the documents are protected by attorney-client and attorney work-product privilege, as well as privileges relating to joint interests of litigants.⁵ The plaintiffs also faulted the trial court for finding that Attorney Goldstein is counsel of record for the plaintiffs. Finally, the plaintiffs asserted that the court erred in ordering production of the documents because the request for the documents was made for purposes of harassment, interference with attorney-client relationships, escalating and churning fees, and conducting improper discovery of claims not at issue.

Appealability

¶ 10 We begin our assessment of this matter by determining whether the trial court's order, which clearly is not a final order that ends the litigation, is nonetheless appealable. The plaintiffs assert that the order is appealable under the collateral order doctrine. That doctrine, now codified, permits an appeal as of right from a non-final order if it is separable from and collateral to the main action, involves a right too important to be denied review and, if review is postponed, the right will be irreparably lost. Pa.R.A.P. 313.

¶ 11 Based on relevant case law on the issue of attorney-client privilege and Rule 313, we conclude that the order of production in this case satisfies the Rule. See Ben v. Schwartz, 556 Pa. 475, 729 A.2d 547 (1999)

; Dibble v. Penn State Geisinger Clinic, 806 A.2d 866 (Pa.Super.2002); Mc-Govern v. Hospital Service Assn. Of Northeastern Pennsylvania, 785 A.2d 1012 (Pa.Super.2001). In all of these cases, our courts held that the appellant's colorable claim of attorney-client and attorney work-product privilege made appellate review proper. In light of those cases, we proceed to consider the merits of this case.

Conflict of Interest

¶ 12 The Pennsylvania Rules of Civil Procedure set out the criteria for class certification. In making a determination of whether the representative parties will "fairly and adequately assert and protect the interests of the class" a court must inquire:

1) whether the attorney for the representative parties will adequately represent the interests of the class,

2) whether the representative parties have a conflict of interest in the maintenance of the class action, and

3) whether the representative parties have or can acquire adequate financial resources to assure that the interests of the class will not be harmed.

Pa.R.Civ.P. 1709.

¶ 13 The defendants' request for documents from Wade Goldstein was based on their allegation that Dr. Gutman, as a class representative, had a conflict of interest because her husband represented the class. The defendants sought the documents at issue to establish the conflict and block class certification, which was pending in the trial court. Relying on a number of federal cases that have recognized the impropriety of such a relationship in the context of a class action, the trial court concluded that in the event Wade Goldstein represented the class, the defendants were entitled to discover that fact and oppose certification on that basis.

¶ 14 The primary case relied on by the trial court is Hale v. Citibank, N.A., 198 F.R.D. 606 (S.D.N.Y.2001). Hale involved the request for class certification in a case brought under the Truth in Lending Act. The evidence revealed that Andrea Hale, named as representative party for the class, was married to the attorney who referred the matter to the law firm representing the class. Because Hale's husband expected some financial recognition for his "contribution" to the case, the district court held that the arrangement would "inevitably cause Hale to confuse her fiduciary duty to the prospective class with her interest in protecting and advancing her husband's contingent financial relationship" with the law firm. Id. at 607. Thus, the Hale court denied certification.

¶ 15 Other federal cases have denied certification on similar grounds. See e.g., Jaroslawicz v. Safety Kleen Corp., 151 F.R.D. 324 (N.D.Ill.1993) (class representative's close working relationship with law firm representing class creates conflict of interest; class certification denied); Pope v. City of Clearwater, 138 F.R.D. 141 (M.D.Fla.1991) (denying certification based on relationship between the named representative and the proposed class attorneys); Zlotnick v. TIE...