Leahy v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 21 May 2018 |
| Docket Number | No. 76272-9-I,76272-9-I |
| Citation | 418 P.3d 175 |
| Parties | Shannon LEAHY, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent. |
| Court | Washington Court of Appeals |
Philip Albert Talmadge, Sidney Charlotte Tribe, Talmadge/Fitzpatrick/Tribe, 2775 Harbor Ave. Sw, Third Floor Suite C, Seattle, WA, 98126-2138, Alex French, GLP Attorneys, P.S., Inc., 2601 4th Ave. Fl. 6, Seattle, WA, 98121-1287, Jeff Nicholas Comstock, GLP Attorneys P.S., Inc., 2601 4th Ave. Fl. 6, Seattle, WA, 98121-4640, for Appellant.
Joseph D. Hampton, Kathryn Naegeli Boling, Betts, Patterson, & Mines, P.S., 701 Pike St. Ste. 1400, Seattle, WA, 98101-3927 for Respondent.
PUBLISHED
¶ 1 Shannon Leahy appeals the trial court’s discovery orders and its order granting summary judgment to State Farm Mutual Automobile Insurance Company, dismissing her extracontractual claims with prejudice. We hold that the trial court did not abuse its discretion in ruling on discovery matters. But there are genuine issues of material fact on the reasonableness of State Farm’s actions in dealing with her UIM claim. We reverse and remand for further proceedings.
¶ 2 On November 1, 2010, Leahy’s car was struck from behind, and she suffered soft tissue injuries to her neck and back. The other driver was at fault, and that driver’s $25,000 liability insurance limit was split between three injured parties. Leahy received only $9,128.50 of this insurance.
¶ 4 Almost 24 months after the accident, State Farm requested that Leahy undergo an independent medical examination (IME) to determine whether the treatments she was receiving were reasonable and medically necessary.
¶ 5 State Farm contacted a third party vendor, MES Solutions, and arranged for Leahy to be examined by Dr. Geoff Lecovin, a licensed naturopath, chiropractor, and acupuncturist. Leahy did not object. After the IME, Dr. Lecovin determined that the treatments Leahy received were appropriate but excessive. He determined that, although she was not yet at maximum medical improvement (MMI), she should have been referred for physical therapy after about 20 acupuncture
and 20 massage visits because those treatments were no longer helping. He recommended that Leahy have six weeks of twice-weekly physical therapy.
¶ 6 On December 17, 2012, State Farm informed Leahy’s counsel that it would not cover any additional massages or acupuncture treatments because they were no longer reasonable and necessary. State Farm asked Leahy to inform it if either she or her medical providers had new or additional information that she would like it to consider. Leahy did not submit any additional information at that time.
¶ 7 While being treated for her soft tissue injuries, Leahy had also sought UIM benefits for other injuries. In May 2012, she had informed State Farm that she had been diagnosed with dermatomyocitis (DM) and that the DM was either caused or triggered by the auto accident. DM is an autoimmune disease
causing muscle inflammation, fatigue, and rashes. Leahy informed State Farm that she was seeking compensation under her UIM for the medical expenses associated with DM.
¶ 8 State Farm informed Leahy that it would likely seek medical review to determine whether her DM was caused by the accident. On June 4, 2012, State Farm received a letter of representation from Leahy’s attorneys and it assigned the claim to claim representative Leo Jung.
¶ 9 Jung contacted State Farm’s internal injury claim trainers who informed him that the cause of DM is unknown but is suspected to be triggered by outside factors such as malignancy, drugs, and infectious agents in genetically predisposed individuals.
¶ 10 Jung requested a demand letter from Leahy’s counsel on September 17, 2012. On June 23, 2013, Leahy’s counsel sent a demand letter alleging that the auto accident caused a "lighting up" of Leahy’s "dormant DM." The demand estimated Leahy’s damages at $287,900, most of which were medical expenses related to DM. Leahy sought the policy limits of both her PIP and UIM.
¶ 11 Jung requested that Leahy submit to State Farm all of her medical records for the three years prior to the accident. Leahy did so, and those records made no mention of DM or associated conditions prior to the accident. On December 3, 2013, Jung told Leahy’s counsel that he did not have enough information to conclude that the DM had been caused by the accident and made an offer to waive $1,615 of State Farm’s PIP subrogation rights.
¶ 12 On December 6, 2013, Leahy sent State Farm the medical report of Dr. Paul Brown, a rheumatologist, who had examined Leahy in October 2013 and concluded that her DM was caused by the accident. State Farm then contacted Medical Consultants Network (MCN) to obtain an expert to review Dr. Brown’s report.
¶ 13 MCN selected Dr. Kenneth Ta, a rheumatologist, who concluded that it was more probable than not that Leahy’s DM was not caused by the accident. He reported that there was no medical support for a causal relationship between trauma such as that resulting from an accident and DM.
¶ 14 State Farm made a second offer of a $11,116.11 waiver of its PIP subrogation rights based on its determination that only Leahy’s soft tissue injuries were caused by the accident. Leahy rejected the offer and sued State Farm for her UIM policy limits.
¶ 15 At the ensuing jury trial, Dr. Brown testified for Leahy and Dr. Ta testified for State Farm. Dr. Lecovin’s deposition testimony was also in evidence.
¶ 16 The jury found in favor of Leahy and awarded her $884,017.31 in damages. Post-verdict, State Farm paid the $100,000 UIM policy limit and the remainder of the PIP limit because the jury had also found that Leahy incurred sufficient medical bills within the scope of her PIP to exhaust that coverage.
¶ 17 Leahy then amended her complaint to add extracontractual claims against State Farm for bad faith insurance practices, violation of the Consumer Protection Act (CPA), and violation of the Insurance Fair Conduct Act (IFCA). She originally brought additional claims, but they were dismissed pursuant to State Farm’s first summary judgment motion and are not at issue on appeal.
¶ 18 Thereafter, the trial court resolved certain discovery disputes related to access to the insurer’s claim file and the responsiveness of witnesses at depositions. Finally, the trial court granted summary judgment to State Farm and dismissed Leahy’s remaining claims.
¶ 19 This appeal follows.
¶ 20 Leahy first argues that the trial court abused its discretion in concluding that portions of State Farm’s UIM claim file were protected either by attorney-client privilege or as work product. We hold that this ruling was proper.
¶ 21 "The attorney-client privilege applies to communications and advice between an attorney and client and extends to documents which contain a privileged communication."1 "The purpose of the attorney-client privilege is to protect information from public disclosure so that clients will not hesitate to speak freely and fully inform their attorneys of all relevant facts."2
¶ 22 The work product doctrine applies to "documents and tangible things ... prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative."3 In order to obtain documents protected by the work product doctrine, the party seeking discovery must show a "substantial need" for the materials and that "the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means."4
¶ 23 Whether a party has made the requisite showing of substantial need "is ordinarily vested in the sound discretion of the trial judge, who should look at the facts and circumstances of each case in arriving at an ultimate conclusion."5 Even if the party shows a substantial need, "the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation."6
¶ 24 We review the trial court's discovery orders for abuse of discretion.7 We will only reverse the trial court’s discovery rulings " ‘on a clear showing’ that the court's exercise of discretion was ‘manifestly unreasonable, or exercised on untenable grounds, or for untenable reasons.’ "8
¶ 25 Leahy amended her complaint to assert the extracontractual claims on November 5, 2015. On December 18, 2015, she served State Farm with discovery including a request for its "entire unredacted claim file." That file contains information concerning action taken on Leahy’s claim, correspondence, evidence gathered during the investigation of the claim, reserves, and notes and worksheets where claims representatives documented their evaluation of her claim.
¶ 26 State Farm produced significant portions of its claim file with redactions on some pages. All information withheld as privileged was described in a privilege log. State Farm withheld as work product all evaluations and mental impression evidence including settlement authority subsequent to June 23, 2013, the date on which it received the demand letter from Leahy’s counsel stating litigation would follow. It also withheld as within the attorney-client privilege all documents concerning litigation strategy including communications with its attorneys in this action for periods after Leahy commenced this suit.
¶ 27 Leahy moved to compel, claiming that these documents were prepared in the ordinary scope of business and that she had a substantial need for them. State Farm opposed the motion, arguing that once it received the demand letter, it anticipated litigation and all internal evaluations, mental impressions, and legal theories compiled...
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