Sowards v. Hills Materials Co.

• Decision Date: 07 September 1994
• Docket Number: Nos. 18471,18476,s. 18471
• Citation: 521 N.W.2d 649
• Parties: Paul SOWARDS, Appellant, v. HILLS MATERIALS COMPANY and Maryland Casualty Company, Appellees.
• Court: South Dakota Supreme Court

Page 649

521 N.W.2d 649

Paul SOWARDS, Appellant, v. HILLS MATERIALS COMPANY and Maryland Casualty Company, Appellees.

Nos. 18471, 18476.

Supreme Court of South Dakota.

Argued April 26, 1994.

Decided Sept. 7, 1994.

William Jason Groves and Michael L. Buffington of Groves Law Office, Rapid City, for appellant.

Benjamin J. Eicher and Heidi L. Towne of Wallahan and Eicher, Rapid City, for appellees.

AMUNDSON, Justice.

Paul Sowards appeals the circuit court's affirmance of the South Dakota Department of Labor's order permitting discovery by Hills Materials Company and Maryland Casualty Company. We affirm.

FACTS

On January 19, 1990, Paul Sowards (Sowards) became injured while working for Hills Materials Company (Employer). A stool broke as Sowards was stepping onto it, causing him to fall and sustain injuries to his right foot, ankle, knee, and hip. Some months after the accident, Sowards began experiencing impotency as well as inflammation of the right testicle. Eventually, in March 1992, Sowards underwent surgery by Dr. Andrew Yamada (Dr. Yamada) for a testicular inflammatory disease called "epididymo-orchitis." The pathologist involved in the surgery was Dr. James A. Rud (Dr. Rud).

Sowards filed a petition for hearing with the State Department of Labor (Department) on May 15, 1992. On June 12, 1992, Dr. Rud reported the condition of the testicle was not related to Sowards' work accident. On August 18, 1992, Dr. Yamada opined that the condition of the testicle was not "secondary to the previous injury [,i.e., work related]." On November 30, 1992, in response to Employer's request for admission, Sowards admitted that the testicular disease was not within the compensation duty of Employer, however, he refused to concede that his sexual dysfunction was not work-related. Consequently, the impotency condition is still disputed.

On January 28, 1993, Employer wrote a letter to Sowards' attorney requesting permission to ask Dr. Yamada and Dr. Rud to address whether the impotency claim was work-related. ¹ On January 29, 1993, Sowards filed a motion for protective order to prevent Employer from sending the proposed letter. Following a hearing on Sowards' motion for protective order, Department entered an order denying Sowards' motion.

Department's order provided the following:

1. Employer/Insurer's January 28, 1993, letter is a permissible communication with Claimant's doctors, is not subject to any physician-patient privilege, and is not an ex parte communication, as Claimant's attorney was provided a copy in advance;

2. Additional contacts by Employer/Insurer's counsel with Claimant's doctors are to be conducted in the following manner: if by letter, a copy is to be provided to Claimant's counsel in advance, with an opportunity given to object to inquiries irrelevant to the present action; if by conversation, in-person, on the phone, and the like, Claimant's counsel is to [be] notified, given the opportunity to participate, and to object to any inquiries deemed irrelevant to the present action. These guidelines in no way prevent [Employer's] use of permissible discovery procedures to obtain medical information, to call Claimant's doctors as witnesses in a hearing, or limit Employer/Insurer's right to seek an independent medical examination pursuant to SDCL 62-7.

Sowards appealed Department's order to the circuit court. The circuit court affirmed Department's order. Sowards appeals.

ISSUES

1. Did Department exceed its authority by issuing a discovery order allowing "informal" discovery over Sowards' objection?

2. Was Employer's letter to Sowards' "treating physicians" a permissible communication and not prohibited by Sowards' physician/patient privilege?

ISSUE ON NOTICE OF REVIEW

Did Department improperly restrict Employer's access to the "treating physicians" in its order?

STANDARD OF REVIEW

"We review the administrative agency's decision the same as did the circuit court. We do not substitute our judgment for that of the agency on the weight of the evidence unless clearly erroneous or characterized by an abuse of discretion." Rank v. Lindblom, 459 N.W.2d 247, 248 (S.D.1990) (citations omitted). "Nor do we make any presumptions that the circuit court's decision was correct." Schlenker v. Boyd's Drug Mart, 458 N.W.2d 368, 370 (S.D.1990) (citation omitted).

DISCUSSION

ISSUE 1

Did Department exceed its authority by issuing a discovery order allowing "informal" discovery over Sowards' objection?

Sowards argues that Department exceeded its statutory authority by issuing the order permitting Employer to contact the treating physicians because the Employer's contact with the treating physicians violates the physician/patient privilege and is also an ex parte communication. ² Further, Sowards contends Department is required to follow the formal discovery rules as provided by SDCL 15-6-26.

Department ruled the proposed letter from Employer to the treating physicians was not subject to any physician/patient privilege and was not an ex parte communication because Sowards' attorney was provided with a copy of the letter in advance and was given an opportunity to object. Department then ordered discovery to continue within certain procedural limits (i.e., notification of Sowards' attorney prior to contacting physicians).

Department's order of discovery will be reviewed under the abuse of discretion standard. Under the abuse of discretion standard, it is not for us to determine whether we would have made a like ruling, but whether a judicial mind in view of the law under the circumstances could reasonably have reached such a conclusion. Myron v. Coil, 82 S.D. 180, 143 N.W.2d 738 (1966); see also Wilcox v. City of Winner, 446 N.W.2d 772 (S.D.1989).

SDCL 15-6-1 ³ provides that the rules of civil procedure govern procedure in the circuit courts. There is no statute or proclamation providing for worker's compensation proceedings to be governed by the rules of civil procedure. "Unless otherwise provided by statute or by proclamation of this court, such rules apply to no other proceedings." Perrine v. S.D. Dept. of Labor, 431 N.W.2d 156, 159 (S.D.1988). The logical conclusion is that worker's compensation proceedings are not governed by the rules of civil procedure unless otherwise ordered by the hearing officer. Perrine, 431 N.W.2d at 159; SDCL 1-26-19.2; ⁴ see also Lawler v. Windmill Restaurant, 435 N.W.2d 708 (S.D.1989).

After reviewing all the evidence in this case, we conclude Department did not abuse its discretion by establishing the ground rules for informal discovery in a worker's compensation case. We agree with the Iowa Supreme Court's statement in Morrison v. Century Engineering, 434 N.W.2d 874, 877 (Iowa 1989): "The system is designed to be essentially nonadversarial. Whatever its faults, real or imagined, the system presupposes that all workers will benefit more if claims are processed routinely and paid quickly." Id. Department's order is a reasonable means of protecting the claimant's privacy interests while accommodating the nonadversarial, informal nature of worker's compensation proceedings.

ISSUE 2

Was Employer's letter to Sowards' "treating physicians" a permissible communication and not prohibited by Sowards' physician/patient privilege?

Sowards' motion for a protective order claimed Employer was making impermissible "ex parte" contacts with the treating physicians. In fact, at that time, Employer had not contacted the physicians but was simply informing Sowards of its plan to ask the physicians for their opinion of the work relatedness of Sowards' impotency. Department ruled the letter was not an ex parte communication because Sowards' attorney was provided with a copy in advance and no communication was made without prior notice. The circuit court affirmed this decision. We agree.

One of the primary purposes of the South Dakota Worker's Compensation Act is to provide an injured employee with a remedy which is both expeditious and independent of proof of fault. Scissons v. City of Rapid City, 251 N.W.2d 681, 686 (S.D.1977). In order to accommodate this purpose, worker's compensation procedure is "generally as summary and informal as is compatible with an orderly investigation of the merits." Larson, Worker's Compensation Law Sec. 77A.00 (1993). "The whole idea is to get away from the cumbersome procedures ... and to reach a right decision by the shortest and quickest possible route." Id. at Sec. 77A.10. This informality not only prevents the defeat of claims by technicalities, but simplifies and expedites the achievement of substantially just results. Id. at Sec. 77A.46.

Sowards also claims the letter is a violation of the physician/patient privilege. Department and the circuit court on appeal concluded the proposed communication was not subject to any physician/patient privilege. We agree.

The applicability of the physician/patient privilege to worker's compensation proceedings has been questioned by more than one scholar. "[E]nforcement of patient-physician privilege in an industrial accident tribunal is nonsense, obvious and complete." Maguire, Evidence Common Sense and Common Law 164 (1947). Professor Larson has written, "the validity of the privilege should be reexamined against the policies of compensation legislation. In particular, the physician-patient privilege ... is of doubtful utility[.]" Larson, Worker's Compensation Law Sec. 79.83(c) (1993).

Under SDCL 1-26-19 South Dakota's administrative procedure provides: "The rules of evidence as applied under statutory provisions and in the trial of civil cases in the circuit courts of this state, or as may be provided in statutes relating to the specific agency, shall be followed.... Agencies shall give effect to the rules of privilege recognized by law."

SDCL 19-13-7 ⁵ provides the physician/patient privilege in South Dakota. It is clear that South Dakota law implies a waiver of the privilege if, as here, a patient...