Brown v. Advocate Health & Hospitals Corp.

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Appellate Court Date: 2018.01.03

13:47:10 -06'00'

Brown v. Advocate Health & Hospitals Corp., 2017 IL App (1st) 161918

Appellate Court ANTHONY BROWN, Individually and as Independent

Caption Representative of the Estate of Joyce R. Hobson, Deceased,

Plaintiff-Appellee, v. ADVOCATE HEALTH AND HOSPITALS

CORPORATION, d/b/a Advocate South Suburban Hospital and

Advocate Medical Group; OLALEKAN SOWADE, M.D.; ERIK

SWENSON, M.D.; JAMES O’DONNELL, M.D.; AGOP TEPELI,

M.D.; GUPTA, M.D., S.C.; and SURGICAL SPECIALISTS, S.C.,

Defendants (Advocate Health and Hospitals Corporation, d/b/a

Advocate South Suburban Hospital, Defendant-Appellant).

District & No. First District, Fifth Division

Docket No. 1-16-1918

Rule 23 order filed July 28, 2017

Motion to publish

allowed August 28, 2017

Opinion filed September 15, 2017

Decision Under Appeal from the Circuit Court of Cook County, No. 13-L-4430; the

Review Hon. Kathy M. Flanagan, Judge, presiding.

Judgment Discovery order affirmed; contempt order vacated.

Counsel on Garrett L. Boehm, Jr., and Tammy L. Wade, of Johnson & Bell, Ltd.,

Appeal of Chicago, for appellant.

Vivian Tarver-Varnado, of AMB Law Group, LLC, of Chicago, for

appellee.

Panel PRESIDING JUSTICE REYES delivered the judgment of the court,

with opinion.

Justice Lampkin concurred in the judgment and the opinion.

Justice Gordon dissented, with opinion.

OPINION

¶1 Advocate Health and Hospitals Corporation, d/b/a Advocate South Suburban Hospital

(Advocate), a defendant in a medical malpractice action, violated an order of the circuit court

of Cook County by refusing to produce certain insurance-related documents for in camera

inspection. The circuit court held Advocate in “friendly contempt” and imposed a $100 fine,

which allowed Advocate to file this interlocutory appeal pursuant to Illinois Supreme Court

Rule 304(b)(5) (eff. Mar. 8, 2016). As discussed herein, we (i) affirm the judgment of the

circuit court directing Advocate to produce certain documents for in camera inspection and

(ii) vacate the order finding Advocate in contempt and imposing a monetary penalty.

¶2 BACKGROUND

¶3 Joyce R. Hobson, after being hospitalized and undergoing multiple medical procedures at

Advocate, experienced cardiopulmonary arrest and died on May 23, 2011. Anthony Brown, as

the administrator of her estate, filed a medical malpractice action against Advocate and other

defendants in 2013.

¶4 The plaintiff issued discovery requests seeking copies of Advocate’s insurance policies.

Advocate responded that there is no policy to produce because it is a self-insured entity.

Pursuant to multiple court orders, Advocate was directed to produce its insurance policies. The

circuit court also entered a protective order, which provided that any insurance documents

produced by Advocate would remain strictly confidential and solely be used for purposes of

this litigation.

¶5 The plaintiff filed a motion to compel, seeking compliance with the previous court orders

and for sanctions pursuant to Illinois Supreme Court Rule 219 (eff. July 1, 2002). According to

the plaintiff, Advocate had produced a “few pages of a document that was 99% blank.” 1 In a

court order entered on June 7, 2016, Advocate was directed “to tender its full trust agreement

related to the substance of the [motion to compel] and an unredacted copy of the endorsement

previously tendered for in camera inspection on or before June 14, 2016.”

¶6 During a hearing on June 14, 2016, Advocate represented that it had previously disclosed

$12.5 million in coverage for the plaintiff’s claim pursuant to a self-insured retention and trust.

Advocate continued to refuse to produce the trust agreement or related documents and asked to

1

Because the document was the subject of the protective order, the plaintiff did not append it to its

motion to compel.

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be held in “friendly contempt.” At the conclusion of the hearing, the circuit court directed the

following statements to Advocate’s counsel:

“[J]ust so I can have it clear, you now are stating in open court that you are asking

me to enter a friendly contempt citation against [Advocate] for purposes of appealing

my order requiring [Advocate] to produce to me, for in camera inspection, a copy of

the self-insured trust agreement plus any endorsements showing who is covered, under

what circumstances people are covered, if employees are covered, all the normal and

customary issues that are governed by insurance documents and/or policies and/or

indemnity agreements.”

Advocate’s counsel answered affirmatively. In a written order entered on June 14, 2016, the

circuit court held Advocate in friendly contempt for failing to comply with the June 7, 2016,

order for the reasons stated on the record and imposed a $100 fine. Advocate filed this timely

appeal pursuant to Rule 304(b)(5). Ill. S. Ct. R. 304(b)(5) (eff. Mar. 8, 2016).

¶7 ANALYSIS

¶8 Advocate advances three primary contentions on appeal. It initially argues that

“[i]nsurance documents are not discoverable in a tort action not involving insurance coverage

because the insurance documents lack relevance to the claims advanced.” Advocate next

contends that its trust agreement is a confidential financial document rather than an insurance

document and thus the circuit court abused its discretion in ordering its production. Finally,

Advocate argues that the contempt order should be vacated because its actions were not

contemptuous of the circuit court’s authority. We address each argument below.

¶9 A discovery order issued by the circuit court is generally not appealable because it is not a

final order. Norskog v. Pfiel, 197 Ill. 2d 60, 69 (2001); Adler v. Greenfield, 2013 IL App (1st)

121066, ¶ 39. It is well settled, however, that the correctness of a discovery order may be tested

through contempt proceedings. Adler, 2013 IL App (1st) 121066, ¶ 39; Payne v. Hall, 2013 IL

App (1st) 113519, ¶ 10. Illinois Supreme Court Rule 304(b)(5) (eff. Mar. 8, 2016) provides

that an “order finding a person or entity in contempt of court which imposes a monetary or

other penalty” is appealable without the special finding required for appeals under Rule 304(a).

In the instant case, the circuit court fined Advocate $100 for contempt to facilitate an appeal

pursuant to Rule 304(b)(5).

¶ 10 The standard of review for a contempt order is abuse of discretion. Payne, 2013 IL App

(1st) 113519, ¶ 10; Illinois Emcasco Insurance Co. v. Nationwide Mutual Insurance Co., 393

Ill. App. 3d 782, 785 (2009). A circuit court abuses its discretion when its ruling is arbitrary,

unreasonable, fanciful, or where no reasonable person would take the view adopted by the

circuit court. Payne, 2013 IL App (1st) 113519, ¶ 10.

¶ 11 Because Advocate is appealing a finding of contempt based on its noncompliance with a

discovery order, we must necessarily review the propriety of the discovery order. See Norskog,

197 Ill. 2d at 69; Klaine v. Southern Illinois Hospital Services, 2014 IL App (5th) 130356, ¶ 9;

Illinois Emcasco Insurance, 393 Ill. App. 3d at 785. Discovery rulings generally are reviewed

for an abuse of discretion. Klaine, 2014 IL App (5th) 130356, ¶ 10; Adler, 2013 IL App (1st)

121066, ¶ 40. Although the applicability of a privilege is reviewed de novo (Klaine, 2014 IL

App (5th) 130356, ¶ 10), Advocate has expressly represented that its objection to production is

based on relevance, not on confidentiality or privilege grounds.

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¶ 12 Illinois Supreme Court Rule 201 (eff. May 29, 2014) “defines the scope of discovery in

civil cases and has been interpreted to allow discovery of all information that would be

admissible at trial as well as information which is reasonably likely to lead to admissible

evidence.” Klaine, 2014 IL App (5th) 130356, ¶ 14. Rule 201(b)(1) provides, in part, that a

party generally “may obtain by discovery full disclosure regarding any matter relevant to the

subject matter involved in the pending action.” Ill. S. Ct. R. 201(b)(1) (eff. May 29, 2014).

Rule 401 of the Illinois Rules of Evidence defines “relevant evidence” as “evidence having any

tendency to make the existence of any fact that is of consequence to the determination of the

action more probable or less probable than it would be without the evidence.” Ill. R. Evid. 401

(eff. Jan. 1, 2011). Pursuant to Rule 402 of the Illinois Rules of Evidence, all relevant evidence

generally is admissible, and evidence that is not relevant is not admissible. Ill. R. Evid. 402

(eff. Jan. 1, 2011).

¶ 13 Advocate argues that the content of the requested insurance documents lacks relevance to

the tort claims advanced by the plaintiff and thus the discovery orders compelling their

production should be vacated. As discussed herein, however, we view the issue of

discoverability as distinct from admissibility in the context of this case.

¶ 14 Citing Seldin v. Babendir, 325 Ill. App. 3d 1058 (2001), and Imparato v. Rooney, 95 Ill.

App. 3d 11 (1981), Advocate contends that “[e]vidence that a party is insured is generally

inadmissible at trial.” Seldin and Imparato addressed the propriety of questioning prospective

jurors regarding their interest in or connections to the insurance industry during voir dire in a

personal injury action. Seldin, 325 Ill. App. 3d at 1064; Imparato, 95 Ill. App. 3d at 15. The

courts in both cases noted that evidence informing a jury that a defendant is insured against

liability is generally inadmissible. Seldin, 325 Ill. App. 3d at 1064; Imparato, 95 Ill. App. 3d

at 17. Unlike in Seldin or Imparato, however, the instant case involves the discoverability of

documents, not their ultimate admissibility at trial. See, e.g., Crnkovich v. Almeida, 261 Ill.

App. 3d 997, 999 (1994) (noting that “the concept of relevance is broader for discovery

purposes than for purposes of the admission of evidence at trial, since it includes not only what

is admissible at trial, but also that which leads to what is admissible”); Maxwell v. Hobart

Corp., 216 Ill. App. 3d 108, 110-11 (1991) (stating that “[p]retrial discovery presupposes a

range of relevance and materiality much broader than that of admissibility of evidence at

trial”).

¶ 15 The Illinois Supreme Court in People ex rel. Terry v. Fisher, 12 Ill. 2d 231 (1957),

recognized an exception to the relevancy requirement of Rule 201, i.e., “that information that

may be discovered prior to trial be admissible in evidence or lead to admissible evidence.”

Manns v. Briell, 349 Ill. App. 3d 358, 365 (2004) (discussing Fisher). In Fisher, the defendant

in a personal injury action arising out of an automobile accident challenged circuit court orders

compelling him to answer interrogatories regarding the existence and amount of his liability

insurance. Fisher, 12 Ill. 2d at 231-32. The Illinois Supreme Court rejected “those cases

limiting pretrial discovery to matters admissible in evidence” but noted that it did “not imply

that answers to interrogatories can be brought to the attention of the jury.” Id. at 237.

¶ 16 In upholding the discovery orders, the Fisher court noted that, under certain Illinois

statutes, “liability insurance is not merely a private matter for the sole knowledge of the carrier

and the insured, but is also for the benefit of persons injured by the negligent operation of

insured’s motor vehicle.” Id. at 238. Our supreme court further stated:

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“Unlike other assets, a liability insurance policy exists for the single purpose of

satisfying the liability that it covers. It has no other function and no other value.

Litigation is a practical business. The litigant sues to recover money and is not

interested in a paper judgment that cannot be collected. The presence or absence of

liability insurance is frequently the controlling factor in determining the manner in

which a case is prepared for trial.” Id.

The Fisher court noted that a plaintiff ordinarily “has many sources of inquiry by means of

which he can appraise the likelihood that the judgment he seeks will be enforceable.” Id. at

238-39. An insurance company, however, “is responsible only within the limits of the policy it

has issued,” and thus a plaintiff’s knowledge of the identity or financial status of the insurance

company “does not help him.” Id. at 239.

¶ 17 Advocate essentially argues for a narrow interpretation of Fisher, limiting its applicability

to discovery disputes involving interrogatories and not document production requests. Neither

Fisher nor any other decision cited by Advocate, however, expressly provides that insurance

documents cannot or should not be produced during discovery in a tort action such as the

instant case. We further note that certain Illinois decisions in other contexts suggest that

production of an insurance policy may be proper. See, e.g., Monier v. Chamberlain, 35 Ill. 2d

351 (1966) (noting that the insurance policy was produced in accordance with a production

order; addressing whether related documents were discoverable); Curtis v. Birch, 114 Ill. App.

3d 127, 130 (1983) (stating that the plaintiffs should have provided copies of the insurance

policy on which they based their claim “and, given the liberal discovery rules in this State (87

Ill. 2d R. 214), there is no excuse for plaintiffs’ failure to have done so”); Schultz v.

Continental Casualty Co., 79 Ill. App. 3d 1035, 1039 (1979) (reversing trial court orders

denying the production of the complete insurance policy).

¶ 18 Advocate also cites Illinois Supreme Court Rule 213 (eff. Jan. 1, 2007), addressing written

interrogatories to parties, and Illinois Supreme Court Rule 214 (eff. July 1, 2014), addressing

requests for the production of documents. Advocate observes that the standard form

interrogatories for medical malpractice actions against hospitals—promulgated pursuant to

Rule 213(j) —permit plaintiffs to obtain information regarding insurance. Advocate posits that

“[i]f defendants were expected to produce insurance policy documents to plaintiffs, that

expectation would be reflected in Rule 214.” Rule 214, however, has no corollary to Rule

213(j), i.e., Rule 214 does not provide for any standard forms of requests for the production of

documents. Ill. S. Ct. R. 214 (eff. July 1, 2014).

¶ 19 Advocate notes that the Illinois Supreme Court has neither incorporated nor endorsed Rule

26(a)(1)(A)(iv) of the Federal Rules of Civil Procedure, which requires a party’s production of

insurance agreements even prior to any discovery requests. Fed. R. Civ. P. 26(a)(1)(A)(iv).

While Advocate suggests that the fact the Illinois Supreme Court has not adopted a federal rule

is significant, it fails to provide any support for this proposition. Although we are not bound by

the Federal Rules of Civil Procedure (e.g., Bianchi v. Savino Del Bene International Freight

Forwarders, Inc., 329 Ill. App. 3d 908, 928 (2002)), we further recognize the advisory

committee notes regarding Rule 26 characterize insurance documents as part of the “basic

information that is needed in most cases to prepare for trial or make an informed decision about

settlement.” (Emphasis added.) Fed. R. Civ. P. 26 (Notes of Advisory Committee—1993

Amendment).

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¶ 20 The Fisher court’s observation that “[l]itigation is a practical business” (Fisher, 12 Ill. 2d

at 238) is arguably more compelling in the instant case, given the amorphous nature of

Advocate’s self-insured status. As noted in Fellhauer v. Alhorn, 361 Ill. App. 3d 792, 796

(2005), the term “self-insurance” has no precise legal meaning. “The concept has led courts

and legislatures to struggle with questions of how to treat parties acting as their own insurer

and, in particular, whether self-insurers should be considered the equivalent of an insurer.” Id.

In a recent decision, this court defined “insurance” as generally referring to “a policy issued by

an authorized and licensed insurance company whose primary business is to assume certain

risks of loss of its insureds, in exchange for the payment of a ‘premium.’ ” Philadelphia

Indemnity Insurance Co. v. Pace Suburban Bus Service, 2016 IL App (1st) 151659, ¶ 32.

Self-insurance, by contrast, was defined as “the retention of the risk of loss by the one upon

whom it is directly imposed by law or contract.” (Internal quotation marks omitted.) Id. While

the dissent suggests that Advocate negotiated its self-insured trust with an insurance company,

such proposition is not definitively demonstrated by the record.

¶ 21 Other than the $12.5 million amount, Advocate has provided little to no information

regarding the scope or nature of the self-insured trust and related documents. Even if it is not a

standard insurance policy per se, Advocate’s self-insured trust presumably exists—at least

indirectly—for the ultimate benefit of parties such as the plaintiff, like the liability policy at

issue in Fisher. Furthermore, as the plaintiff observes, a review of the self-insurance

documents may lead to admissible evidence regarding certain substantive issues in this case,

e.g., whether an agency relationship existed between certain defendants.

¶ 22 In sum, we reject Advocate’s contention that we “need not reach the question of in camera

review because [the plaintiff’s] document request seeking irrelevant insurance policies was

improper in the first instance according to Fisher.” Advocate has not cited any case, statute, or

rule that plainly exempts it from production of its insurance-related documents.

¶ 23 Turning to the issue of in camera review, we recognize that a trial court may supervise all

or any part of the discovery process. Ill. S. Ct. R. 201(c)(2) (eff. May 29, 2014). “This power

includes the authority to review discovery materials in camera to determine any possible

relevance.” Youle v. Ryan, 349 Ill. App. 3d 377, 381 (2004). The circuit court’s comments

during the June 14, 2016, hearing indicate that its order entered on June 7, 2016—providing for

in camera review—superseded the prior orders that directed Advocate to produce the

documents to the plaintiff. Although Advocate’s notice of appeal references prior orders, the

issue we consider herein is whether the circuit court erred in ordering an in camera inspection.

¶ 24 Circuit courts are afforded wide latitude in their rulings on discovery matters. Payne, 2013

IL App (1st) 113519, ¶ 13. Based on our review of the record, the circuit court did not abuse its

discretion in ordering an in camera inspection of Advocate’s insurance-related documents.

Absent such a firsthand review, the circuit court would have no means to assess the

discoverability of the challenged materials.

¶ 25 Citing Manns, 349 Ill. App. 3d 358, Advocate also contends that its trust agreement is a

confidential financial document rather than an insurance document and thus the circuit court

erred in ordering its production. As noted above, contrary to Advocate’s assertions, the circuit

court’s June 2016 orders solely contemplated an in camera review, not production of the

disputed materials to the plaintiff. In any event, Advocate’s reliance on Manns is misplaced.

¶ 26 The plaintiff in Manns filed a negligence action, alleging personal injuries arising out of an

automobile accident. Id. at 359. During pretrial discovery, the plaintiff sought documents and

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information pertaining to the defendant’s personal financial affairs. Id. The defendant refused

to answer, contending that the requested materials were irrelevant to any issue in the lawsuit

and were not subject to discovery until a judgment was entered against him exceeding the

limits of his liability insurance policy. Id. In reversing the trial court’s finding of contempt, the

appellate court noted that “[t]here are important differences between a liability insurance

policy and a defendant’s personal financial assets that do not justify extending the holding in

Fisher to pretrial discovery of a defendant’s financial affairs.” Id. at 364. The Manns appellate

court noted that certain rights are created by liability insurance policies, which inure to the

benefit of injured parties. Id. at 365. Conversely, a plaintiff only has rights regarding a

defendant’s financial assets after a judgment is entered. Id.

¶ 27 As an initial matter, we presume that an entity’s self-insured trust agreement would be

more akin to an insurance document than the types of confidential financial documents at issue

in Manns. The fact that Advocate appears to have disclosed the existence of the $12.5 million

in self-insurance in response to the plaintiff’s interrogatories regarding insurance belies its

efforts to distinguish its trust document from a traditional liability policy. More significantly,

we fail to understand how the circuit court (or this court) could simply accept Advocate’s

representation that the trust document is “nothing more than one of Advocate’s financial

documents,” which it utilizes “to set forth its proprietary self-insured business structure.” The

dissent contends that the self-insured trust is a confidential document containing trade secrets;

however, the circuit court could not be expected to assess the potential applicability of Manns

absent an in camera inspection of the disputed documents. The dissent also posits that

Advocate would not want its employees, physicians, or other medical personnel to know the

intricate matters contained in the trust. Although our decision herein is limited to the propriety

of in camera review, we note that a protective order entered by the circuit court strictly limits

the use or dissemination of any produced insurance documents. We thus conclude that the

circuit court did not abuse its discretion. See, e.g., Anderson v. St. Mary’s Hospital, 101 Ill.

App. 3d 596, 600 (1981) (noting that “where there is a genuine dispute as to the nature or

content of the document sought to be discovered, an attorney must ordinarily comply with the

trial court’s order for an in camera inspection of the document or be subject to sanctions for

contempt”).

¶ 28 As a final matter, Advocate asks that we vacate the contempt order, and the plaintiff does

not object. “Requesting the circuit court to enter a contempt order is a proper procedure to seek

immediate appeal of a discovery order.” Klaine, 2014 IL App (5th) 130356, ¶ 41; accord Adler,

2013 IL App (1st) 121066, ¶ 71. “If we find that the discovery order should be upheld, we may

nevertheless vacate the finding of contempt and assessment of a monetary penalty if we find

that the defendant’s refusal to produce the documents at issue was not contemptuous of the

circuit court’s authority but rather was made in good faith based on sound legal arguments for

purposes of effectuating an interlocutory appeal.” Klaine, 2014 IL App (5th) 130356, ¶ 9. We

find this to be such a case and thus vacate the circuit court’s June 14, 2016, order, which found

Advocate to be in contempt of court for failing to produce the contested documents for

in camera inspection and assessed a monetary penalty. See Chicago Trust Co. v. Cook County

Hospital, 298 Ill. App. 3d 396, 410 (1998) (vacating a contempt order where the

hospital-defendant’s refusal to produce documents was “not contemptuous of the court’s

authority”).

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¶ 29 CONCLUSION

¶ 30 For the foregoing reasons, we affirm the circuit court’s order of June 7, 2016, directing the

production of certain documents for in camera inspection. We vacate the circuit court’s order

of June 14, 2016, which found Advocate in contempt and assessed a monetary penalty.

¶ 31 Discovery order affirmed; contempt order vacated.

¶ 32 JUSTICE GORDON, dissenting.

¶ 33 I must respectfully dissent. Advocate represented that it had $12.5 million in coverage for

plaintiff’s claim pursuant to a self-insured retention and trust agreement. There are obvious

reasons why a hospital that negotiates a self-insured trust with an insurance company does not

want anyone to know the financial formulas that are contained in their self-insured trust. These

documents contain confidential financial information regarding the triggering of payments by

the insurance company or companies that are providing the excess coverage contained in the

trust. Advocate’s self-insured trust does not exist for the benefit of injured parties such as the

plaintiff in this case, like the liability policy at issue in Fisher. I doubt whether Advocate would

want its employees, physicians, or other medical personnel to know the intricate matters

contained in this trust. This is basically a confidential document with trade secrets that is not

relevant in any malpractice case before the entry of a judgment and may not even be relevant

after judgment if Advocate has the funds to pay to satisfy any judgment entered against it. I

also do not agree with the majority that it could lead to admissible evidence as to whether an

agency relationship existed between certain defendants, and there is nothing in the record of

this case that would indicate that was an issue. I know of no court that has allowed the

production of a self-insured trust by a hospital, municipality, or large corporation before

judgment, nor do I find any relevancy in ordering its production. A self-insured trust is not an

insurance policy and should not be treated as one. I would reverse the circuit court of Cook

County and vacate the contempt finding and fine.

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