Philalom, Lynnese v. State Farm Mutual Automobile Ins. Co.

FILED

Oct 08, 2021

09:10 AM(CT)

TENNESSEE

WORKERS' COMPENSATION

APPEALS BOARD

TENNESSEE BUREAU OF WORKERS’ COMPENSATION

WORKERS’ COMPENSATION APPEALS BOARD

Lynnese Philalom ) Docket No. 2020-05-0763

)

v. ) State File No. 109377-2019

)

State Farm Mutual Automobile Ins. Co., )

et al. )

)

Appeal from the Court of Workers’ ) Heard September 28, 2021

Compensation Claims ) via Microsoft Teams

Robert V. Durham, Judge )

Affirmed and Remanded

This interlocutory appeal arises from a discovery dispute concerning certain

communications between the employer’s attorney and the nurse case manager assigned to

the employee’s claim by a third-party administrator. The trial court issued an order

instructing the employer to respond to the employee’s discovery requests and provide a

copy of the nurse case manager’s records to the employee, and the employer has appealed.

We affirm the trial court’s order and remand the case.

Presiding Judge Timothy W. Conner delivered the opinion of the Appeals Board in which

Judge David F. Hensley and Judge Pele I. Godkin joined.

A. Allen Grant, Nashville, Tennessee, for the employer-appellant, State Farm Mutual

Automobile Ins. Co.

Carmen Y. Ware, Chattanooga, Tennessee, for the employee-appellee, Lynnese Philalom

Factual and Procedural Background

Lynnese Philalom (“Employee”) works for State Farm Mutual Automobile

Insurance Co. (“Employer”) as a claims specialist. On November 4, 2019, while working

within the course and scope of her employment, Employee tripped and fell onto her left

side. As a result of the fall, she reported multiple symptoms involving her left ankle, left

knee, and lower back as well as a mental injury. She has received authorized medical care

with multiple physicians and other medical providers. 1

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The nature and extent of Employee’s work-related injuries are not at issue in this appeal.

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Employer’s workers’ compensation insurer, Agri General Insurance Co., retained a

third-party administrator, Sedgwick Claims Management Services (“Sedgwick”), to

administer Employer’s workers’ compensation claims. With respect to Employee’s claim,

Sedgwick assigned a nurse case manager, Christy Spurlock, RN, who is also a Sedgwick

employee, to assist in the medical case management of the claim as described in Tennessee

Code Annotated section 50-6-123 (2020). 2

During the course of discovery, Employee submitted written discovery requests to

Employer, including requests for production of documents. Employer objected to some of

the requests, which resulted in several motions to compel discovery filed by Employee. In

her third motion to compel, Employee asserted that Employer had failed to adequately

respond to request for production number 14, which reads as follows:

Please provide a copy of all correspondence, emails and communications

whatsoever between you and the employee, healthcare providers, case

managers, utilization review, expert witnesses, Tennessee Department of

Labor or any other persons concerning the employee and/or any matters

arising out of the accident forming the basis of this action. If you contend

that any such document is privileged, please provide a privilege log

concerning the same.

In a “second supplemental request,” Employee acknowledged having received some

documents responsive to the original request but asserted entitlement to “all

correspondence, emails and communications whatsoever between you and the

employee . . . as well as between you and any of the other above-mentioned persons,

including . . . Christy Spurlock, RN case manager.”

Employee also submitted a request for production of documents identified as

“RFPD #15,” which sought “a copy of the case management file concerning [Employee]

to include, but not limited to, all reports, assignment instructions, initial evaluation and

plan; file notes; all communications with . . . attorneys whether this information be kept in

the case management file or elsewhere.” In the alternative, Employee requested a privilege

log describing any documents responsive to this request that Employer asserted were

protected from discovery.

In its written response, Employer asserted, in pertinent part, that “Employer’s

communications with both Christy Spurlock and counsel included are protected by

attorney-client privilege due to Ms. Spurlock being a Sedgwick employee.” (Emphasis

added.) In a subsequent brief, Employer contended that “Employer’s attorney’s

2

Tennessee’s Workers’ Compensation Law authorizes an employer to establish “its own program of case

management that meets the guidelines promulgated by the administrator in rules.” Tenn. Code Ann. § 50-

6-123(e). The rules governing medical case management are contained in Tenn. Comp. R. & Regs 0800-

02-07 (2017).

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communications with Christy Spurlock, NCM are protected by the attorney-client privilege

because, even if Christy Spurlock is a third party, she is an ‘insider’ that does not break the

privilege.” Employer further argued that “Employer’s attorney’s communications with

Christy Spurlock, NCM are protected by the work product doctrine because the

communications contain the mental impressions, conclusions, opinions, or legal theories

of an attorney or other representative of a party concerning the litigation.”

Following a hearing on Employee’s motion to compel discovery, the trial court

issued an order in which it determined that none of the nurse case manager’s notes are

protected by either the attorney-client privilege or the attorney work product doctrine. It

ordered Employer to provide copies of all such notes to Employee. Employer has appealed.

Standard of Review

The standard we apply in reviewing a trial court’s decision presumes the court’s

factual findings are correct unless the preponderance of the evidence is otherwise. See

Tenn. Code Ann. § 50-6-239(c)(7) (2020). A trial court’s decisions regarding pre-trial

discovery are reviewed under an abuse-of-discretion standard. See, e.g., Bellsouth

Telecoms. v. Howard, No. M2019-00788-WC-R3-WC, 2013 Tenn. LEXIS 343, at *7

(Tenn. Workers’ Comp. Panel Apr. 11, 2013). The interpretation and application of

statutes and rules are questions of law that are reviewed de novo with no presumption of

correctness afforded the trial court’s conclusions. See Mansell v. Bridgestone Firestone N.

Am. Tire, LLC, 417 S.W.3d 393, 399 (Tenn. 2013). We are also mindful of our obligation

to construe the workers’ compensation statutes “fairly, impartially, and in accordance with

basic principles of statutory construction” and in a way that does not favor either the

employee or the employer. Tenn. Code Ann. § 50-6-116 (2020).

Analysis

In its notice of appeal, Employer asserted the trial court erred in finding that

“Counsel for Employer’s communications with the [nurse case manager] are not protected

by the attorney-client privilege or work product doctrine in light of the [nurse case

manager’s] status as an agent of Employer” or her status as “an actual employee of

Employer.” In a subsequent brief, Employer characterized itself, its workers’

compensation insurer, and the third-party administrator, Sedgwick, as “collectively

‘Employer.’” It asserted that although Sedgwick is not a “formal party” to the litigation

such that it could be sued directly by Employee, Sedgwick is “part and parcel of the joint

‘client’ of the undersigned Counsel” and that Sedgwick employees are “also the ‘client’ of

undersigned counsel.” Hence, in Employer’s view, the nurse case manager assigned to

assist Employee in the medical case management of the claim is a “joint client” of

Employer’s counsel because she is employed by Sedgwick, which is the third-party

administrator of Agri General Insurance Company, which is the insurer of Employer.

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Common Interest Doctrine

In support of its position, Employer cites the “common interest doctrine,” which it

asserts protects communications between Employer, its counsel, and a nurse case manager

employed by a third-party administrator. In Gibson v. Richardson, No. W2002-03027-

COA-R7-CV, 2003 Tenn. App. LEXIS 43 (Tenn. Ct. App. Jan. 17, 2003), the Tennessee

Court of Appeals addressed the applicability of the “common interest doctrine” in a

personal injury lawsuit. In Gibson, two defendants asserted that certain communications

between the defendants and their attorneys for the purpose of coordinating a joint legal

strategy were protected by the attorney-client privilege under the “common interest

doctrine.” In analyzing this issue, the Court of Appeals noted a four-part test:

A party asserting that certain communications are protected by the common

interest doctrine must show:

(1) that the otherwise privileged information was disclosed due to actual or

anticipated litigation,

(2) that the disclosure was made for the purpose of furthering a common

interest in the actual or anticipated litigation,

(3) that the disclosure was made in a manner not inconsistent with

maintaining its confidentiality against adverse parties, and

(4) that the person disclosing the information has not otherwise waived its

[sic] attorney-client privilege for the disclosed information.

Id. at *13-14 (emphasis added) (citing Boyd v. Comdata Network, Inc., 88 S.W.3d 203, 214

(Tenn. Ct. App. 2002) (The doctrine “permits the participants in a joint defense to

communicate among themselves and with their attorneys on matters of common legal

interest for the purpose of coordinating their joint legal strategy.”) (Emphasis added.)).

We conclude the “common interest doctrine” is inapplicable in this case for several

reasons. First, as acknowledged by Employer, neither Sedgwick nor the nurse case

manager is a party to this cause of action, and neither is subject to any potential liability in

this case. Tennessee Code Annotated section 50-6-102(13) defines the term “employer”

to “include the employer’s insurer.” It does not, however, expressly include a third-party

administrator or the employees of a third-party administrator within the definition of the

term “employer.” Thus, Employer’s attempt to include Sedgwick and its employees within

the umbrella term “joint client” is unsupported by statutory or case law. Second, counsel

for employer is not seeking to establish a “joint legal strategy” between Employer and

Sedgwick or the nurse case manager because neither Sedgwick nor the nurse case manager

is a defendant in this litigation that needs a “joint legal strategy.” Third, the regulations

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authorizing an employer to establish a case management program make clear that a nurse

case manager is to provide case management services for the benefit of the employee while

also seeking to control medical costs. See Tenn. Code Ann. § 50-6-122(a)(1); Tenn. Comp.

R. & Regs. 0800-02-07-.01(3). A nurse case manager is expressly prohibited from

participating in the investigation of a claim, any compensability determinations, any

medical causation assessments, or any impairment rating assessments. Tenn. Comp. R. &

Regs. 0800-02-07-.04(2) (2017). A nurse case manager cannot coordinate or participate in

any surveillance activities of the employee, and he or she is also prohibited from “refus[ing]

to provide case management reports to parties to the claim.” Tenn. Comp. R. & Regs.

0800-02-07-.04(2)(i)-(j).

In short, the “common interest doctrine” was developed to “widen[] the circle of

persons to whom clients may disclose privileged communications,” but that circle is limited

to “participants in a joint defense” who have “common legal interest[s]” in coordinating a

“joint legal strategy.” Boyd, 88 S.W.3d at 214. In the context of this workers’

compensation litigation, we conclude the nurse case manager is beyond the reach of the

“common interest doctrine.”

Attorney-Client Privilege

Employer also asserts that any communication between Employer and its counsel

that includes the nurse case manager is protected by the attorney-client privilege.

Employer relies, in part, on the law of agency. In discussing the attorney-client privilege,

Employer notes that it was developed to “encourage full and frank communications

between attorneys and their clients.” We agree. However, the application of this privilege

in the context of this case hinges on a finding that the nurse case manager, as an employee

of a third-party administrator hired by Employer’s workers’ compensation insurer is, in

effect, an agent of Employer. Moreover, Employer relies heavily on the intent of

“legislative and administrative bodies” that promulgated the laws and regulations

governing the workers’ compensation system. In Employer’s view, these entities “had both

confidentiality and privilege” in mind at the time of drafting.

The purposes and intent of the case management system was discussed by the

Tennessee Supreme Court’s Special Workers’ Compensation Appeals Panel in Seiber v.

Methodist Med. Ctr., No. 03S01-9801-CV-00006, 1999 Tenn. LEXIS 205 (Tenn. Workers’

Comp. Panel Mar. 25, 1999). In that case, the Appeals Panel noted the intent expressed by

the legislature:

It is the intent of the general assembly that quality medical care services shall

be available to injured and disabled employees. It is also the legislative intent

to control increasing medical costs in workers’ compensation matters by

establishing cost control mechanisms to ensure cost-effective delivery of

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medical care services by employing a program of medical case management

and a program to review the utilization and quality of medical care services.

Id. at *7 (quoting Tenn. Code Ann. § 50-6-122(a)(1)). Thus, the statutory and regulatory

elements of nurse case management evidence a dual purpose: to assist injured workers in

obtaining quality medical services and to help control medical costs. The language noted

by the Appeals Panel in Seiber discussing legislative intent remains in the statute today.

The Panel in Seiber further explained that, at that time, the Commissioner of Labor was

authorized to establish a case management system that would:

(1) Develop a treatment plan to provide appropriate medical care services

to an injured or disabled employee;

(2) Systematically monitor the treatment rendered and the medical progress

of the injured or disabled employee;

(3) Assess whether alternate medical care services are appropriate and

delivered in a cost-effective manner based on acceptable medical

standards;

(4) Ensure that the injured or disabled employee is following the prescribed

medical care plan; and

(5) Formulate a plan for return to work with due regard for the employee’s

recovery and restrictions and limitations, if any.

Id. at *7-8 (quoting Tenn. Code Ann. § 50-6-123(b) (1996)). That language no longer

appears in the statute but is included in Tenn. Comp. R. & Regs. 0800-02-07-.04 along

with other provisions addressing the duties and obligations of nurse case managers.

Contrary to Employer’s position, we find nothing in the stated legislative intent of

statutory and regulatory provisions relating to nurse case management to suggest the

legislature intended nurse case managers to act as agents of employers. In fact, as noted

above, the regulations governing nurse case management explicitly prohibit nurse case

managers from participating in compensability determinations, medical causation findings,

negotiations, investigations, “or any other non-rehabilitative activity.” Tenn. Comp. R. &

Regs. 0800-02-07-.04(2). Thus, unlike an adjuster or claims specialist, whose express

purpose is to act as an agent of an employer in administering and adjusting claims, the

nurse case manager is expressly prohibited from engaging in any “non-rehabilitative”

activity.

In support of its position, Employer cites the Tennessee Supreme Court’s decision

in Dialysis Clinic, Inc. v. Medley, 567 S.W.3d 314 (Tenn. 2019). In Medley, the Court

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considered whether communications between a litigant’s attorney and a third party could

be protected from discovery. Id. at 316. In analyzing this issue, the Court noted a three

part-test for determining whether such communications are protected from discovery: (1)

whether the third party is the “functional equivalent” of the party’s employee; (2) whether

the communications relate to the subject matter of legal counsel’s representation of the

party; and (3) whether the communications were made with the intention that they would

be kept confidential. Id. Additionally, in determining whether the third party is the

“functional equivalent” of an employee of legal counsel’s client, the Court instructed trial

courts to consider the following “non-exclusive” factors:

[W]hether the nonemployee performs a specific role on behalf of the entity;

whether the nonemployee acts as a representative of the entity in interactions

with other people or other entities; whether, as a result of performing its role,

the nonemployee possesses information no one else has; whether the

nonemployee is authorized by the entity to communicate with its attorneys

on matters within the nonemployee’s scope of work to facilitate the

attorney’s representation of the entity; and whether the nonemployee’s

communications with the entity’s attorneys are treated as confidential.

Id. at 324. In considering these factors in the context of a nurse case manager, we conclude

the nurse case manager is not the functional equivalent of an employee of Employer such

that communications between the nurse case manager and the attorney representing

Employer are protected from discovery. First, as noted above, nurse case managers have

statutory and regulatory duties intended to benefit both employees and employers. Second,

unlike employees and agents of the employer, nurse case managers are expressly prohibited

from engaging in any “non-rehabilitative” conduct pertinent to the compensability of an

employee’s claim for benefits. Third, a nurse case manager is obligated to provide his or

her reports to all parties to the claim. Fourth, there is nothing in the statute or regulations

that obligates a nurse case manager to keep confidential any communications it has with

the attorneys for either party.

In short, we find nothing in the statutes, regulations, or case law to suggest that the

nurse case manager in this case is an agent acting on behalf of Employer, or the functional

equivalent of an employee of Employer, for purposes of invoking the attorney-client

privilege. Thus, we conclude the trial court did not abuse its discretion in ordering

Employer to respond to Employee’s discovery requests.

Attorney Work-Product Doctrine

Finally, Employer asserts that communications between Employer, its counsel, and

the nurse case manager are protected from discovery by the work-product doctrine. That

doctrine, which originated in the United States Supreme Court’s opinion in Hickman v.

Taylor, 329 U.S. 495, 512 (1947), reflects a “general policy against invading the privacy

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of an attorney’s course of preparation [for litigation].” Over the years, various states,

including Tennessee, adopted language from Rule 26(b)(3) of the Federal Rules of Civil

Procedure. Tennessee’s rule provides that, in ordering discovery, a trial court must “protect

against disclosure of the mental impressions, conclusions, opinions, or legal theories of an

attorney or other representative of a party concerning the litigation.” Tenn. R. Civ. P.

26.02(3). Moreover, Tennessee’s rule requires a party seeking to protect information from

discovery “by claiming that it is privileged or subject to protection as trial preparation

material” to “make the claim expressly and . . . describe the nature of the documents,

communications, or things not produced or disclosed.” Tenn. R. Civ. P. 26.02(5).

As explained by the Tennessee Supreme Court in Wilson v. State, 367 S.W.3d 229,

235 (Tenn. 2012), “[a]n attorney’s work product consists of those internal reports,

documents, memoranda, and other materials that the attorney has prepared or collected in

anticipation of trial.” The Supreme Court’s Special Workers’ Compensation Appeals

Panel further explained that the doctrine “prevents litigants from taking a free ride on the

research and thinking of their adversary’s lawyer.” Boyd, 88 S.W.3d at 219. In

circumstances where a party makes a showing that certain materials are otherwise

discoverable, “the burden shifts to the party opposing discovery to show that the materials

are work product.” Id. at 221. Such a party must also “demonstrate that it has not waived

its protection with regard to the documents being sought.” Id.

The Tennessee Court of Appeals has concluded that information otherwise

protected by the work product doctrine is discoverable if the work product designation has

been waived “under very specific and narrow circumstances, namely when . . . the claim

of privilege has been waived or has expired.” Sharp v. Tenn. DOC, No. M2016-01207-

COA-R3-CV, 2017 Tenn. App. LEXIS 740, at *8 (Tenn. Ct. App. Nov. 9, 2017). In Arnold

v. City of Chattanooga, 19 S.W.3d 779 (Tenn. Ct. App. 1999), the Court of Appeals

discussed waiver of the work product doctrine:

The protections afforded litigants by [Rules] 26.02(3) and 26.02(4) [of the

Tennessee Rules of Civil Procedure] are qualified, and equitable in nature.

The privilege can be overcome upon a proper showing. In keeping with

equitable considerations that must be examined in applying the privilege,

courts have recognized exceptions to the work product doctrine. An example

is where the attorney or client has waived the protection by voluntarily

disclosing the work sought to be protected. Partial waiver of work product

as well as attorney/client privilege can act to waive the entire privilege . . . .

The scope of the waiver by disclosure is defined by the “fairness doctrine,”

which aims to prevent the prejudice and distortion that may be caused by one

party’s selective disclosure of otherwise protected information.

Id. at 787 (internal citations omitted) (emphasis added).

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Here, Employer asserts that communications between its attorney and the nurse case

manager qualify as attorney work product because “Counsel for Employer’s mental

processes are evident from the fact-gathering questions and remarks made by Counsel for

Employer to [the nurse case manager].” Specifically, Employer argues that “counsel for

Employer has had to communicate with [the nurse case manager] to find out the latest

developments from Employee’s treatment, which . . . has been critical for defending this

claim in light of the constant pressure Employee has placed on her medical providers.”

Moreover, Employer asserts that were it to be required to disclose these materials,

“Employee would obtain the mental processes of Counsel for Employer because these

processes can be deduced from the nature of the questions and comments contained in the

communications from Counsel for Employer to [the nurse case manager].” We are

unpersuaded.

As discussed above, a nurse case manager is not a party to workers’ compensation

litigation and does not act solely for the benefit of the employer. A nurse case manager’s

role is essentially neutral. The nurse case manager is directed by regulations to assist the

injured worker in rehabilitative activities and address return-to-work issues, and the nurse

case manager is prohibited from engaging in any activity that places him or her in an

adversarial role to either the employee or the employer. Both parties are required to provide

information to and cooperate with the nurse case manager in the performance of his or her

duties. Tenn. Comp. R. & Regs. 0800-02-07-.02(3)-(4). Hence, if an attorney for either

party chooses to discuss matters with the nurse case manager that could be construed to

reveal that attorney’s mental impressions or legal theories of the case, that attorney risks

waiving any protections afforded by the work product doctrine because any such mental

impressions have been shared with a neutral third party.

In the present case, the record is unclear as to the precise nature of the information

Employer claims was communicated to the nurse case manager that is protected by the

work product doctrine. However, if any of those communications included the mental

impressions or legal theories of the attorney, we conclude that the work product doctrine

was waived when those mental impressions or legal theories were communicated to a

neutral third party. As a result, we conclude the trial court did not abuse its discretion in

ordering Employer to produce the requested information.

Conclusion

For the foregoing reasons, we affirm the trial court’s order and remand the case.

Costs on appeal are taxed to Employer.

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TENNESSEE BUREAU OF WORKERS’ COMPENSATION

WORKERS’ COMPENSATION APPEALS BOARD

Lynnese Philalom ) Docket No. 2020-05-0763

)

v. ) State File No. 109377-2019

)

State Farm Mutual Automobile Ins. Co., et al. )

)

)

Appeal from the Court of Workers’ ) Heard September 28, 2021

Compensation Claims ) via Microsoft Teams

Robert V. Durham, Judge )

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the Appeals Board’s decision in the referenced

case was sent to the following recipients by the following methods of service on this the 8th day

of October, 2021.

Name Certified First Class Via Via Sent to:

Mail Mail Fax Email

A. Allen Grant X agrant@eraclides.com

Carmen Ware X cyware@thewarelawfirm.com

Robert V. Durham, Judge X Via Electronic Mail

Kenneth M. Switzer, Chief Judge X Via Electronic Mail

Penny Shrum, Clerk, Court of X penny.patterson-shrum@tn.gov

Workers’ Compensation Claims

Olivia Yearwood

Clerk, Workers’ Compensation Appeals Board

220 French Landing Dr., Ste. 1-B

Nashville, TN 37243

Telephone: 615-253-1606

Electronic Mail: WCAppeals.Clerk@tn.gov