Yani Sanharib Warda v. Farm Bureau General Insurance Company

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to

revision until final publication in the Michigan Appeals Reports.

STATE OF MICHIGAN

COURT OF APPEALS

YANI SANHARIB WARDA, UNPUBLISHED

January 25, 2024

Plaintiff-Appellee,

and

GREAT LAKES PHARMACY,

Intervening Plaintiff,

v No. 362690

Macomb Circuit Court

FARM BUREAU GENERAL INSURANCE LC No. 2021-002803-NI

COMPANY OF MICHIGAN, SCOTT ALLEN

KOHMESCHER, MARTIN TRANSPORT

SYSTEMS, and GREAT LAKES TRUCK

LEASING, LLC,

Defendants,

and

PAUL FLYNN and JAMAL HAMMOUD,

Appellants.

YANI SANHARIB WARDA,

Plaintiff-Appellee,

and

GREAT LAKES PHARMACY,

Intervening Plaintiff,

-1-

v No. 362698

Macomb Circuit Court

FARM BUREAU GENERAL INSURANCE LC No. 2021-002803-NI

COMPANY OF MICHIGAN,

Defendant-Appellant,

and

SCOTT ALLEN KOHMESCHER, MARTIN

TRANSPORT SYSTEMS, and GREAT LAKES

TRUCK LEASING, LLC,

Defendants.

YANI SANHARIB WARDA,

Plaintiff-Appellee,

and

GREAT LAKES PHARMACY,

Intervening Plaintiff,

v No. 362699

Macomb Circuit Court

FARM BUREAU GENERAL INSURANCE LC No. 2021-002803-NI

COMPANY OF MICHIGAN, SCOTT ALLEN

KOHMESCHER, MARTIN TRANSPORT

SYSTEMS, and GREAT LAKES TRUCK

LEASING, LLC,

Defendants,

STEVEN KALKANIS and CHRISTIAN SCHUTTE,

Appellants.

Before: K. F. KELLY, P.J., and JANSEN and HOOD, JJ.

PER CURIAM.

-2-

The appellants in these consolidated appeals challenge the trial court’s order denying

defendant Farm Bureau General Insurance Company’s motion to quash plaintiff Yani Sanharib

Warda’s subpoenas seeking production of tax documents from individuals who performed

insurance medical examinations (IMEs)1 of Warda. Nonparties Dr. Paul Flynn, D.D.S, and Dr.

Jamal Hammoud, M.D. appeal in Docket No. 362690, Farm Bureau appeals in Docket No. 362698,

and nonparties Dr. Steven Kalkanis, M.D. and Dr. Christian Schutte, Ph.D., appeal in Docket No.

362699. This Court initially denied the appellants’ applications for leave to appeal, but our

Supreme Court remanded the appeals for consideration as on leave granted.2 We affirm.

I. BACKGROUND

This case arises from Warda’s claims for no-fault personal protection insurance benefits

for injuries he allegedly suffered in a June 10, 2020 motor-vehicle wreck. Warda treated with

dozens of doctors and medical providers in Michigan and Illinois. Pursuant to MCL 500.3151,

Farm Bureau required Warda to submit to IMEs. Appellants Paul Flynn (a dentist), Christian

Schutte (a psychologist), and medical doctors Jamal Hammoud and Steven Kalkanis were among

the professionals conducting the IMEs.

Warda’s counsel issued subpoenas to the individuals who performed the IMEs, requesting

production of the examining individual’s “2019-2021 Tax returns and the documents that were

used to evaluate Yani Warda.” Farm Bureau moved to quash the subpoenas with respect to the

request for the tax documents. At the hearing on the motion, the trial court noted Farm Bureau’s

position that Warda could pursue this information in depositions, but stated that simply accepting

the examiners’ word during a deposition was “not a way to conduct discovery,” “especially in

terms of delving into credibility.” The court further indicated that it was “open to alternative

means” of discovery, though defense counsel had “provided none.” The trial court found that the

doctors had “interjected themselves” into and were being paid for their participation in this

litigation, so they had waived any privacy concerns related to this litigation. The court then entered

an order denying Farm Bureau’s motion to quash but granted its request at the hearing for personal

information not to be divulged.

1

The trial court followed this Court’s lead in Micheli v Mich Auto Ins Placement Facility, 340

Mich App 360, 364 & n 3; 986 NW2d 451 (2022), and used the term “insurance medical

examination” to describe the so-called “independent medical examinations” performed by the

examining professionals. In Micheli, this Court reasoned that because the actual “independence”

of these examinations is questionable, courts sometimes now use the term “insurance medical

examination.” Id. at 364 n 3 (noting that calling such IMEs “independent” “is a euphemistic term

of art” because “an IME involves obtaining a second opinion from a doctor who is entirely selected

and paid for by an insurance company, rendering the ‘independence’ of the examination somewhat

questionable”). We do the same here.

2

Warda v Farm Bureau Gen Ins Co of Mich, 511 Mich 859 (2023) (relating to Docket No.

362690); Warda v Farm Bureau Gen Ins Co of Mich, 511 Mich 860 (2023) (relating to Docket

No. 362698); Warda v Farm Bureau Gen Ins Co of Mich, 511 Mich 859 (2023) (relating to Docket

No. 362699).

-3-

Farm Bureau moved for reconsideration. Nonparties Flynn and Hammoud also moved for

reconsideration, while nonparties Kalkanis and Schutte moved for relief from the trial court’s

order. At the hearing on these motions in late July 2022, counsel for Farm Bureau expressly did

not object to producing Forms 1099 in lieu of the entire tax return documents. Counsel for

Kalkanis and Schutte also did not object to producing the relevant 1099s. The trial court

determined that evidence of the amount of income the IME examiners made from performing those

examinations was relevant and discoverable. The court was, however, cognizant of the examiners’

privacy concerns, especially for others who may be listed on the examiners’ tax returns, so it

narrowed the scope of the discoverable documents from the tax returns and forms to just the 1099s

and W-2s. The trial court was not satisfied that only disclosing the 1099 forms from the IME

schedulers was sufficient because that information by itself would fail to “show the proportion of

the practice dedicated to” conducting IMEs. The court therefore ordered the nonparty examiners

to produce their Forms 1099 showing income earned from conducting IMEs for the years 2019

through 2021, in addition to any Forms W-2 for those years concerning “income received from

active clinical practice of medicine, instruction of students in an accredited medical school or

residency, and clinical research program for physicians.” The trial court did not order the

production of the examiners’ tax returns, such as Forms 1040, or other tax forms or schedules.

These appeals followed.

II. STANDARD OF REVIEW

We review for an abuse of discretion a trial court’s decision whether to grant or deny

discovery. Micheli v Mich Auto Ins Placement Facility, 340 Mich App 360, 367; 986 NW2d 451

(2022). A trial court abuses its discretion when its decision falls outside the range of reasonable

and principled outcomes, and when it makes an error of law. Id. This Court reviews a trial court’s

factual findings for clear error. Hardrick v Auto Club Ins Ass’n, 294 Mich App 651, 660; 819

NW2d 28 (2011), citing MCR 2.613(C). A finding is clearly erroneous if we are definitely and

firmly convinced the trial court made a mistake. Id. To the extent this issue involves the proper

interpretation and application of court rules, we review those aspects de novo. Id.

III. DISCOVERY OF TAX DOCUMENTS

Appellants argue that the trial court erred when it denied Farm Bureau’s motion to quash

and ordered the disclosure of the IME examiners’ 1099s and W-2s for the tax years 2019 to 2021.

We disagree.

A. CIVIL DISCOVERY GENERAL PRINCIPLES

“Michigan follows an open, broad discovery policy that permits liberal discovery . . . .”

Micheli v Mich Auto Ins Placement Facility, 340 Mich App 360, 371; 986 NW2d 451 (2022)

(quotation marks and citation omitted). The purpose of discovery is to simplify and clarify issues.

Domako v Rowe, 438 Mich 347, 360; 475 NW2d 30 (1991). This “commitment to open and far-

reaching discovery does not,” however, “encompass fishing expeditions.” Micheli, 340 Mich App

at 371 (quotation marks and citation omitted). “Discovery rules must be liberally construed to

further the ends of justice.” In re CADP, 341 Mich App 370, 380; 990 NW2d 386 (2022)

(quotation marks and citations omitted). MCR 2.302(B)(1) governs the general scope of discovery

and provides:

-4-

In General. Parties may obtain discovery regarding any non-privileged

matter that is relevant to any party’s claims or defenses and proportional to the

needs of the case, taking into account all pertinent factors, including whether the

burden or expense of the proposed discovery outweighs its likely benefit, the

complexity of the case, the importance of the issues at stake in the action, the

amount in controversy, and the parties’ resources and access to relevant

information. Information within the scope of discovery need not be admissible in

evidence to be discoverable.

Although such information must be “relevant,” the information need not be admissible to be

discoverable. MCR 2.302(B)(1). A matter is “relevant” when it has a “practical . . . bearing” on

a party’s claim or defense or is “pertinent” to it. McClellan v Collar (On Remand), 240 Mich App

403, 410; 613 NW2d 729 (2000) (quotation marks and citation omitted). And MRE 401 provides

that evidence is relevant if it “has any tendency” to make a fact of consequence more or less

probable than without the evidence. MRE 401(a) and (b) (emphasis added).3 Thus, as a general

rule, “any document that is relevant and not privileged is freely discoverable upon request.”

Hartmann v Shearson Lehman Hutton, Inc, 194 Mich App 25, 28; 486 NW2d 53 (1992).

A party’s tax returns and supporting documentation, though generally confidential, are not

privileged under 26 USC 6103 and, contrary to appellants’ position, as a general rule, are subject

to discovery. In re Pott, 234 Mich App 369, 375; 593 NW2d 685 (1999). See also 26 USC 6103

(providing that tax returns and return information filed with the U.S. Secretary of Treasury are

“confidential,” and placing restrictions on federal and state government disclosures of such

information). Nonparties, however, have a privacy interest in their tax documentation, and courts

should take steps to protect that interest. See Micheli, 340 Mich App at 374 n 5 (“Individuals have

a privacy interest in their personal tax returns”); Fassihi v St Mary’s Hosp, 121 Mich App 11, 15-

16; 328 NW2d 132 (1982) (reversing trial court order denying discovery of the plaintiff’s tax

returns in a wrongful termination suit; rejecting the plaintiff’s argument that his returns should not

be subject to discovery because he filed jointly with his wife and his wife had never been party to

the action; directing the trial court to conduct an in-camera review redacting the wife’s return

information).4

B. ANALYSIS

Warda asserted that the information was relevant and discoverable for two purposes: first,

it would shed light on whether the examiners met the requirements to conduct IMEs under MCL

500.3151, and second, the information would be relevant to show potential bias. The trial court

agreed with Warda, as do we.

3

The Michigan Rules of Evidence were recently amended, effective January 1, 2024.

4

Although Fassihi is not strictly binding pursuant to MCR 7.215(J)(1) because it was issued before

November 1, 1990, as a published opinion, it nevertheless “has precedential effect under the rule

of stare decisis” pursuant to MCR 7.215(C)(2). See Legacy Custom Builders, Inc v Rogers, ___

Mich App ___, ___; ___ NW2d ___ (2023) (Docket No. 359213); slip op at 5 n 1.

-5-

1. BIAS

The trial court did not abuse its discretion with respect to its determination that the tax

documents were relevant to showing potential bias. It is well established that a witness’s bias is

always relevant. Powell v St John Hosp, 241 Mich App 64, 72; 614 NW2d 666 (2000) (citation

omitted). See also Swift Electric Light Co v Grant, 90 Mich 469, 475; 51 NW 539 (1892)

(“Testimony of this kind, which touches the bias or interest of the witness, is always

admissible . . . .”). This Court explained in Micheli:

To show that an expert witness is potentially biased, one may show that an expert

has a pattern of testifying for a particular category of defendants, and one may show

that an expert has a pecuniary interest in the outcome. Whether nonparty appellants

have a history of serving as experts for insurance companies, and their

compensation for doing so, bears on [the experts’] credibility, and it is therefore

relevant. [Micheli, 340 Mich App at 373-374 (citations and footnote omitted).]

See also id. at 383-384 (GLEICHER, C.J., concurring) (noting that it is an “unremarkable . . . notion”

that “an expert who regularly testifies for one particular attorney or client may be biased in a

party’s favor”).

An IME examiner’s history of performing IMEs and their income from conducting those

IMEs is therefore relevant to potential bias. Appellants do not seriously dispute this. They instead

assert that such information should be obtained by deposing the examiners. Appellants rely on

MCR 2.302(B)(4), which provides, in relevant part:

Discovery of facts known and opinions held by experts, otherwise

discoverable under the provisions of subrule (B)(1) and acquired or developed in

anticipation of litigation or for trial, may be obtained only as follows:

* * *

[a](ii) A party may take the deposition of a person whom the other party

expects to call as an expert witness at trial. [Emphasis added.]

As this Court observed in Micheli, 340 Mich App at 369-371, the plain language of this court rule

only applies to facts and opinions of experts “acquired or developed in anticipation of litigation or

for trial.” See also Spine Specialists of Mich, PC v State Farm Mut Auto Ins Co, 317 Mich App

497, 501-502; 894 NW2d 749 (2016) (distinguishing for discovery purposes facts acquired in

anticipation of litigation from facts acquired through other means). And because the information

sought in this case—the experts’ past income—was not acquired or developed in anticipation of

-6-

litigation, MCR 2.302(B)(4) does not apply. Micheli, 340 Mich App at 371.5 Appellants’ reliance

on MCR 2.302(B)(4) is thus misplaced.

Appellants also argue that even if their income from performing IMEs is arguably relevant,

their income from other sources is not. They therefore argue that the trial court abused its

discretion by compelling the disclosure of their W-2 forms, which show their income from other,

non-IME-related sources. We disagree.

The amount an expert has made conducting IMEs is relevant for purposes of exposing

potential bias, but so is the amount earned from IMEs relative to their total income. In other words,

it is also relevant to determining the percentage of total income they earned from conducting IMEs.

Knowing an expert’s yearly income from conducting IMEs may provide some insight into potential

bias, but alone that information does not tell a complete story. Instead, it requires knowing how

that income amount relates to the expert’s total yearly income. An individual could be more prone

to bias if a significant and greater portion of that person’s income is dependent on conducting

IMEs. Thus, a person whose IME income constitutes only 10% of their total income is quite

different than someone deriving 50% of their income from conducting IMEs. The trial court

therefore did not abuse its discretion by allowing the W-2 income pertaining to non-IME work.

2. QUALIFICATIONS TO CONDUCT INSURANCE MEDICAL EXAMINATIONS

It is less apparent that the information was relevant for determining whether the examiners

were qualified to conduct IMEs under MCL 500.3151. That statute provides, in relevant part:

(1) If the mental or physical condition of a person is material to a claim that

has been or may be made for past or future personal protection insurance benefits,

at the request of an insurer the person shall submit to mental or physical

examination by physicians. A personal protection insurer may include reasonable

provisions that are in accord with this section in a personal protection insurance

5

Appellants Flynn and Hammoud in Docket No. 362690 argue that Micheli was wrongly decided,

and that this Court should express its disagreement with that decision and convene a conflict panel

under MCR 7.215(J)(2) and (3). Because we perceive no error in how this Court decided Micheli,

we decline their invitation.

Farm Bureau argues that Micheli is distinguishable because, while there is no evidence of

gamesmanship in the instant case, the expert in Micheli engaged in gamesmanship by attempting

to withdraw once she saw the composition of the appellate panel. Contrary to Farm Bureau’s

assertion, this Court in Micheli did not “clearly consider[]” gamesmanship as a factor when

deciding the merits of the issues. That the expert in Micheli withdrew her services after the case

was submitted to a panel of this Court was significant only because of potential mootness concerns.

Micheli, 340 Mich App at 375 n 6; id. at 378-380 (GLEICHER, C.J., concurring). The majority

simply noted that even if the issue was moot, it would exercise its discretion to address the merits

of the issue. Id. at 375 n 6 (opinion of the Court). Though gamesmanship arguably allowed the

Micheli Court to review an otherwise moot issue, it did not affect the Court’s actual analysis of

the merits of the underlying issues.

-7-

policy for mental and physical examination of persons claiming personal protection

insurance benefits.

(2) A physician who conducts a mental or physical examination under this

section must be licensed as a physician in this state or another state and meet the

following criteria, as applicable:

(a) If care is being provided to the person to be examined by a specialist,

the examining physician must specialize in the same specialty as the physician

providing the care, and if the physician providing the care is board certified in the

specialty, the examining physician must be board certified in that specialty.

(b) During the year immediately preceding the examination, the examining

physician must have devoted a majority of his or her professional time to either or

both of the following:

(i) The active clinical practice of medicine and, if subdivision (a) applies,

the active clinical practice relevant to the specialty.

(ii) The instruction of students in an accredited medical school or in an

accredited residency or clinical research program for physicians and, if subdivision

(a) applies, the instruction of students is in the specialty. [Emphasis added.]

By limiting the W-2s to those pertaining to “income received from active clinical practice

of medicine, instruction of students in an accredited medical school or residency, and clinical

research program for physicians,” the trial court was ostensibly allowing Warda to discover

information related to whether the different examiners met the requirements of MCL 500.3151 to

conduct IMEs in the first place. But as appellants point out, a dollar amount related to conducting

IMEs (identifiable from Forms 1099) and a dollar amount related to the tasks described in MCL

500.3151(2)(b)(i) and (ii) (identifiable from Forms W-2) do not fully address the actual

requirements under MCL 500.3151(2)(b). The statute only requires that a majority of the

examiner’s time be spent on certain non-IME matters; it is silent on income.

At first glance, the requested 1099s and W-2s, which merely contain dollar amounts with

no reference to the time spent by an examiner on those tasks, are questionably helpful in

determining whether an examiner meets the requirements of MCL 500.3151(2)(b). We note,

however, that the information need only be relevant, and not conclusive or dispositive, for it to be

discoverable. Thus, while the information may not directly shed light on an examiner’s eligibility

under MCL 500.3151(2)(b), we cannot say that the information has no use for that purpose.

Indeed, the time spent conducting IMEs could be deduced by questioning the examiners about the

rates they charged for their services and calculating the time spent based on those rates and their

income from conducting IMEs. Flynn and Hammoud’s attorney indicated at the July 2022 hearing

that doctors may charge different amounts depending on the services provided, so there were “too

many variables” to perform simple division of a “lump sum . . . by some hourly rate . . . .” But

even if that is true, their income from conducting IMEs is not irrelevant. The “lump sum”

information can be used to verify accuracy of deposition testimony regarding the services provided

and the rates charged for those services, allowing Warda to more accurately ascertain the time

-8-

spent conducting IMEs for each doctor. Regardless, this issue is not dispositive because, as

discussed, the examiners’ income from IMEs (represented in Forms 1099) and the income from

other wage jobs (Forms W-2) are relevant to show potential bias, and are therefore discoverable.

Farm Bureau also argues that because the no-fault act is similar to a statutory provision

relevant to medical-malpractice actions, MCL 600.2169, which explicitly prohibits the discovery

of experts’ tax returns. It argues we should import those prohibitions into the no-fault act which

is silent on the issue. We disagree.

MCL 600.2169(1) governs expert witness qualification requirements in medical

malpractice cases and is generally similar to the provisions in the more-recently amended MCL

500.3151. Compare MCL 600.2169(1) with MCL 500.3151(2). But unlike MCL 500.3151, MCL

600.2169 contains provisions that explicitly bar certain pieces of information from discovery.

Regarding these prohibitions, MCL 600.2169(5) provides, in relevant part:

(5) In an action alleging medical malpractice, all of the following limitations

apply to discovery conducted by opposing counsel to determine whether or not an

expert witness is qualified:

(a) Tax returns of the expert witness are not discoverable.

(b) Family members of the expert witness shall not be deposed concerning

the amount of time the expert witness spends engaged in the practice of his or her

health profession.

(c) A personal diary or calendar belonging to the expert witness is not

discoverable.

Citing the similarity between MCL 500.3151(2) and the medical-malpractice statute, Farm

Bureau essentially asks us to read into the no-fault act the prohibitions of MCL 600.2169(5),

including the bar on tax returns being discoverable. We decline this invitation.

Courts must interpret statutes from the plain meaning of the words used, and should not

“casually read” terms into an unambiguous statute. McCormick v Carrier, 487 Mich 180, 192,

209; 795 NW2d 517 (2010). See In re Wayne Co Prosecutor, 232 Mich App 482, 486; 591 NW2d

359 (1998) (“A court must not judicially legislate by adding into a statute provisions that the

Legislature did not include.”). Farm Bureau admits that the no-fault act does not contain language

barring discovery of tax returns like that in the medical-malpractice statute. And, assuming the

Legislature modeled MCL 500.3151 after MCL 600.2169, it is striking that the Legislature

deliberately chose not to incorporate MCL 600.2169(5). Had the Legislature intended to

incorporate the prohibition of the discovery of tax returns, it could have—and likely would have—

included that language when it amended MCL 500.3151 in 2019.6 We can only interpret its

6

The Legislature significantly amended the no-fault act, including MCL 500.3151, by 2019 PA

21 and 2019 PA 22. The Legislature last amended MCL 600.2169 in 1993, effective April 1, 1994.

See 1994 PA 78.

-9-

decision to not include that provision as the Legislature not wanting to include that provision. See

Alan v Wayne Co, 388 Mich 210, 256-257; 200 NW2d 628 (1972). See also Farrington v Total

Petroleum, Inc, 442 Mich 201, 210; 501 NW2d 76 (1993) (“Courts cannot assume that the

Legislature inadvertently omitted from one [portion of a] statute the language that it placed in

another statute, and then, on the basis of that assumption, apply what is not there.”).

3. DISCOVERY IS PROPORTIONAL TO THE NEEDS OF THE CASE

Because the documents sought are relevant and nonprivileged, the next question is whether

discovery of the documents is “proportional to the needs of the case . . . including whether the

burden or expense of the proposed discovery outweighs its likely benefit . . . .” MCR 2.302(B)(1).

In Micheli, this Court held that this analysis requires the trial court to “balance the value of [the]

plaintiff’s proposed discovery . . . against the burden of the discovery, including addressing

nonparty appellants’ privacy concerns and the practically available alternative means for the

plaintiff to discover the information.” Micheli, 340 Mich App at 376.

Here, the IME examiners have an interest in maintaining the privacy of the income

information contained in their Forms 1099 and W-2. See Micheli, 340 Mich App at 374 n 5. But,

as discussed, the income information from those documents is highly relevant to potential bias by

the examiners. The burden or difficulty of producing those documents is also minimal. The trial

court noted that the parties had not submitted any evidence establishing that disclosure of the

documents would be “unduly burdensome in any way.” The court ultimately narrowed the scope

of the subpoena request to just Forms 1099 and Forms W-2, rather than the returns themselves or

other attached schedules and forms.. The court also found that “these different tax records would

be readily accessible.” The trial court did not clearly err. Tax documents for recent past tax years

necessarily already exist. Though some redaction may be necessary, we do not consider that

unduly burdensome. And, aside from deposing the examiners, there is no other practical way for

Warda to obtain this information. Even a deposition, however, may not provide Warda

sufficiently-accurate information in this regard. Indeed, the trial court observed that the parties

presented no evidence showing that the examiners “could testify with any precision” about their

IME work. The court also rejected the idea that Warda “just accept [the examiners’] testimony”

and be “unable to dispel or confirm their testimony through documentation.”

Appellants’ privacy concerns, though valid, were addressed by the trial court. The court

ordered that the documents be held in confidence by Warda’s and Farm Bureau’s attorneys, were

“not [to] be photocopied or reproduced by any means,” were to “be used only in connection with

[the lawsuit],” and were to be either returned to the original owners or destroyed within 30 days

of the conclusion of the lawsuit. The trial court took a reasonable approach to protecting the

examiners’ legitimate privacy interests. See Fassihi, 121 Mich App at 15-16. And, notably, just

because these documents are subject to discovery does not mean that they ultimately will be

admissible at trial. See MCR 2.302(B)(1). Thus, the actual privacy concerns implicated are less

than if the documents and information were put into the public eye in general.

In sum, when balancing the value of discovery of the tax documents against the burden of

producing them, the trial court did not abuse its discretion when it allowed discovery of the

examiners’ Forms 1099 and W-2.

-10-

We affirm.

/s/ Kirsten Frank Kelly

/s/ Noah P. Hood

-11-