American Family Mutual Insurance v. Grant

Citations: 217 P.3d 1212; 222 Ariz. 507; 566 Ariz. Adv. Rep. 26; 2009 Ariz. App. LEXIS 733Docket: 1 CA-SA 09-0145

Court: Court of Appeals of Arizona; October 8, 2009; Arizona; State Appellate Court

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American Family Mutual Insurance Company sought special action review of a superior court's order that granted Lauren Allo's motion to compel discovery and denied American Family's motion to quash a subpoena directed at Dr. Jon Zoltan, an expert witness. The case arises from Allo's claim for underinsured motorist (UIM) benefits following an automobile accident, where she alleged significant medical expenses and lost wages due to injuries sustained in the incident. American Family, after evaluating Allo’s claim, concluded that her ongoing treatment was related to preexisting conditions rather than the accident, leading to the denial of her UIM claim.

In her lawsuit against the insurer, Allo accused American Family of breaching the insurance contract and acting in bad faith, particularly criticizing the selection of Dr. Zoltan, whom she contended was biased against personal injury plaintiffs. During discovery, Allo subpoenaed extensive documentation from Dr. Zoltan, who objected to various portions of the request. American Family moved to quash the subpoena and requested a protective order concerning specific documentation related to Dr. Zoltan's prior reports and testimonies. The court accepted jurisdiction over the matter, granted relief to American Family, and remanded the case for further proceedings.

A list is required detailing cases where the individual has served as an expert witness in the last five years, including case names, retaining attorneys, and opposing party attorneys. Financial documentation from 2005 to the present must be provided, outlining income from expert consulting, law firm consulting, and other professional services, with examples of acceptable documents like tax returns and profit-sharing statements. The plaintiff will agree to restrict the use of these materials to the current litigation and will return or destroy copies after the case concludes. Additionally, documents evidencing income from the Lewis Allen Law Firm since 2005 and from various insurance sources from 2002 onward must be submitted. The opposing party, American Family, argued that the subpoena to Dr. Zoltan was overly broad and harassing, while the plaintiff contended it was essential to demonstrate bad faith in the insurer's claim evaluation. The court ordered Dr. Zoltan to provide medical review and independent medical examination reports from 2000 onward and financial information regarding total revenues from the insurance industry, limited to cases arising in Arizona, and mandated confidentiality of the disclosed information. The discussion includes the principles governing special action jurisdiction, emphasizing its discretionary nature and the consideration of whether an adequate remedy exists through appeal or if the issue has statewide significance.

Appellate courts typically do not consider petitions for extraordinary relief regarding discovery issues; however, special action jurisdiction may be warranted when a discovery order is not appealable. This is supported by case law indicating that such jurisdiction is appropriate when civil procedure rules are at issue or when significant statewide disagreements among superior court judges arise. In this case, American Family lacks an adequate remedy by appeal, reinforcing the need for special action jurisdiction.

A trial court has broad discretion in resolving discovery disputes but can abuse this discretion by committing legal errors or lacking substantial support for its decisions. Under Arizona Rule of Civil Procedure 26(b)(1)(A), parties can discover any non-privileged matter relevant to the case, regardless of admissibility at trial, as long as the information is reasonably calculated to lead to admissible evidence. The court can also issue protective orders to shield parties from undue burden or harassment.

Litigants are entitled to present evidence suggesting witness bias or prejudice, which is critical for jurors assessing credibility. Instructions for jurors emphasize considering various factors, including potential motives and biases of witnesses. The relevance of witness bias extends to the substantive merits of claims, such as bad faith in insurance cases, where an insurer's unreasonable conduct during an investigation may indicate bad faith. An insurer must conduct an adequate investigation, and failure to do so may reflect bad faith if the insurer is aware of its unreasonable actions.

Expert witnesses’ relationships with hiring parties and counsel are subject to expansive cross-examination, allowing for inquiries into potential bias. Previous cases establish that connections can reveal motives, but courts must also guard against introducing collateral issues that may complicate proceedings. In this context, the party seeking bias-related information must balance their need for such data against the rights of witnesses to avoid overly intrusive questioning, as well as the overall efficiency and cost-effectiveness of litigation.

The superior court's order requiring an expert, Dr. Zoltan, to produce documents spanning from 2000 to the present exceeds the original subpoena's three to five-year scope without substantial justification. While the exact limits for bias-related discovery are not strictly defined, other jurisdictions typically endorse a three-year timeframe. The record does not support the necessity for a nine-year disclosure period.

Additionally, the party seeking information, Allo, seemingly failed to pursue less intrusive discovery methods, such as deposing Dr. Zoltan or obtaining bias information through alternate means, before issuing the broad subpoena. Courts recommend prioritizing the least burdensome approaches to discovery, reinforcing both legal and equitable principles in the litigation process.

Overbroad discovery requests can deter qualified experts from participating in legal proceedings due to concerns about personal privacy and excessive burdens. Courts have noted that overly demanding discovery processes might lead to prolonged questioning regarding expert bias, impeding the ability to secure willing expert witnesses. It is recognized that initial discovery attempts should be less intrusive, aligning with civil procedure rules aimed at ensuring just and efficient case resolution. While parties are not required to first depose an expert, the sequence of discovery methods is flexible. A subpoena duces tecum can be a valid initial step for gathering evidence of expert bias, provided it is not excessively broad. 

In this case, substantial information about Dr. Zoltan was already available to the requesting party, including his extensive history of testifying in trials predominantly for defendants, income from expert work, and details from previous depositions. This raises questions about the necessity of further discovery regarding bias, emphasizing the need for limits to prevent excessive inquiries that could dissuade experts from participating. The balance between obtaining relevant information and avoiding intrusive, prejudicial inquiries is critical to maintaining the integrity of the discovery process.

Defining a bright-line standard for financial inquiries in expert witness cases is impractical. Some courts have excessively allowed detailed investigations into physicians' finances, which often only serve to highlight biases evident during cross-examination. It is emphasized that extensive financial documentation, as requested in Allo's subpoena, should only be produced in compelling circumstances after exploring less intrusive means for bias-related evidence. Several cases illustrate that expert financial records should not be routinely disclosed, as such requests can lead to harassment and discourage reputable experts from testifying. The balance favors the expert's privacy over broad discovery needs. In the current case, Allo is not facing a refusal to provide bias-related information; American Family permits deposition inquiries into Dr. Zoltan’s background, compensation, and involvement in related cases, which he has shown willingness to share in line with the Federal Rule of Civil Procedure.

The excerpt emphasizes that the doctor's acknowledgment of Allo's right to significant impeachment information indicates that a broad subpoena for discovery is unwarranted. Citing precedent, it suggests that before compelling the production of financial documents, less intrusive methods should be attempted. Although less intrusive discovery may sometimes be insufficient, courts have found ways to address issues when experts are evasive or dishonest. If an expert is found to have falsified information, the aggrieved party can seek to exclude their testimony or recover costs incurred in exposing such misconduct. Furthermore, if an expert is uncooperative with initial requests, the court may allow for more extensive discovery. The conclusion vacates parts of the superior court's discovery order and remands for further proceedings, requiring an assessment of whether less intrusive discovery was pursued and if there is good cause for expanded inquiries. The court is also directed to establish a more reasonable timeline for disclosures on remand.

Dr. Zoltan and American Family did not contest the production of Dr. Zoltan's file related to Allo's claim, which includes various types of documentation such as medical images and correspondence. The subpoena specifies that patient names and identifying information must be redacted. American Family objected to a portion of the subpoena, arguing that the request for a testimony list covering the past five years exceeds the requirements of Federal Rule 26(a)(2)(B)(v), which mandates disclosure of cases in which a witness testified as an expert in the previous four years. They claimed the request was overbroad and unduly burdensome.

Additionally, American Family expressed concerns that the subpoena violated the confidentiality of medical records under Arizona law and HIPAA, although these issues were addressed through a trial court order and an agreement to redact identifying information. It is noted that Dr. Zoltan was ordered to provide a list of cases for a four-year period, which is not contested. However, the subpoena's request for documents over a six to seven year period was deemed outside acceptable parameters, causing confusion among the parties. 

While Allo argued that American Family's lack of an evidentiary record should prevent consideration of their objections, it was acknowledged that logical reasoning suggests experts might hesitate to participate in litigation if their professional and financial matters are excessively scrutinized. In her motion to compel, Allo claimed to have provided significant evidence of Dr. Zoltan's bias.