Brunson v. Liberty Mutual Insurance

Citations: 92 So. 3d 90; 2012 WL 887472Docket: 2110210

Court: Court of Civil Appeals of Alabama; March 16, 2012; Alabama; State Appellate Court

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Liberty Mutual Insurance Company sought a writ of mandamus to compel the Mobile Circuit Court to vacate its order from November 21, 2011, which denied Liberty Mutual’s motion for a protective order. The court had instructed Liberty Mutual to produce personnel files, peer review policy manuals, and details of other lawsuits alleging torts of outrage related to its handling of workers’ compensation claims. The case originated from a lawsuit filed by Kenneth Wesley Brunson against his employer, Big Ten Tires, Inc., and Liberty Mutual, claiming they failed to provide all benefits under the Alabama Workers’ Compensation Act after he sustained a back injury during employment. Brunson alleged that the refusal to authorize recommended back surgery constituted the tort of outrage due to its extreme nature. He had submitted requests for production of various documents, including personnel files of specific employees and policy manuals, prompting Liberty Mutual to file for a protective order and later seek to set aside the trial court's order compelling further discovery. The court ultimately granted the writ in part and denied it in part.

On October 3, 2011, the trial court set aside its September 9, 2011 order while granting Brunson's motion to compel, limiting the lawsuit information to names, case numbers, and filing locations. Brunson agreed to narrow his request for litigation documents to cases from the last 12 years concerning the tort of outrage or related claims linked to delayed medical treatment authorization in Alabama, Florida, Mississippi, Georgia, Texas, and Tennessee, with the option to substitute Maine or Arizona if Liberty Mutual lacked coverage in any of these states. On November 2, 2011, Liberty Mutual sought a protective order to prevent the disclosure of employee personnel files, policy manuals on peer review, incentive program details, and information on other lawsuits. The trial court denied this motion on November 21, 2011, requiring Liberty Mutual to produce the requested documents. Personnel files were to be disclosed under a protective order limiting their dissemination, with a deadline of 14 days for production. The court also mandated that information on lawsuits alleging similar claims against Liberty Mutual for Alabama, Georgia, Mississippi, Florida, Texas, and Tennessee during the 10 years prior to Brunson's injury be provided, deeming it potentially relevant for discovering admissible evidence, including punitive damages. Brunson alleged that Liberty Mutual was improperly influencing medical treatment decisions against the recommendations of authorized physicians. Liberty Mutual subsequently filed a petition for a writ of mandamus to partially vacate the November 21 order and protect against the disclosure of non-discoverable information.

Mandamus is an extraordinary legal remedy granted under specific conditions: the petitioner must demonstrate a clear legal right to the requested order, an imperative duty on the respondent that has been refused, the absence of an adequate alternative remedy, and that the court possesses proper jurisdiction. The court will not issue a mandamus if the petitioner can obtain full relief through an appeal. Discovery matters are at the trial court's discretion, and rulings will only be reversed if the trial court clearly exceeds its discretion and the petitioner lacks an adequate remedy by appeal. An appeal is generally sufficient, even if it may delay resolution or incur additional costs. Immediate mandamus review of all discovery orders is impractical, as it disrupts trial proceedings.

Exceptional cases exist where appeal may be inadequate: (1) if privileged information is disregarded, (2) if irrelevant or duplicative documents are ordered, (3) if sanctions preclude a decision on the merits or deny essential discovery, and (4) if the petitioner is prevented from creating a record for appellate review. The petitioner bears the burden of proving that their case meets these exceptional criteria. The excerpt further addresses specific categories of documents sought in a discovery dispute, emphasizing the need to assess the particularized need for discovery based on the nature of the claim.

Brunson alleges that Liberty Mutual, the workers’ compensation insurance carrier, improperly denied authorization and payment for a back surgery recommended by his authorized treating physician, claiming the denial lacked valid justification. He argues that this denial is part of a systematic effort by Liberty Mutual to control medical treatment decisions. Brunson cites a relevant case, City of Auburn v. Brown, which establishes that employers cannot dictate treatment plans to authorized physicians. He claims that Liberty Mutual's actions constitute the tort of outrage, which requires proving that the conduct was intentional or reckless, extreme and outrageous, and caused severe emotional distress. The Alabama Supreme Court has indicated that a tort-of-outrage claim may arise if a carrier unlawfully denies necessary medical treatment to coerce a settlement. Conversely, such claims fail if the carrier acted within its legal rights. To substantiate his claim, Brunson must demonstrate that Liberty Mutual’s denial was unlawful. His complaint notes that Alabama's workers’ compensation law includes a detailed process for disputing the necessity of medical treatment, which involves a four-step review by a board-certified medical practitioner to assess the appropriateness of the treatment plan against accepted medical standards. If the treatment is deemed inconsistent with these standards, the carrier may deny authorization or payment based on lack of medical necessity.

Under Alabama law, a workers' compensation insurance carrier may deny medical treatment for a work-related injury if it does not provide 'good and valid reasons,' specifically failing to submit the treatment plan for utilization review or rejecting it as medically unnecessary based on established regulations. In this case, Brunson claims that Liberty Mutual improperly used its own criteria for determining medical necessity, rather than adhering to Alabama law, and selected peer reviewers to support this unlawful denial of claims, including his. Brunson's assertion that lawsuits from other states regarding tortious denial of medical benefits are relevant is rejected, as those laws differ significantly from Alabama's. Utilization review standards vary across states, with some having broader or stricter definitions of medical necessity. The court emphasizes that relevant discovery for punitive damages must relate specifically to the plaintiff’s harm and cannot be based on unrelated out-of-state conduct. The precedent set in Ex parte Vulcan Materials Co. reinforces that punitive damages cannot be supported by general out-of-state lawsuits without a direct connection to the plaintiff's case, aligning with the principle that one state cannot impose punitive measures for actions occurring outside its jurisdiction.

Brunson initially sought discovery related to various aspects of workers' compensation claims but later refined his request to focus on lawsuits concerning delayed or denied medical treatment authorization. However, the court determined that Brunson's narrowed request lacked a connection to the specific harm he claimed against Liberty Mutual. Neither Brunson nor the trial court confined the discovery to lawsuits alleging tortious denial of medical benefits based on conduct similar to that which Brunson accused Liberty Mutual of committing. As a result, the court rejected the notion that extraterritorial lawsuits would provide relevant evidence for Brunson's claims, particularly for punitive damages.

Conversely, the trial court acted within its discretion by ordering Liberty Mutual to disclose information on litigation filed against it within Alabama. The state's policy emphasizes that injured workers should receive necessary medical treatment, and denials based on impermissible reasons are unacceptable. Therefore, the discovery of lawsuits in Alabama could yield admissible evidence to support Brunson's tort-of-outrage claim and punitive damages. The discovery should focus solely on lawsuits alleging that Liberty Mutual unlawfully directed medical treatment and denied benefits to injured workers based on standards not consistent with Alabama law.

Additionally, the discovery order should be temporally limited, beginning after the implementation of Alabama's utilization-review statutes in 1996. Brunson did not specify when he believes Liberty Mutual's alleged misconduct began, but any relevant claims would have arisen only after this date.

The trial court ordered Liberty Mutual to produce records of similar lawsuits dating back to December 1, 1999, in relation to Brunson’s work-related injury. Although a five-year limit on discovery requests is generally seen as reasonable, the court found the ten-year period justified due to the novelty of Brunson’s claims and the lack of evidence from Liberty Mutual about the difficulty in identifying relevant lawsuits. The court advised that Liberty Mutual should only produce lawsuits filed in Alabama asserting substantially similar claims.

Brunson also requested the personnel files of Liberty Mutual employees involved in his claim, seeking resumes, continuing education records, and complaints against them. Liberty Mutual objected, citing that the requests were overly broad, burdensome, irrelevant, and invasive of privacy. The trial court ordered the production of these personnel files under a protective order to limit dissemination. The court acknowledged that personnel files are generally private and protected from disclosure, referencing previous cases that apply a "rule-of-reason" test when determining the necessity of disclosing sensitive documents. The court emphasized the need to balance public interests in transparency against the efficient functioning of government operations.

The ruling in Graham is not applicable to the current case because it was based on the Open Records Act and State Personnel Board rules, which do not pertain here. The principles established in Stone and Graham are inapplicable to the private sector, as private employees do not have the same public interest considerations as those in public employment. The Alabama Court of Criminal Appeals in State v. Turner noted that Alabama has not specifically addressed the discoverability of police officers' personnel files in post-conviction proceedings, although other jurisdictions often deny such requests unless there is a detailed factual basis demonstrating that the files are likely to contain relevant evidence. Broad claims of discovery rights are insufficient to compel disclosure. 

The expectation of privacy for private employees should be at least equivalent to that of public employees, following the rule-of-reason test from Graham and Stone. A strong public policy against the disclosure of personnel files exists, allowing for discovery only if the information is clearly relevant and the need for it is compelling and not readily obtainable. General allegations do not suffice; a fact-specific showing is required. Consequently, Brunson must demonstrate that the personnel files he seeks are clearly relevant and that his need for this discovery is compelling. Brunson's request focuses on the personnel files of those involved in denying his care, aiming to gather evidence on how Liberty Mutual's policies affected the handling of workers' compensation claims.

Brunson has not named any Liberty Mutual employees as defendants nor claimed negligent hiring, retention, or supervision regarding his workers' compensation claim. Consequently, the relevance of the employees' resumes, credentials, and training to Brunson's tort of outrage claim is questionable. The trial court exceeded its discretion by ordering the production of entire personnel files. However, specific information relevant to the handling of Brunson’s claim—such as training on medical necessity assessments, reasons for claim denials, and incentives related to the alleged unlawful denial of benefits—should be discoverable. Precedents support the notion that such information can inform the claims of outrageous conduct. The trial court should limit discovery to these pertinent areas, but all personnel files should be submitted for in camera review to identify relevant documents while protecting sensitive information. The court has previously determined that a protective order will govern the dissemination of personnel file information. Additionally, the trial court has mandated that Liberty Mutual produce all policy and procedure manuals related to peer review.

Liberty Mutual's mandamus petition claims that its peer-review manuals contain confidential, proprietary, and privileged business information, arguing that disclosing these materials would constitute harassment and impose an undue burden compared to any benefit for Brunson. However, Liberty Mutual fails to provide legal authority supporting its confidentiality claims regarding the manuals. Instead, it merely references cases on the tort of outrage related to workers' compensation, which do not pertain to the confidentiality of peer-review materials. The court notes that Liberty Mutual does not adequately explain the manuals' lack of relevance to Brunson's claim, asserting only that they are not material to proving outrageous conduct. The court finds this assertion unconvincing, noting that the manuals could contain pertinent information about the qualifications of peer reviewers and compliance with Alabama law regarding medical necessity determinations. Such information could potentially substantiate Brunson's claim that Liberty Mutual unlawfully denied medical treatment for work-related injuries. The court emphasizes the necessity for clear presentation of arguments supported by relevant legal authority, and it concludes that the trial court acted within its discretion in ordering the production of the manuals. Consequently, the court partially grants and partially denies Liberty Mutual's petition for a writ of mandamus.

The trial court is directed to revise its discovery order to ensure compliance with the opinion issued. The petition is granted in part and denied in part, with a writ issued. Judges Thompson, Pittman, and Thomas concur, while Judge Bryan concurs in the result without a written opinion. Brunson has submitted a second set of requests for production of documents, including personnel files of additional individuals, though it is uncertain if all are employees of Liberty Mutual. The analysis regarding the requests for personnel records applies to all requested files. Liberty Mutual sought a protective order under Rule 26(c) of the Alabama Rules of Civil Procedure, adhering to supreme court guidelines for mandamus in discovery disputes. Additionally, Liberty Mutual requested a stay of proceedings, which the trial court partially granted by staying Brunson's tort-of-outrage claim while allowing his workers' compensation claim to proceed. Liberty Mutual's motion for a protective order included a request to prevent the disclosure of its policy and procedure manuals related to workers’ compensation claims; however, it does not contest the trial court’s order requiring the production of those manuals pertaining to the handling of such claims.