GEORGE R. BOUSAMRA, M.D.
EXCELA HEALTH, A CORPORATION; WESTMORELAND REGIONAL HOSPITAL, DOING BUSINESS AS EXCELA WESTMORELAND HOSPITAL, A CORPORATION; ROBERT ROGALSKI; JEROME E. GRANATO, M.D., LATROBE CARDIOLOGY ASSOCIATES, INC., A CORPORATION; ROBERT N. STAFFEN, M.D.; MERCER HEALTH & BENEFITS, LLC; AND AMERICAN MEDICAL FOUNDATION FOR PEER REVIEW AND EDUCATION, INC., A CORPORATION. APPEAL OF: EXCELA HEALTH,WESTMORELAND REGIONAL HOSPITAL, ROBERT ROGALSKI, JEROME E. GRANATO, M.D., AND LATROBE CARDIOLOGY ASSOCIATES, INC.
from the Order Dated October 6, 2015 In the Court of Common
Pleas of Allegheny County Civil Division at No(s): G.D. No.
BEFORE: BOWES, STABILE AND MUSMANNO, JJ.
Excela Health, a corporation ("Excela");
Westmoreland Regional Hospital, doing business as Excela
Westmoreland Hospital, a corporation ("Westmoreland
Hospital"); Robert Rogalski; Jerome E. Granato, M.D.;
Latrobe Cardiology Associates, Inc., a corporation; Robert N.
Staffen, M.D.; Mercer Health & Benefits, LLC
("Mercer"); and American Medical Foundation For
Peer Review And Education, Inc., a corporation
("American"), challenge the propriety of a
discovery order compelling them to produce a document.
Appellants assert that the document in question is protected
by the attorney-client and work-product privileges. We
March 1, 2012, Appellee George R. BouSamra, M.D., instituted
this action against Appellants. Ehab Morcos, M.D. instituted
a separate action that was consolidated with this lawsuit for
purposes of discovery. Excela operates Westmoreland Hospital,
which is an acute care hospital in Greensburg, Pennsylvania.
In 2010, Mr. Rogalski became Excela's chief executive
officer. Appellee and Dr. Morcos were members of Westmoreland
County Cardiology, and had staff privileges as interventional
cardiologists at Excela. Interventional cardiology is a
subspecialty of cardiology wherein practitioners utilize
intravascular catheter-based techniques to treat, inter
alia, coronary artery disease. These specialists employ
catheterization and angiography to measure the amount of
blood flow through a patient's coronary arteries in order
to ascertain if there is blockage, also known as narrowing,
which restricts the blood movement through a patient's
coronary arteries. If the blockage is severe enough,
interventional cardiologists implant a stent in the artery,
and that device increases blood current through the affected
and Dr. Morcos practiced interventional cardiology at
Excela's Westmoreland Hospital. The two lawsuits arose
after Excela publicly accused Appellee and Dr. Morcos of
conducting stent implantations that were medically
unnecessary in that the blockage in the patients at issue was
so minimal that stents were not appropriate.
to the allegations by the two doctors, the following occurred
with respect to these accusations against them. Mr. Rogalski
became CEO of Excela and reportedly heard from other
physicians that interventional cardiologists were implanting
medically-unnecessary stents at Excela. To ascertain the
veracity of these complaints, in June 2010, Mr. Rogalski
hired Mercer, an outside peer review organization, to
evaluate the quality, efficiency, and medical necessity of
stent utilization by physicians in interventional cardiology.
generated purportedly random samples of cases to review, and
it contracted with specialists in interventional cardiology
from across the country to evaluate the cases. Those
specialists submitted their findings to Mercer. In December
2010, Mercer issued preliminary reports to Excela that were
critical of the care provided to some patients. Specifically,
Mercer indicated that Appellee and Dr. Morcos had performed
unnecessary stent implantations at Excela's facilities.
January 12, 2011, after they became aware that Excela planned
to suspend their staff privileges, Appellee and Dr. Morcos
voluntarily resigned to avoid a suspension, which would have
impaired their ability to obtain privileges at other
facilities. Mercer issued its final report to Excela on
February 3, 2011. On February 9, 2011, Excela hired American,
another outside peer review corporation, to conduct a review
of all of Appellee's and Dr. Morcos' cases for
purposes of determining if any of the procedures that they
performed at Excela were not medically necessary. American
engaged expert cardiologists to examine the files of those
patients to determine the propriety of the interventional
cardiology procedures performed.
February 23, 2011, American issued a report to Excela that
indicated that the practice of Appellee and Dr. Morcos was to
overestimate arterial blockage and to inappropriately treat
mild narrowing with stents. On March 2, 2011, Excela publicly
announced that its experts had concluded that Appellee and
Dr. Morcos performed medically unnecessary stent procedures
in 2010. Excela notified the affected patients and offered
and Dr. Morcos instituted lawsuits averring that the two peer
review proceedings were pretextual and conducted in bad faith
and in an improper manner. According to the two doctors,
Excela had unsuccessfully attempted to acquire their
practice. After Appellee and Dr. Morcos opposed the sale,
Excela deliberately decided to undermine and destroy their
practice so that they could not compete with Excela
cardiologists. Appellee and Dr. Morcos contended that, in
order to eliminate them as competitors in interventional
cardiology, Excela hired Mercer and American to conduct
reviews that were specifically intended to disparage their
medical practices. They also claimed that Excela, in
furtherance of its campaign of preventing Appellee and Dr.
Morcos from competing with it, publicly announced the
unsupported findings from the two peer reviews that Appellee
and Dr. Morcos implanted stents that were not medically
necessary. The claims in the two actions include intentional
interference with existing and potential contractual
relationships and defamation.
present appeal pertains to discovery, and the following facts
are pertinent in that respect. Excela engaged outside
counsel, Hope Foster, Esquire, to advise it regarding the
propriety of publicly naming Appellee and Dr. Morcos and
accusing them of improperly implanting stents. On February
26, 2011, Ms. Foster authored an opinion letter on the
subject and emailed it to Timothy Fedele, Esquire, who was
Excela's Senior Vice-President and General Counsel.
Before it publicly announced that Appellee and Dr. Morcos
were performing medically-unnecessary stent implants, Excela
hired an independent public relations firm, Jarrard,
Phillips, Cate, & Hancock ("Jarrard"), which is
located in Nashville, Tennessee, to create a media plan to
implement the public announcement about the alleged stenting
issues. Molly Cate was the principal at Jarrard who worked on
the Excela media plan, and her team also included Tim Fox,
Alan Taylor, and Magi Curtis.
Fedele forwarded to the four members of Jarrard's team a
copy of Ms. Foster's February 26, 2011 email containing
her legal analysis regarding whether Appellee and Dr. Morcos
could be publicly named during the media announcement. Mr.
Fedele's email, in turn, generated further email
discussions among the members of the Jarrard team as well as
29, 2013, Appellee served interrogatories and a request for
production of documents on Appellants, including a request
for the following: "Documents related to or revealing
any information related to your thoughts, suggestions,
reasons, intentions, or plan disclose to the media the
conclusions of Mercer and [American], or any information
supplied to you by Mercer or [American] from their reviews,
or any implications or conclusions you drew from the
conclusions of Mercer or [American]." Interrogatories
and Request for Production of Documents, 5/29/13, at 98.
Appellants objected to the request, claiming, inter
alia, that the attorney-client privilege covered any
documents relating to its plan to publicly disclose the
results of the peer reviews conducted by Mercer and American.
2014, Excela provided notice that it intended to depose Ms.
Cate, and on June 18, 2014, Appellee and Dr. Morcos served
her with a subpoena duces tecum asking her to
produce any document that related to, among other things, the
public announcement of the results of cardiology audits or
services at Excela. Jarrard did not object to the subpoena,
and Ms. Cate was deposed in Nashville, Tennessee on June 26,
2014. She was questioned about information that she was given
regarding publicly naming Appellee and Dr. Morcos at the
media event planned by Excela.
Cate's deposition demonstrates that Jarrard questioned
Excela about whether the physicians who purportedly implanted
medically-unnecessary stents were to be named at the media
event that Jarrard was to plan. Specifically, Ms. Cate
testified that she asked whether Appellee and Dr. Morcos were
to be named publicly and, on February 25, 2011, Excela
informed her that legal issues prevented them from announcing
their names. Then, on February 28, 2011, Mr. Rogalski,
Excela's CEO, informed Ms. Cate that Excela had changed
its decision in that respect and told her that the names were
to be used. Ms. Cate did not reveal that Excela, through Mr.
Fedele, had sent her the February 26, 2011 opinion letter
authored by Ms. Foster.
his two depositions, Mr. Fedele never indicated that he had
any legal discussions with any member of the Jarrard team or
that he sought any type of input from Jarrard on legal
matters. His depositions also clarified that Jarrard was
hired as an outside media consulting firm by Excela and that
its sole function was to orchestrate the public announcement
regarding the alleged misdeeds of Appellee and Dr. Morcos.
March 2015, Appellee became aware of the February 26, 2011
opinion letter authored by Ms. Foster when it was listed in a
privilege log created by Excela. At that time, Appellee also
realized that the letter in question had been forwarded to
Jarrard by Excela.
trial court overseeing the two lawsuits had assigned
discovery matters to a special master, Attorney Rosslyn
Littman. Following the receipt of the privilege log, Appellee
presented a motion to compel before the special discovery
master demanding that he be given a copy of Ms. Foster's
letter and the email discussion that it generated following
its dissemination to Jarrard. Excela claimed these
communications were protected by the attorney-client
privilege and work product privileges. The master conducted
an in camera review of the documents in question and
concluded that they were subject to the attorney-client
privilege. She did not rule on whether it was subject to the
work product privilege.
filed exceptions to the master's determination. The
matter was briefed, and the trial court concluded that Excela
waived the attorney-client privilege because it had
disseminated the February 26, 2011 email to a third party,
Jarrard. The trial court reasoned as follows:
A communication between counsel and a third party is not
protected by the attorney-client privilege. Also, the
privilege is lost when a protected communication is shared
with a third person. There is exception where a third party
acting as an agent of a lawyer is facilitating the
lawyer's representation. See Restatement of the Law
Governing Lawyers § 70 (2000), which reads as follows:
Privileged persons within meaning of § 68 are the client
(including a prospective client), the client's lawyer,
agents of either who facilitate communications between them,