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Bousamra v. Excela Health

Superior Court of Pennsylvania

March 13, 2017


         Appeal from the Order Dated October 6, 2015 In the Court of Common Pleas of Allegheny County Civil Division at No(s): G.D. No. 12-003929



          BOWES, J.

         Appellants, 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 affirm.

         On 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 artery.

         Appellee 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.

         According 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.

         Mercer 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.

         On 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.

         On 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 follow-up care.

         Appellee 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.

         The 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.

         Mr. 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 Excela employees.

         On May 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.

         In June 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.

         Ms. 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.

         During 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.

         In 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.

         The 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.

         Appellee 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 ยง 68 are the client (including a prospective client), the client's lawyer, agents of either who facilitate communications between them, and ...

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