MAY 2009 BAD FAITH CASES
DOCUMENTS SUBPOENA UPHELD ON ABUSE OF PEER REVIEW ORGANIZATION PROCESS IN BAD FAITH CLAIM; HOWEVER, INSURED TO BEAR PART OF COST OF PRODUCTION (Western District)

In Miller v. Allstate Fire & Casualty Insurance Company, the court enforced the subpoena for records related to a bad faith claim, but ordered costs to be shared by or shifted to the insured.

A nonparty moved for a protective order to avoid complying with certain document subpoenaed in connection with a bad faith claim. The consulting company that provided the medical reviewer who evaluated the insured’s file asserted that: four requests for documents were irrelevant; three were privileged under HIPAA; that producing any of them could portray the company in a false light; and that production would be overly burdensome. The company argued on the last two issues that having to comply could put the company out of business.

The court found that all of the requests fell within the scope for discovery (relevant, not privileged, and admissible or reasonably calculated to lead to admissible evidence) under Fed. R. Civ. P. 26(b)(1). They all were relevant to the insured’s bad faith claim that alleges abuse of the Peer Review Organization (“PRO”) process; and the information requested was not privileged under HIPAA privacy regulations because the consulting company is not a covered entity (health plan, health care clearinghouse, or health care provider). Further, even if HIPAA did apply, the documents could be produced because of the instant court order or because the insured was willing to accept redacted documents to remove the personal identification.

In applying a balancing test, the court noted that the requests were limited in scope (one for records prepared by a specific peer reviewer, the others for peer review activities — contractual items, Service Forms, and reports for other Pennsylvania claims — with this insurer, all for a specific time period), but ordered that the insured share the cost of production for the first request, and pay the entire cost for the other three requests so that the insured could determine how aggressively to pursue these requests.

Date of Decision: March 17, 2009

Miller v. Allstate Fire & Cas. Ins. Co., CIVIL ACTION No. 07-260, 2009 U.S. Dist. LEXIS 21225 (W.D. Pa. Mar. 17, 2009)(Gibson, J.)