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May 2014 Bar Bulletin

Youngs v. PeaceHealth: Drawing the Curtain Between a Hospital and Its Defense Counsel

By Christopher H. Howard and Virginia Nicholson


The purchase of physician practices by hospitals is a trend in healthcare. Hospital-employed physicians are now commonplace in all practice areas. There are many hospital functions for which this arrangement should be advantageous, including quality assurance and quality improvement programs.

This arrangement could offer some advantages in defending hospital lawsuits. It could also present a conflict between attorney-client privilege and physician-patient privilege, requiring the hospital to draw a curtain, at least partially, between its employee physicians and its defense counsel.

Washington has statutory privileges for both attorney-client and physician-patient relationships. The two privileges come into potential conflict where a physician is employed by a hospital (an increasingly common scenario) that has been sued. In such instances, Washington's law protecting the sanctity of physician-patient privilege arguably conflicts with the corporate defendant's right to have counsel speak with its employees as was established by the U.S. Supreme Court in Upjohn.1

Washington's law on the sanctity of physician-patient privilege has continued to evolve over the past few decades. Historically, it was recognized that because it would be necessary for a plaintiff in a personal injury action to waive the privilege in order to prove his or her damages, that waiver could be accelerated to allow for pretrial discovery.2 Such common law waiver occurred on a case-by-case basis, often via a defense motion. The case law did not contemplate issues arising from a physician being employed by a hospital that was a party to a case.

In 1986, the waiver of physician-patient privilege was adopted by the Legislature as part of the Tort Reform Act. The waiver of privilege was automatic 90 days after the filing of the claim. However, following that statutory enactment, case law evolved to protect plaintiffs from ex parte contact.3 This prohibition was reaffirmed and arguably extended in Smith v. Orthopedics, International.4

In Smith, the hospital's defense counsel forwarded a trial brief, a transcript of an expert's testimony, a copy of the treating doctor's deposition, and an outline of proposed questions to the attorney representing the treating physician. The Smith court found such common communication was inappropriate ex parte contact. Given the discussion in Smith about counsel "helping each other out," it now would probably be unsafe for defense counsel to share such information with a treating physician's attorney even if it were not provided to the physician.

Meanwhile, although the Supreme Court allowed a plaintiff's counsel to contact a hospital's non-speaking agent employees in Wright v. Group Health Hospital,5 that case did not deal with a hospital's right to maintain attorney-client privilege in interviewing its constituents. Wright was decided under the old Canons of Professional Ethics. Current RPC 1.19, dealing with constituents, had no corresponding section in the Canons. The incidence of physicians employed by hospitals has greatly increased in recent years, setting the stage for the issue presented in Youngs v. PeaceHealth, decided by the Washington Supreme Court in January.6

In Youngs, the Supreme Court addressed the tension between corporate representation and attorney-client privilege and the protections of the physician-patient privilege. The issue the Court addressed in this combined appeal was the conflict/tension between the corporate attorney-client privilege of a defendant hospital with physician employees and the restrictions on ex parte contact with physicians by defense counsel, due to physician-patient privilege.

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