J-A20012-16
2017 PA Super 235
GEORGE R. BOUSAMRA, M.D. IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
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.
No. 1637 WDA 2015
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
BEFORE: BOWES, STABILE AND MUSMANNO, JJ.
OPINION BY BOWES, J.: FILED JULY 19, 2017
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., and
J-A20012-16
Latrobe Cardiology Associates, Inc. (“Latrobe Cardiology”), filed this appeal
from an October 6, 2015 discovery order. Appellants assert that the order in
question required them to produce documents that are 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 as well as Dr. Robert N. Staffen, Mercer Health &
Benefits, LLC (“Mercer”), and American Medical Foundation For Peer Review
And Education, Inc., a corporation (“American”). Ehab Morcos, M.D.
instituted a separate action at docket number 12-3941 against the same
defendants, and Dr. Morcos’ lawsuit was consolidated with this lawsuit for
purposes of discovery as both cases concern the same events.1
During the pertinent time period, Excela operated Westmoreland
Hospital, which is an acute care hospital in Greensburg, Pennsylvania, Mr.
Rogalski was Excela’s Chief Executive Officer (“CEO”), and Dr. Granato was
Chief Medical Officer for Excela. Dr. BouSamra and Dr. Morcos were
members of a private cardiology practice known as Westmoreland County
Cardiology (“WCC”), and had staff privileges as interventional cardiologists
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1
We note that Appellants’ notice of appeal failed to include the lower court
docket number or caption for Dr. Morcos’ lawsuit, although the two actions
were consolidated for purposes of discovery, and the order in question was
captioned with both Dr. BouSamra’s name and Dr. Morcos’ name.
Additionally, the order stated that it was entered at “NO. GD-12-003929 NO.
GD-12-003941 (CONSOLIDATED).” Order of Court, 10/6/15, at 1.
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at Westmoreland Hospital. Dr. BouSamra gained medical privileges at
Westmoreland Hospital in 2005 while Dr. Morcos was granted those
privileges in 2006. The two doctors relinquished their staff privileges at
Westmoreland Hospital on January 12, 2011.
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 restricting the
blood movement. If the blockage is present and severe enough,
interventional cardiologists implant a stent, and that device increases the
flow of blood through the affected artery.
Dr. BouSamra claimed the following in this lawsuit. By 2006, WCC
performed approximately ninety percent of the interventional cardiology
procedures at Westmoreland Hospital. WCC generated most of Excela’s
yearly multi-million dollar income from cardiology services, a large portion of
which involved interventional procedures, and the quality of WCC’s services
attracted patients who otherwise would have traveled to Pittsburgh. In
2007, Excela acquired Latrobe Cardiology. However, that entity did not
employ interventional cardiologists and patients who needed interventional
cardiac procedures were referred by Latrobe Cardiology cardiologists to
other groups, including WCC.
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Dr. BouSamra also averred the following. Animosity existed between
the privately-owned WCC and Latrobe Cardiology because those entities
competed for patients. In 2008, defendant Dr. Staffen, who was a member
of defendant Latrobe Cardiology, complained to Excela that Dr. BouSamra
and Dr. Morcos were not properly referring back to Latrobe Cardiology
patients whom Latrobe Cardiology had referred to WCC for interventional
procedures.
In this action, Dr. BouSamra additionally alleged that the following
occurred. Physicians from Latrobe Cardiology began to speciously accuse
WCC of various improper medical practices, including, inter alia, that its
cardiologists were placing medically-unnecessary stents in patients. In
response, in 2009, the Chief Medical Officer of Westmoreland Hospital
decided to conduct an evaluation of the cardiac catheterization laboratory at
Westmoreland Hospital and the practices of physicians, including Dr.
BouSamra and Dr. Morcos. One of the principals of WCC, one of the
cardiologists from Latrobe Cardiology, and the Chief Medical Officer of
Westmoreland Hospital agreed that the evaluation of the interventional
cardiology procedures performed at WCC would be performed by Dr. Mahdi
Al-Bassam, a skilled interventional cardiologist.
On April 26, 2009, Dr. Al-Bassam issued a report that contained a
favorable evaluation of the WCC interventional cardiologists. He found that
their work demonstrated outstanding skills and judgment, there was no
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misuse or abuse of the practice of interventional cardiology, and their
performance of procedures involved no increased complications or mortality.
Dr. BouSamra also indicated the following in this case. After
defendant Mr. Rogalski was appointed CEO of Excela, he became aware of
the tension between WCC and Latrobe Cardiology. Mr. Rogalski also
attempted to incorporate WCC into the Excela system. Through this
endeavor, Excela planned to dominate the Westmoreland County market in
interventional cardiology. WCC and Excela began negotiating. In April,
2010, WCC rejected Excela’s overtures; the following month, Excela began
to recruit interventional cardiologists to compete with WCC.
Dr. BouSamra claimed in this lawsuit that Excela then used Latrobe
Cardiology’s unfounded complaints about his and Dr. BouSamra’s over-
stenting to discredit them in the Westmoreland County area, as follows. In
June 2010, without notice to Dr. BouSamra and Dr. Morcos, Excela engaged
Mercer to conduct peer review of interventional cardiologists, including Dr.
BouSamra and Dr. Morcos. Based upon Dr. Al-Bassam’s 2009 evaluation
outcome, Mr. Rogalski’s knowledge of the rivalry between Latrobe Cardiology
and WCC, and the passage of a mere two months between the rejection of
Excela’s offer to incorporate WCC under its umbrella and the initiation of the
Mercer peer review, Dr. BouSamra averred that Mercer’s 2010 peer review
was pretextual and was designed to discredit Dr. BouSamra and Dr. Morcos.
The outcome of the Mercer peer review, which was based upon a sampling,
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indicated that Dr. BouSamra and Dr. Morcos, as well as other interventional
cardiologists, had performed medically unnecessary stenting. Excela
focused upon Dr. BouSamra and Dr. Morcos, who were given the results of
the Mercer review on December 18, 2010. The two doctors resigned their
privileges at Westmoreland Hospital on January 12, 2011, to avoid negative
professional repercussions from what they perceived as an unwarranted and
pretextual peer-review outcome.
Wary of the events occurring with Excela, Dr. BouSamra already had
begun to look at other hospitals, and, by the time he resigned, he had
gained provisional privileges to perform coronary interventions at Forbes
Regional Hospital, which serves patients in Westmoreland County and
eastern Allegheny County.
Before Mercer completed its peer review, Excela hired an outside
public relations consultant, Jarrard, Phillips, Cate, & Hancock (“Jarrard”), to
aid it in publicizing the over-stenting issues. Since the Mercer review was
based upon a sampling, on February 9, 2011, Excela hired American,
another outside peer review corporation, to conduct an additional peer
review. American evaluated interventional procedures performed by only
Dr. BouSamra and Dr. Morcos for 2010, which amounted to 753 files. The
purpose of that review was to determine if any of the procedures that they
performed at Excela were not medically necessary.
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In this case, Dr. BouSamra also accused the American peer review of
being pretextual and specifically designed to discredit him and Dr. Morcos,
maintaining that American conducted its review of their 753 cases from
2010 over the course of a weekend and devoted less than ten minutes to
each patient file. On February 23, 2011, American issued a report to Excela
that indicated that the practice of Dr. BouSamra and Dr. Morcos was to
overestimate arterial blockage and to inappropriately implant stents.
On March 2, 2011, Excela held a press conference and publicly
announced that its experts had concluded that Dr. BouSamra and Dr. Morcos
performed medically unnecessary stenting procedures in 2010. That press
conference received wide media coverage the following day.
Dr. BouSamra and Dr. Morcos instituted their lawsuits. Their positions
were: 1) the Mercer and American peer review proceedings were conducted
in bad faith and were specifically intended to disparage their medical
practices; and 2) Excela, in furtherance of its campaign of preventing Dr.
BouSamra and Dr. Morcos from competing with it in Westmoreland County,
publicly announced the unsupported findings from the two peer reviews to
discredit the doctors. They raised various causes of action in the two
lawsuits; they also included intentional interference with existing and
potential contractual relationships and defamation.
The present appeal pertains to a discovery ruling, and the following
facts are pertinent in that respect. Timothy Fedele, Esquire, was Excela’s
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Senior Vice-President and General Counsel (occasionally referred to as “in-
house counsel”) during the relevant events. Excela hired Jarrard, an
independent public relations firm that is located in Nashville, Tennessee, to
create a media plan to implement the public announcement about the over-
stenting issues. Molly Cate was the principal at Jarrard who worked on the
Excela media plan, and included on her team were Tim Fox, Alan Taylor, and
Magi Curtis.
On February 25, 2011, Ms. Cate was told by Excela that legal issues
prevented public disclosure of the names of the doctors who implanted
unnecessary stents. On February 26, 2011, outside counsel transmitted
advice to Mr. Fedele by means of an email. On February 26, 2011, Mr.
Fedele forwarded that email to Ms. Cate2 and management level employees
at Excela. Ms. Cate forwarded Mr. Fedele’s email, which included in its chain
the email authored by outside counsel, to the other three members of the
Jarrard team. On February 28, 2011, Excela told Ms. Cate that, at the press
conference planned for March 2, 2011, Dr. BouSamra and Dr. Morcos would
be publicly named as the cardiologists who over-stented.
The issue in this appeal is whether Dr. BouSamra and Dr. Morcos are
entitled to view the February 26, 2011 email from outside counsel to Mr.
____________________________________________
2
The master suggested that Mr. Fedele provided outside counsel’s email to
the entire team working at Jarrard. However, Mr. Fedele gave outside
counsel’s email only to Ms. Cate, who forwarded it to her team.
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Fedele, and certain emails generated in response to that email. On
November 18, 2014, special master Marvin A. Fein was appointed herein to
resolve all discovery disputes. Excela created a privilege log, which
referenced the February 26, 2011 email from Mr. Fedele to Ms. Cate and
various management level Excela personnel, which included outside
counsel’s February 26, 2011 email. The log also listed various emails
generated among the members of the Jarrard team, as well as an email Ms.
Cate sent to a management level executive at Excela and copied to Mr.
Fedele. These emails will be collectively referred to as the “Jarrard
documents.”
A motion to compel Excela to produce the Jarrard documents was
presented. In response, Appellants asserted that both the attorney-client
and the work-product privileges applied. Appellees countered that the
attorney-client and work-product privileges with respect to the Jarrard
documents was improper due to the fact that Excela waived any privilege
when Mr. Fedele forwarded outside counsel’s email to Ms. Cate, a third
party. The special master conducted an in camera review of the emails and,
on May 16, 2015, concluded that, although the February 26, 2011 email
from outside counsel to Mr. Fedele would probably have to be produced
eventually, the email was subject to the attorney-client privilege. The
special master did not discuss the work-product privilege.
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Dr. BouSamra filed exceptions to that ruling. On October 6, 2015,
after reviewing the emails in camera, the trial court concluded that the
attorney-client privilege was waived when Mr. Fedele sent outside counsel’s
email to a third party, Ms. Cate of 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 an 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, and agents of the
lawyer who facilitate representation.
This exception does not apply because persons with Jarrard
Phillips Cate & Hancock were not agents of defendants' counsel
facilitating the representation. They were retained by Excela to
assist Excela in public relations matters.
It was not the role of defendants' counsel to make decisions
regarding communications with the public. At the most, a lawyer
will give advice to a client asking the lawyer to advise it regarding
legal issues with respect to communications with the public. The
presence of Jarrard would not in any way assist counsel in giving
such legal advice.
Trial Court Opinion, 10/6/15, at 1-2.
Appellants filed the present appeal in Dr. BouSamra’s action from the
October 6, 2015 order. They advance these issues for our review.
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1. Does attorney-client privilege apply to a company's email with
its media consultants, if the emails contain the advice of outside
counsel and seek feedback so that in-house counsel may give
legal advice to the company CEO on the appropriate course of
action?
2. Does the work product doctrine protect the mental
impressions of outside counsel contained in the email?
Appellants’ brief at 9.
Initially, we note that we have jurisdiction over this appeal under
Pa.R.A.P. 313,3 which embodies the collateral order doctrine. Herein, the
order in question compelled discovery of materials that Appellants assert are
privileged under the attorney-client and work-product privileges. When a
discovery order requires the production of materials that the appealing party
has asserted are privileged, Pa.R.A.P. 313 applies, and we will accept
jurisdiction. See e.g., Yocabet v. UPMC Presbyterian, 119 A.3d 1012,
1016 n.1 (Pa.Super. 2015) (holding that discovery order was appealable
____________________________________________
3
That rule of appellate procedure embodies the collateral order doctrine
and provides:
(a) General Rule. An appeal may be taken as of right from a
collateral order of an administrative agency or lower court.
(b) Definition. A collateral order is an order separable from
and collateral to the main cause of action where the right
involved is too important to be denied review and the
question presented is such that if review is postponed until
final judgment in the case, the claim will be irreparably
lost.
Pa.R.A.P. 313.
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since the appellant asserted that order required it to reveal documents
purportedly protected under the peer-review and attorney-client privileges
and stating that if “a party is ordered to produce materials purportedly
subject to a privilege, we have jurisdiction under Pa.R.A.P. 313”); Red
Vision Sys., Inc. v. Nat'l Real Estate Info. Servs., L.P., 108 A.3d 54, 59
(Pa.Super. 2015) (citation omitted) (“Appellate review is appropriate when a
colorable claim of privilege is asserted.”).
As to the applicable standard of review, our Supreme Court articulated
in In re Thirty–Third Statewide Investigating Grand Jury, 86 A.3d 204,
215 (Pa. 2014), “Whether the attorney-client privilege or the work product
doctrine protects a communication from disclosure is a question of law.”
Thus, our standard of review is de novo and our scope of review is plenary.
Id.
The attorney-client privilege was derived from the common law, id.,
and was codified at 42 Pa.C.S. § 5928, which states: “In a civil matter
counsel shall not be competent or permitted to testify to confidential
communications made to him by his client, nor shall the client be compelled
to disclose the same, unless in either case this privilege is waived upon
the trial by the client.” (Emphases added). We also note that
Evidentiary privileges are not favored. Exceptions to the
demand for every man's evidence are not lightly created nor
expansively construed, for they are in derogation of the search
for truth. Thus, courts should accept testimonial privileges only
to the very limited extent that permitting a refusal to testify or
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excluding relevant evidence has a public good transcending the
normally predominant principle of utilizing all rational means for
ascertaining the truth.
Red Vision, supra at 61 (citation omitted). To invoke the attorney-client
privilege, a party must establish these four elements:
1) The asserted holder of the privilege is or sought to become a
client.
2) The person to whom the communication was made is a
member of the bar of a court, or his subordinate.
3) The communication relates to a fact of which the attorney was
informed by his client, without the presence of strangers, for the
purpose of securing either an opinion of law, legal services or
assistance in a legal matter, and not for the purpose of
committing a crime or tort.
4) The privilege has been claimed and is not waived by the
client.
Id. at 62–63 (emphases added; citation omitted).4
As articulated in Carbis Walker, LLP v. Hill, Barth & King, LLC, 930
A.2d 573, 578–79 (Pa.Super. 2007), the attorney-client privilege is waived
“when the communication is made in the presence of or communicated to a
third party[.]” In asserting that it did not waive the privilege, Excela first
relies upon the proposition that, if a communication protected by the
____________________________________________
4
After in camera review, we conclude that the email from outside counsel to
Excela’s in-house counsel was subject to the attorney-client privilege. See
Gillard v. AIG Ins. Co., 15 A.3d 44 (Pa. 2011) (communication from a
lawyer to client is subject to privilege). The only issue we address is
whether Excela waived the privilege by disseminating it to Jarrard.
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attorney-client privilege is disseminated to members of a team involved in
offering legal advice to the client, the privilege is not waived. Principally,
Excela relies upon United States v. Kovel, 296 F.2d 918 (2nd Cir. 1961),
maintaining, "Courts and commentators alike refer to Kovel as the
‘landmark’ or ‘seminal’ case on attorney-client privilege as applied to
agents.” Appellants’ brief at 24. In Kovel, a law firm specializing in tax law
hired a former Internal Revenue Service agent with accounting skills to help
it give legal advice to a client. The issue was whether communications
between the client and accountant were subject to the attorney-client
privilege. In concluding that the privilege applied, the Second Circuit
recognized that communications between a client and a third party are
privileged if the third party was employed to facilitate the legal advice
rendered by the lawyer. It analogized the matter to the scenario where an
interpreter is needed by a lawyer to translate a client’s language, when the
privilege would undoubtedly apply:
This analogy of the client speaking a foreign language is by
no means irrelevant to the appeal at hand. Accounting concepts
are a foreign language to some lawyers in almost all cases, and
to almost all lawyers in some cases. Hence the presence of an
accountant, whether hired by the lawyer or by the client,
while the client is relating a complicated tax story to the lawyer,
ought not destroy the privilege, any more than would that of the
linguist . . . of the foreign language theme discussed above; the
presence of the accountant is necessary, or at least highly
useful, for the effective consultation between the client and the
lawyer which the privilege is designed to permit. By the same
token, if the lawyer has directed the client, either in the specific
case or generally, to tell his story in the first instance to an
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accountant engaged by the lawyer, who is then to interpret it so
that the lawyer may better give legal advice, communications by
the client reasonably related to that purpose ought fall within the
privilege[.]
Id. at 922 (footnote omitted; emphasis added).
Initially, we note that, in Pennsylvania, it is established that “the
attorney-client privilege does extend to an agent of an attorney who
assists in the provision of legal advice to the client.” Commonwealth v.
DuPont, 730 A.2d 970, 977 (Pa.Super. 1999) (emphasis added). Jarrard
admittedly was hired by Excela, the client, rather than outside counsel.
Excela is thus asking this Court to expand the privilege to encompass a
client’s outside agents. This scenario has not been addressed in
Pennsylvania.
Initially, we observe that the attorney-client privilege applies to a
corporation differently than to an individual. As we noted in Yocabet,
supra,
A corporation is a creature of legal fiction, which can act or
“speak” only through its officers, directors, or other agents.
Where a representative for a corporation acts within the scope of
his or her employment or agency, the representative and the
corporation are one and the same entity, and the acts performed
are binding on the corporate principal.
Thus, the board of directors of a corporation, in addition to
its officers, can act on its behalf for purposes of application of
the attorney-client privilege.
Yocabet, 119 A.3d at 1028.
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In Yocabet, we ruled that high-ranking officials, the board of
directors, and the officers of a corporation are considered part of the
corporation for purposes of application of the attorney-client privilege.
Similarly, in Red Vision, supra at 60, we observed: “The administration of
the attorney-client privilege in the case of corporations presents special
problems. As an inanimate entity, a corporation must act through agents.”
Thus, “A corporation cannot speak directly to its lawyers. Similarly, it
cannot directly waive the privilege when disclosure is in its best interest.
Each of these actions must necessarily be undertaken by individuals
empowered to act on behalf of the corporation.” Id. (Emphasis
added). In that case, we ruled that those individuals included managers,
officers, and directors.
In the present case, the record does not support a finding that Jarrard
falls within the parameters of corporate employees or agents entitled to
attorney-client protection under the reasoning of either Yocabet or Red
Vision. It was not part of the board of directors or Excela’s management,
nor was it an official or officer with Excela. Instead, Jarrard was an
independent business entity operating on a national level with numerous
clients, one of which was Excela. Essentially, then, Excela is asking us to
expand the scope of the attorney-client privilege and apply it to any entity
hired by a corporation to aid it with a project, whether or not the agent is
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part of the corporate organization. In so doing, it asks us to apply the
reasoning of Kovel.
Pursuant to Kovel, the attorney-client privilege attaches to an agent
of the client in two instances: where the presence of that agent is necessary
or, at the very least, useful for purposes of the lawyer’s dissemination of
legal advice or where the lawyer directed the client to contact the agent so
that the lawyer could give better legal advice. In its brief, Excela relies upon
the first principle and maintains that Jarrard was necessary or useful for
purposes of dissemination of legal advice on the legal issue involved herein.
See Appellants’ brief at 20 (“the attorney-client privilege applies to an in-
house lawyer’s communication with the outside media consultants designed
to assist in providing legal advice to the company”); Id. (Mr. Fedele
maintained confidentiality in outside counsel’s email because he, as inside
counsel, sent outside counsel’s email to the media firm in order to solicit
“advice from Jarrard so that he could advise Excela on the legal risks
associated with the content of the public disclosure.”) (Emphases added in
both instances).
After careful review of the certified record and in camera review of the
emails in question, we have decided that the reasoning of Kovel is
inapplicable in this matter. We find that the record conclusively establishes
that Jarrard was uninvolved in the legal issue in question. Contrary to
Excela’s assertions on appeal, Mr. Fedele’s February 26th communication to
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the outside media consultant was not designed to gain Jarrad’s assistance in
providing legal advice to the company nor did Mr. Fedele send outside
counsel’s email to the media firm in order to solicit advice from Jarrard so
that counsel could advise Excela on the legal risks associated with the
content of the public disclosure. Additionally, Jarrard failed to render any
input into the question. We therefore do not need to address whether the
attorney-client privilege in Pennsylvania should be expanded to encompass
outside agents of the client under the reasoning employed in Kovel.
We first review the deposition of Ms. Cate, who reported the following.
Jarrard, Phillips, Cate & Hancock was formed in 2006 in Nashville,
Tennessee. Ms. Cate is a partner and part owner of the company. Ninety
percent of Jarrard’s work is “with hospitals and health systems, and
organizations that are in the business of providing care to patients.”
Deposition of Molly Cate, 6/24/14, at 12. Jarrard works with those entities
“through times of significant challenge or transformation or change,”
including “[m]ergers and acquisitions; crisis communications; issue
management, reputation building; . . . communication engineering, [and]
government relations.” Id. at 13. While based in Nashville, Jarrard has
clients nationwide, and Excela was “a client of Jarrard.” Id. at 15.
From 2007 through 2010, Jarrard had given Excela media advice
concerning specified issues: 1) helping its CEO unveil a strategic plan for the
organization; 2) acquisition of a hospital; 3) the closing of that hospital; 4)
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managing personnel in Excela’s communications/marketing/public relations
department on an interim basis until Excela found a leader, Alexandra Piper-
Jones, for the department; 5) after Ms. Piper-Jones left at the end of 2010,
again managing personnel in Excela’s communications/marketing/public
relations department on an interim basis and recruiting a new leader for the
department, which employed several individuals; and 6) working on the
public relations aspect of the over-stenting issue involved in this case.
Excela hired Jarrard to help with the disclosure of over-stenting
towards the end of 2010, before the Mercer peer review was completed.
Jarrard’s primary contact on the project was the head of human resources,
John Caverno. Ms. Cate also communicated with Mr. Rogalski, Dr. Granato,
Michael Busch, who was a Vice-President and the Chief Operating Officer,
and in-house counsel Mr. Fedele. Dr. Granato was consulted for advice on
the medical issues involved in this matter. Jarrard was paid a monthly
retainer for its work on the over-stenting controversy.
Jarrard performed the following specific work in connection with the
over-stenting problem. It prepared anticipated questions and proposed
answers, which were given to Excela’s leadership, that would be asked at
the press conference. It authored a press release to reveal the results of the
audit to the media, communications to elected officials and community
leaders, and letters to patients, primary care physicians of the patients,
employees and volunteers of Excela, and Excela’s former CEO and trustees.
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Jarrard also created a timetable for distribution of information to the
media, a protocol for hospital staff if they received calls from the media, and
a hotline with operators for calls from patients. Jarrard arranged the March
2, 2011 public press conference where it was announced that Dr. BouSamra
and Dr. Morcos had improperly implanted stents in their patients. Jarrard
also set up a meeting before that public press conference with a reporter
from a prominent area newspaper “to shorten the news cycle and control the
message.” Id. at 65. After the press conference, Jarrard monitored the
ensuing media coverage. Finally, Jarrard oversaw the release of the results
of the American peer review.
Ms. Cate indicated that Jarrard was hired to protect Excela’s reputation
in the community, which was her sole concern. Her discussions with Excela
personnel about the public announcement centered on whether the contents
of the public announcement would aid or be detrimental to Excela’s
reputation in the community. Id. at 108. Ms. Cate recommended that there
be a public announcement in the form of a press conference about Mercer’s
anticipated finding that there was over-stenting since the failure to publicly
announce the problem might damage Excela’s reputation. Id. at 109.
As noted, Jarrard personnel created for Excela’s senior management a
list of anticipated questions that would be asked at the press conference.
Ms. Cate testified that as of February 25, 2011, question three on the list of
“hot button questions” was, “Who are the reviewed physicians?”; the answer
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as of February 25, 2011, was, “We are not publicly identifying the
physicians.[.]” Id. at 134. Question five on the list was “Why is the hospital
not publicly identifying the physicians?”’; the answer was, “Legal issues
prevent us from publicly identifying the physicians.” Id. at 135. Ms. Cate
said that she had extensive discussions with Excela management about
whether the doctors were to be named. She also unequivocally testified that
someone from Excela prepared the answer indicating that the doctors were
not going to be named due to legal issues. Id. at 136. She was unable to
recall who it was:
Q. ....
Now, who was it that told you that there were legal issues
that prevented you from publicly identifying the physicians, or is
that something that you just chose to write in there
yourself based on your experience?
A. I don’t remember who told us that. It was a topic of
discussion, whether we were going to name them or not. But I
don’t remember specifically who gave us this language.
Q. Well, who – who was it that said that there’s a legal
issue that prevents you from publicly disclosing them?
A. I just—I don’t remember who exactly there.
Q. Was it somebody in Excela?
A. Yes.
Id. at 135-36 (emphases added).
Ms. Cate reported that sometime between February 25, 2011 and
February 28, 2011, Mr. Rogalski changed the answers to questions three and
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five and decided that the doctors were to be named. Id. at 135. Ms. Cate’s
deposition confirmed that a defamation attorney, i.e., outside counsel, had
been consulted by February 27, 2011. Id. at 144. Ms. Cate indicated that a
Jarrard team member suggested calling outside counsel, but Ms. Cate
consciously decided not to speak with outside counsel. She stated:
“Ultimately it’s [Excela’s] decision to make.” Ms. Cate confirmed at her
deposition that “it wasn’t up to [her] to decide whether you were going to
identify the docs[.]” Id. at 145.
At his deposition, Mr. Fedele did not indicate that he consulted with
Jarrard about the legal implications of using the doctors’ names at the press
conference. Indeed, Mr. Fedele stated that he did not recall having any
dialogue “with Jarrard, Cate, Phillips between the 25th of February to the 28th
of [February] eliminating the question regarding the legal issues preventing
publicly identifying the physicians[.]" Deposition of Timothy Fedele, 7/23/14,
at 190 (emphasis added). Moreover, Mr. Fedele indicated that he did not
regularly speak with members of Jarrard, and their primary contact was with
Mr. Caverno. Id. at 165.
At his deposition, Mr. Rogalski acknowledged that sometime between
February 25th and February 28th there was a change in Excela’s position as
to whether to name the doctors. He confirmed Ms. Cate’s deposition
testimony that he made the decision to name the doctors. When questioned
about what caused the change, Mr. Rogalski was evasive but definitively
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stated that Ms. Cate was uninvolved in the discourse of the legal issue in
question. Specifically, when asked what happened between February 25 and
28 to cause Jarrard to go from believing legal issues prevented the
disclosure of the doctor’s name to naming those doctors, Mr. Rogalski
refused to answer the posited question and instead, responded that he did
not believe that the answer was material because, “I mean, we made a
decision to name them during that time period.” Deposition of Robert
Rogalski, 10/30/14, Volume II, at 474 (emphasis added).
Our in camera review of the Jarrard documents confirms that Jarrard
was not involved in outside counsel’s dissemination of advice. Mr. Fedele
emailed outside counsel a copy of the documents related to the upcoming
public announcement. Of critical importance herein is that the record
establishes, through the depositions of Mr. Rogalski and Ms. Cate, that
Excela, not Jarrard, prepared the response to question five of the hot button
issues, which response was that legal issues prevented public disclosure of
the names of the doctors who allegedly over-stented. That, of course, is the
“legal issue” involved in this case. Outside counsel reviewed the materials
sent by Mr. Fedele and outside counsel rendered advice as to their contents.
Outside counsel sent his advice only to in-house counsel. Outside counsel’s
email does not solicit input.
After the email from outside counsel was sent to Mr. Fedele on
February 26, 2011, Mr. Fedele forwarded outside counsel’s email to
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management level employees of Excela and Ms. Cate of Jarrard. Mr.
Fedele’s email invited discussion but did not seek feedback5 from Jarrard on
the legal issue involved. Instead, it invited discussion as to what to do
based upon counsel’s advice.
After analysis of the pertinent emails, we reject Excela’s position that
the attorney-client privilege applies to Mr. Fedele’s communication with Ms.
Cate because the email was designed to solicit her assistance with Mr.
Fedele’s provision of “legal advice to the company.” Appellants’ brief at 20.
We likewise discount its averment that Mr. Fedele maintained confidentiality
in outside counsel’s email because he sent outside counsel’s email to Ms.
Cate in order to solicit advice from Jarrard so that Mr. Fedele could advise
Excela on the “legal risks associated with the content of the public
disclosure.” Id. Mr. Fedele was not asking for input from Jarrard into the
legal advice proffered by outside counsel; it solicited input for implementing
the legal advice already rendered by outside counsel. While the other
____________________________________________
5
We would not have discussed any of the contents of the Jarrard
documents. However, in its statement of issues involved in this appeal,
Excela has represented that the attorney-privilege applies because, in their
emails, in-house counsel and outside counsel sought feedback from its
recipients, including Jarrard, so that in-house counsel could give legal advice
to the company CEO on the appropriate course of action. Since the party
seeking invocation of the attorney-client privilege advances the position that
Mr. Fedele and/or outside counsel solicited feedback in their emails so they
could render legal advice to Excela, we are constrained to analyze the truth
of that position.
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recipients of Mr. Fedele’s February 26th email were management level
decision makers on the issue of whether to name the physicians in question
after consideration of outside counsel’s advice, Ms. Cate was not a
corporate-decision maker, as defined by Yocabet and Red Vision.
Ms. Cate, in turn, sent in-house counsel’s email, to which outside
counsel’s email was attached, to the three other members of her team. That
team commented amongst themselves, but did not communicate with
outside counsel or anyone from Excela about outside counsel’s email. One
high-level executive of Excela emailed Ms. Cate about outside counsel’s
advice after February 26, 2011, and Ms. Cate’s response to that executive,
which was copied to Mr. Fedele, did not contain a scintilla of input, advice,
criticism, or analysis of the legal question involved. It is consistent with her
deposition that she acquiesced in the decision of the corporate management
empowered to make that determination.
Mr. Rogalski confirmed Ms. Cate’s deposition testimony. He refused to
answer the question as to what caused Jarrard to change the public
announcement between February 25th and February 28th from not naming
the doctors to naming the doctors. He stated that the answer to that
question was irrelevant because Jarrard was not involved in the decision to
name the doctors. Finally, contrary to Excela’s assertion on appeal, Jarrard
did not need to see the email from outside counsel, Appellants’ brief at 30;
it merely needed to be told to name the doctors. Hence, Kovel’s reasoning
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does not apply in the first instance because Jarrard was uninvolved in the
rendition of legal advice on the question at issue. Given these facts, we do
not need to decide whether an agent of the client can fall within the
penumbra of the attorney-client privilege under the reasoning employed in
Kovel.
Furthermore, there is case law rejecting the notion that an outside
public relations firm can fall within the parameters of the attorney-client
privilege even if the public relations firm is actually involved in the legal
decision-making process. In Egiazaryan v. Zalmayev, 290 F.R.D. 421,
431 (S.D.N.Y. 2013), the Court was applying New York law, which has an
“agency exception” to the disclosure of privileged communications to third
parties where the disclosure is “necessary for the client to obtain informed
legal advice.” In the Egiazaryan case, the plaintiff sued a writer for
defamation, and the writer counter-sued. The writer sought discovery of
communications between the plaintiff and a public relations firm, and the
plaintiff asserted the attorney-client privilege in the communications. The
plaintiff proffered evidence that the public relations firm actively participated
in the legal strategy and advice sessions with the attorney.
Despite this proof, the court in Egiazaryan concluded that the plaintiff
failed to establish that the public relations consultant, in contrast to a
translator or an accountant in a tax case, was necessary to facilitate
communications between the plaintiff and his lawyer. The federal court
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explained that, in order to be needed, the advice must be more than useful,
and, instead, the involvement of third party must be either virtually
indispensable to the legal advice or must specifically facilitate attorney-client
communications. It held that the decision to insert the public relations
consultant in the legal decisions did not render that consultant’s involvement
necessary to obtaining legal advice. See also Behunin v. Superior
Court, 215 Cal. Rptr. 3d 475 (Cal.App.2Dist. 2017).
Excela relies upon various federal cases that have ruled that the
attorney-client privilege is not waived when the privileged communication is
disseminated to a public relations firm where the firm was the functional
equivalent of an employee of the client due to the degree of work performed
for the client by the firm or due to the close association between the outside
public relations firm and the client. See F.T.C. v. GlaxoSmithKline, 294
F.3d 141, 148 (D.C. Cir. 2002) (documents disseminated to public relations
firm were protected by attorney-client privilege and privilege was not waived
where the corporation demonstrated that corporate counsel worked with
public relations consultants in same manner as it did with full-time
employees and the consultants were integral members of the team assigned
to deal with litigation and had to sign non-disclosure agreements); In re
Bieter Co., 16 F.3d 929, 938 (8th Cir. 1994) (independent consultant’s
relationship with client justified application of attorney-client privilege to
consultant where consultant was involved daily with principals of corporation
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formed with the only one objective and where consultant was “intimately
involved in the attempt to achieve that objective”); In re Copper Market
Antitrust Litigation, 200 F.R.D. 213 (S.D.N.Y. 2001) (public relations firm
that regularly conferred with the client's litigation counsel in preparing press
releases and other materials incorporating the lawyer's advice was the
“functional equivalent” of an in-house public relations department).
Herein, the record establishes that Jarrard was not treated as the
functional equivalent of one of Excela’s employees or of its public relations
department. Ms. Cate outlined that, over the course of a three-year period,
Jarrard was hired to work on six specific projects, including the one at issue.
Excela had a staffed communications/marketing/public relations department.
Excela was utilizing Jarrard for a situation requiring crisis management. In
this Commonwealth, whether a person/entity is an employee is determined
largely by whether the employer had “control over the work to be completed
and the manner in which it is to be performed.” Universal Am-can, Ltd. v.
W.C.A.B. (Minteer), 762 A.2d 328, 333 (Pa. 2000). Similarly, the
Restatement of Employment Law provides:
(a) Except as provided in §§ 1.02 [volunteers] and 1.03
[controlling owners], an individual renders services as an
employee of an employer if:
(1) the individual acts, at least in part, to serve the interests
of the employer;
(2) the employer consents to receive the individual's
services; and
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(3) the employer controls the manner and means by
which the individual renders services, or the
employer otherwise effectively prevents the
individual from rendering those services as an
independent businessperson.
(b) An individual renders services as an independent
businessperson and not as an employee when the
individual in his or her own interest exercises
entrepreneurial control over important business
decisions, including whether to hire and where to assign
assistants, whether to purchase and where to deploy
equipment, and whether and when to provide service to
other customers.
Restatement of Employment Law § 1.01 (emphases added).
Ms. Cate’s deposition proved that Jarrard had control over the project
for which it had been hired (publicizing the expected results of the Mercer
peer review that there was over-stenting in 2010 by interventional
cardiologists at Westmoreland Hospital) in a manner that would protect
Excela’s reputation in the community. Jarrard prepared the materials and
implemented the methods for achieving this goal. It was an independent
business entity that had clients nationwide, and was hired by Excela
intermittently to handle specific projects. Jarrard was not the functional
equivalent of Excela’s employee nor did it function as Excela’s in-house
public relations department.
We thus conclude that the record establishes that Jarrard was
uninvolved in the legal decision-making process as to whether to name the
doctors at the March 2, 2011 press conference. We also rule that Jarrard
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was not the functional equivalent of an employee or Excela’s public relations
department during the pertinent events. Likewise, Jarrad was not one of the
persons empowered to act on behalf of and bind Excela as outlined in
Yocabet and Red Vision. We therefore affirm the trial court’s ruling that,
by sending outside counsel’s email to Jarrard, a third party, Excela waived
the attorney-client privilege applicable to the Jarrad documents.
Excela next asserts the work-product privilege applied to the February
26, 2011 email sent by outside counsel to Mr. Fedele.6 As the Court noted in
In re Thirty–Third Statewide Investigating Grand Jury, supra, the
work-product privilege is embodied in Pa.R.C.P. 4003.3.7 Our Supreme
____________________________________________
6
In the interest of judicial economy, we will review the issue, even though it
was not considered by the special master or the trial court, since application
of the work-product privilege, as noted in the text supra, is a question of
law.
7
Pa.A.C.P. 4003.3 states:
Subject to the provisions of Rules 4003.4 and 4003.5, a party
may obtain discovery of any matter discoverable under Rule
4003.1 even though prepared in anticipation of litigation or trial
by or for another party or by or for that other party's
representative, including his or her attorney, consultant, surety,
indemnitor, insurer or agent. The discovery shall not include
disclosure of the mental impressions of a party's attorney or his
or her conclusions, opinions, memoranda, notes or summaries,
legal research or legal theories. With respect to the
representative of a party other than the party's attorney,
discovery shall not include disclosure of his or her mental
impressions, conclusions or opinions respecting the value or
merit of a claim or defense or respecting strategy or tactics.
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Court further observed in Lepley v. Lycoming Cty. Court of Common
Pleas, 393 A.2d 306, 310 (Pa. 1978), that work product is “not protected
against compelled disclosure by the U.S. Constitution, any statute, or any
common-law privilege[.]” The work product privilege, being a creation of
the rules of civil procedure, thus must be analyzed in accordance with the
parameters set forth therein. We also remain mindful that evidentiary
privileges are not favored as they are in derogation of the search for the
truth.
The party invoking the work-product privilege must initially delineate
the facts showing that the privilege has been properly invoked; once that
party does so, the burden shifts to the party seeking disclosure to establish
that revealing the information will not violate the privilege. T.M. v. Elwyn,
Inc., 950 A.2d 1050, 1063 (Pa.Super. 2008). We conclude that Excela has
not delineated facts showing that the privilege has been properly invoked
herein. The comment to Rule 4003.3 states, “The essential purpose of the
Rule is to keep the files of counsel free from examination by the
opponent, insofar as they do not include written statements of witnesses,
documents or property which belong to the client or third parties, or
other matter which is not encompassed in the broad category of the ‘work
product’ of the lawyer.” Pa.R.C.P. 4003.3, Explanatory Comment–1978
(emphases added).
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In this case, Dr. BouSamra is not attempting to discover any item from
the file of outside counsel, whose identity has been hidden from Dr.
BouSamra. Dr. BouSamra, concomitantly, is not demanding that the lawyer
reveal the email. Dr. BouSamra is seeking that email directly from the client
Excela, the email was sent to the client Excela by outside counsel, and the
email is a document that belonged to Excela. The email from outside
counsel was subject to the attorney-client privilege, which was waived when
Excela sent it to a third party.
Excela’s position on appeal is straightforward: the work product
privilege cannot be waived when work product is disseminated to a third
party or witness as such disclosures are often needed to enable the attorney
to prepare for litigation and since work product distributions to witnesses
and third parties are not inconsistent with the purpose of the work product
doctrine. Excela maintains that the work product privilege can be waived
only when distributed to an adversary or under circumstances where there is
a substantial increase in a potential adversary’s opportunities to obtain the
information. Appellants’ brief at 32-33. See Barrick v. Holy Spirit Hosp.
of the Sisters of Christian Charity, 32 A.3d 800, 812 (Pa.Super. 2011),
aff'd by an equally divided court sub nom. Barrick v. Holy Spirit Hosp. of
Sisters of Christian Charity, 91 A.3d 680 (Pa. 2014) (work-product
privilege applies to communications sent by a lawyer to a witness in order to
prepare that witness for trial).
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However, the principles invoked by Excela are not relevant herein.
Outside counsel, the lawyer, did not use the email to aid him/her in
preparing for litigation by disclosing its contents to a third party or witness.
Outside counsel would not have waived his privilege in his own work product
if he had given it to Jarrard to aid outside counsel in preparing this case for
trial. That did not occur in this case. The client sent the email, and the
email was not sent by Excela to Jarrard to help outside counsel in preparing
a case for trial.
Order affirmed. Case remanded. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/19/2017
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