Submitted: October 5, 2004
Stephen D.Roberts, Esq. Lon J. Dale, Esq. Monte D. Beck, Esq.
Bradley J. Luck, Esq. Thomas Harrington, Esq. Carrie L.
Garber, Esq. Larry W. Jones, Esq. Greg E. Overturf, Esq. Mark
E. Cadwallader, Esq.
DECISION AND ORDER REGARDING DISCLOSURE OF CLAIMANT
INFORMATION
MIKE
McCARTER JUDGE
Summary:
Following
the Supreme Court decision in Flynn v. State Comp. Ins.
Fund, 2002 MT 279, 312 Mont. 410, 60 P.3d 397, the
petitioner's attorney sought common fund fees with
respect to other, nonparty claimants benefitted by the
decision. The request was consolidated with a second,
parallel case brought by the attorney. Ultimately, the
parties entered into a settlement agreement, approved by the
Court, which provided that the respondent insurer (State
Compensation Insurance Fund) will identify other claimants
entitled to Flynn benefits and pay the benefits due
them. The agreement also concedes petitioner's
attorney's entitlement to common fund attorney fees.
The
settlement agreement provides for disclosure of information
regarding nonparty claimants who may be entitled to
Flynn benefits. The Workers' Compensation Court
approved the disclosure subject to strict confidentiality
rules precluding further dissemination of the information to
others. After approving the agreement, the Supreme Court
decided St. James Community Hosp., Inc. v. Dist. Court of
Eighth Jud. Dist, 2003 MT 261, 317 Mont. 419, 77 P.3d
534, which held that the constitutional right of privacy, as
well as statutes, precluded disclosure of the identity and
other information of patients of a hospital which had
overcharged its patients and others for copies of medical
records. The parties in this case now seek direction
concerning what can and cannot be disclosed in this case.
Held:
The
right of privacy extends only to information as to which an
individual has a reasonable expectation of privacy as
measured by societal expectations. Pengra v. State,
2000 MT 291, 302 Mont. 276, 14 P.3d 499; Jefferson County
v. Montana Standard, 2003 MT 304, 318 Mont. 173, 79 P.3d
805. Claimants in workers' compensation cases do not have
a reasonable expectation of privacy with respect to their
identities and information pertaining to their entitlement to
benefits, at least with respect to attorneys who have
established their entitlement to further benefits under the
common fund doctrine and where the attorneys are prohibited
from disseminating information regarding their identities and
claims to others.
Topics:
Constitutions, Statutes, Rules, and Regulations:
Montana State Constitution: Art. II, section 10. The
right of privacy extends only to information as to which an
individual has a reasonable expectation of privacy as
measured by societal expectations. Pengra v. State,
2000 MT 291, 302 Mont. 276, 14 P.3d 499; Jefferson County
v. Montana Standard, 2003 MT 304, 318 Mont. 173, 79 P.3d
805. Claimants in workers' compensation cases do not have
a reasonable expectation of privacy with respect to their
identities and information pertaining to their entitlement to
benefits, at least with respect to attorneys who have
established their entitlement to further benefits under the
common fund doctrine and where the attorneys are prohibited
from disseminating information regarding their identities and
claims to others.
¶1
Prior proceedings in this case established the right of the
petitioner, Robert Flynn (claimant), to a credit against the
social security offset[1] taken with respect to his workers'
compensation benefits. The credit is for one-half of the
attorney fees and costs he expended in securing the social
security benefits. Flynn v. State Comp. Ins. Fund,
2002 MT 279, 312 Mont. 410, 60 P.3d 397.
¶2
Following that determination, the claimant sought common fund
attorney fees with respect to other, nonparty claimants who
will benefit from the main decision. This case was
consolidated with a parallel action brought by Flynn's
attorney - Miller v. Montana State Fund, WCC No.
2003-0771.
¶3
The Montana State Fund (State Fund) contested the
claimant's request for common fund certification. The
issues raised by the State Fund were determined by order of
this Court on August 5, 2003, which is reported at Flynn
v. State Comp. Ins. Fund, 2003 MTWCC 55. In that
decision this Court held that the Supreme Court's
decision found at 2002 MT 279 applied retroactively and that
Flynn's attorney is entitled to common fund fees with
respect to other claimants who benefit from the precedent
established in that decision.
¶4
The State Fund appealed my common fund decision. However, the
parties thereafter entered into a mutually agreeable
settlement which resulted in the dismissal of the appeal. The
terms of the settlement provide that the State Fund will
identify and indemnify other similarly situated claimants.
Under the agreement, the claimants' attorney is entitled
to claim common fund attorney fees with respect to the
additional benefits and credits due the nonparty claimants.
The agreement was reviewed, approved, and adopted by this
Court.
¶5
Pursuant to a strict confidentiality agreement[2] approved by this
Court, the State Fund has provided the claimants' counsel
with the names of the Flynn claimants it has
identified. Claimants' counsel is under a strict
obligation precluding him from disclosing the shared
information to others. His role, as contemplated by the
parties and this Court, is to assist in assuring that
claimants entitled to Flynn benefits are in fact
identified and that the additional benefits and/or credits
due them are properly calculated and paid.
¶6
Following this Court's approval of the agreement
regarding the sharing of information, the Montana Supreme
Court decided St. James Community Hosp., Inc. v. Dist.
Court of Eighth Jud. Dist, 2003 MT 261, 317 Mont. 419,
77 P.3d 534. In that case, the Court held that
medical providers are constitutionally and statutorily
prohibited from disclosing medical information, including
the identity of patients, to a plaintiffs counsel in a
class action even though the class action potentially
benefitted the very patients whose identity was protected.
Id., ¶¶ 8, 9. In light of the decision in
St. James, the parties now seek guidance regarding
further disclosure of information.
Discussion
A. Background
¶7
Where a court decision establishes the right of other
nonparty claimants to additional benefits, a common fund is
created. Murerv. State Comp. Mut. Ins. Fund, 283
Mont. 210, 222-23, 942 P.2d 69, 76-77 (1997); Rausch v.
State Comp. Ins. Fund, 2002 MT2O3, ¶¶45-48,
311 Mont. 210, 54 P.3d 25. The common fund extends to all
claimants benefitted by the decision irrespective of which
insurer (or self-insured) is liable for the benefits.
Ruhd v. Liberty Northwest Ins. Corp., 2004 MT 236,
¶ 25 (Ruhd II.)[3].
¶8
In Ruhd II, the Supreme Court specifically directed
the Workers' Compensation Court to "supervise
enforcement of the common fund pursuant to Rausch,
[4] and
all court-approved agreements stemming from it, from all
insurers involved." 2004 MT 236, ¶ 25 (footnote
added). Thus, this Court has a duty to assure that claimants
benefitted by court decisions are identified and paid the
benefits owing them, and to then determine the amount of
attorney fees due the prevailing claimants' attorneys.
¶9
While the common fund doctrine is predicated on the right of
the attorneys bringing the principal litigation to collect
attorney fees from nonparties who benefit from the
litigation, Murer, 283 Mont, at 222, 942 P.2d at 76,
and Rausch, 2002 MT 203, ¶ 45, the rationale
for the doctrine is the proverbial tail that wags the dog.
Before attorney fees can be determined, the claimants who are
due additional benefits must be identified and the amounts
due them must be calculated. Such identification and
calculation is the major undertaking in any
common fund case. In contrast, the calculation of attorney
fees is simply a matter of determining a reasonable and
appropriate percentage or amount to be paid the successful
attorneys.
¶10
This Court has extensive experience in supervising the
enforcement of common fund rights. It has supervised common
fund proceedings following Murer v. State Comp. Mut. Ins.
Fund, supra.; Broeker v. State Comp. Mutual Ins. Fund,
275 Mont. 502, 914 P.2d 967 (1996); Rausch v. State Comp.
Ins. Fund, supra.; and in this case. The Murer
case involved 3, 200 claimants and is still not closed,
although the case is getting very near to finalization.
¶11
Based on my experience in common fund cases, I respectfully
disagree with the Supreme Court's statement in
Ruhd that "[e]forcement in a specific case is
not a necessary element of the common fund doctrine."
Ruhd, ¶ 23. Lacking enforcement, i.e.,
identification of benefitted claimants and the amounts of
additional benefits due them, the beneficiaries of the common
fund cannot be identified and attorney fees cannot be
determined.
¶12
In each of the common fund cases I have supervised, including
this one, I have enlisted the parties and their counsel in a
cooperative endeavor to identify benefitted claimants,
calculate the additional benefits due them, pay the
additional benefits, and ultimately determine the attorney
fees due claimants' counsel. By acting in concert, we
have avoided time-consuming, costly discovery, as well as
further, contentious litigation. We have spent hours around
conference tables identifying the most efficient and
effective means for identifying affected claimants and for
calculating the benefits due them. The process in each of the
cases has been efficient and effective. On the other hand,
the time and effort spent by claimants' counsel in each
of these cases has far exceeded the time and effort they
spent in establishing the precedent giving rise to the common
fund.
¶13
In Ruhd, the Supreme Court noted that there are
"only 165 permanently totally disabled
claimants" affected by the decision. Ruhd,
¶ 24 (italics added). Such a small number of claimants
may suggest that enforcement of the common fund doctrine will
be simple and straightforward. However, information furnished
to this Court in a post-remand conference held on October 5,
2004, with counsel and officials of the Department of Labor
and Industry (DLI) indicates that more than 165 claimants are
affected by the Ruhd decision. Additional, difficult
work needs to be done to identify all of the affected
claimants. I have attached a copy of my minute entry of the
conference. A copy of the minute entry is also posted on the
Court's WEB site, http://wcc.dli.state.mt.us. A
copy of the transcript of the conference is also posted on
the Court's WEB site and with this reference is made a
part of the record in this case.
¶14
The information furnished at the conference illustrates the
difficulty and time-consuming nature in enforcing the common
fund doctrine. The DLI's initial data identified 377
permanently totally disabled (PTD) claimants. One hundred
sixty-seven (167) are insured by the State Fund. That leaves
another 210 claimants who are insured by 57 insurers,
excluding the Uninsured Employers' Fund and the
Western Guaranty Insurance Fund.[5] Moreover, the DLI's data
is incomplete. It covers only PTD claimants who filed claims
after March 1995 or who were paid benefits after April of
1995.[6] The decisions in Ruhd and
Rausch affect claimants injured after July 1, 1991,
thus there is a period of four years for which there is
incomplete data.
¶15
Moreover, the Supreme Court has under advisement an appeal in
Rausch in which the petitioners contend that all PTD
claimants injured since 1987 are encompassed
in the decision. The original decision in Rausch
applied only to claimants injured on or after July 1, 1991.
Depending on the outcome of the appeal, this Court may have
to expand the proceeding to encompass PTD claimants injured
between 1987 and 1991, thus requiring the additional mining
of data.
¶16
Additional data mining will require either compelling each
Montana insurer and self-insured (there are over 600 of them)
to identify other PTD claimants and/or resorting to an old
database maintained by the Division of Workers'
Compensation (Division) prior to its demise in 1989. 1989
Mont. Laws, ch. 613. The Division database is commonly
referred to as the DBO2 database. For a period of time after
the Division was dissolved, the State Fund maintained the
database.
¶17
In Rausch, the Court was also alerted to the fact
that some PTD claimants may in fact be improperly classified
as temporarily totally disabled. If the common fund is
extended to encompass such improperly classified claimants,
the data mining will have to expanded.[7]
¶18
Finally, in Ruhd and Rausch the Court will
have to hale at least fifty-seven insurers before the Court
to determine whether they have paid the affected claimants
the impairment awards required by law. It will then have to
compel payment of those impairment awards not already paid.
¶19
Ruhd and Rausch are not the only common
fund cases pending in this Court. This Court has previously
held that the common fund doctrine applies to Schmill v.
Liberty Northwest Ins. Corp., 2003 MT 80, 315 Mont. 51,
67 P.3d 290 (striking down the apportionment provision of the
Occupational Disease Act), and Stavenjord v. Montana
State Fund, 2003 MT 67, 314 Mont. 466, 67 P.3d 229.
Schmill v. Liberty Northwest Ins. Corp., 2004 MTWCC
47; Stavenjord v. Montana State Fund, 2004 MTWCC 62.
Those cases involve thousands of claimants - the State Fund
alone has identified 3, 500 potentially affected claimants.
Stavenjord, 2004 MTWCC 62, ¶ 25.
¶20
I have set out the above information to illustrate the nature
of the tasks involved in enforcing the common fund doctrine.
The information provides the background and setting for the
St. James issue.
B. The
St. James Issue
¶21
To facilitate the enforcement of the common fund doctrine, in
each of the common fund cases I have handled to date, I have
authorized insurers to provide the claimants' counsel
with information and documents identifying affected claimants
and showing the basis for calculating the additional benefits
due them. The dissemination of the information has been
subject to strict confidentiality agreements. Claimants'
attorneys in each of the cases have been integrally involved
in the enforcement process and have made major contributions
to the process. Indeed, their assistance has been essential
to the process. And, they have honored the confidentiality
requirements.
¶22
St. James, however, raises questions as to whether I
can authorize insurers to share information with
claimants' counsel. Both parties in the instant case
agree these questions must be addressed before proceeding
further with the implementation of their agreement.
¶23
St. James was a class action seeking "monetary
damages predicated upon excessive fees allegedly charged for
copies of patients' medical records from 1993 to
1999." 2003 MT 261, ¶ 2. The District Court held
that the defendant medical providers had overcharged patients
and their representatives, i.e., attorneys, for copies of
medical records. It certified a class consisting of patients
and others who had obtained copies of records and gave notice
to the potential class members, apparently without disclosing
individual identities. The District Court gave class members
an option to "opt-out" of the class; members who
failed to expressly "opt-out" were automatically
included in the class.
¶24
Following the class determination and notice to class
members, plaintiffs filed discovery requests seeking
information as to the identity of patients within the class
and the charges they had incurred for copies of records. The
District Court ordered the health care providers to provide
the information. The providers then sought a writ of
supervisory control quashing that order.
¶25
In considering the writ, the Supreme Court noted that ail
patients who had not expressly elected to "opt-out"
of the class had in theory become clients of the
plaintiffs' attorneys but that "[i]n essence,
plaintiffs' counsel are seeking to identify their own
clients ... [to enable them] to compute damages and notify
the class members." 2003 MT 261, ¶ 6. The Court
went on to hold that the provisions of the Montana Health
Care Information Act and, "[m]ore importantly, Article
II, Section 10" of the Montana Constitution protected
the patients from the non-consensual release of information
identifying them. Id., ¶ 8. Finally, the Court
held that failure of patients to reply to an opt-out notice
did not constitute consent to release their names and other
information to plaintiffs' attorneys.
¶26
The Court in St. James recognized that its decision
created a dilemma as to how to enforce the constitutional and
statutory privacy rights of the class members while advancing
their rights to damages for copying overcharges. It resolved
the dilemma by requiring the District Court to provide an
"opt-in" notification. An "opt-in"
notification assured that the class members expressly
consented to the release of identifying information to
plaintiffs' attorneys.
¶27
In the present case, the State Fund has expressed concern
that St. James precludes the release of claimant
information to the claimants' attorney. It has suggested
that the Court follow an opt-in procedure similar to that
required in St. James.
¶28
An opt-in procedure will complicate and delay identification
and payment of claimants entitled to Flynn benefits.
It may also result in the imposition of additional
administrative burdens on the Court, which would be tasked
with undertaking its own independent inquiry with respect to
benefits due those who fail to expressly opt-in. I therefore
concluded that I will adopt an opt-in procedure only if it is
legally required by St. James.
¶29
The decision in St. James has both constitutional
and statutory underpinnings. The constitutional foundation is
Article II, section 10 of the Montana Constitution. The
statutory foundation is the Uniform Health Care Information
Act, § 50-16-501, et seq., MCA (2003).
¶30
Article II, section 10 of the Montana Constitution provides:
"The right of individual privacy is essential to the
well-being of a free society and shall not be infringed
without the showing of a compelling state interest." The
section neither defines what is encompassed in the right of
privacy or what constitutes a compelling state interest. A
review of Montana Supreme Court decisions ...