Finding Purpose - A Look at the Discoverability of Incident Reports

Sierra J. Spitzer, Partner
Schwartz, Semerdjian, Ballard & Cauley, LLP
Published:  08.01.2014

In today’s litigation hungry world, it can seem like there is a “lawsuit waiting to happen” around every corner.  For this reason, employers have had to learn to be prepared for this prospect and have adopted practices to deal with potential claims before they even become a lawsuit.  One of most common tools used is the incident report.  However, while these reports can prove useful in some regards, they are also often the subject of discovery disputes due to their potentially privileged nature.  The question of whether such reports are discoverable or privileged is an issue that arises time and again and does not always have an obvious answer.  

In California, a communication between an attorney and client is privileged if it is made in the course of the attorney client relationship and in confidence.  California Evidence Code §952.  Such communications also include legal opinions formed and the advice given in the course of that relationship. Id. § 952; Calvert v. State Bar, 54 Cal.3d 765, 779, 1 Cal.Rptr.2d 684, 819 P.2d 424 (1991). The party claiming the attorney-client privilege has the burden of establishing the preliminary facts necessary to support its exercise, i.e., a communication made in the course of an attorney-client relationship. Costco Wholesale Corp. v. Superior Court, 47 Cal.4th 725, 733, 101 Cal.Rptr.3d 758, 219 P.3d 736 (2009) (“Costco” ); United States v. Martin, 278 F.3d 988, 999–1000 (9th Cir.2002) (the first part of establishing the privilege is demonstrating that legal advice was sought); In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 805 (Fed.Cir.2000) (“the central inquiry is whether the communication is one that was made by a client to an attorney for the purpose of obtaining legal advice or services.”). Once a prima facie claim of privilege is established, the communication is presumed to have been made in confidence and the opposing party has the burden to establish the communication was not confidential or that the privilege does not apply for other reasons. Id. The privilege “only protects disclosure of communications between the attorney and the client; it does not protect disclosure of underlying facts which may be referenced within a qualifying communication.”State Farm Fire & Casualty Co. v. Superior Court, 54 Cal.App.4th 625, 639, 62 Cal.Rptr.2d 834 (1997). Furthermore, “documents prepared independently by a party, including witness statements, do not become privileged communications or work product merely because they are turned over to counsel.” Wellpoint Health Networks, Inc. v. Superior Court, 59 Cal.App.4th 110, 119, 68 Cal.Rptr.2d 844 (1997).

Applying these principles in the context of a report or communication made related to an incident, the determination of privilege depends on the “dominant purpose” behind the report.  In other words, the business’s reason for requiring the report will dictate whether privilege applies, and, where there is more than one purpose in requiring the report, the dominant purpose will control.  D.I. Chadbourne, Inc. v. Superior Court (1964) 60 Cal.2d 723 [36 Cal.Rptr. 468, 388 P.2d 700].  By way of example, in the matter of Scripps Health v. Superior Court, 109 Cal.App.4th 529 (2003), the heirs of a deceased patient brought a wrongful death action against the hospital and moved for production of occurrence reports prepared by hospital employees.  Specifically, plaintiffs sought “all records regarding any incidents and/or changes in [the] condition of [Reynolds] during his stay at the Scripps facility that were not contained in his medical records.”  Scripps responded by saying it had five “occurrence reports” that is was withholding based on attorney-client and attorney work product privileges.  Scripps also supplied a blank occurrence report form and provided a privilege log indicating that hospital employees prepared the reports in anticipation of litigation. The occurrence report form states in bold letters at the top “CONFIDENTIAL: Not part of medical record / Do not photocopy.” The form seeks information about the occurrence and asks for an evaluation of the significance level of the occurrence in terms of the potential for claims or litigation.  Despite Scripps’ claim of privilege, however, the trial court granted plaintiffs’ motion ordering production of the reports, finding that the reports were not privileged because they were administrative in nature, did not contain information resulting from investigations of a medical review committee, were not necessarily forwarded to a hospital review committee, were not provided by an insurer, not necessarily forwarded to counsel or an insurer, and were not necessarily prepared for the purpose of preparing to defend the hospital in the event of a lawsuit. Scripps Health, supra, 109 Cal.App.4th 529.  In essence, the court found that the primary purpose of the report was to chronicle the incident to prevent a similar thing from happening again - accident prevention.  The court further reasoned that the report form primarily called for “observational information” as opposed to opinions or assessment of the incident.    

This ruling was challenged by Scripps who asserted that the occurrence reports were confidential records prepared by employees pursuant to a risk management plan and at the directive of its legal department. To support its argument that the reports were privileged, Scripps relied on Sierra Vista Hospital v. Superior Court (1967) 248 Cal.App.2d 359, 364 which followed the “dominant purpose” test articulated in Chadbourne. (Sierra Vista, supra, 248 Cal.App.2d at p. 368.)  In Sierra Vista there was an “incident report” prepared by a hospital's director of nursing services and its hospital administrator after an alleged injury at issue. (Id. at p. 363.) The report was typed on a form with the words “Confidential Report Of Incident (Not A Part of Medical Record)” appearing at the top. (Id. at p. 368.) The insurance company for the hospital instructed the administrator to use the form to report all incidents that might result in litigation against the hospital and send the reports to the insurance company for use by the attorney representing the hospital in the event of litigation. (Id. at p. 365.) The administrator sent the completed form to the hospital's insurance company adjuster and did not retain a copy of the report or send a copy to anyone else. (Id. at p. 366.) The court held that the report was protected under the attorney-client privilege because the hospital intended the report to be a confidential communication to its attorney through its insurance company. (Id. at p. 368.)
The trial court in Scripps distinguished the case from Sierra Vista, stating the “occurrence reports [were] not provided by the insurer, not necessarily forwarded to counsel or an insurer, and [were] not necessarily prepared for the purpose of preparing to defend the hospital in the event of a lawsuit.”  The appellate court disagreed, finding that the distinctions identified by the trial court were illusory because Scripps was self-insured, maintained in-house counsel, required completion of the confidential occurrence reports for the purpose of attorney review and intended the reports to be confidential.  Scripps Health, supra, 109 Cal.App.4th at 534.  In making this finding, the appellate court relied on evidence provided by Scripps that the occurrence reports were part of a risk management plan devised as part of a self-insurance program for professional liability claims. co_anchor_b52003401432_1 “Self-insurance” is “ 'insurance of oneself or of one's own interests by the setting aside of money at regular intervals to provide a fund to cover possible losses ....' ” (Alderson v. Insurance Co. of North America (1990) 223 Cal.App.3d 397, 407.  The Scripps self-insurance program requires that each Scripps facility have an on-site risk manager who serves as the liaison to the Scripps legal department. This person is also deemed to be an “agent” of Scripps's legal department. “Scripps considers the reports to be the underpinning of its self-insurance program, risk management program and quality assurance program and its legal department has always maintained the reports as an ‘attorney/client communication directly between employees and in-house counsel pursuant to SCRIPPS Risk Management Plan.’”  Scripps Health, supra, 109 Cal.App.4th at 535.  According to the Scripps’ in house counsel, the reports are designed to be an internal risk and claim assessment profile and provide the basis for setting the reserves for Scripps's self-insurance plan.  

The appellate court also rejected the trial court’s idea that the primary purpose of the reports was “accident prevention.”  Although the reports serve a dual purpose of attorney review in anticipation of possible litigation and quality assurance/peer review, the actual physical reports are not reviewed or submitted to any peer review or quality assurance committee and were kept confidential, with only risk managers, in-house or outside counsel and third party litigation claim administrators having access to same.  “Where, as here, the right to the privilege is clearly established it should not be cast aside. The fact that the information contained in the communications might also be used for incidental purposes not entitled to the privilege is unimportant.” (Holm, supra, 42 Cal.2d at p. 509.)

Thus, as these cases evidence, the key factor in making the determination of whether privilege applies is the “dominant purpose” behind the communication and sufficiently demonstrating that said purpose is one invoking a privilege requires careful and specific planning, intent and structure.