16 Fla. L. Weekly Supp. 851a

Online Reference: FLWSUPP 169ROBER

Insurance — Personal injury protection — Discovery — Failure to comply — Sanctions — Motion to strike insurer’s pleadings is granted where insurer’s six-year pattern of withholding discovery and misleading court and medical provider on ultimate issue of pattern of taking unwarranted PPO reductions was willful, deliberate and contumacious; insurer has been previously sanctioned; conduct was not wholly attributable to insurer’s attorney; delays prejudiced provider through expenditure of undue time and expense; there is no justification for noncompliance, and noncompliance created significant problems of judicial administration

ROBERTS CHIROPRACTIC CENTER, P.A., Plaintiff, vs. NEW HAMPSHIRE INDEMNITY COMPANY, Defendant. County Court, 1st Judicial Circuit in and for Escambia County. Case No. 2002 CC1044, Division 5. July 6, 2009. Pat Kinsey, Judge. Counsel: Donald A. Myers, Jr., Bailey & Myers, P.A., Maitland; and Lefferts L. Mabie, III, for Plaintiff. Michael T. Bill and Brentt E. Palmer, for Defendant.

ORDER GRANTING PLAINTIFF’S MOTION FOR SANCTIONS AND DENYING DEFENDANT’S MOTION TO STAY AND GRANTING PARTIAL SUMMARY JUDGMENT

At a hearing in open court on June 18, 2009, the plaintiff appeared through counsel and the defendant appeared with counsel. The court first addressed defendant’s motion to stay. Defendant’s primary concern, expressed multiple times, was the “irreversible harm” which would occur should the motion for stay be denied as the defendant would be “powerless to stop punitive damages discovery.” However, the defendant was unable to provide a convincing argument regarding the “likelihood of success” for his petition for writ of certiorari. In fact, plaintiff’s presentation established a real concern that the petition is both untimely and fails to present a reviewable issue. See Levitt-Ansca Towne Park Partnership, et al. v. Smith & Company, Inc., 807 So.2d 197 (Fla. 4th DCA 2002); Powell, et al. v. Wingard, et al., 402 So.2d 532 (Fla. 5th DCA 1981).

In the interest of judicial economy, in a county court case that now spans more than seven (7) years, the court asked the parties to stipulate that there would be no “punitive damages discovery” if the court denied the request for stay and imposed sanctions which resulted in partial summary judgment. The parties agreed to this stipulation.

The court then asked the parties to address plaintiff’s motion for sanctions. This is a PIP case wherein the defendant New Hampshire Indemnity Company, part of the AIG group (NHIC) applied a PPO reduction to medical care provided by plaintiff. It is undisputed that NHIC has never offered a PPO policy in Florida. It is undisputed, therefore, that they were not entitled to take such a reduction. Defendant’s actions in applying a PPO reduction to their insured’s benefits certainly begs the question of whether or not this procedure was wide-spread and that is precisely what plaintiff is endeavoring to discover at this time. From the inception of this case, NHIC has prevented orderly and timely litigation of this case. The fact that this is a county court case which has lingered for more than seven years is evidence of the problems and/or roadblocks which NHIC has placed in the path of this litigation’s resolution.

The court’s decision in this case comes after much deliberation about whether the delay tactics so obviously employed in this case are the result of the attorney’s actions or that of NHIC. It would be inappropriate and unjust to punish the defendant were the actions and/or inactions solely those of its attorney. Also, because dismissal, or striking a party’s pleadings, is the ultimate sanction, it should be reserved for those circumstances where a lesser sanction would fail to provide a just result. See Kozel v. Ostendorf, 629 So.2d 817 (Fla. 1993).

This case is a textbook presentation displaying how litigation gets a “bad name.” By ignoring the discovery rules in a manner which caused the case to drag on for years and by forcing the plaintiff to bring the case back into court time and time again for the sole purpose of compelling the defendant to comply with the rules and/or court orders, a simple PIP case has evolved into a seven-year time-consuming, expensive ordeal. Not only have time deadlines been ignored on nearly every discovery request, but this case is also replete with examples of other discovery roadblocks including but not limited to providing inaccurate and incomplete discovery responses which caused confusion and wasted even more time. For example, defendant responded to one interrogatory by providing names of employees with knowledge about the issues, but failing to provide contact information. When pressed to set depositions for these NHIC employees, NHIC removed some of the names from the list and claimed to have erred in disclosing those names as they don’t even work for NHIC nor do they have any idea who they might be or how their names got on the discovery list. This “error” cost endless discovery time, attorney hours, court time and leaves a very unsettled feeling about the identity of the now “missing and/or deleted” witnesses and why they were originally listed.

Another recent and even more egregious example of a discovery roadblock is NHIC’s failure to disclose the information about other PIP claims where a PPO reduction may have been improperly applied. NHIC sought protection from the court as they estimated it would take nearly 10,000 man-hours to search more than 3200 files to see if there was a pattern of improper PPO reductions. Furthermore NHIC stated it would require a “trained and experienced” worker to review the files to see if there had been a PPO reduction. This experienced worker would cost NHIC $17.60/hour or about $169,000.00 to answer this one interrogatory. When the plaintiff offered to do the review with their own personnel if defendant would simply make the files available, NHIC first said they were unable to locate the files, then said they were in one or two of their storage facilities, and then, when the court threatened to strike their pleadings, NHIC managed to find 55 of the 3277 files and provide them for plaintiff’s review. Unfortunately, they failed to disclose to the court or plaintiff that these files were incomplete; that is, without access to the computer records, the “paper files” would not necessarily show if a PPO reduction had been taken. This critical information was only disclosed by NHIC’s representative while testifying in the June 18, 2009 evidentiary hearing on plaintiff’s motion to strike defendant’s pleadings more than a month after plaintiff sent a team to review the files. Again, just another example of how NHIC has failed to meet its responsibilities in this seven-year case by delaying the litigation and causing unnecessary expense.

On April 28, 2009, the court placed defendant on notice that there would be no further delay. In a written order, the court warned NHIC that it would grant plaintiff’s motion to strike should they not provide the information detailed in the court’s August 16, 2007 Order. The court gave NHIC twenty days to comply or suffer the consequences and they did not. In fact, not only did they fail to comply, they did not even make a good faith effort to comply. Providing 55 paper files that were not even complete records of the particular PIP claims, and attempting to mislead the plaintiff and the court into thinking that these 55 files were representative of the group of 3277 files all the while knowing that the files were incomplete without the corresponding computer records, was the final contumacious act that the court cannot ignore without compromising the integrity of the judicial system.

The decision to strike the defendant’s pleadings is the culmination of seven years of actions and/or inactions. For this latest round of discovery violations, the court begins in April, 2003, when plaintiff served its Third Interrogatories with the express purpose of discovering if defendant applied improper PPO reductions on any similar claims. In December, 2003, the defendant filed incomplete answers. In January, 2004, the plaintiff filed a motion to compel. In March, 2004, the court compelled the defendant to answer within 30 days. The defendant filed for an extension and was given until May as requested. However, defendant still did not respond. In November, 2004, plaintiff sought enforcement of the order compelling answers and the court issued a written order granting the request in December, 2004. Still, no response. In March, 2005, plaintiff again filed to compel and still no response. In August, 2007, the court entered an order limiting the discovery response to a three-year period and the defendant still failed to respond. In April, 2009, six years after receiving the interrogatories, the defendant sought a protective order because of the amount of work NHIC claimed would be required to answer the April, 2003 request. That request was denied and the court again ordered defendant to respond. At this point, the plaintiff offered to help by reviewing the files themselves if defendant would merely provide the claim file and plaintiff offered to sign a confidentiality agreement prior to said reviews. . .which they did.

NHIC, now faced with the court’s order that they would either provide the files for review or subject themselves to having their pleadings struck, managed to “find” 55 files which they made available for plaintiff’s review. What they failed to disclose to plaintiff was that the files were incomplete because defendant did not provide computer records to supplement the paper files and without the computer records, there was no possibility of making a definitive finding of whether or not a PPO reduction had been taken. In other words, NHIC once again engaged in what can only be seen as another deliberate tactic to delay, circumvent and mislead.

In Kozel, the Supreme Court provides a simple six-prong test for the court to use in analyzing whether or not to strike the defendant’s pleadings. First, was this a simple case of neglect or inexperience? Clearly, no. The pattern of conduct over the past six years in withholding discovery and even misleading the court and opposing counsel on the ultimate issue before the finder of fact was willful, deliberate and contumacious¹.

Second, the court must have given the defendant and counsel at least some prior sanction to put them on notice that this behavior must change. The court finds that the defendant has been sanctioned in the past through imposition of attorney’s fees and costs incurred by the plaintiff in bringing multiple motions to compel. Furthermore, the defendant was placed on notice that further disobedience or failure to comply would result in the court granting plaintiff’s motion to strike.

Third, the court must decide if the defendant was personally involved in the contumacious behavior or if it was merely the action/inaction of the attorney. Here, the defendant clearly participated in and/or solely caused the violations. In fact, faced with disclosing the information about PPO reductions on other PIP cases during this three-year period, NHIC alone had the ability and knowledge to withhold the critical relevant information from the files they provided to be examined by plaintiff. Defendant also attempted to mislead the court and plaintiff that they had reviewed a representative sample (55 of 3277 files) and found no other PPO reductions thereby answering the compelled interrogatory in the negative when in fact they did not review all of the relevant and necessary information on the representative sample and did not qualify their answer as being a “guess” rather than an accurate review of all relevant records. NHIC also participated in willful and contumacious behavior by providing names for a discovery witness list as those persons having information about the PPO reduction problem but later, when faced with presenting them to be deposed, decided that they did not know why their names were placed on a discovery list or who they were or how to contact them and then attempted to circumvent the problem by deleting them from their list of employees with knowledge. It is clear to the court that NHIC must take personal responsibility for the actions the court is forced to take today.

Fourth, the court must analyze if the delays prejudiced the opposing party through undue expense, loss of evidence, or otherwise. There is no reason why any party should be forced to file multiple motions to compel discovery on the same issue. In this case, it is most interesting that the defendant, NHIC, now complains that the information requested is so old and outdated that it is hard to even find in storage and too dated to be easily compiled and/or relevant. However, it is their actions which have caused the delays which in turn have caused the case to be “so old and outdated.” The time spent in court on these multiple motions to compel, time spent drafting motions, the time and expense expended seeking information already determined to be relevant and discoverable is beyond explanation and/or excuse.

In addition, the court considered the fact that plaintiff incurred the time and expense of a wasted trip to review files in May when the claim files provided were apparently incomplete. It was apparent to the court that everyone but the witness on the stand was stunned to discover through a comment made by the NHIC witness during the June 18, 2009 hearing, that review of the paper file would not necessarily disclose if a PPO reduction had been applied on any given claim. The witness testified that certain records were kept solely in paper form and other records remained solely in the computer file on each and every claim file. Defendant’s actions in producing 55 paper files (when 3277 claims files were ordered to be produced) so that plaintiff could review them for PPO reductions, was a blatant and willful act which both delayed and mislead the plaintiffs into potentially reaching a false conclusion about defendant’s policies, procedures and actions. Defendant failed to alert plaintiff that the paper files were only part of the claims record, and that without the corresponding computer records to supplement the paper files being reviewed, plaintiff could not accurately determine if defendant had improperly applied PPO reductions.

Two attorneys and two staff members traveled to defendant’s location to review the 3277 claims files, but found only 55 had been produced. They spent the time reviewing the files, but this was time wasted as the computer access was not provided. . .nor even disclosed as existing and relevant. Defendant then proclaimed that these 55 files were representative of the group of 3277 and that because there was no evidence of any PPO reductions in those 55 paper files, there was no reason to believe further review would be otherwise productive. This attempt by NHIC to mislead counsel and the court cannot be left without consequence.

Fifth, the court must ascertain if there was reasonable justification for the noncompliance. There is none. After six years of delay NHIC produced only 55 of their 3277 PIP files and then, only later disclosed that the files could not be relied on as they were incomplete. From these actions/inactions the court cannot even find a showing of good faith.

Finally, the court must consider if the noncompliance created significant problems of judicial administration. In fact, defendant’s noncompliance rises to a level far more significant than just creating “problems of judicial administration.” Defendant’s noncompliance creates the appearance of not only contumacious behavior, but an affront to the integrity of the judicial system as a whole. The court can only find that this willful display of delay tactics, misleading information, and failure to comply even on a good faith basis, leaves the court no choice but to react in a manner which sends a clear and unambiguous message to defendant.

Striking a party’s pleadings is the harshest sanction and should be saved for only the rarest and most egregious circumstances. The totality of circumstances surrounding the manner by which defendant has treated this case and the discovery of the ultimate issue of whether there is a pattern of conduct by defendant in taking PPO reductions in cases when they admit they have never issued a PPO policy in the State of Florida, appears to the court to be deliberate, willful and worthy of this the most harsh sanction. This sanction does not come as a surprise. The defendant was warned that further noncompliance would result in this consequence and still failed to provide even a good faith attempt at compliance and therefore it is

ORDERED AND ADJUDGED that the plaintiff’s motion to strike the defendant’s pleadings is granted. Further ordered that plaintiff’s motion for partial summary judgment is granted with a finding of liability in favor of plaintiff and with a finding the allegations of paragraphs one through 15 of the Amended Complaint are deemed admitted and established for purposes of this action. Further ordered that plaintiff is entitled to attorneys fees and costs and the court reserves jurisdiction over that finding as well as further relief as may be needed to be fair, just and proper.

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¹The court notes that the definition of contumacious is best described as stubborn disobedience.