By Elizabeth O. Bryant

Colleen Konicek and Liza Bryant of Fletcher & Sippel, together with appellate counsel, received a favorable appellate court ruling.  Pursuant to the Illinois contribution statute, parties must enter into settlement agreements in good faith because a settlement by one party extinguishes its liability to all other joint tortfeasors.  In this case, F&S challenged the trial court’s finding that a settlement agreement entered into between the plaintiff and his treating doctor—against whom F&S brought a third-party contribution claim—was made in good faith. F&S also challenged the court’s finding that the plaintiff and the doctor shared a common interest such that they did not waive the attorney-client privilege between them and their respective counsel.  On May 6, 2019, the court reversed the trial court on both grounds.

Summary of Case

In this case, the plaintiff—an employee of F&S’s railroad client—claims he was injured while attempting to board a moving train.  Five days after the incident, he began treating with a spinal surgeon (the “Doctor”) who ultimately performed 18 different procedures on the plaintiff’s spine and ordered 173 sessions of physical therapy—all of which were provided at facilities owned solely by the doctor.  Noticing a discrepancy between the extent of the treatment and the nature of the injury, the railroad had an independent neurosurgeon (the “Neurosurgeon”) review the plaintiff’s medical records.  The Neurosurgeon opined in a letter to the railroad that the treatment the plaintiff was undergoing at the hands of the Doctor was unreasonable, unnecessary, and harmful, and that the “assault on his spine” should be stopped. The railroad sent the letters to the plaintiff, who then presented them to the Doctor.  The plaintiff continued treating with the Doctor for another 3+ years.

In June of 2015, the plaintiff sued the railroad.  Two months later, the railroad filed a third-party claim against the Doctor seeking contribution based on his negligent treatment of the plaintiff. In support of its claim, the railroad retained as an expert the Neurosurgeon, who opined in his expert report that 17 of the 18 procedures performed by the Doctor were unreasonable, unnecessary, and violated the standard care, as did the Doctor’s conduct in altering his medical records, which he admitted doing at some point after reviewing the Neurosurgeon’s 2013 letters.  The plaintiff’s own retained expert echoed the findings of the Neurosurgeon, and further opined that the plaintiff had a “psychological dependence” on the Doctor.

Despite this substantial evidence of the Doctor’s malpractice, in early 2018, the Doctor and the plaintiff agreed to settle the case for the measly sum of $25,000.  Thereafter, the Doctor moved for a finding of good faith and to dismiss his case.  The trial court granted the motion and dismissed the railroad’s third-party complaint against the Doctor with prejudice.

Prior to the settlement, the railroad served discovery requests to both the plaintiff and the Doctor requesting communications between them and their respective counsel, including joint defense agreements.  The Doctor made clear that no joint defense agreement existed, but claimed that all communications between he and the plaintiff were privileged on the basis that they shared a common interest in maximizing the railroad’s liability and defeating their common litigation opponent, such that there was no waiver of the attorney-client privilege.  The trial court agreed and sustained the Doctor’s objections to disclosing certain communications to the railroad.  The railroad appealed the trial court’s finding of good faith, as well as its finding that the common interest exception to the waiver rule shielded the communications between the plaintiff and the Doctor and their respective counsel.

Appellate Court Ruling

The appellate court reversed on both counts.  The court found that the strongest evidence of a lack of good faith was the amount the Doctor paid compared to his proportionate share of liability.  The plaintiff’s economic damages alone are estimated to be over $3.5 million, yet the Doctor settled for $25,000.  The court found the discrepancy between the two amounts to be amplified by the substantial evidence supporting liability on the part of the Doctor, that the settlement amount was a mere fraction of the liens the Doctor still held on any recovery by the plaintiff, and that the Doctor’s $1 million malpractice insurance policy was not a factor in the settlement, because the Doctor paid the $25,000.00 out of his own pocket.  The court also noted that one of the underlying purposes of the Contribution Act is to encourage settlement of the entire litigation.  Here, however, by settling for a mere fraction of the total amount of the Doctor’s liens, F&S argued, and the court agreed, that upholding the settlement made resolution of the entire case difficult because the starting point for settlement would have to be the amount of the Doctor’s outstanding liens.

With regards to the trial court’s finding that a common interest existed—the appellate court found that, in order for the common interest exception to apply, there must actually be an agreement between the parties.  Here, however, the Doctor admitted that he and the plaintiff did not enter in an agreement—neither formal nor informal.

As a result, the appellate court reversed both the trial court’s finding of a good-faith settlement and the its ruling that the plaintiff and the Doctor shared a common interest such that the attorney-client privilege protected their communications and those of their respective counsel.

The full appellate court decision can be found here.