Appeals court avoids ‘chilling effect’ of discovery seeking past settlement documents

A couple who sued health care providers over a hospital bed incident will not have to produce settlement documents for a car accident that occurred after the hospital stay. The Missouri Court of Appeals Eastern District disagreed with a St. Louis County judge’s order to produce the settlement documents.

The April 19 opinion by Judge Lisa P. Page involves the underlying case of Kristine Hill and her husband, who sued health care providers for allegedly failing to maintain a hospital bed that malfunctioned and collapsed on Hill during her 2017 hospital stay.

Hill had a confidential settlement with an at-fault driver from a 2018 car accident that occurred after the hospital stay and was settled before filing a lawsuit against the hospital stay defendants, Mercy Rehabilitation Hospital and Stryker Corporation.

The new defendants filed an affirmative defense to reduce the amount of the tort settlement from the pending case, and in discovery they sought the 2018 settlement and related non-privileged communications. St. Louis County Judge Stanley J. Wallach granted the defendants’ motion to compel the documents. The Eastern District made permanent its preliminary order to stop Wallach’s direction, with Judges Colleen Dolan and Kelly C. Broniec concurring.

“I’m glad that the court ultimately got it right,” said Patrick Robert Dowd of The Holland Law Firm, who represents Hill.

According to the opinion, Hill claimed the settlement documents are protected work product and that Mercy failed to demonstrate its need for discovery.

As the opinion noted, Hill agreed that Mercy could learn the amount of the past settlement if a monetary judgment in favor of Hill is delivered for the case at hand.

“While Relators agreed Mercy may be entitled to discover the amount of the settlement for the purpose of a reduction, they merely disagreed on when they were required to disclose the information,” Page wrote.

Mary Anne Mellow of Sandberg Phoenix represents Mercy as a defendant and Wallach as a respondent, and filed the answer to the Eastern District. She did not respond to a call requesting comment by press time. Mercy claimed that Hill’s medical records presented a timeline of improvement that worsened after the 2018 accident, and that the settlement documents were required for its affirmative defense of reducing a possible future settlement with Mercy. 

According to the opinion, Wallach had claimed in his answer that the settlement documents should be included in discovery because they were relevant to causation and damages and not protected work product, so Mercy did not need to prove substantial need for the settlement.

A 2012 Missouri Supreme Court ruling in Sanders v. Ahmed determined that defendants had the burden to prove a settlement’s applicability and amount in an affirmative defense of reduction. While citing this ruling, Page wrote that the court did not believe Mercy met this burden to show the relevancy of the settlement documents, because Hill had voluntarily produced her medical records.

“Moreover, these disclosures are the ‘substantial equivalent’ of the requested settlement documents,” Page wrote, “because they provided Mercy the ability to contest the causation of Ms. Hill’s injuries from the 2017 hospital bed incident.”

The Eastern District was most concerned about how an opposite ruling could have “a chilling effect on the cause of justice.”

“We are obliged to act in prohibition to prevent an irreparable harm that cannot be addressed on appeal as it is undisputed the documents themselves are inadmissible at trial,” Page wrote.

The case is Hill v. Wallach, ED110232.