Washington State Supreme Court Limits Attorney-Client Privilege For Healthcare-Provider Corporations

In a major decision that affects healthcare-provider corporations, the Washington State Supreme Court significantly limited attorneys' ability to engage in privileged conversations with the provider corporation's employed physicians and other medical staff. The court held that, except in narrowly tailored circumstances, the State's common-law prohibition of defense attorneys' ex parte communications with a plaintiff-patient's non-party physicians supersedes the corporation's attorney-client privilege with its employed physicians. Youngs v. Peacehealth, 316 P.3d 1035 (Wash. 2014).

BATTLE OF THE PRIVILEGES

Washington's physician-patient privilege statute precludes a physician from revealing her patient's communications, but the patient automatically waives this privilege "as to all physicians or conditions" 90 days after filing a personal injury or wrongful death case. RCW § 5.60.060(4)(b). In Loudon v. Mhyre, 756 P.2d 138 (Wash. 1988), the Washington State Supreme Court prohibited defense attorneys from holding ex parte communications with a plaintiff-patient's non-party treating physicians.

But Washington also follows the corporate attorney-client privilege adopted by the U.S. Supreme Court in Upjohn Co. v. United States, 449 U.S. 383 (1981), which provides that a corporation's attorneys may have privileged communications with a corporate employee regardless of the employee's position in the corporate hierarchy. And when healthcare-provider corporations employ physicians, the Upjohn rule allows the provider-corporation's attorneys to have privileged communications with its physicians.

The Loudon no-contact rule (derived from the physician-patient privilege) and the corporate attorney-client privilege conflict in medical practice actions against the provider-corporations. When a patient sues a provider-corporation, the attorney-client privilege protects the corporate attorney's communications with employed treating physicians, but Loudon simultaneously prohibits the corporate attorney from having ex parte interviews with these same treating physicians.

THE VICTOR

The court resolved this privilege battle largely in favor of patient confidentiality. Wanting to avoid forcing the injured plaintiff-patient "to suffer the additional injury of privacy invasion," the court rejected the argument that the corporate attorney-client privilege completely trumps the physician-patient privilege. The court instead adopted a so-called "modified version of...