Opinion
2023-CA-1011-MR
08-30-2024
KESHA DEADWYLER AND ASHLEY ANDERSON APPELLANTS v. THE GRANGE PROPERTY AND CASUALTY INSURANCE COMPANY APPELLEE
Brief and Oral Argument for Appellant: John P. Ward, Jr. Louisville, Kentucky Brief for Appellee: R. Christian Garrison Eric S. Rice Daniel S. Gumm Louisville, Kentucky Oral Argument for Appellee: Eric Rice Louisville, Kentucky
Appeal from Jefferson Circuit Court Honorable Eric Joseph Haner, Judge Action No. 23-CI-001791
Brief and Oral Argument for Appellant: John P. Ward, Jr. Louisville, Kentucky
Brief for Appellee: R. Christian Garrison Eric S. Rice Daniel S. Gumm Louisville, Kentucky
Oral Argument for Appellee: Eric Rice Louisville, Kentucky
Before: Thompson, Chief Judge; Acree and L. Jones, Judges.
OPINION
ACREE, JUDGE
Appellants, Kesha Deadwyler and Ashley Anderson, appeal the Jefferson Circuit Court's August 28, 2023 order granting Appellee Grange Property and Casualty Insurance Company's (Grange) petition to conduct examinations under oath (EUOs) of Appellants. Appellants claim the circuit court committed two legal errors: (1) finding Grange had good cause to conduct its proposed EUOs; and (2) allowing Grange to ask questions beyond the scope of permissible inquiry as established in State Farm Mutual Auto Insurance Company v. Adams, 526 S.W.3d 63 (Ky. 2017). We detect no error and affirm.
BACKGROUND
Appellants were involved in an auto accident. Deadwyler was driving, and Anderson was a passenger. For injuries they claim were incurred in the accident, Appellants received medical treatment from Total Health Chiropractic and Rehab (Total Health). They sought this treatment forty-six days after the collision. At the time of the accident, Deadwyler was party to an insurance policy with Grange entitling her and Anderson to basic reparation benefits (BRB). Appellants sought reimbursement from Grange for their treatment at Total Health sixty-four days after the accident.
"Basic reparation benefits" is defined by statute as "benefits providing reimbursement for net loss suffered through injury arising out of the operation, maintenance, or use of a motor vehicle, subject, where applicable, to the limits, deductibles, exclusions, disqualifications, and other conditions provided in this subtitle." Kentucky Revised Statutes (KRS) 304.39-020(2).
The subject policy enabled Grange to take an EUO of a person seeking coverage. Under Part E of the policy, titled "duties after an accident or loss[,]" a person seeking coverage must submit to EUOs as often as Grange reasonably requires. Part E also provides Grange may void the policy or deny coverage in the event a person seeking coverage makes an incorrect statement to Grange regarding any material fact or circumstance, conceals or misrepresents a material fact or circumstance, or engages in fraud.
To further its investigation of Appellants' claims, Grange filed a petition with the circuit court to conduct an EUO of Appellants pursuant to KRS 304.39-280(3), seeking to question them "regarding their knowledge of the facts and circumstances surrounding" the auto accident. Record (R.) at 1. In its petition, Grange asserted, based on other claim investigations, it had a good faith basis for believing Total Health engages in insurance fraud. Specifically, Grange asserted it believed Total Health bills for services not rendered, such as MRIs. Grange also asserted Total Health bills for services beyond the scope of chiropractic care and bills for services provided by unlicensed individuals. Grange also expressed a good faith belief that Total Health solicited Appellants within thirty days of the accident despite the statutory prohibition of KRS 367.4082.
Grange listed seven categories of inquiry it desired to pursue by means of the EUOs:
a. Standard background information, including, but not limited to, name, address, previous addresses, coresidence, education history, work history, etc.;
b. Detailed testimony of all facts and circumstances regarding the subject accident;
c. Complete testimony relative to all claims, injuries, and bills which [Appellants are] submitting as a result of this subject accident;
d. Detailed testimony regarding any communications between [Appellants] and others regarding this accident;
e. Detailed testimony regarding pre-existing medical conditions and injuries and related bills arising out of prior accidents;
f. Detailed testimony regarding claim history; and
g. Detailed testimony regarding solicitation.Record (R.) at 7-8.
In response, Appellants noted they had already given unsworn recorded statements as the insurance policy required, answering many of the questions Grange sought to ask in its EUO. R. at 71. Relevant to this appeal, Appellants also challenged Grange's EUO requests as beyond the permissible scope of EUOs, as contemplated by Adams. Appellants also asserted Grange had not shown good cause for its requested EUO, as KRS 304.39-280(3) requires.
The circuit court granted Grange's petition, determining good cause did exist. However, the circuit court limited the scope of Grange's inquiry.
It determined Grange's first and second requests "are generally permissible topics for an EUO" but limited the inquiry to "name, address, previous addresses for past three (3) years, work history for the past three (3) years, and educational background." R. at 133.
The circuit court determined the third and fifth categories would not be appropriate because they concern medical information Grange could obtain under provisions of the Motor Vehicle Reparations Act (MVRA); however, the circuit court permitted inquiry into the names of medical providers who have rendered treatment to Appellants in the past three years, as well as the dates which Appellants attended appointments.
It determined the fourth and sixth categories, in toto, were impermissible because they were unrelated to the circumstances of the accident, injuries, or whether Appellants' medical treatment is related to the accident.
As to the seventh topic - solicitation - the circuit court determined this topic fell in the gray area between what is a permissible inquiry under Adams and what is not. Therefore, the court limited the EUO on the topic of solicitation to the following questions:
1) Were you referred to Total Health within thirty (30) days of the June 13, 2022 motor vehicle collision? If the answer is "no," then the inquiry is over. If the answer is "yes," counsel may ask the next question.
2) If so, what is the name of the person who referred you?R. at 134.
Appellants now appeal.
STANDARD OF REVIEW
The issue as to whether an insurer may subject a person seeking coverage to an EUO is a question of law and is thus reviewed de novo. Adams, 526 S.W.3d at 65 (citing Cumberland Valley Contractors, Inc. v. Bell Cnty. Coal Corp., 238 S.W.3d 644, 647 (Ky. 2007)). This Court reviews good cause determinations by applying the deferential abuse-of-discretion standard. "[T]he question of good cause is essentially one of reasonableness to be determined by the particular facts of each case." Nichols v. Kentucky Unemployment Ins. Comm'n, 677 S.W.2d 317, 321 (Ky. App. 1984). We conclude a trial court's determination that good cause exists to permit an EUO under KRS 304.39-280 requires the same standard of review. See Thomas v. Allstate Ins. Co., No. 2016-CA-000939-MR, No. 2017-CA-001019-MR, 2020 WL 1816096, at *2 (Ky. App. Apr. 10, 2020).We will only reverse the trial court's determination of good cause if the trial court abused its discretion. Miller v. U.S. Fidelity & Guar. Co., 909 S.W.2d 339, 342 (Ky. App. 1995).
We do not cite Thomas as precedent to be followed, but only to demonstrate this Court's consistency in its application of the law.
ANALYSIS
Appellants mount two challenges to the circuit court's grant of Grange's EUO petition. First, they argue Grange did not demonstrate good cause for its requested EUO as KRS 304.39-280(3) requires. Second, they argue the circuit court erred in granting the petition because the information Grange seeks is beyond the scope of acceptable EUO topics that Adams established.
"Because a claimant is only entitled to receive BRB for motor vehicle accident-related losses, reparation obligors are entitled to conduct a reasonable investigation to determine if such a relationship exists." Adams, 526 S.W.3d at 66. To facilitate these investigations, reparation obligors such as Grange may provide for EUOs as a condition to payment of benefits under an insurance policy. Relevant to this appeal, Kentucky law imposes two limitations on the ability to subject a claimant to an EUO.
The existence of good cause for an EUO is the first limitation. Good cause is a statutory prerequisite for a trial court to grant an EUO petition:
In case of dispute as to the right of a claimant or reparation obligor to discover information required to be disclosed, the claimant or reparation obligor may petition the Circuit Court in the county in which the claimant resides for an order for discovery including the right to take written or oral depositions. Upon notice to all persons having an interest, the order may be made for good cause shown. It shall specify the time, place, manner, conditions, and scope of the discovery. To protect against annoyance, embarrassment, or oppression, the court may enter an order refusing discovery or specifying conditions of discovery and directing payment of costs and expenses of the proceeding, including reasonable attorney's fees.KRS 304.39-280(3). Scant jurisprudence exists illuminating an answer to the question when a party petitioning for an EUO has adequately shown good cause under this statute. However, our jurisprudence discussing involuntary medical examinations (IMEs) provides guidance by analogy.
CR 35.01 governs IMEs. Like KRS 304.39-280(3), CR 35.01 permits trial courts to order a party to submit to a physical or mental examination by the appropriate health care professional "for good cause shown." Compare KRS 304.39-280(3), with CR 35.01. Good cause under CR 35.01 requires the movant to demonstrate that the issue the movant seeks to resolve by IME "'is really and genuinely in controversy[.]'" Metro. Prop. &Cas. Ins. Co. v. Overstreet, 103 S.W.3d 31, 39 (Ky. 2003) (quoting Schlagenhauf v. Holder, 379 U.S. 104, 118, 85 S.Ct. 234, 242-43, 13 L.Ed.2d 152 (1964)). Further, "[g]ood cause is shown when information of the same degree of reliability is not available from another source and it is useful in the preparation, trial, or disposition of the cause." Perry v. Commwealth, ex rel. Kessinger, 652 S.W.2d 655, 660 (Ky. 1983). A CR 35.01 motion should be denied "[o]nly if no additional relevant information could be gleaned from such an examination[.]" Taylor v. Morris, 62 S.W.3d 377, 380 (Ky. 2001) (citing Duncan v. The Upjohn Co., 155 F.R.D. 23, 25 (D. Conn. 1994)).
Kentucky Rules of Civil Procedure.
We disagree with Appellants' contention that Grange lacked good cause for its proposed EUOs. As our case law for IMEs demonstrates, and which we draw upon here, establishing good cause is a low hurdle. It cannot be said in this case that no additional relevant information could be gleaned from the proposed EUOs, even restricted to the scope established by the circuit court. In its order, the circuit court identified Grange's concerns regarding potential solicitation and insurance fraud by Total Health. EUOs of Appellants certainly could reveal relevant information regarding those concerns. If valid, these concerns could relieve Grange of its obligation to compensate Appellants under the terms of the policy. Likewise, Appellants would also be relieved of any obligation to pay the provider. KRS 367.4083. Therefore, we identify no abuse of discretion in the circuit court's determination that good cause existed for Grange's proposed EUOs.
The second limitation upon EUOs relates to the subject matter that may be inquired into during the examination. Adams, Kentucky's keystone jurisprudence on EUOs, provides that only certain topics may be inquired into during an EUO. In Adams, the Supreme Court of Kentucky determined accident-related questions may be inquired into during an EUO, while medical-related questions are disallowed. Adams, 526 S.W.3d at 68. Insurance policies may require EUOs and such provisions are enforceable. Id. However, the Supreme Court noted the MVRA "'is a comprehensive act which not only relates to certain tort remedies, but also establishes the terms under which insurers pay no-fault benefits, and provides for the penalties to which insurers are subjected if they fail to properly pay no-fault benefits.'" Id. (quoting Foster v. Ky. Farm Bur. Mut. Ins. Co., 189 S.W.3d 553, 557 (Ky. 2006). Therefore, "a reparation obligor must avail itself of the provisions of the MVRA to resolve" issues related to a claimant's mental or physical condition "because the MVRA specifically provides for the sharing of documentation regarding" such issues. Id.
In applying this distinction, the Supreme Court in Adams discussed the four issues State Farm wished to inquire into during an EUO. As to "[w]hether the bodily injury or property damage was caused by the accident[,]" this issue "involve[d] medical information and State Farm should have pursued resolution of that issue through the provisions of the MVRA." Id.
The second issue, "whether the injury was caused by a hit-and-run vehicle[,]" and the third issue, "whether the accident arose out of the ownership, maintenance, or use of an uninsured motor vehicle[,]" were "related to the accident itself and are proper subjects for questioning under oath." Id.
As to the fourth issue, the Supreme Court noted that "whether Adams had made false statements in connection with her claim[s,]" could involve "both medical and accident-related questions" and, therefore, State Farm "should have pursued any medical-related questions through the provisions of the MVRA." Id.
Importantly, the Supreme Court acknowledged that a particular issue may not be an obvious fit for a particular category. Id. Further, accident-related and medical-related issues "may sometimes be inter-related." Id. In such cases, the Supreme Court expressed its faith "that our trial courts and the parties will be able to perform the necessary analysis to make those distinctions until such time as the General Assembly deems it appropriate to address this potential dilemma." Id.
As to whether the circuit court erred in allowing Grange to inquire into certain topics during its EUOs, we conclude it did not. As noted above, the circuit court disallowed a large portion of the inquiries which Grange sought to advance during its EUOs. After tailoring Grange's proposed inquiries in light of Adams, the circuit court allowed Grange to ask Appellants about information related to the subject accident and Total Health's alleged solicitation. Appellants believe this exceeded the statutory limits of inquiry. We do not.
As in Alvarez v. Allstate Property and Casualty Insurance Company, Appellants seek to strictly limit the scope of Grange's inquiry to questions about the accident itself. __ S.W.3d __, No. 2023-CA-0013-MR, 2024 WL 3210270, at *1 (Ky. App. Jun. 28, 2024), mot. for disc. rev. filed No. 2024-SC-0013 (Ky. Jul. 30, 2024). We here repeat what we said in that opinion and as clearly indicated in Adams, "the scope is necessarily broader" than just accident-related questions. Id. at *2.
Furthermore, we add our conclusion that regardless of the service offered, asking whether a service provider engaged in solicitation falls entirely outside the scope of medical-related inquiries. "Solicitation" is defined in Black's Law Dictionary with no mention of medical or health care services providers. Solicitation, BLACK'S LAW DICT. (12th ed. 2024). In fact, Black's only examples of services sometimes solicited are those provided by lawyers and prostitutes. Id. Solicitation is simply a business ploy from which consumers are protected by law. KRS 367.4082. So long as the inquiry does not veer into questions regarding the actual provision of medical care, it is not prohibited by statute or case law.
The circuit court specifically disallowed Grange from inquiring into medical information which Grange could obtain through provisions of the MVRA. Because the Supreme Court in Adams expressed "faith in our trial courts" and their ability to distinguish between topics appropriate for EUO and those that are not, we afford the circuit court here the deference contemplated by the Supreme Court in making these distinctions.
Finally, Appellants expressed a broader concern at oral argument that there is inconsistency in the scope of EUO inquiry rulings by the various divisions of the Jefferson Circuit and District Courts, including grants of carte blanche inquiry to insurance companies. If this is so, we are unaware of any appeals of such grants. Still, Appellants seek clearer "black letter law" restricting the trial court's discretion in establishing the scope of inquiry. We could not grant that request even if we were so inclined.
The Supreme Court has had the final word, at least for the time being, saying, and we repeat, "[W]e have faith that our trial courts and the parties will be able to perform the necessary analysis to make those distinctions until such time as the General Assembly deems it appropriate to address this potential dilemma." Adams, 526 S.W.3d at 68. With this faith and this guidance, we do not see a dilemma. The available remedy to appeal a trial court's ruling under KRS 304.39280(3) is more than sufficient to address every concern raised by Appellants.
CONCLUSION
We detect no error in the circuit court's allowance of Grange's EUO within the narrow parameters defined by the circuit court. We affirm the circuit court's July 31, 2023 order granting Grange's KRS 304.39-280(3) petition.
ALL CONCUR.