Henderson County Healthcare Corporation D/B/A Redbanks Skilled Nursing Facility v. Honorable Karen Lynn Wilson, Judge ( 2020 )

RENDERED: DECEMBER 17, 2020
TO BE PUBLISHED
Supreme Court of Kentucky
2020-SC-0001-MR
HENDERSON COUNTY HEALTH CARE APPELLANTS
CORPORATION D/B/A REDBANKS
SKILLED NURSING FACILITY;
KEN GRAVES, IN HIS CAPACITY AS
ADMINISTRATOR OF REDBANKS
SKILLED NURSING FACILITY; AND
WELLS HEALTH SYSTEMS, INC.
ON APPEAL FROM COURT OF APPEALS
NO. 2019-CA-1067
V. HENDERSON CIRCUIT COURT NO. 17-CI-00231
HONORABLE KAREN LYNN WILSON, APPELLEE
JUDGE, HENDERSON CIRCUIT COURT
AND
ROLAND E. MCGUIRE, AS REAL PARTY IN INTEREST
ADMINISTRATOR OF THE ESTATE
OF JACQUELINE E. MCGUIRE,
DECEASED
OPINION OF THE COURT BY JUSTICE KELLER
REVERSING
Henderson County Health Care Corporation d/b/a Redbanks Skilled
Nursing Facility (hereinafter “Redbanks”) appeals from the Court of Appeals’
denial of its petition for a writ to prohibit the enforcement of an order issued by
Judge Karen Wilson of the Henderson Circuit Court compelling Redbanks to
produce certain consultant reports to Roland McGuire (hereinafter “McGuire”),
the real party in interest. After a thorough review of the facts and the law, we
reverse the Court of Appeals.
I. BACKGROUND
Jacqueline E. McGuire (hereinafter “Ms. McGuire”) was a resident at
Redbanks from 2010 to 2016. According to the complaint filed by McGuire,
who is Ms. McGuire’s brother, Ms. McGuire suffered multiple injuries while at
Redbanks, including serious bedsores. Ms. McGuire eventually died at another
facility, and McGuire, as administrator of her estate, filed suit against
Redbanks.
During the discovery process, McGuire served Redbanks with requests
for production of documents. Included in these requests were the following
three requests at issue in this case.
Request for Production No. 41: Please produce all surveys, mock
survey visits, documents, reports, and tools, including quarterly
site visits and all focused/follow up visits, applicable to the
residency of Jacqueline E. McGuire, and six months before, which
memorialize Defendants’ evaluation and monitoring of the facility’s
compliance with mandatory regulations, policies and procedures,
and care given to the residents.
Request for Production No. 42: Please produce all documents
reflecting and/or reviewing clinical outcomes in the facility during
the residency of Jacqueline E. McGuire including Dashboard and
Clinical Outcomes reports (COR) and QI/QM Reports and Flags.
Request for Production No. 48: Please produce all documentation
and/or reports from any consultant or management personnel
hired to evaluate the adequacy of care rendered to residents at the
facility anytime during residency.
Redbanks refused to turn over certain documents arguably included within
these requests, and McGuire filed a motion to compel. Specifically disputed
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were nurse consultant reports and whether the Federal Quality Assurance
Privilege (FQAP), 42 U.S.C. § 1396r(b)(1)(B) and 42 U.S.C. § 1395i-3(b)(1)(B),
protects these reports from disclosure.
In 1987, the United States Congress enacted the Federal Nursing Home
Reform Act (FNHRA), of which the FQAP is a subsection. See 42 U.S.C.1
§ 1396r, et seq.; 42 U.S.C. § 1395i–3, et seq.; 42 C.F.R. 483, et seq. “Broadly,
FQAP requires ‘skilled nursing facilit[ies]’ and ‘nursing facilit[ies]’ to establish a
quality assessment and assurance committee in an attempt to ensure nursing
homes are vigilant about the quality of care their residents are receiving.”
Richmond Health Facilities-Madison, LP v. Clouse, 473 S.W.3d 79, 84 (Ky. 2015)
(footnotes omitted). The FQAP protects from disclosure the records of that
committee. It states, “[a] State or the Secretary may not require disclosure of
the records of such committee except insofar as such disclosure is related to
the compliance of such committee with the requirements of this
subparagraph.” 42 U.S.C. § 1395i–3(b)(1)(B). At issue in this case is whether
the nurse consultant reports are “the records of [the quality assessment and
assurance] committee” and therefore privileged.
In compliance with the FNHRA, Redbanks has established a Quality
Assurance Performance Improvement (QAPI) committee. Redbanks’s QAPI
committee contracts with an independent contractor, Wells Health Systems
(hereinafter “Wells”), to consult with it and, according to the trial court, “to
1 United States Code.
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evaluate the facility’s quality of care and provide guidance where care can be
improved.” Wells employs nurse consultants who perform site visits at
Redbanks approximately monthly. These nurse consultants examine residents’
medical charts (“chart audits”), observe Redbanks’s staff perform their duties
(“compliance rounds”), and review various statistical data. They compile reports
that are then provided to the QAPI committee. It is undisputed that the nurse
consultants are not employees of Redbanks and are not members of
Redbanks’s QAPI committee.
The trial court found the nurse consultant reports were not records of
the QAPI committee, as they were not created by the committee, and ordered
Redbanks to produce them. Redbanks then filed a petition for a writ of
prohibition in the Court of Appeals to prevent disclosure of these reports. The
Court of Appeals denied the writ petition, holding that the trial court did not
err in finding the documents were not protected by the FQAP, as they “were not
generated by Redbanks’ quality assurance committee, ‘nor were they minutes,
internal papers or conclusions of’ the committee.” Redbanks appealed to this
Court.
II. ANALYSIS
A. Writ standard
We begin our writ analysis by reiterating that “[t]he issuance of a writ is
an extraordinary remedy that is disfavored by our jurisprudence. We are
therefore ‘cautious and conservative both in entertaining petitions for and in
granting such relief.’” Caldwell v. Chauvin, 464 S.W.3d 139, 144-45 (Ky. 2015)
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(citing Ridgeway Nursing & Rehab. Facility, LLC v. Lane, 415 S.W.3d 635, 639
(Ky. 2013); Bender v. Eaton, 343 S.W.2d 799, 800 (Ky. 1961)). Writs “are truly
extraordinary in nature and are reserved exclusively for those situations where
litigants will be subjected to substantial injustice if they are required to
proceed.” Indep. Order of Foresters v. Chauvin, 175 S.W.3d 610, 615 (Ky. 2005).
Extraordinary writs may be granted in two classes of cases. The first
class requires a showing that “the lower court is proceeding or is about to
proceed outside of its jurisdiction and there is no remedy through an
application to an intermediate court.” Hoskins v. Maricle, 150 S.W.3d 1, 10 (Ky.
2004). The second class requires a showing that “the lower court is acting or is
about to act erroneously, although within its jurisdiction, and there exists no
adequate remedy by appeal or otherwise.” Id. This second class also usually
requires a showing that “great injustice and irreparable injury will result if the
petition is not granted.” Id. There are, however, special cases within the second
class of writs that do not require a showing of great injustice and irreparable
injury. In those special cases, a writ is appropriate when “a substantial
miscarriage of justice” will occur if the lower court proceeds erroneously, and
“correction of the error is necessary in the interest of orderly judicial
administration.” Chauvin, 175 S.W.3d at 616 (quoting Bender, 343 S.W.2d at
801). Even in these special cases, the party seeking a writ must show that
there is no adequate remedy by appeal. Id. at 617. “No adequate remedy by
appeal” means that the party’s injury “could not thereafter be rectified in
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subsequent proceedings in the case.” Id. at 615 (quoting Bender, 343 S.W.2d at
802). Redbanks seeks this writ of prohibition under the second class of writs.
We summarized the standard for appellate review of a lower court’s
decision in a writ action in Appalachian Racing, LLC v. Commonwealth:
We employ a three-part analysis in reviewing the appeal of a
writ action. We review the Court of Appeals’ factual findings
for clear error. Legal conclusions we review under the de novo
standard. But ultimately, the decision whether or not to issue
a writ of prohibition is a question of judicial discretion. So
review of a court’s decision to issue a writ is conducted under
the abuse-of-discretion standard. That is, we will not reverse
the lower court’s ruling absent a finding that the
determination was “arbitrary, unreasonable, unfair, or
unsupported by sound legal principles.”
504 S.W.3d 1, 3 (Ky. 2016) (internal citations omitted).
The first requirement for a writ under the second class is that the party
requesting the writ have no adequate remedy by appeal. In writ petition cases
where discovery is sought, this Court has explained “that there will rarely be an
adequate remedy on appeal if the alleged error is an order that allows
discovery.” Grange Mut. Ins. Co. v. Trude, 151 S.W.3d 803, 810 (Ky. 2004).
Furthermore, this Court has explained that “[o]nce...information is furnished it
cannot be recalled.... The injury suffered...will be complete upon compliance
with the order [mandating disclosure of discovery] and such injury could not
thereafter be rectified in subsequent proceedings in the case. Petitioners have
no other adequate remedy.” Id. at 810-11 (quoting Bender, 343 S.W.2d at 802).
In this case, McGuire is seeking discovery of nursing consultant reports
that Redbanks alleges are privileged. If those reports are disclosed to McGuire,
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that information “cannot be recalled.” Therefore, we hold that Redbanks has no
adequate remedy by appeal.
The next requirement of a writ of the second class is that great and
irreparable harm will result if the petition is not granted. Kentucky courts have
repeatedly defined “great and irreparable harm” as “something of a ruinous
nature.” Bender, 343 S.W.2d at 801. However, our courts have recognized a
subset of second class writs in certain special cases.
[I]n certain special cases this Court will entertain a petition
for prohibition in the absence of a showing of specific great
and irreparable injury to the petitioner, provided a
substantial miscarriage of justice will result if the lower
court is proceeding erroneously, and correction of the error
is necessary and appropriate in the interest of orderly
judicial administration. It may be observed that in such a
situation the court is recognizing that if it fails to act the
administration of justice generally will suffer the great and
irreparable injury.
Id. We have applied the certain special cases exception when “the action for
which the writ is sought would violate the law, e.g. by breaching a tightly
guarded privilege or by contradicting the requirements of a civil rule.” Trude,
151 S.W.3d at 808 (citing Wal-Mart Stores, Inc. v. Dickinson, 29 S.W.3d 796,
803 (Ky. 2000); Bender, 343 S.W.2d at 803). In this case, Redbanks alleges
that disclosure of the nurse consultant reports would violate a privilege
conferred upon it by the FNHRA. As such, Redbanks’s writ petition has met the
requirements to fall within the certain special cases exception.
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B. Privilege
This Court has long held that “privileges should be strictly construed,
because they contravene the fundamental principle that ‘the public ... has a
right to every man's evidence.’” Sisters of Charity Health Sys., Inc. v. Raikes,
984 S.W.2d 464, 468 (Ky. 1998) (citing Trammel v. United States, 445 U.S. 40,
45 (1980)). As such, “claims of privilege are carefully scrutinized.” Id. at 469
(citation omitted). Furthermore, “the burden of proving that a privilege applies
rests on the party claiming its benefit.” Id.
Quality assurance committees, in general, “are ‘key internal mechanisms
that allow nursing homes opportunities to deal with quality concerns in a
confidential manner and can help them sustain a culture of quality
improvement.’” In re Subpoena Duces Tecum to Jane Doe, Esq., 787 N.E.2d 618,
621 (N.Y. 2003) (quoting Report of Off. of Inspector Gen., Dept. of Health &
Human Servs., Quality Assurance Committees in Nursing Homes, Jan. 2003, at
2 [republished at ]). The FQAP fosters “a culture of quality improvement” by
“promot[ing] the quality of care through self-review without fear of legal
reprisal.” Id. (quoting Katherine F. v. State of New York, 723 N.E.2d 1016 (N.Y.
1999)). In likening the policies behind the FQAP to those behind a privilege for
hospital-based quality assurance committees under the State Education Law,
the Court of Appeals of New York explained that “such protections enhance the
objectivity of the review process and ensure that the committees may frankly
and objectively analyze the quality of health services rendered.” Id. (citations
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and internal quotation marks omitted). Further, “[t]he cloak of confidentiality
covering quality assurance procedures and materials is designed to encourage
thorough and candid peer review and thereby improve the quality of care.” Id.
(citation and internal asterisks omitted).
As explained above, the FQAP protects “the records of” a nursing facility’s
quality assessment and assurance committee from disclosure. The issue before
us today is whether reports of outside nurse consultants qualify as “records of”
Redbanks’s QAPI committee. The question of the scope of the FQAP has come
before this Court only once before. See Clouse, 473 S.W.3d 79. However, in
that case, we were unable to squarely address it because the parties asserting
the privilege failed to produce the documents for an in camera review or even
produce a relatively detailed description of what the documents contained. Id.
at 85. Without the documents themselves or additional information about the
documents, we held that the nursing facility failed to meet its burden of
showing that the documents were privileged. Id. In the case before us today,
however, Redbanks has filed under seal various nurse consultant reports for
our review. Accordingly, we will answer the question that Clouse left
unanswered.
Few jurisdictions have interpreted the scope of the FQAP. Of those that
have, two approaches have emerged. The first and more narrow interpretation
has been called “the Missouri Rule.” The second, broader interpretation of the
FQAP has been dubbed “the New York Rule.”
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1. The Missouri Rule
In State ex rel. Boone Retirement Center, Inc. v. Hamilton, the Supreme
Court of Missouri limited the FQAP privilege so that it only “protects the
committee’s own records–its minutes or internal working papers or statements
of conclusions.” 946 S.W.2d 740, 743 (Mo. 1997). That court stated, “[n]o
honest reading of the statute, however, can extend the statute’s privilege to
records and materials generated or created outside the committee and
submitted to the committee for its review.” Id. That court’s interpretation of the
statute focused primarily on whether the privilege applied to a grand jury
subpoena, and its analysis on that issue was detailed. However, its analysis
regarding its interpretation of the phrase “the records of such committee” was
significantly more limited and seems to focus on the plain statutory language.
The United States District Court for the Eastern District of Tennessee
only noted the Missouri court’s interpretation of the privilege and found that
court’s reasoning to be persuasive and adopted it. Brown v. Sun Healthcare
Group, Inc., No. 3:06-CV-240, 2008 WL 1751675, at *4 (E.D. Tenn. Apr. 14,
2008). It then echoed Missouri’s holding and found that “the privilege created
under the [Social Security Act] applies only to the committee's own records,
including its minutes, internal working papers, and statements of conclusions,
not to documents generated outside the committee and submitted to the
committee for its review.” Id.
The highest federal court to have analyzed the scope of the FQAP is the
United States Court of Appeals for the Third Circuit in Jewish Home of Eastern
10
PA v. Centers for Medicare and Medicaid Services, 693 F.3d 359 (3d Cir. 2012).
In that case, the Third Circuit was tasked with determining if “event report
forms and witness interview statements that accompanied those reports” were
shielded from disclosure by the FQAP. Id. at 361. The court held the reports
were not privileged, as “the documents in question were contemporaneous,
routinely-generated incident reports that were part of the residents’ medical
records and were not minutes, internal papers, or conclusions generated by the
Quality Assurance Committee.” Id. at 362.
Although the Third Circuit cited to Boone Retirement Center when it held
that “[t]he language of 42 U.S.C. § 1396r(b)(1)(B),…limits the scope of
protection from discovery to the records generated by the Quality Assurance
Committee,” id., it did not define the phrase “generated by” as used in the rule
it laid out. In fact, the court noted that an administrative law judge found the
documents “were given to [the committee] at the time of the surveys and were
not produced by or at the behest of the Quality Assurance Committee” and that
the nursing home “presented no evidence to suggest otherwise.” Id. (emphasis
added). The court went on to note that a doctor’s affidavit that was relied upon
by the nursing home “simply does not state that the Event Reports were
created by or at the direction of the Quality Assurance Committee.” Id.
(emphasis added). Finally, the court noted that the nursing home was required
to generate the reports under another federal statute. Id. These extra
observations and statements made by the Third Circuit could leave room for
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that court to interpret the FQAP more broadly if, in the future, it would be
presented with a different set of facts.
2. The New York Rule
In the case of In re Subpoena Duces Tecum to Jane Doe, Esq., the Court of
Appeals of New York, that state’s highest court, discussed the purposes behind
quality assurance committees and the confidential nature of their work. 787
N.E.2d at 621. It then explicitly declined to adopt the Missouri rule “because
the federal statute does not restrict quality assurance records to only those
reports created by quality assurance committee members themselves.” Id. at
623. Instead, that court held “the language ‘records of such committee’ (42
USC § 1396r [b][1][B][ii]) [] encompass[es] within its parameters any reports
generated by or at the behest of a quality assurance committee for quality
assurance purposes.” Id. It went on to explain,
where the committee simply duplicates existing records from
clinical files, no privilege will attach. However, compilations,
studies or comparisons of clinical data derived from multiple
records, created by or at the request of committee personnel for
committee use, are “records of such committee” and are entitled to
protection from disclosure pursuant to federal law.
Id. In explaining what documents are not included in the privilege, the court
stated,
Where facilities are compelled by a statutory or regulatory dictate
to maintain a particular record or report that is not expressly
related to quality assurance, the fact that a quality assurance
committee reviews such information for quality assurance
purposes does not change the essential purpose of the document.
A facility may not create a privilege where none would otherwise
exist merely by assigning the duty for compliance or compilation to
a quality assurance committee.
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Id. at 622.
The United States District Court for the Northern District of Georgia
found the New York rule to be “the more reasoned view” in United States v.
Lilburn Geriatric Center, Inc., No. 1:03-CV-1517-JEC, 2003 WL 27381235, at *5
(N.D. Ga. Sept. 23, 2003). That court supported the New York rule by likening
the FQAP to the attorney-client privilege. “[D]ocuments created by a third party
at the direction of the attorney, to be used in conjunction with the legal
services the attorney is providing the client, are also protected by the attorney-
client privilege.” Id. (citing Upjohn Co. v. United States, 449 U.S. 383, 390
(1981)). The court then went on to explain, “[w]here counsel seeks and obtains
outside consulting services, the attorney-client privilege has been extended to
such third parties ‘employed to assist a lawyer in the rendition of legal
services.’” Id. (quoting Abdallah v. The Coca-Cola Co., No. CIV
A1:98CV3679RWS, 2000 WL 33249254, at *3 (N.D. Ga. Jan. 25, 2000)
(Scofield, Magistrate J.)). Finally, the court held,
the “records of such committee,” found at 42 U.S.C. §§ 1395i-
3(b)(1)(B) and 1396r(b)(1)(B) (2003), encompass both the records
actually generated by the [Quality Assessment & Assurance
(QA&A)] Committee and those generated by non-committee
members at the behest of the QA&A Committee….The Court notes,
however, that documents created outside the QA&A Committee do
not become privileged merely because the QA&A Committee
reviewed them. Rather, such documents are only privileged if they
were generated at the request of and for use by Lilburn's QA&A
Committee.
Id. at *6.
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3. The nurse consultant reports are records of Redbanks’s QAPI committee
and are protected by the FQAP.
In determining whether the nurse consultant reports at issue in this case
are “records of” Redbanks’s QAPI committee and therefore protected by the
FQAP, we are cognizant of the competing interests on both sides of this issue.
On the one hand, privileges “contravene the fundamental principle that ‘the
public...has a right to every man's evidence.’” Sisters of Charity Health Sys.,
Inc., 984 S.W.2d at 468 (quoting Trammel, 445 U.S. at 45). These types of
records may contain highly relevant information about the dangerous
conditions in nursing homes and the facility’s potential knowledge of those
conditions. We further recognize “the interest in ensuring that tort victims may
access and use relevant and reliable evidence.” Thomas v. Univ. Med. Ctr., Inc.,
___ S.W.3d ___, No. 2018-SC-000454-DG, 2020 WL 5103681, at *7 (Ky. Aug.
20, 2020).2
However, on the other hand, “we do not want potential defendants to shy
away from self-critical analyses and improvements for fear that the same can
be used against them in a civil suit. Such self-critical analysis is a key step in
improving safety conditions, procedures, and outcomes.” Id. FNHRA was
enacted by the United States Congress “[i]n an attempt to improve the quality
of care afforded to nursing home residents.” Clouse, 473 S.W.3d at 84. As
discussed above, “[t]he cloak of confidentiality covering quality assurance
2 As of the drafting of this Opinion, Westlaw noted Thomas was not yet final. It
became final on September 10, 2020.
14
procedures and materials is designed to encourage thorough and candid peer
review and thereby improve the quality of care.” In re Subpoena Duces Tecum to
Jane Doe, Esq., 787 N.E.2d at 621 (citation and internal asterisks omitted).
After weighing the competing interests, this Court declines to adopt the
Missouri Rule that the FQAP only protects a quality assurance committee’s
own documents such as minutes, internal working papers, or statements of
conclusions. See Boone Ret. Ctr., 946 S.W.2d at 743. Instead, we adopt a case-
by-case approach that allows a trial court to determine how a document was
generated, why it was generated, and by whom it was generated before
determining if the FQAP applies to the document. We set forth some guidelines
but emphasize that a case-by-case determination must be made.
First, we must make clear that a quality assurance committee cannot be
used to “create” a privilege where one did not exist previously. By this we mean
that a nursing home cannot “funnel” documents through its quality assurance
committee in an attempt to confer privilege on otherwise unprivileged records.
Documents generated outside of the committee and for purposes unrelated to
the committee are not protected by the FQAP merely because the committee
reviews the documents during the course of its work. Accord In re Subpoena
Duces Tecum to Jane Doe, Esq., 787 N.E.2d at 622. This is true even if those
documents are used in creating privileged quality assurance documents.
Documents kept in the facility’s ordinary course of business or that are kept as
a part of a patient’s medical record are not privileged. If documents are
15
required to be generated pursuant to other legal requirements, those
documents are not privileged.
However, documents created by or at the behest of a quality assurance
committee for quality assurance purposes of the committee will likely be
protected by the FQAP. Further, documents that otherwise would have been
generated by the committee in the course of its work but were generated
instead by an outside source at the behest of the committee will also likely be
protected. Put simply, if a document is generated for the express purpose of
aiding the committee in its work, then it will likely be privileged.
The FNHRA requires a nursing facility’s quality assurance committee “to
identify issues with respect to which quality assessment and assurance
activities are necessary” and “develop[] and implement[] appropriate plans of
action to correct identified quality deficiencies.” 42 U.S.C.A. § 1396r(b)(1)(B). If
documents are created for the purposes outlined in the statute at the behest of
the committee, even if generated by someone who is not a member of the
committee, said documents will likely be protected by the FQAP.
In this case, Redbanks’s QAPI committee contracted with Wells “to
evaluate the facility’s quality of care and provide guidance where care can be
improved.” The activities performed by Wells for Redbanks are exactly the
activities the QAPI committee is statutorily required to perform. Presumably,
Wells has expertise in evaluating the quality of a facility’s care, identifying
areas of improvement, and recommending remedial measures. Under this
relationship, Wells was effectively an “agent” of the QAPI committee performing
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a function that in a larger institution would likely be kept in house. To hold
otherwise would be to fail to recognize that it may not be feasible for a small
nursing facility to employ, on its own staff, persons with quality assurance
expertise. In such a situation, the goals of the FNHRA may be best served by
contracting out these responsibilities. Further, the FQAP was created to allow a
quality assurance committee to conduct its business confidentially.
Contracting for assistance in performing this business does not inhibit this
goal, just as an attorney contracting with an outside expert does not inhibit the
confidential relationship between the attorney and his client. The reports
generated by the nurse consultants employed by Wells and provided to
Redbanks’s QAPI committee are then used by the committee to improve care at
the facility, i.e., for quality assurance purposes. As such, they are protected by
the FQAP, and the Court of Appeals erred in holding otherwise.
III. CONCLUSION
For the above reasons, we reverse the Court of Appeals’ denial of
Redbanks’s petition for a writ of prohibition.
All sitting. All concur.
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COUNSEL FOR APPELLANTS:
Craig Louis Johnson
James Nelson Martin, Jr.
Steptoe & Johnson, PLLC
APPELLEE, JUDGE WILSON:
Honorable Karen Lynn Wilson
COUNSEL FOR APPELLEE/REAL PARTY IN INTEREST, ROLAND E. MCGUIRE,
AS ADMINISTRATOR OF THE ESTATE OF JACQUELINE E. MCGUIRE,
DECEASED:
Lisa Erickson Circeo
Hannah Rebecca Jamison
Circeo Fannin, P.S.C.
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