Opinion ID: 2284813
Heading Depth: 2
Heading Rank: 1

Heading: Commonality of Insurance

Text: Appellant filed a pretrial motion in limine to exclude evidence that Appellant and his expert witness, Dr. Butcher, shared a malpractice insurance carrier. Appellees sought to admit the evidence to demonstrate the expert witness's bias in favor of Appellant. Appellees argued that Dr. Butcher was biased by their commonality of insurance because he believed that a judgment against his insurance company could adversely affect his own premiums. In making this claim, Appellees relied on Dr. Butcher's deposition testimony. When previously deposed, Dr. Butcher had described how several malpractice claims against his former liability insurer had driven up his premiums and eventually drove the insurer into bankruptcy, effectively forcing him out of practice in Mississippi. Regarding his new practice in Kentucky, he had stated that doctors were now leaving the Commonwealth because of malpractice claims resulting in increased premiums. After an extensive hearing, the court denied the motion in limine. The morning before the expert was to testify, the court returned to the matter and again denied the motion in limine and then permitted evidence of the common insurance coverage to be introduced at trial. It is well-recognized that evidence of a defendant's insurance is inadmissible to imply liability. As provided in KRE 411, Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully. Under this rule, a doctor's malpractice insurance may not be introduced to suggest that, because he would not bear the burden of any damage to a patient, he was more likely to be negligent in his treatment. The rule is not, however, a complete bar on evidence of liability insurance. The remainder of KRE 411 explicitly instructs, This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness. (Emphasis added.) Evidence of commonality of insurance was thus clearly not barred by KRE 411 when offered to prove a witness's bias. That was the purpose for which it was offered and that is the purpose for which the trial court allowed it. While the weight of such evidence is debatable, and is indeed case-specific as will be discussed below, it must certainly pass the relaxed test for relevance under KRE 401. A juror might reasonably find it more likely that the expert would be biased in favor of Appellant having the same insurance coverage than if they did not. See KRE 401. Yet this does not end the inquiry as to admissibility of such evidence. Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of undue prejudice.... KRE 403. The very existence of KRE 411 demonstrates a concern that proof of a defendant's liability insurance inherently creates the danger of undue prejudice. There is always the danger that a jury will show less sympathy to an insured defendant, inappropriately resulting in a verdict for the plaintiff. The question presented in this case is whether that danger in admitting Appellant's and his expert's shared insurance coverage substantially outweighed its probative value. The only bright-line solution to this problem has been developed by the Supreme Court of Ohio, which employs versions of Rules 403 and 411 identical to Kentucky's. That court has conclusively held that in a medical malpractice action, evidence of a commonality of insurance interests between a defendant and an expert witness is sufficiently probative of the expert's bias as to clearly outweigh any potential prejudice evidence of insurance might cause. Ede v. Atrium S. OB-GYN, 71 Ohio St.3d 124, 642 N.E.2d 365, 368 (1994); see also Davis v. Immediate Medical Servs., 80 Ohio St.3d 10, 684 N.E.2d 292, 297 (1997). The Ohio Supreme Court drew from the general truth-seeking nature of the rules of evidence, along with the specific exception for bias under Rule 411, in creating its bright-line rule favoring the inclusion of such evidence. See Ede, 642 N.E.2d at 368. Ohio's formation of a bright-line rule rests on two vital principles: the general inclusionary thrust of the Rules of Evidence and the preference for allowing evidence for bias. These are core principles of Kentucky's evidence law also. See Baker v. Kammerer, 187 S.W.3d 292, 296 (Ky. 2006) (noting significance of the general inclusionary thrust of the Rules of Evidence and the more particular preference to allow evidence of bias). Nevertheless, this Court finds a bright line rule on admissibility of common insurance to be incompatible with KRE 403. Ohio's approach disregards the role of judicial discretion under Rule 403, which is the same in both Ohio and Kentucky. The dissent in Ede noted this and correctly emphasized the role of judicial discretion in balancing probative value against prejudicial effect: In applying Evid.R. 403, a trial court must have broad discretion because of the practical problems inherent in the balancing of tangible and indefinable factors, such as unfair prejudice and probative value. The task of assessing potential prejudice is one for which a trial judge, in light of his familiarity with all the evidence in a particular case, is well suited. Unlike reviewing judges who must look at a cold record, a trial judge is in a superior position to evaluate the impact of the evidence because he sees the mannerisms and reactions of the jurors, witnesses, parties, and attorneys. Ede, 642 N.E.2d at 370 (Wright, J., dissenting). The Ede dissent echoes this Court's own implementation of judicial discretion in a similar insurance-bias case, Baker v. Kammerer . In Baker, the plaintiff attempted to reveal a defense witness's employment with the defendant's insurance company. This Court recognize[d] the trial court's inherent discretion over evidentiary questions such as this one, 187 S.W.3d at 296, and then stated: Because a multitude of factors may be considered by a trial judge addressing such an issue, judges are free to consider a spectrum of potential remedies. In an appropriate case, a judge might reasonably conclude that insurance evidence should be freely admitted. Another judge might choose a middle ground, allowing the identification of a witness as an agent of the defendant, but refusing to allow the disclosure that a defendant is insured. Likewise, applying the balancing test of KRE 403 might lead to the conclusion that certain insurance evidence is inadmissible. Id. We concluded by rejecting a rigid, per se exclusion of any evidence of insurance in favor of the flexible, case-by-case approach required by KRE 403. Id. at 297. Appellant principally bases his argument on the Court of Appeals' decision in Wallace v. Leedhanachoke, 949 S.W.2d 624 (Ky.App.1996). In Wallace, the expert and the defendant shared an insurance company, but the plaintiff could not supply the trial court with any hint of bias stemming from that relationship. Id. at 625-26. The trial court excluded evidence of the shared insurance because any bias inherent therein was too remote and speculative to outweigh its prejudicial effect. Id. at 628. The court stated it was not prepared to adopt a per se rule either permitting or prohibiting this line of cross-examination, and affirmed the trial court's exercise of discretion. Id. Appellant urges this Court to adopt and directly apply Wallace to hold that evidence of insurance should have been excluded in this case as well. While willing to adopt the well-reasoned analysis in Wallace, this Court disagrees with Appellant that its disposition controls the outcome here. Although the facts of both cases are indeed similar, Wallace does not provide a per se rule that evidence of shared insurance should be excluded. See id. On the contrary, it vests the trial judge with broad discretion to evaluate the proof of bias on a case-by-case basis. See id. When the trial court in this case addressed the matter a second time, the morning before the evidence was introduced, it listed several factors that swayed it toward admitting the commonality of insurance evidence. Those factors, paraphrased, were as follows: (1) Dr. Butcher unequivocally stated in his deposition that he is of the belief and opinion that malpractice cases result in, and have a direct link to, rate increases; (2) Dr. Butcher left one state because he believed there was collusion between judges and lawyers in malpractice cases; (3) Dr. Butcher's comments were so severe during his deposition that defense counsel felt the need to rein him in and caution him; (4) Dr. Butcher has established a general hostility to medical negligence cases; (5) Dr. Woolum and Dr. Butcher have more than simply the casual connection of having the same insurance company, as they had worked side by side for twenty years in the same community hospital. In factoring these considerations into its estimation of probative value, the trial court properly exercised its discretion under KRE 403. Admittedly, as Appellant contends, these factors indicate bias on their own, isolated from the issue of common insurance. Notwithstanding this independent impeachment value, these factors also develop a link between the shared insurance and Dr. Butcher's bias against this malpractice claim. They demonstrate that Dr. Butcher is no average, passive policyholder, but instead a practitioner very concerned with the affairs of his insurer. See Wallace, 949 S.W.2d at 626 (recognizing distinction between mere policyholder and someone actively interested in his insurer's affairs). Based on these factors, the court made the following finding about Dr. Butcher upon first considering the issue: I wish it could be avoided, but I think they can get in under the bias exception. If they're both insuredI mean he's clearly got a perceived financial stake in the outcome of this trial if they're insured by the [same insurance company]based on his testimony in his deposition. He obviously believes that lawsuits are theare what are pushing his premiums up. It's obvious perceived bias. When the court returned to the matter during trial and reiterated its ruling, it stated: He's indicated a strong belief thatand I think that should be the focus of the review, notnot the actual statistical analysis of what malpractice verdicts do to rates, but what the witness believes in his mind. I think that's the key here. The fact that he believes there is a direct link. ?The court's finding that Dr. Butcher had perceived bias is reviewed only for clear error. CR 52.01; Miller v. Eldridge, 146 S.W.3d 909, 915 (Ky.2004). From the factors duly considered, this Court cannot deduce clear error in the lower court's determination. As noted above, dual concernsthe general inclusionary thrust of the Rules of Evidence and the more particular preference to allow evidence of biasweigh heavily in favor of admissibility. Baker, 187 S.W.3d at 294. A situation such as Wallace, where there is absolutely no evidence linking common insurance to witness bias, is the exception, not the rule. See id. at 296. Absent unusual circumstances wherein the evidence would be ... minimally probative, the principal question is the scope of the evidence of bias to be allowed, not its initial admissibility. Id. In this case, the scope of such evidence consisted of only two questions. The trial court appropriately exercised its discretion by including this evidence of bias. It is important to note that Dr. Butcher's trial testimony about his insurance carrier and his belief in the effect of the litigation on his premiums is immaterial to the analysis of whether such questioning should have been permitted. The questioning proceeded as follows: Q: Now, you and Dr. Woolum share the same insurance carrier, correct? A. He has the same one that I have. Q: And what happens in this case to Dr. Woolum you believe will have some impact or may have some impact on your insurance premium, don't you, sir? A: No. With his denial of any impact, all questioning about their common insurance ceased. That Dr. Butcher actually testified that this malpractice claim would not impact his insurance premiums cannot retroactively control the trial court's KRE 403 balancing, which was done in response to a motion in limine resolved prior to trial and based on deposition testimony. If the trial court had been presented at the hearing on the motion in limine with evidence that Dr. Butcher did not think this litigation would impact his insurance premiums e.g., in his deposition testimonyit would have weighed heavily in favor of excluding the commonality of insurance. Even then, the trial court would not have been bound by Dr. Butcher's claim and could consider his other testimony that evidenced bias. As a result of the strong connection between common insurance and witness bias, it was not an abuse of discretion to admit the evidence.