Tuesday, January 20, 2009
Kentucky Fried Opinion: Hospital's Appeal Reveals That Kentucky Courts Use The Wrong Test In Bias-Liability Insurance Cases
The recent opinion of the Court of Appeals of Kentucky in University Medical Center, Inc. v. Beglin, 2009 WL 102800 (Ky.App. 2009), reveals that Kentucky court are applying the wrong analysis when determining whether evidence of liability insurance is admissible to prove bias.
In Beglin, Jennifer Beglin died after being treated for Chron's Disease at University Medical Center d/b/a University of Louisville Hospital. Beglin's husband subsequently sued several defendants, including the hospital and Drs. Susan Galandiuk and Dr. Guy Lerner. After trial, the jury awarded the husband $9,047,003.09 after finding that the hospital, or its employees and agents, acted negligently in causing his wife's death. However, two employees who were found not to have acted negligently were Galandiuk and Lerner, after both provided testimony favorable to the other at trial.
The hospital subsequently appealed, claiming, inter alia, that the trial court erred by failing to permit it to introduce, as proof of the doctors' bias, evidence that Dr. Galandiuk and Dr. Lerner were insured by the same malpractice carrier (meaning that if either was found liable, the other's insurance rates would go up). The court noted that the issue was governed by Kentucky Rule of Evidence 411, which states that:
"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. 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."
Of course, as is clear from the text of this Rule, if evidence of liability insurance is offered to prove bias, there is no Rule 411 problem; instead, the court simply needs to determine under Kentucky Rule of Evidence 403 whether the evidence should be excluded because its probative value is substantially outweighed by the danger of unfair prejudice, i.e., the danger that jurors will find against a party because they know that insurance will cover any award of damages. So, in Beglin, the court should have admitted the evidence that Dr. Galandiuk and Dr. Lerner were insured by the same malpractice carrier unless it found that its probative value for establishing bias was substantially outweighed by the danger that the jurors would find against them if they knew that insurance would cover any award of damages against them.
But that's not what the Court of Appeals of Kentucky did. Instead, it cited to its previous opinion in the factually similar Wallace v. Leedhanachoke, 949 S.W.2d 624, 628 (Ky.App.1996), where it found that:
"The mere fact that the two physicians shared a common insurance carrier-absent a more compelling degree of connection-does not clearly evince bias by the expert, and its arguable relevance or probative value is insufficient to outweigh the well-established rule as to the inadmissibility of evidence as to the existence of insurance....We cannot conclude that evidence indicating that Sachetello might experience rising insurance rates is so probative as to the issue of his credibility or bias as to outweigh the prejudicial import of evidence of insurance."
Applying this reasoning, the court found that the trial court did not err in excluding similar evidence in Beglin. As the above language makes clear, however, it applied the wrong analysis. According to the Court of Appeals of Kentucky, the evidence of that Dr. Galandiuk and Dr. Lerner were insured by the same malpractice carrier was inadmissible because its probative value didn't outweigh its unfairly prejudicial effect. But under Rule 403, it didn't need to make such a finding for the evidence to be admissible. The probative value of the evidence could have equaled its unfairly prejudicial effect or the prejudicial effect of the evidence could have even outweighed its probative value, but to a non-substantial degree, and the court would have been obligated to admit it.