State Farm Mutual Automobile Insurance v. Health Horizons, Inc.

590 S.E.2d 798, 264 Ga. App. 443, 2003 Fulton County D. Rep. 3666, 2003 Ga. App. LEXIS 1489
CourtCourt of Appeals of Georgia
DecidedDecember 1, 2003
DocketA03A1387
StatusPublished
Cited by13 cases

This text of 590 S.E.2d 798 (State Farm Mutual Automobile Insurance v. Health Horizons, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Farm Mutual Automobile Insurance v. Health Horizons, Inc., 590 S.E.2d 798, 264 Ga. App. 443, 2003 Fulton County D. Rep. 3666, 2003 Ga. App. LEXIS 1489 (Ga. Ct. App. 2003).

Opinions

Barnes, Judge.

This court granted State Farm Mutual Automobile Insurance Company’s application for an interlocutory appeal of the trial court’s order granting Health Horizons, Inc.’s motion for sanctions, dismissing its answer, and granting a judgment to Health Horizons on liability. The insurance company argues on appeal that the trial court abused its discretion, and further contends that the trial court erred in granting a judgment on liability because Health Horizons’ complaint failed to allege fraud properly. We conclude that the trial court did not abuse its discretion in dismissing State Farm’s answer and issuing a judgment against it as to liability, and therefore affirm the trial court’s order.

The history of this case is long and complicated, having already made one trip to this court on an unrelated matter.1 The only issue before us, however, is whether the trial court erred in concluding that State Farm wilfully failed to comply with its previous order granting Health Horizons’ motion to compel, and thus striking the defendant’s answer and granting a default judgment to the plaintiff on the issue of liability.

In August 1997, Health Horizons filed a complaint against State Farm asserting that the insurer had fraudulently denied Health Horizons’ claims for reimbursement of medical services provided to State Farm’s policyholders. State Farm answered and denied liability. The parties conducted extensive discovery, and the trial court eventually granted Health Horizons’ second motion to compel discovery after a hearing conducted on December 20, 2001. The written order was entered on January 30, 2002, after the parties agreed to the wording. On October 10, 2002, the trial court granted Health Horizons’ motion to strike State Farm’s answer, finding that State Farm wilfully disregarded that portion of the January 30 order requiring it to respond to Health Horizons’ “Request for Production of Documents No. 18.” Specifically, the trial court had ordered State Farm to “produce copies of its documents regarding the handling of medical claims, protocols for medical reviews of State Farm policyholders, incentatives [sic] in claim reductions, and reductions in claims, which it also produced in the cases of Robinson v. State Farm and Foltz v. State Farm.” Robinson was a similar action filed in an [444]*444Idaho state court, and Foltz was a similar action filed in federal district court in Oregon. The order further provided that State Farm’s attorneys should review these documents and prepare a “privilege log” identifying the documents State Farm contends do not fall into these four categories, to enable the plaintiff to challenge the omissions and the court to resolve the dispute.

While the order did not specify a time period for compliance, at the hearing a month earlier counsel for State Farm stated that 30 days should be more than enough time, although he also stated that he did not know how many documents were involved. After the plaintiff moved for sanctions on April 22, 2002, State Farm filed a brief in response arguing to the court for the first time that it had been delayed in responding because it could not find duplicate copies of all the documents from these other two cases that were not stamped “sealed.”

As Health Horizons made clear during the hearing on its motion for sanctions, it was not complaining about the length of time it took for State Farm to deliver the voluminous records it produced in response to the court’s order to compel production. Rather, it was complaining about the fact that State Farm declined to produce some of the documents. One of the reasons it gave for declining to produce some of these documents was that a federal court in Oregon had placed them under seal. The issue of these documents being under seal was exactly the issue that the parties argued about in their hearing on Health Horizons’ motion to compel. The trial court considered this issue, and gave State Farm very specific directions about how to handle it, which was to produce copies of these documents from their own files that related to four specific issues, and if it thought that the documents did not relate to these four issues, list them in a log and the court would decide whether they were relevant or not. The parties agreed at the hearing to a protective order covering all discovery produced in this case, and then worked together for a month to draft an order that reflected the trial court’s direction at the hearing.

State Farm decided not to seek an interlocutory appeal challenging the trial court’s order, as it explained later at the sanctions hearing, because “a discovery order doesn’t. . . get much attention in the appellate courts.” Instead, State Farm employees at the corporate headquarters produced a log identifying some of these documents as not being produced because they were under seal, “Not related to Health Horizons’ litigation in time,” contained personal information, or related to a different case. Health Horizons moved for sanctions, and at that hearing, State Farm told the court that, at the previous hearing on the motion to compel, it had no idea what had been produced in the Oregon federal court case Health Horizons was seeking [445]*445information about, although it had received the plaintiff’s request to produce seven months before that hearing. At the sanctions hearing, State Farm said it would consider the trial court’s suggestion that it could have sought instruction from the other court if it were concerned about being in contempt of that court’s order.

In its first post-hearing letter to the trial court, State Farm then suggested that Health Horizons could attempt to intervene in the other case, which was on appeal to the Court of Appeals for the Ninth Circuit. Two months later, in its second post-hearing letter to the trial court, State Farm’s attorney told the trial court that he had been advised that the company had corresponded with the judge in the other case, asking it to reassume jurisdiction for the purposes of unsealing the record for another reason, even though it was still on appeal. If that court agreed to unseal the records, then State Farm offered to ask that the records also be unsealed for production in this case.

The trial court found that State Farm’s refusal to comply with the mandates of its order to compel production was “wilful and in conscious disregard” of the court’s order. It further found that

State Farm’s behavior throughout the discovery process, from its untimely production to its conscious, intentional refusal to comply with the Court’s Order to Compel Production has been adverse to constitutional and statutory mandates for a speedy and efficient discovery process and undermines the power and authority of the Court.

At the sanctions hearing, the plaintiff argued that State Farm was in contempt of the trial court’s order granting its motion to compel because, in its 63-page privilege list, it indicated that it need not produce a number of documents because they were under court seal, rather than because they were not relevant or otherwise did not fall within the four categories the trial court specified in its previous order. The plaintiff further argued that some of State Farm’s other reasons for withholding documents were because they contained personal information, they were related to a different case, and they involved a different time frame, in defiance of the court’s order granting its motion to compel.

In its order, the trial court responded to these assertions as follows:

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State Farm Mutual Automobile Insurance v. Health Horizons, Inc.
590 S.E.2d 798 (Court of Appeals of Georgia, 2003)

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Bluebook (online)
590 S.E.2d 798, 264 Ga. App. 443, 2003 Fulton County D. Rep. 3666, 2003 Ga. App. LEXIS 1489, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-farm-mutual-automobile-insurance-v-health-horizons-inc-gactapp-2003.