Reports Prepared by Consultant During Investigation of Claims Held Not Privileged or Work Product

On November 9, 2017, the Third Department issued a decision in NYAHSA Services, Inc., Self-Insurance Trust v. People Care Inc., 2017 NY Slip Op. 07909, holding that a report evaluating litigation claims prepared by a consultant engaged by counsel was not privileged or entitled to protection as work product, explaining:

During this collection litigation, Cool made a discovery request to produce a report commissioned by defendant's then-counsel, Whiteman Osterman and Hanna, LLP (hereinafter WOH) and prepared by a consultant, Towers Perrin, regarding Cool's management and administration of the workers' compensation claims of defendant's employees. Cool also sought documents and written communication related to that report. Defendant refused to comply with the discovery request, claiming that the materials were protected by, among other things, the attorney-client privilege. Cool and plaintiff then moved to compel production of the requested report and materials. Supreme Court examined the requested materials in camera and partially granted the motions to compel, ordering defendant to disclose the report and related documents, but denied disclosure as to one email exchange between defendant's executives and WOH attorney Joel Hodes. Defendant appeals.

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Defendant argues that the report was protected by the attorney-client privilege, as attorney work product and as material prepared in anticipation of litigation. Supreme Court properly rejected these claims. The attorney-client privilege shields from disclosure any confidential communications between an attorney and his or her client made for the purpose of obtaining or facilitating legal advice in the course of a professional relationship. As the party asserting the privilege, defendant was required to show that the communication at issue was between an attorney and a client for the purpose of facilitating the rendition of legal advice or services, in the course of a professional relationship, that the communication is predominantly of a legal character, that the communication was confidential and that the privilege was not waived.

The record, including the report itself, reflects that WOH, defendant's counsel, retained Towers, an independent claims consultant, to undertake a comprehensive claims review to include the trust's reserve practices and Cool's administration of claims of defendant's employees, in order to resolve the parties' impasse over defendant's unpaid assessments. Towers was given in-house access to Cool's documents for this purpose in addition to supporting documentation already provided by Cool. To that end, defendant's president sent a letter to Cool's vice-president reflecting that the purpose of the consultant's review of Cool's records was to facilitate an intelligent conversation with Cool's claims department, which Supreme Court aptly characterized as a typical business purpose. Cool's vice- president submitted an affidavit attesting that it was his understanding that the purpose of the consultant's review was to verify the accuracy of the assessments billed to defendant, and that Towers assured him that it would discuss its findings with Cool; another Cool vice-president attested that Towers did share certain findings with Cool, including that it did not find any problems with inappropriate payment of claims by Cool.

As Supreme Court correctly concluded, the report does not include any legal advice, legal analysis or discussion of legal issues nor does it disclose confidences of defendant, and we further note that it was based almost exclusively on information provided by Cool and, as such, it is not a communication of a legal character. Further, we discern no error in the court's conclusion — after crediting the proof that defendant did not expect that the report would remain confidential and that the contents of the report were not, in fact, kept confidential — that the report was not a confidential communication, and that any privilege was waived. Thus, the report was not protected by the attorney-client privilege.

We further find that the report was not protected from disclosure as attorney work product, as this privilege should be narrowly applied to materials prepared by an attorney, acting as an attorney, which contain his or her analysis and trial strategy.

Materials such as reports prepared by a third party, a nonlawyer consultant, during an investigation do not ordinarily qualify under this exception. Notably, the report does not incorporate information or opinions from counsel or discuss legal issues or conclusions. Further, the report was prepared in connection with a billing dispute, not pending litigation, and cannot be classified as an adjunct to the lawyer's strategic thought processes so as to qualify, on this alternative theory, for an exemption from disclosure as attorney work product.

With regard to the claim that the report was protected from disclosure as material prepared for litigation, defendant's burden was to demonstrate that the report was obtained solely for litigation purposes, which cannot be satisfied with wholly conclusory allegations. Mixed or multipurpose reports are not free from disclosure. We discern no abuse of discretion in Supreme Court's conclusion that defendant did not make the requisite showing that the report was prepared exclusively in anticipation of litigation. While defendant's chief executive officer reportedly believed that Cool's demands for payment of the assessment raised the possibility of litigation and that defendant thereafter retained WOH to assess its liability, the court rightfully relied upon contemporaneous correspondence from defendant's vice-president to Cool indicating that the purpose of the Towers review was to facilitate negotiations, i.e., intelligent conversation, and come to a resolution over the disputed invoices. As the record supports the court's conclusion that the report was partly, if not primarily, for business purposes and not solely for litigation, we find that defendant has not demonstrated that it was protected from disclosure on this or any of the bases claimed.

(Internal quotations and citations omitted).