Hermanson v. MultiCare: Washington Supreme Court clarifies scope of corporate attorney-client privilege and application of Loudon rule
Monday, February 8, 2021
by: David Norman & Mike Madden

Section: Winter 2021

David Norman, Bennett Bigelow & Leedom, P.S., focuses on the defense of medical malpractice claims against physicians and other health care practitioners, against health care facilities, and also claims against product manufacturers. He has a broad background in general liability defense, and has represented numerous clients in complex negligence litigation, including the defense of legal malpractice, Consumer Protection Act, and intentional tort claims.

Mike Madden, Bennett Bigelow & Leedom, P.S., has over 30 years of wide-ranging trial and appellate experience at every level of the state and federal court systems. His current practice focuses on medical liability and regulatory matters, Medicaid and health insurance payment issues, class action litigation including employment disputes, constitutional litigation, and related appeals. He has been lead counsel on more than 50 appeals resulting in published opinions.
Over 20 years ago, the Washington Supreme Court announced in Loudon v. Myhre2  that, in order to protect the patient-physician relationship, defense counsel cannot have what it called “ex parte” communications with a personal injury plaintiff’s non-party treating physicians.  Accordingly, where Loudon applies, defense counsel can communicate with non-party treating physicians only in a deposition or with the consent of plaintiff’s counsel. Loudon spawned many disputes about its scope and application,3  most significantly regarding physicians who were involved in events that resulted in a claim but who are not named as defendants in the case.  In its 2014 Youngs decision,4 the Court decided that Loudon does not apply to non-party treating physicians employed by a defendant hospital who have direct knowledge of the events leading to a claim.  It reasoned that the corporate attorney-client privilege trumps Loudon in these circumstances.  Youngs left a number of questions open, however, two of which were answered by court’s recent decision in Hermanson v. MultiCare.5   

The case arose when Doug Hermanson drove his car into a utility pole.  He was taken to Tacoma General Hospital, owned by MultiCare, with severe injuries.  A blood alcohol test indicated that he was drunk.  In his lawsuit against MultiCare, he claimed that one or more members of his treatment team illegally disclosed the test results to law enforcement and that, as a result, he was charged with negligent driving as well as hit and run.6  He initially identified a social worker employed by MultiCare and a trauma surgeon employed by Trauma Trust as the “employees and agents” of MultiCare who were responsible for the disclosure, but later seemed to focus on the social worker.  

Trauma Trust is a non-profit corporation formed to provide trauma and emergency medical services at Tacoma General and St. Joseph’s hospitals.  MultiCare and Franciscan Health (operator of St. Joseph’s) are its corporate members.  Trauma Trust’s offices are located at Tacoma General.  Its board is dominated by Franciscan and MultiCare representatives.  MultiCare admitted vicariously liability for the actions of its employees and any Trauma Trust employees involved in Mr. Hermanson’s care.  

In the superior court, the plaintiff objected to defense counsel having ex parte contact with the physician, Trauma Trust, the social worker, and the two MultiCare-employed nurses who participated in plaintiff’s emergency care.  The trial court prohibited MultiCare’s counsel from ex parte communications with the physician and social worker, but allowed contact with the nurses.  On discretionary review, Division II of the Court of Appeals affirmed the superior court’s order to the extent that it prohibited ex parte privileged communications between MultiCare’s counsel and the physician.7  Based on the Supreme Court’s decision in Newman v. Highland Sch. Distr.,8  the Court of Appeals concluded that the physician fell outside the scope of corporate attorney client privilege because he was not a MultiCare employee.  Because Newman holds that the corporate privilege does not cover former employees, even those responsible for creating the liability, the Court of Appeals reasoned that Loudon prohibited any contact with the physician.  But, it held that Loudon does not apply to nurses or social workers. 

Reversing both rulings, the Supreme Court brought Washington in line with prevailing national precedent regarding communications between corporate counsel and persons who are agents, but not employees, of their clients by holding that the corporate attorney-client privilege applies to communications between counsel for a defendant-hospital and a physician employed by a medical group affiliated with the hospital.  

Plowing new ground, the Court also held that Loudon applies to nurses and social workers, because they are subject to statutory evidentiary privileges and confidentiality requirements similar in scope and purpose to the patient-physician privilege.  In each instance, the Court held that ex parte privileged communications were permitted under Youngs because the physician, nurse and social worker had direct knowledge of the events creating the alleged liability. 

While adding helpful clarity in these areas, the decision leaves several important questions open.  For example, if a hospital is the only defendant in a lawsuit claiming negligence by a staff physician for whom the hospital is alleged to be vicariously liable, are the hospital’s lawyers prohibited from discussing the case with the physician or the physician’s lawyers?  This scenario frequently comes up with respect to emergency medicine, radiology, and anesthesiology groups that are the exclusive providers of services at a hospital but are not controlled by the hospital.  The answer to the question is likely to depend on whether their contracts include administrative duties (medical directorships or quality improvement responsibilities) or obligate them to cooperate with the hospital’s investigation and defense of claims.  These contractual duties may be enough to fit under the Court’s “functional employee” analysis. 

Regarding non-physicians, the Court’s analysis suggests that generalized privacy obligations applicable to all hospital staff (HIPAA, etc.) are not enough to trigger Loudon.  Rather, there must be a statutory privilege that is analogous to the physician-patient privilege.  Beyond this reasoning, the Court declined to express an opinion as to whether Loudon applies to other hospital workers.  Accordingly, while it is reasonable to think Loudon does not apply to housekeeping and transport staff, there is less certainty around technicians and others who assist those to whom Loudon does apply. 
David Norman and Mike Madden submitted an amicus brief in the Supreme Court on behalf of the Washington State Hospital Association, Washington State Medical Association, and the American Medical Association. 
Loudon v. Myhre, 110 Wn.2d 675, 756 P.2d 138 (1988).
Examples that led to published appellate decisions include Ford v. Chaplin, 61 Wn. App. 896, 812 P.2d 532 (1991) (Loudon prohibits defense counsel’s from meeting with nonparty physician-witnesses to prepare them for trial) and Smith v. Orthopedics Int'l, Ltd., P.S., 170 Wn.2d 659, 244 P.3d 939 (2010) (Loudon prohibits defense counsel’s contact with lawyer for non-party physician-witness).
Youngs v. PeaceHealth, 179 Wn.2d 645, 316 P.3d 1035 (2014).
5 Hermanson v. MultiCare, 2020 WL 6603473, 475 P.3d 484 (Nov. 12, 2020), reversing 10 Wn. App.2d 343, 448 P.3d 153 (2019). 
Presumably, Hermanson was not charged with DUI because the test conducted at the hospital did not meet statutory requirements for admissibility in criminal cases. 
7 Hermanson v. MultiCare Health System, Inc., 10 Wn. App.2d 343, 358-59, 448 P.3d 153 (2019). 
8 Newman v. Highland Sch. Distr. No. 203, 186 Wn.2d 769, 381 P.3d 1188 (2016).