Philalom, Lynnese v. State Farm Mutual Automobile Ins. Co.

FILED
Oct 08, 2021
09:10 AM(CT)
TENNESSEE
WORKERS' COMPENSATION
APPEALS BOARD

TENNESSEE BUREAU OF WORKERS’ COMPENSATION
WORKERS’ COMPENSATION APPEALS BOARD

Lynnese Philalom ) Docket No. 2020-05-0763
)
v. ) State File No. 109377-2019
)
State Farm Mutual Automobile Ins. Co., )
et al. )
)
Appeal from the Court of Workers’ ) Heard September 28, 2021
Compensation Claims ) via Microsoft Teams
Robert V. Durham, Judge )

Affirmed and Remanded

This interlocutory appeal arises from a discovery dispute concerning certain
communications between the employer’s attorney and the nurse case manager assigned to
the employee’s claim by a third-party administrator. The trial court issued an order
instructing the employer to respond to the employee’s discovery requests and provide a
copy of the nurse case manager’s records to the employee, and the employer has appealed.
We affirm the trial court’s order and remand the case.

Presiding Judge Timothy W. Conner delivered the opinion of the Appeals Board in which
Judge David F. Hensley and Judge Pele I. Godkin joined.

A. Allen Grant, Nashville, Tennessee, for the employer-appellant, State Farm Mutual
Automobile Ins. Co.

Carmen Y. Ware, Chattanooga, Tennessee, for the employee-appellee, Lynnese Philalom

Factual and Procedural Background

Lynnese Philalom (“Employee”) works for State Farm Mutual Automobile
Insurance Co. (“Employer”) as a claims specialist. On November 4, 2019, while working
within the course and scope of her employment, Employee tripped and fell onto her left
side. As a result of the fall, she reported multiple symptoms involving her left ankle, left
knee, and lower back as well as a mental injury. She has received authorized medical care
with multiple physicians and other medical providers. 1

1
The nature and extent of Employee’s work-related injuries are not at issue in this appeal.
1
Employer’s workers’ compensation insurer, Agri General Insurance Co., retained a
third-party administrator, Sedgwick Claims Management Services (“Sedgwick”), to
administer Employer’s workers’ compensation claims. With respect to Employee’s claim,
Sedgwick assigned a nurse case manager, Christy Spurlock, RN, who is also a Sedgwick
employee, to assist in the medical case management of the claim as described in Tennessee
Code Annotated section 50-6-123 (2020). 2

During the course of discovery, Employee submitted written discovery requests to
Employer, including requests for production of documents. Employer objected to some of
the requests, which resulted in several motions to compel discovery filed by Employee. In
her third motion to compel, Employee asserted that Employer had failed to adequately
respond to request for production number 14, which reads as follows:

Please provide a copy of all correspondence, emails and communications
whatsoever between you and the employee, healthcare providers, case
managers, utilization review, expert witnesses, Tennessee Department of
Labor or any other persons concerning the employee and/or any matters
arising out of the accident forming the basis of this action. If you contend
that any such document is privileged, please provide a privilege log
concerning the same.

In a “second supplemental request,” Employee acknowledged having received some
documents responsive to the original request but asserted entitlement to “all
correspondence, emails and communications whatsoever between you and the
employee . . . as well as between you and any of the other above-mentioned persons,
including . . . Christy Spurlock, RN case manager.”

Employee also submitted a request for production of documents identified as
“RFPD #15,” which sought “a copy of the case management file concerning [Employee]
to include, but not limited to, all reports, assignment instructions, initial evaluation and
plan; file notes; all communications with . . . attorneys whether this information be kept in
the case management file or elsewhere.” In the alternative, Employee requested a privilege
log describing any documents responsive to this request that Employer asserted were
protected from discovery.

In its written response, Employer asserted, in pertinent part, that “Employer’s
communications with both Christy Spurlock and counsel included are protected by
attorney-client privilege due to Ms. Spurlock being a Sedgwick employee.” (Emphasis
added.) In a subsequent brief, Employer contended that “Employer’s attorney’s
2
Tennessee’s Workers’ Compensation Law authorizes an employer to establish “its own program of case
management that meets the guidelines promulgated by the administrator in rules.” Tenn. Code Ann. § 50-
6-123(e). The rules governing medical case management are contained in Tenn. Comp. R. & Regs 0800-
02-07 (2017).
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communications with Christy Spurlock, NCM are protected by the attorney-client privilege
because, even if Christy Spurlock is a third party, she is an ‘insider’ that does not break the
privilege.” Employer further argued that “Employer’s attorney’s communications with
Christy Spurlock, NCM are protected by the work product doctrine because the
communications contain the mental impressions, conclusions, opinions, or legal theories
of an attorney or other representative of a party concerning the litigation.”

Following a hearing on Employee’s motion to compel discovery, the trial court
issued an order in which it determined that none of the nurse case manager’s notes are
protected by either the attorney-client privilege or the attorney work product doctrine. It
ordered Employer to provide copies of all such notes to Employee. Employer has appealed.

Standard of Review

The standard we apply in reviewing a trial court’s decision presumes the court’s
factual findings are correct unless the preponderance of the evidence is otherwise. See
Tenn. Code Ann. § 50-6-239(c)(7) (2020). A trial court’s decisions regarding pre-trial
discovery are reviewed under an abuse-of-discretion standard. See, e.g., Bellsouth
Telecoms. v. Howard, No. M2019-00788-WC-R3-WC, 2013 Tenn. LEXIS 343, at *7
(Tenn. Workers’ Comp. Panel Apr. 11, 2013). The interpretation and application of
statutes and rules are questions of law that are reviewed de novo with no presumption of
correctness afforded the trial court’s conclusions. See Mansell v. Bridgestone Firestone N.
Am. Tire, LLC, 417 S.W.3d 393, 399 (Tenn. 2013). We are also mindful of our obligation
to construe the workers’ compensation statutes “fairly, impartially, and in accordance with
basic principles of statutory construction” and in a way that does not favor either the
employee or the employer. Tenn. Code Ann. § 50-6-116 (2020).

Analysis

In its notice of appeal, Employer asserted the trial court erred in finding that
“Counsel for Employer’s communications with the [nurse case manager] are not protected
by the attorney-client privilege or work product doctrine in light of the [nurse case
manager’s] status as an agent of Employer” or her status as “an actual employee of
Employer.” In a subsequent brief, Employer characterized itself, its workers’
compensation insurer, and the third-party administrator, Sedgwick, as “collectively
‘Employer.’” It asserted that although Sedgwick is not a “formal party” to the litigation
such that it could be sued directly by Employee, Sedgwick is “part and parcel of the joint
‘client’ of the undersigned Counsel” and that Sedgwick employees are “also the ‘client’ of
undersigned counsel.” Hence, in Employer’s view, the nurse case manager assigned to
assist Employee in the medical case management of the claim is a “joint client” of
Employer’s counsel because she is employed by Sedgwick, which is the third-party
administrator of Agri General Insurance Company, which is the insurer of Employer.

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Common Interest Doctrine

In support of its position, Employer cites the “common interest doctrine,” which it
asserts protects communications between Employer, its counsel, and a nurse case manager
employed by a third-party administrator. In Gibson v. Richardson, No. W2002-03027-
COA-R7-CV, 2003 Tenn. App. LEXIS 43 (Tenn. Ct. App. Jan. 17, 2003), the Tennessee
Court of Appeals addressed the applicability of the “common interest doctrine” in a
personal injury lawsuit. In Gibson, two defendants asserted that certain communications
between the defendants and their attorneys for the purpose of coordinating a joint legal
strategy were protected by the attorney-client privilege under the “common interest
doctrine.” In analyzing this issue, the Court of Appeals noted a four-part test:

A party asserting that certain communications are protected by the common
interest doctrine must show:

(1) that the otherwise privileged information was disclosed due to actual or
anticipated litigation,

(2) that the disclosure was made for the purpose of furthering a common
interest in the actual or anticipated litigation,

(3) that the disclosure was made in a manner not inconsistent with
maintaining its confidentiality against adverse parties, and

(4) that the person disclosing the information has not otherwise waived its
[sic] attorney-client privilege for the disclosed information.

Id. at *13-14 (emphasis added) (citing Boyd v. Comdata Network, Inc., 88 S.W.3d 203, 214
(Tenn. Ct. App. 2002) (The doctrine “permits the participants in a joint defense to
communicate among themselves and with their attorneys on matters of common legal
interest for the purpose of coordinating their joint legal strategy.”) (Emphasis added.)).

We conclude the “common interest doctrine” is inapplicable in this case for several
reasons. First, as acknowledged by Employer, neither Sedgwick nor the nurse case
manager is a party to this cause of action, and neither is subject to any potential liability in
this case. Tennessee Code Annotated section 50-6-102(13) defines the term “employer”
to “include the employer’s insurer.” It does not, however, expressly include a third-party
administrator or the employees of a third-party administrator within the definition of the
term “employer.” Thus, Employer’s attempt to include Sedgwick and its employees within
the umbrella term “joint client” is unsupported by statutory or case law. Second, counsel
for employer is not seeking to establish a “joint legal strategy” between Employer and
Sedgwick or the nurse case manager because neither Sedgwick nor the nurse case manager
is a defendant in this litigation that needs a “joint legal strategy.” Third, the regulations

4
authorizing an employer to establish a case management program make clear that a nurse
case manager is to provide case management services for the benefit of the employee while
also seeking to control medical costs. See Tenn. Code Ann. § 50-6-122(a)(1); Tenn. Comp.
R. & Regs. 0800-02-07-.01(3). A nurse case manager is expressly prohibited from
participating in the investigation of a claim, any compensability determinations, any
medical causation assessments, or any impairment rating assessments. Tenn. Comp. R. &
Regs. 0800-02-07-.04(2) (2017). A nurse case manager cannot coordinate or participate in
any surveillance activities of the employee, and he or she is also prohibited from “refus[ing]
to provide case management reports to parties to the claim.” Tenn. Comp. R. & Regs.
0800-02-07-.04(2)(i)-(j).

In short, the “common interest doctrine” was developed to “widen[] the circle of
persons to whom clients may disclose privileged communications,” but that circle is limited
to “participants in a joint defense” who have “common legal interest[s]” in coordinating a
“joint legal strategy.” Boyd, 88 S.W.3d at 214. In the context of this workers’
compensation litigation, we conclude the nurse case manager is beyond the reach of the
“common interest doctrine.”

Attorney-Client Privilege

Employer also asserts that any communication between Employer and its counsel
that includes the nurse case manager is protected by the attorney-client privilege.
Employer relies, in part, on the law of agency. In discussing the attorney-client privilege,
Employer notes that it was developed to “encourage full and frank communications
between attorneys and their clients.” We agree. However, the application of this privilege
in the context of this case hinges on a finding that the nurse case manager, as an employee
of a third-party administrator hired by Employer’s workers’ compensation insurer is, in
effect, an agent of Employer. Moreover, Employer relies heavily on the intent of
“legislative and administrative bodies” that promulgated the laws and regulations
governing the workers’ compensation system. In Employer’s view, these entities “had both
confidentiality and privilege” in mind at the time of drafting.

The purposes and intent of the case management system was discussed by the
Tennessee Supreme Court’s Special Workers’ Compensation Appeals Panel in Seiber v.
Methodist Med. Ctr., No. 03S01-9801-CV-00006, 1999 Tenn. LEXIS 205 (Tenn. Workers’
Comp. Panel Mar. 25, 1999). In that case, the Appeals Panel noted the intent expressed by
the legislature:

It is the intent of the general assembly that quality medical care services shall
be available to injured and disabled employees. It is also the legislative intent
to control increasing medical costs in workers’ compensation matters by
establishing cost control mechanisms to ensure cost-effective delivery of

5
medical care services by employing a program of medical case management
and a program to review the utilization and quality of medical care services.

Id. at *7 (quoting Tenn. Code Ann. § 50-6-122(a)(1)). Thus, the statutory and regulatory
elements of nurse case management evidence a dual purpose: to assist injured workers in
obtaining quality medical services and to help control medical costs. The language noted
by the Appeals Panel in Seiber discussing legislative intent remains in the statute today.
The Panel in Seiber further explained that, at that time, the Commissioner of Labor was
authorized to establish a case management system that would:

(1) Develop a treatment plan to provide appropriate medical care services
to an injured or disabled employee;

(2) Systematically monitor the treatment rendered and the medical progress
of the injured or disabled employee;

(3) Assess whether alternate medical care services are appropriate and
delivered in a cost-effective manner based on acceptable medical
standards;

(4) Ensure that the injured or disabled employee is following the prescribed
medical care plan; and

(5) Formulate a plan for return to work with due regard for the employee’s
recovery and restrictions and limitations, if any.

Id. at *7-8 (quoting Tenn. Code Ann. § 50-6-123(b) (1996)). That language no longer
appears in the statute but is included in Tenn. Comp. R. & Regs. 0800-02-07-.04 along
with other provisions addressing the duties and obligations of nurse case managers.

Contrary to Employer’s position, we find nothing in the stated legislative intent of
statutory and regulatory provisions relating to nurse case management to suggest the
legislature intended nurse case managers to act as agents of employers. In fact, as noted
above, the regulations governing nurse case management explicitly prohibit nurse case
managers from participating in compensability determinations, medical causation findings,
negotiations, investigations, “or any other non-rehabilitative activity.” Tenn. Comp. R. &
Regs. 0800-02-07-.04(2). Thus, unlike an adjuster or claims specialist, whose express
purpose is to act as an agent of an employer in administering and adjusting claims, the
nurse case manager is expressly prohibited from engaging in any “non-rehabilitative”
activity.

In support of its position, Employer cites the Tennessee Supreme Court’s decision
in Dialysis Clinic, Inc. v. Medley, 567 S.W.3d 314 (Tenn. 2019). In Medley, the Court

6
considered whether communications between a litigant’s attorney and a third party could
be protected from discovery. Id. at 316. In analyzing this issue, the Court noted a three
part-test for determining whether such communications are protected from discovery: (1)
whether the third party is the “functional equivalent” of the party’s employee; (2) whether
the communications relate to the subject matter of legal counsel’s representation of the
party; and (3) whether the communications were made with the intention that they would
be kept confidential. Id. Additionally, in determining whether the third party is the
“functional equivalent” of an employee of legal counsel’s client, the Court instructed trial
courts to consider the following “non-exclusive” factors:

[W]hether the nonemployee performs a specific role on behalf of the entity;
whether the nonemployee acts as a representative of the entity in interactions
with other people or other entities; whether, as a result of performing its role,
the nonemployee possesses information no one else has; whether the
nonemployee is authorized by the entity to communicate with its attorneys
on matters within the nonemployee’s scope of work to facilitate the
attorney’s representation of the entity; and whether the nonemployee’s
communications with the entity’s attorneys are treated as confidential.

Id. at 324. In considering these factors in the context of a nurse case manager, we conclude
the nurse case manager is not the functional equivalent of an employee of Employer such
that communications between the nurse case manager and the attorney representing
Employer are protected from discovery. First, as noted above, nurse case managers have
statutory and regulatory duties intended to benefit both employees and employers. Second,
unlike employees and agents of the employer, nurse case managers are expressly prohibited
from engaging in any “non-rehabilitative” conduct pertinent to the compensability of an
employee’s claim for benefits. Third, a nurse case manager is obligated to provide his or
her reports to all parties to the claim. Fourth, there is nothing in the statute or regulations
that obligates a nurse case manager to keep confidential any communications it has with
the attorneys for either party.

In short, we find nothing in the statutes, regulations, or case law to suggest that the
nurse case manager in this case is an agent acting on behalf of Employer, or the functional
equivalent of an employee of Employer, for purposes of invoking the attorney-client
privilege. Thus, we conclude the trial court did not abuse its discretion in ordering
Employer to respond to Employee’s discovery requests.

Attorney Work-Product Doctrine

Finally, Employer asserts that communications between Employer, its counsel, and
the nurse case manager are protected from discovery by the work-product doctrine. That
doctrine, which originated in the United States Supreme Court’s opinion in Hickman v.
Taylor, 329 U.S. 495, 512 (1947), reflects a “general policy against invading the privacy

7
of an attorney’s course of preparation [for litigation].” Over the years, various states,
including Tennessee, adopted language from Rule 26(b)(3) of the Federal Rules of Civil
Procedure. Tennessee’s rule provides that, in ordering discovery, a trial court must “protect
against disclosure of the mental impressions, conclusions, opinions, or legal theories of an
attorney or other representative of a party concerning the litigation.” Tenn. R. Civ. P.
26.02(3). Moreover, Tennessee’s rule requires a party seeking to protect information from
discovery “by claiming that it is privileged or subject to protection as trial preparation
material” to “make the claim expressly and . . . describe the nature of the documents,
communications, or things not produced or disclosed.” Tenn. R. Civ. P. 26.02(5).

As explained by the Tennessee Supreme Court in Wilson v. State, 367 S.W.3d 229,
235 (Tenn. 2012), “[a]n attorney’s work product consists of those internal reports,
documents, memoranda, and other materials that the attorney has prepared or collected in
anticipation of trial.” The Supreme Court’s Special Workers’ Compensation Appeals
Panel further explained that the doctrine “prevents litigants from taking a free ride on the
research and thinking of their adversary’s lawyer.” Boyd, 88 S.W.3d at 219. In
circumstances where a party makes a showing that certain materials are otherwise
discoverable, “the burden shifts to the party opposing discovery to show that the materials
are work product.” Id. at 221. Such a party must also “demonstrate that it has not waived
its protection with regard to the documents being sought.” Id.

The Tennessee Court of Appeals has concluded that information otherwise
protected by the work product doctrine is discoverable if the work product designation has
been waived “under very specific and narrow circumstances, namely when . . . the claim
of privilege has been waived or has expired.” Sharp v. Tenn. DOC, No. M2016-01207-
COA-R3-CV, 2017 Tenn. App. LEXIS 740, at *8 (Tenn. Ct. App. Nov. 9, 2017). In Arnold
v. City of Chattanooga, 19 S.W.3d 779 (Tenn. Ct. App. 1999), the Court of Appeals
discussed waiver of the work product doctrine:

The protections afforded litigants by [Rules] 26.02(3) and 26.02(4) [of the
Tennessee Rules of Civil Procedure] are qualified, and equitable in nature.
The privilege can be overcome upon a proper showing. In keeping with
equitable considerations that must be examined in applying the privilege,
courts have recognized exceptions to the work product doctrine. An example
is where the attorney or client has waived the protection by voluntarily
disclosing the work sought to be protected. Partial waiver of work product
as well as attorney/client privilege can act to waive the entire privilege . . . .
The scope of the waiver by disclosure is defined by the “fairness doctrine,”
which aims to prevent the prejudice and distortion that may be caused by one
party’s selective disclosure of otherwise protected information.

Id. at 787 (internal citations omitted) (emphasis added).

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Here, Employer asserts that communications between its attorney and the nurse case
manager qualify as attorney work product because “Counsel for Employer’s mental
processes are evident from the fact-gathering questions and remarks made by Counsel for
Employer to [the nurse case manager].” Specifically, Employer argues that “counsel for
Employer has had to communicate with [the nurse case manager] to find out the latest
developments from Employee’s treatment, which . . . has been critical for defending this
claim in light of the constant pressure Employee has placed on her medical providers.”
Moreover, Employer asserts that were it to be required to disclose these materials,
“Employee would obtain the mental processes of Counsel for Employer because these
processes can be deduced from the nature of the questions and comments contained in the
communications from Counsel for Employer to [the nurse case manager].” We are
unpersuaded.

As discussed above, a nurse case manager is not a party to workers’ compensation
litigation and does not act solely for the benefit of the employer. A nurse case manager’s
role is essentially neutral. The nurse case manager is directed by regulations to assist the
injured worker in rehabilitative activities and address return-to-work issues, and the nurse
case manager is prohibited from engaging in any activity that places him or her in an
adversarial role to either the employee or the employer. Both parties are required to provide
information to and cooperate with the nurse case manager in the performance of his or her
duties. Tenn. Comp. R. & Regs. 0800-02-07-.02(3)-(4). Hence, if an attorney for either
party chooses to discuss matters with the nurse case manager that could be construed to
reveal that attorney’s mental impressions or legal theories of the case, that attorney risks
waiving any protections afforded by the work product doctrine because any such mental
impressions have been shared with a neutral third party.

In the present case, the record is unclear as to the precise nature of the information
Employer claims was communicated to the nurse case manager that is protected by the
work product doctrine. However, if any of those communications included the mental
impressions or legal theories of the attorney, we conclude that the work product doctrine
was waived when those mental impressions or legal theories were communicated to a
neutral third party. As a result, we conclude the trial court did not abuse its discretion in
ordering Employer to produce the requested information.

Conclusion

For the foregoing reasons, we affirm the trial court’s order and remand the case.
Costs on appeal are taxed to Employer.

9
TENNESSEE BUREAU OF WORKERS’ COMPENSATION
WORKERS’ COMPENSATION APPEALS BOARD

Lynnese Philalom ) Docket No. 2020-05-0763
)
v. ) State File No. 109377-2019
)
State Farm Mutual Automobile Ins. Co., et al. )
)
)
Appeal from the Court of Workers’ ) Heard September 28, 2021
Compensation Claims ) via Microsoft Teams
Robert V. Durham, Judge )

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the Appeals Board’s decision in the referenced
case was sent to the following recipients by the following methods of service on this the 8th day
of October, 2021.

Name Certified First Class Via Via Sent to:
Mail Mail Fax Email
A. Allen Grant X agrant@eraclides.com
Carmen Ware X cyware@thewarelawfirm.com
Robert V. Durham, Judge X Via Electronic Mail
Kenneth M. Switzer, Chief Judge X Via Electronic Mail
Penny Shrum, Clerk, Court of X penny.patterson-shrum@tn.gov
Workers’ Compensation Claims

Olivia Yearwood
Clerk, Workers’ Compensation Appeals Board
220 French Landing Dr., Ste. 1-B
Nashville, TN 37243
Telephone: 615-253-1606
Electronic Mail: WCAppeals.Clerk@tn.gov