A recent case in Pennsylvania reminds companies to think carefully about sharing their attorney-client communications with third parties, such as public relations firms. On March 13, a unanimous three-judge panel of the Pennsylvania Superior Court ruled that a hospital waived its attorney-client privilege and work product protection when it forwarded a legal opinion from its outside counsel to its public relations firm, both hired in connection with a peer-review matter. Superior Court Judge Mary Jane Bowes wrote the precedential opinion, BouSamra v. Excela Health, 2017 Pa. Super. 66,  which upheld the ruling from the Allegheny County Court of Common Pleas.

In response to this decision, companies should:

• Avoid sharing privileged communications with third parties unless an exception applies.

• For example, if a company needs to share legal counsel with a third party without waiving privilege, the company must be able to establish that the third party was necessary or useful to acting on legal advice.

Background

The privilege dispute stemmed from lawsuits filed by two doctors against Excela Health. Excela had hired two independent peer-review organizations to conduct internal investigations into whether the doctors were performing medically unnecessary procedures. Both peer reviewers concluded that they had, and Excela publicly announced this fact. The doctors then sued Excela for intentional interference with contractual relations and defamation, alleging that the peer-review proceedings were pretextual and the announcement was done to harm the doctors’ business.

Before Excela’s public announcement, it engaged outside counsel for advice on the announcement. Outside counsel wrote an opinion letter on the subject. Excela also engaged an independent public relations firm to create a media plan about the issues. Excela’s internal personnel forwarded the email containing outside counsel’s legal analysis to the public relations firm. That email generated further email discussions between counsel, the hospital and its public relations firm.

During discovery, Excela objected to discovery requests relating to its plan to publicly disclose the peer-review findings. Excela said the attorney-client privilege and work product doctrine covered any documents about its plan.

One of the doctors learned about the opinion letter when it was listed on Excela’s privilege log. Realizing the letter had been forwarded by Excela to the public relations firm, he moved to compel the production of the letter and the email discussion it generated.

Waiver of Attorney-Client Privilege

The special discovery master in the case said that the attorney-client privilege covered the legal opinion and related email communications. The doctor then filed exceptions, and the trial court held that Excela waived the attorney-client privilege when it sent the opinion letter to its public relations firm. The Superior Court found the letter was subject to the attorney-client privilege, but that the privilege had been waived. It agreed with the trial court, which relied on Carbis Walker LLP v. Hill, Barth & King, LLC, 930 A.2d 573, 578-79 (Pa. Super. 2009), holding that attorney-client privilege is waived “when the communications are made in the presence of or communicated to a third party[.]”

Excela unsuccessfully argued that the attorney-client privilege was not waived because it sent the communications to a party that was involved in offering legal advice to a client. This concept was established in United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), which said that communications between a client and third party are privileged when the third party is employed to facilitate a lawyer’s legal advice. Under the Kovel rationale, the presence of the third party must be necessary to, or at least useful for, acting on a lawyer’s legal advice.

The Superior Court found that Excela did not show that the hospital’s public relations firm helped to provide legal advice about whether to release the doctors’ names. Deposition testimony did not establish that the public relations firm in any way participated or aided in Excela’s legal decision to identify the two doctors. Therefore, the court concluded that the public relations firm’s presence was not necessary, or even useful, to the legal assessment of whether to publicly name the doctors.

Waiver of Work Product Protection

The Superior Court found that the opinion letter was protected by the work product doctrine, even though the doctor argued that the letter could not be considered work product because there was no pending litigation and it was not prepared in anticipation of litigation. The court’s decision relied heavily on Bagwell v. Pennsylvania Department of Education, 103 A.3d 409 (Pa. Commw. Ct. 2014), which applied the work product privilege even where no litigation had been commenced, but when it was anticipated. The Superior Court took a similar approach.

It reasoned that Excela undoubtedly anticipated litigation and obtained advance legal advice about the ramifications of its public announcement. Assuming the letter detailed counsel’s legal conclusions, thoughts and opinions about the matter, the Superior Court concluded that the opinion letter was covered by the work product doctrine. However, the court again ruled the privilege was waived because Excela disclosed the legal opinion to its third-party PR firm without falling within any exception.

Implications

This decision reinforces the general rule that sharing privileged materials with a third party is considered a waiver of privilege. If a party wants to rely on the Kovel exception to the attorney-client privilege, it must be able to establish that the third party was necessary, or at least useful, in counsel’s providing legal advice. This is an exception, and parties should think critically about whether, and under what circumstances, to disclose privileged information to third parties.