First District Affirms Decision Requiring Hospital to Produce Insurance Documents for In Camera Inspection

 On July 28, 2017, the Illinois Appellate Court (First District) affirmed the judgment of Judge Kathy Flanagan requiring a defendant hospital to produce documents related to its self-insured trust for in camera inspection.

 In Brown v. Advocate Health and Hospitals Corp., 2017 IL App (1st) 161918-U, the plaintiff issued discovery requests seeking copies of the defendant hospital’s insurance policies. The hospital disclosed $12.5 million in coverage for the plaintiff’s claim, and stated that there was no policy because it was a self-insured entity. Ruling on plaintiff’s motion to compel, the circuit court ordered the hospital to tender its unredacted trust documents for in camera inspection. The hospital refused to tender the documents and asked to be held in “friendly contempt.” Judge Flanagan entered an order to that effect.

 On appeal, the hospital argued the insurance documents were confidential financial documents that were irrelevant to the plaintiff’s claims. In a divided decision, the Appellate Court majority relied on the 1957 Illinois Supreme Court decision Terry v. Fisher, 12 Ill. 2d 231. In Fisher (a case that arose from a motor vehicle accident), the Supreme Court reasoned that liability insurance existed, in part, for the benefit of the persons injured by the negligence of the insured. The majority in Brown held the same was true of the hospital’s self-insured trust, “even if it is not a standard insurance policy per se.” The majority further reasoned that review of the documents could lead to admissible evidence regarding substantive issues, such as whether an agency relationship existed between certain defendants.

 In his dissent, Justice Gordon noted there were “obvious reasons” for a hospital to protect these types of documents from disclosure, such as its interest in keeping financial formulas establishing what triggers excess coverage confidential. Justice Gordon distinguished Fisher and reasoned that unlike motor vehicle insurance, the hospital’s self-insured trust did not exist for the benefit of injured parties. He further disagreed the documents could lead to admissible evidence regarding whether an agency relationship existed, noting that nothing in the record even indicated that agency was at issue in the case.

 This opinion was filed under Supreme Court Rule 23 and therefore cannot be cited as precedent at this time. However, a petition to publish is pending. Although the holding is limited to the propriety of an in camera review of documents related to self-insured trusts, it is likely to embolden plaintiffs to pursue the production of insurance-related documents. Further, the Court emphasized that a protective order strictly limited “the use or dissemination of any produced insurance documents,” perhaps suggesting that such an order would be seen as sufficient to protect the hospital’s interest in the event that it was ordered to produce the documents following in camera inspection. In the event the opinion is published, self-insured defendants will have a more difficult time objecting to the production of documents outlining the existence and extent of self-insured trusts from which settlements or judgments could be paid. Those defendants should still request an in camera inspection of all such documents and should argue any relevant objections via a privilege log when those documents are submitted for inspection.