ATRA makes case against W.Va. judge's order

WASHINGTON (Legal Newsline) - The American Tort Reform Association is arguing that an "overly broad" protective order entered in West Virginia could impose a burdensome and conflicting layer of regulation.

Specifically at issue is Harrison County Circuit Judge Thomas A. Bedell's issuance of a protective order that imposes document disclosure and destruction requirements. ATRA made its argument in an amicus brief filed Friday with the U.S. Supreme Court.

The order provides, at the end of the period covered by the order, State Farm Mutual Automobile Insurance Co. to certify that it has destroyed all records -- including internal memoranda and other company files -- relating to a plaintiff's medical condition.

ATRA, a coalition of more than 300 businesses and corporations, argues that the circuit court's order conflicts with statutory requirements governing insurers and their fraud prevention obligations.

"Typically, 'regulation through litigation' involves situations in which courts, at the urging of plaintiffs' lawyers, impose regulatory requirements on entire industries where legislators and government agencies have not done so, either consciously or through inaction," it wrote.

"This case raises a different, but also troubling, type of regulation through litigation: state court protective orders that impose obligations on litigants and their insurers in areas already tightly regulated by state and federal governments."

Such protective orders, if they become widespread, threaten to create significant confusion for regulated parties, unravel the ability of regulators to properly monitor the industry and investigate fraud, and increase the cost of insurance for the public, ATRA contends.

The coalition also argues that the circuit court's order is premised on a federal law that is "explicitly inapplicable" to automobile insurers.

"This piecemeal regulation-by-protective-order has the potential to impose burdensome obligations on an already-regulated party and place a company at risk of liability and civil penalties as it attempts to fulfill competing requirements," it said.

ATRA says the nation's high court should grant certiorari to address the constitutionality of including such provisions in protective orders and to provide regulated parties with clarity as to their legal obligations.

It's also important for the Court to grant certiorari, the coalition argues, because the appeal presents a "stark example of unpredictability and inconsistency in the civil justice system" -- particularly in West Virginia.

ATRA points to the record, which shows that the West Virginia Supreme Court of Appeals, in an unanimous decision, initially invalidated a protective order issued by the circuit court due to conflicts between the order's requirements and state law.

The state's highest court also invalidated this first protective order due to the absence of any showing whatsoever -- beyond "vague fears" and generic privacy concerns -- that existing laws and regulations were insufficient to protect against disclosure of personally identifiable medical records.

However, after the trial court made minor revisions to the protective order, the same state high court -- less than one year later -- reached the opposite conclusion.

"It did so despite continued conflicts between the order and statutory obligations, and while acknowledging that the plaintiff added no new information to the record demonstrating good cause supporting the need for the order," ATRA wrote.

That order is now before the U.S. Supreme Court.

"Such inconsistent rulings undermine the ability of litigants to rely on the civil justice system," the coalition continued. "The Court should grant certiorari to consider the due process implications of such inconsistent rulings on litigants."

Mark A. Behrens of the law firm Shook, Hardy & Bacon LLP, which filed the ATRA brief, said such orders, as a policy matter, make it more difficult to police insurance fraud and to identify whether a condition is based on a pre-existing event.

"We understand that such overly broad orders are now being entered with some frequency in West Virginia as a result of the order in this action and could serve as a template for plaintiffs in other states," he said.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.