TYLER CODY SQUIRIC, Plaintiff-Appellee, v. SURGICAL HOSPITAL AT SOUTHWOODS et al., Defendants-Appellant.
Case No. 20 MA 0015
IN THE COURT OF APPEALS OF OHIO SEVENTH APPELLATE DISTRICT MAHONING COUNTY
December 23, 2020
[Cite as Squiric v. Southwoods Surgical Hosp., 2020-Ohio-7026.]
BEFORE: Carol Ann Robb, Cheryl L. Waite, Judges and Mary Jane Trapp, Judge of the Eleventh District Court of Appeals, Sitting by Assignment.
Civil Appeal from the Court of Common Pleas of Mahoning County, Ohio Case No. 2018 CV 00867
Affirmed in Part and Reversed in Part.
Atty. Kevin M. Norchi, Atty. Steven J. Forbes, Atty. Brendan M. Richard, Norchi Forbes LLC, Commerce Park IV, 23240 Chagrin Boulevard, Suite 210, Cleveland, Ohio 44122 for Plaintiff-Appellee Tyler Cody Squiric and
Dated: December 23, 2020
OPINION AND JUDGMENT ENTRY
Robb, J.
{¶1} Defendant-Appellant Surgical Hospital at Southwoods appeals the decision of the Mahoning County Common Pleas Court denying a motion for protective order and compelling the production of documents requested by Plaintiff-Appellee Tyler Squiric. First, the hospital seeks to protect utilization reports and case-by-surgeon reports as they were generated for use by a peer review committee for credentialing and quality assurance purposes. We agree these reports requested from the hospital were protected by the peer review privilege and not subject to discovery. The decision ordering the disclosure of the utilization and case-by-surgeon reports is reversed.
{¶2} Next, the hospital seeks to protect certain financial documents, including financial statements and profit and loss reports, arguing they should have been exempted from discovery as confidential trade secrets. The hospital‘s affidavit did not contain a detailed explanation of the economic impact of disclosure. Even if the contested financial documents contained trade secrets, the trial court reasonably exercised its discretion in allowing the discovery of the documents subject to an existing agreed protective order on confidentiality. The decision ordering disclosure of the financial documents, subject to the existing protective order, is affirmed.
STATEMENT OF THE CASE
{¶3} On April 4, 2018, the plaintiff filed a complaint alleging medical malpractice and lack of informed consent after Dr. Igor Milosevic surgically excised various lymph nodes from the plaintiff‘s body when he was 21 years old. The plaintiff alleged this 2017 surgery was unnecessary and caused permanent nerve damage. In addition to suing Dr. Milosevic and his practice (The Comprehensive Surgical Group of Northeast Ohio Ltd.), the plaintiff filed suit against The Surgical Hospital at Southwoods, trade name for The Surgery Center at Southwoods LLC.
{¶5} On November 22, 2019, the hospital filed a motion for summary judgment pointing out there was no evidence the hospital was negligent and the plaintiff signed an informed consent form. The hospital argued it was not liable for Dr. Milosevich‘s negligence as he was not an employee or agent but merely was privileged to practice at the hospital in which he had an ownership interest. The plaintiff moved to strike the motion. The court rejected this request after the hospital pointed out there was no dispositive motion deadline and the plaintiff‘s newly amended complaint dismissed the anesthesia providers (thus modifying the allegation as to the hospital‘s liability).
{¶6} Due to the intervening discovery dispute at issue in this interlocutory appeal, the plaintiff has not yet responded to the hospital‘s summary judgment motion. This appeal revolves around certain requests in the plaintiff‘s second request for production of documents.
{¶7} In requests 9 and 17, the plaintiff asked the hospital for all of Dr. Milosevich‘s case-by-surgeon reports for the past five years and any reports generated demonstrating utilization of the hospital by Dr. Milosevich and all physicians at his practice. The hospital‘s motion for protective order argued these reports were exempt from disclosure by the peer review, credentialing, and quality assurance privileges in
{¶8} In requests 1, 3, 7, and 8, the plaintiff sought: any documents demonstrating the relationship between Dr. Milosevich and the hospital; owners’ profit and loss statements for the past five years; quarterly and annual financial statements for the past five years; and any financial statements given to Dr. Milosevich or members of
{¶9} The plaintiff‘s brief in opposition to the hospital‘s motion for protective order explained that the material was requested in discovery to assist in investigating whether the defendants had a motive to profit from unnecessary surgeries at the expense of patients. An expert report was attached suggesting the surgical excisions were unnecessary. The plaintiff criticized the hospital‘s failure to provide the disputed discovery material for the trial court‘s in camera review.
{¶10} As to the utilization and case-by-surgeon reports, the plaintiff argued the reports: (1) were not protected by the peer review privilege because the hospital failed to show an investigation into the plaintiff‘s case actually took place; and (2) were not protected by the physician-patient privilege because they were not a part of any patient‘s medical record and patient identifiers can be redacted. As to the financial documents claimed to contain trade secrets, the plaintiff said he was not a competitor of the hospital and there was no showing the disclosure would have an economic impact upon the hospital.
{¶11} On January 9, 2020, the trial court denied the hospital‘s motion for protective order. Regarding the utilization and case-by-surgeon reports, the trial court found the hospital had the burden of showing a peer review committee actually investigated the incident in question, this burden was not met, and the hospital merely showed the documents were of the type reviewed in the Ongoing Professional Practice Evaluation. The court also concluded the reports were not protected by the physician-patient privilege as they were administrative records of a surgeon‘s procedures and were not found in a patient‘s medical record. The court ordered redaction of any patient-specific identifiers.
{¶13} On January 29, 2020, after a status hearing, the trial court issued a judgment ordering the hospital to produce the required responses in accordance with the court‘s January 9, 2020 judgment (and to produce three deponents) within seven days. The court found there was “no just reason for delay.” On February 3, 2020, the hospital filed a timely notice of appeal from the January 9 and 29, 2020 judgments.
FINAL APPEALABLE ORDER
{¶14} An order that grants or denies a provisional remedy is a final order if it (a) determines action with respect to a provisional remedy and prevents judgment for the appellant with respect to provisional remedy and (b) the appellant would not be provided a meaningful or effective remedy by a later appeal.
{¶15} The order compelling production of material allegedly protected by a statutory privilege is a final appealable order. See, e.g., Burnham v. Cleveland Clinic, 151 Ohio St.3d 356, 2016-Ohio-8000, 89 N.E.3d 536 (order compelling the production of documents allegedly protected by statutory attorney-client privilege is a final, appealable order); Jacob v. Youngstown Ohio Hosp. Co., 7th Dist. Mahoning No. 11 MA 193, 2012-Ohio-1302, ¶ 20 (provisional remedy order is final if it compelled the production of documents containing trade secrets or privileged communications). Moreover,
ASSIGNMENTS OF ERROR 1 & 2:
UTILIZATION REPORTS AS PRIVILEGED DOCUMENTS
{¶17} The hospital combines the arguments on the first and the second assignments of error, which provide:
“THE TRIAL COURT ERRED BY COMPELLING DISCOVERY BY THE SURGICAL HOSPITAL AT SOUTHWOODS OF INFORMATION AND DOCUMENTS THAT ARE EXEMPT FROM DISCOVERY UNDER THE PEER REVIEW AND CREDENTIALING PRIVILEGES SET FORTH IN
R.C. 2305.252 ANDR.C. 2305.24 AND BY THE PHYSICIAN PATIENT PRIVILEGE.”“THE TRIAL COURT ERRED BY DENYING APPELLANT‘S MOTION FOR A PROTECTIVE ORDER TO PREVENT THE DISCOVERY OF CERTAIN INFORMATION AND DOCUMENTS THAT ARE EXEMPT FROM DISCLOSURE UNDER THE PEER REVIEW AND CREDENTIALING PRIVILEGES SET FORTH IN
R.C. 2305.252 ANDR.C. 2305.24 AND BY PHYSICIAN-PATIENT PRIVILEGE.”
{¶18} The hospital‘s first assignment of error refers to the order compelling discovery, and the second assignment of error refers to the denial of the motion for protective order. Both assignments of error contest the trial court‘s refusal to apply a peer review privilege and/or a physician-patient privilege to the requests for production of the hospital‘s utilization and case-by-surgeon reports. Specifically, the plaintiff asked the hospital for Dr. Milosevic‘s “case-by-surgeon(s) reports” for the past five years and for “any reports generated demonstrating utilization of Southwoods hospital by Dr. Milosevic and all physicians at the Comprehensive Medical Group of Northeast Ohio.”
{¶20} The parties agree that our standard of review of the trial court‘s decision refusing to apply the peer review or physician-patient privileges is de novo. The parties also agree the burden of showing a privilege applies rests upon the party seeking to protect the information. See Waldmann v. Waldmann, 48 Ohio St.2d 176, 178, 358 N.E.2d 521 (1976).
{¶21} In support of the motion for protective order, the hospital submitted the affidavit of the chief medical officer and head of the Medical Executive Committee (Dr. Gemma, an anesthesiologist who was one of the former defendants). He oversees, conducts, and participates in investigations into the competence and professional conduct of physicians and the quality of care they provide, and he “routinely reviews credentialing and re-credentialing applications through the OPPE process” (Ongoing Professional Practice Evaluation). He explained that the hospital‘s Medical Executive Committee completes the OPPE process not only for physicians seeking to practice medicine at the hospital but also for all physicians currently credentialed to practice medicine at the hospital.
{¶22} The affiant said a function of the committee‘s OPPE process “is initiating, facilitating, organizing, conducting, reporting on the professional activities of physicians seeking or holding credentials to practice medicine at Southwoods” through investigations and meetings. He also attested that the purpose of OPPE is “peer review, credentialing,
{¶23} The chief medical officer further attested that the case-by-surgeon reports and the reports of physician utilization of the hospital2 are not only reviewed in the OPPE process but are “created in the OPPE process and are not original documents available from any other sources.” He also said the reports “contain protected health information and patient identifiers” to allow the OPPE process to address the quality of care provided to the patients.
{¶24} In addition to this affidavit, the hospital pointed to the deposition testimony of the hospital‘s director of quality. When she was asked about a notation in the patient‘s computerized medical record, she explained that this was an indication that a case-by-surgeon report was generated by the computer as the patient‘s medical record is accessed when the report is created. She said a case-by-surgeon report is a “quality report” which is “run for each surgeon to see * * * all their cases so that then we could pick cases at random to do for their OPPE. So every surgeon gets a report called Cases by Surgeon * * * probably every other month.” She equated the OPPE process to “physician report cards.”
{¶25} The plaintiff pointed out that when the hospital‘s director of quality was asked at deposition whether there was a peer review investigation as to the plaintiff‘s case, she was instructed not to answer by the hospital‘s counsel. The plaintiff also pointed to the deposition of a former defendant (anesthesiologist Dr. Sethi) who testified that he was a non-voting member of the Medical Executive Committee. When asked if a peer review investigation was conducted as to the plaintiff‘s care he said, “Not that I recall” (but also explained that every member of the committee does not participate in every peer review). The plaintiff emphasizes that the hospital failed to provide evidence that an actual investigation took place regarding the plaintiff‘s specific incident.
{¶26} The definition statute for the peer review privilege provides the following definition of a peer review committee:
a utilization review committee, quality assessment committee, performance improvement committee, tissue committee, credentialing committee, or other committee that does either of the following:
(a) Conducts professional credentialing or quality review activities involving the competence of, professional conduct of, or quality of care provided by health care providers [whether an individual or entity];
(b) Conducts any other attendant hearing process initiated as a result of a peer review committee‘s recommendations or actions.
{¶27} The peer review privilege is contained in
Proceedings and records within the scope of a peer review committee of a health care entity shall be held in confidence and shall not be subject to discovery or introduction in evidence in any civil action against a health care entity or health care provider, including both individuals who provide health care and entities that provide health care, arising out of matters that are the subject of evaluation and review by the peer review committee.
{¶28} As to the peer review records privilege at issue herein, the division points out that “Information, documents, or records otherwise available from original sources are not to be construed as being unavailable for discovery or for use in any civil action merely
{¶29} The hospital also refers to a “quality assurance privilege,” citing to
{¶30} We have stated that this particular quality assurance statute does not create a privilege as to civil discovery, but rather it clarifies the obligations of physicians and committee members. Large v. Heartland-Lansing, 2013-Ohio-2877, 995 N.E.2d 872, ¶ 32 (7th Dist.). We then discussed the peer review privilege in
{¶31} A peer review committee statutorily includes “a utilization review committee, quality assessment committee, performance improvement committee, * * * credentialing
{¶32} The hospital presented evidence that a peer review committee existed at the hospital and that its function was to perform peer review, credentialing, and quality assurance functions. And, there was evidence that the utilization and case-by-surgeon reports were “records within the scope” of the committee. See
{¶33} The plaintiff claims there was not enough information to know exactly what the reports contained as there was no in camera review. Pursuant to Civ.R. 26(B)(8)(a), “When information subject to discovery is withheld on a claim that it is privileged * * *, the claim shall be made expressly and shall be supported by a description of the nature of the documents * * * that is sufficient to enable the demanding party to contest the claim.” A hospital asserting privilege can meet its initial burden by either: (1) submitting the disputed documents to the trial court for an in camera inspection; or (2) presenting an affidavit or deposition containing the information to allow the court to determine whether it was privileged. Cousino v. Mercy St. Vincent Med. Ctr., 2018-Ohio-1550, 111 N.E.3d 529, ¶ 16 (6th Dist.); Stewart v. Vivian, 12th Dist. Clermont No. CA2011-06-050, 2012-Ohio-228, ¶ 15; Bansal v. Mt. Carmel Health Sys. Inc., 10th Dist. Franklin No. 09AP-351, 2009-Ohio-6845, ¶ 17.
{¶34} Notably, it was the plaintiff‘s request for production of documents that specifically asked for Dr. Milosevich‘s case-by-surgeon reports and for “any reports generated demonstrating utilization of the hospital” by Dr. Milosevich and other physicians at his practice with regards to their use of the hospital. In fact, the reports of the utilization committee are discussed in the quality assurance statute,
{¶35} Moreover, the affidavit of the chief medical officer explained utilization and case-by-surgeon reports: are created as to the individual physician at the hospital (and
{¶36} There was no need for an in camera review of these reports, and presentation of the reports for an in camera review was not requested by the trial court. Even where in camera review is traditionally required, a court need not conduct an in camera inspection if the matters in the requested record are not in dispute, making only its status under the law an issue. Salemi v. Cleveland Metroparks, 145 Ohio St.3d 408, 2016-Ohio-1192, 49 N.E.3d 1296, ¶ 33-34 (“The matters contained in the records which the court of appeals held were either trade secrets or privileged are not in dispute—the records contain names and e-mail addresses, the marketing plan for Metroparks, and directives on access to and protection of its customer list. The court did not need to conduct an in camera review to determine the status of those records under the Public Records Act“). Likewise, there was no indication the general contents of the reports in this case were in dispute.
{¶37} We turn to the language prohibiting these utilization and case-by-surgeon reports from being discovered “in any civil action * * * arising out of matters that are the subject of evaluation and review by the peer review committee.”
{¶38} The plaintiff points to the cases finding a party relying on the peer review privilege must demonstrate “that a peer-review committee existed and that it actually investigated the incident.” Giusti v. Akron Gen. Med. Ctr., 178 Ohio App.3d 53, 2008-Ohio-4333, 896 N.E.2d 769, ¶ 17 (9th Dist.), citing Smith v. Manor Care of Canton Inc.,
{¶39} This court has also recited the premise that the hospital must show the peer review committee actually investigated the incident. Large, 2013-Ohio-2877 at ¶ 37-38 (after stating the plain language of
More importantly, the affidavit offered by Appellant also clearly indicates that the material was not generated by or at the request of the committee. Appellee did not seek documents directly from any peer review committee. Appellant has failed to assert any peer review privilege with regard to the documents described as patient/family complaints. The affidavit intended to support privilege instead conclusively establishes that the documents were not generated by or under the direction of a committee whose activities are protected by the statutory privilege.
{¶40} Therefore, the case at bar is distinguishable as the affidavit here specifically said the utilization reports and case-by-surgeon reports were generated by the peer review committee as they were created in the Ongoing Professional Practice Evaluation process, which engages in re-credentialing of physicians who practice at the hospital, and the reports were not available from another source.
{¶41} Along these lines, the hospital points to law stating “all documents generated by or exclusively for a peer review committee are privileged and immune from discovery.” Cousino, 111 N.E.3d 529, ¶ 23, 26 (6th Dist.) (the credentialing file of the physician consists entirely of documents generated by and created solely for use by the credentials committee, the Medical Executive Committee, and the Board of Directors in their review of his professional qualifications, and thus, the contents of the credentialing file are absolutely privileged), citing Huntsman, 2008-Ohio-2554, ¶ 57 (finding the trial court erred by compelling a physician to produce any applications for medical privileges because they were prepared exclusively for the peer review committee and therefore privileged under the peer review statute).
{¶42} The Tenth District has stated: ”
{¶43} The Eighth District found morbidity and mortality reports addressing the treatment rendered to particular patients were privileged because uncontradicted testimony explained the records were part of the hospital‘s peer review process; in addition, the materials were provided to the quality assurance department. Wall v. Ohio Permanente Med. Group Inc., 119 Ohio App.3d 654, 662, 695 N.E.2d 1233 (8th Dist.1997) (distinguishing a prior case where there was no affidavit stating the records
{¶44} We conclude the language of
Proceedings and records within the scope of a peer review committee of a health care entity shall be held in confidence and shall not be subject to discovery or introduction in evidence in any civil action against a health care entity or health care provider, including both individuals who provide health care and entities that provide health care, arising out of matters that are the subject of evaluation and review by the peer review committee.
(Emphasis added).
{¶45} The use of “are” instead of “were” in “are the subject of evaluation and review” clause suggests the statute is referring to whether the matters are subject to review by the committee, not whether an investigation was conducted in the plaintiff‘s case. Under the plaintiff‘s interpretation, documents generated by or on behalf of the peer review committee are discoverable if the committee does not proceed to investigate the particular incident which occurred to the medical malpractice plaintiff seeking the records. Yet, the plaintiff is seeking records involving the surgeries performed on other patients over a five-year period (not just a record of his surgery).
{¶46} The plaintiff‘s theory suggests the documents a peer review committee generates in preparation for credentialing or utilization review would be discoverable if requested before the committee meets to decide what cases to investigate or further review. The evidence demonstrated the credentialing of surgeons by a peer review committee was ongoing in order for a surgeon to continue practicing at the hospital and the documents requested were only generated as part of the credentialing and quality assurance process. Once generated on behalf of the committee for use in the scope of a protected process, the report was essentially a part of the credentialing file regardless
{¶47} In sum, as the credentialing process is ongoing for all physicians practicing medicine at the hospital and the affiant receives applications for re-credentialing and uses the utilization reports and case-by-surgeon reports in considering the re-credentialing applications as part of the Ongoing Professional Practice Evaluation, the hospital demonstrated that these reports generated for the peer review committee “are subject to evaluation and review” by the peer review committee. Accordingly, the hospital‘s argument on peer review privilege is sustained, and the trial court‘s decision finding the privilege did not apply to the utilization and case-by-surgeon reports is reversed as these reports are protected by the peer review privilege in
{¶48} The hospital alternatively argues, under the first and second assignments of error, that the utilization and case-by-surgeon reports are exempt from disclosure under the physician-patient privilege in
{¶49} As we find the utilization and case-by-surgeon reports are protected from discovery by the peer review privilege, we need not address this alternative argument. We therefore find the physician-patient privilege argument to be moot.
FINANCIAL DOCUMENTS AS TRADE SECRETS
{¶50} The hospital combines the arguments for the third and fourth assignments of error, which provide:
“THE TRIAL COURT ERRED BY COMPELLING THE PRODUCTION OF CONFIDENTIAL AND PROPRIETARY FINANCIAL INFORMATION BY THE SURGICAL HOSPITAL AT SOUTHWOODS THAT WAS NOT RELEVANT TO THE UNDERLYING MEDICAL MALPRACTICE CLAIM AND CONSTITUTES PROTECTED TRADE SECRET INFORMATION UNDER OHIO REVISED CODE 1333.61(D).”
“THE TRIAL COURT ERRED BY DENYING APPELLANT‘S MOTION FOR A PROTECTIVE ORDER TO PREVENT THE DISCOVERY OF CONFIDENTIAL TRADE SECRET INFORMATION BY THE SURGICAL HOSPITAL AT SOUTHWOODS.”
{¶51} The third assignment refers to the order compelling production of financial records, and the fourth assignment refers to the denial of the motion for protective order to prevent the disclosure of the same records. The hospital‘s combined argument for both assignments of error contests the trial court‘s denial of its request for trade secret protection from disclosure.
{¶52} The hospital‘s motion for protective order referred to the following financial items within the plaintiff‘s request for production of documents:
- Any and all documentation demonstrating the relationship between Dr. Milosevich and Southwoods, including but not limited to, contracts with Southwoods, stock certificates, reimbursement [or] compensation agreements, employment/partnership agreements;
- Documents showing all owners of Southwoods and their respective profit/losses from Southwoods’ business for the past five (5) years;
- Quarterly and annual financial statements of Southwoods for the past five (5) years;
- Any and all financial statements provided by Southwoods to Comprehensive Surgical Group and/or Dr. Milosevic for the past five (5) years.
(Plaintiff‘s Request for Production of Documents 1, 3, 7, 8).
{¶54} The affidavit of the hospital‘s vice president and chief operating officer was attached to the motion for protective order in support of the trade secret argument. His duties included maintaining financial data for the hospital and its business affiliates and members, including the physician-owners. He said this financial data included annual financial statements and owners’ profit and loss statements.
{¶55} The affiant stated that this financial data is: held in secrecy and not publicized to the general public; stored electronically with limited access password protection; known only to executives, members, and owners of the hospital; and not publicized to other employees, except the accounting department where the documents are prepared. He claimed the hospital “expended substantial time, energy, research, and talent to setting up and maintaining its business model since 2012” and disclosure of the requested financial data “would be detrimental to the business of Southwoods and leave Southwoods open to attacks from competitors.”
{¶56} Ohio‘s Uniform Trade Secrets Act (UTSA) is set forth in
{¶57} The parties agree with the use of the definition of trade secret set forth in the UTSA, which specifies that a trade secret is:
information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following:
(1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
{¶58} In analyzing whether the information fits the definition of a trade secret, the Supreme Court adopted factors which can be considered: (1) the extent the information is known outside the business; (2) the extent it is known inside the business by employees; (3) the precautions taken to guard the information‘s secrecy; (4) the value of having the information as against competitors; (5) the effort or money expended to obtain and develop the information; and (6) the time and expense for others to acquire and duplicate the information. State ex rel. Besser v. Ohio State Univ., 89 Ohio St.3d 396, 399-400, 732 N.E.2d 373 (2000) (“Besser II“).
{¶59} The parties agree these are guidelines that “may” be considered. “[I]t is ultimately the statute that controls the analysis, not the factors. MNM & MAK Enterprises LLC v. HIIT Fit Club LLC, 2019-Ohio-4017, 134 N.E.3d 242, ¶ 25 (10th Dist.) (no single factor is dispositive). As stated by the Supreme Court after listing the factors, the party claiming trade secret status has the “burden to identify and demonstrate that the material
{¶60} We turn to our standard of review. The hospital states the trial court misapplied the law by: finding the hospital “did not meet its burden of establishing trade secret status“; stating the disclosure would “have no economic impact upon” the hospital, while noting the plaintiff was not a competitor; and reasoning that the plaintiff was not asking for disclosure of the hospital‘s entire business model, while recognizing the sensitive nature of the material.
{¶61} The hospital applies the same de novo standard of review as applicable to the peer review or the physician-patient privilege, urging the following holding would apply to a trade secret discovery determination: “whether the information sought is confidential and privileged from disclosure is a question of law that is reviewed de novo.” Medical Mut. of Ohio v. Schlotterer, 122 Ohio St.3d 181, 2009-Ohio-2496, 909 N.E.2d 1237, ¶ 13. See also Ward v. Summa Health Sys., 128 Ohio St.3d 212, 2010-Ohio-6275, 943 N.E.2d 514, ¶ 13 (“if the discovery issue involves an alleged privilege, as in this case, it is a question of law that must be reviewed de novo“). However, both cases were ascertaining whether information was protected by the physician-patient privilege.
{¶62} Although the plaintiff agrees the de novo standard of review applied to our review of the peer review and physician-patient privileges, which are absolute privileges, the plaintiff contends the trial court‘s trade secret decision is subject to an abuse of discretion review applicable to other discovery determinations. We note that both parties cite law holding that the appropriate standard of review for a decision on disclosure of a trade secret in discovery depends on whether it presents a question of fact or a question of law. See Block Communications Inc. v. Pounds, 2015-Ohio-2679, 34 N.E.3d 984, ¶ 44 (6th Dist.). See also Lima Mem. Hosp. v. Almudallal, 2016-Ohio-5177, 69 N.E.3d 204, ¶ 58 (3d Dist.); Blackburn v. Coon Restoration & Sealants Inc., 5th Dist. Richland No. 2006-CA-0037, 2007-Ohio-558, ¶ 9, 14-15.
{¶63} In reviewing a protective order issued in administrative discovery, the Supreme Court has stated: “Whether information constitutes a trade secret is a question of fact.” In re Review of Alternative Energy Rider Contained in Tariffs of Ohio Edison Co.,
{¶64} The plaintiff states that even if the information was a trade secret, the court‘s balancing of the interests in allowing discovery of the financial information was a proper exercise of discretion. The plaintiff notes the secrecy of the information will be protected by the agreed protective order (while acknowledging they may later attempt to use the information at trial). Contrary to the hospital‘s suggestion, the plaintiff emphasizes that a trade secret is not absolutely privileged.
{¶65} A trial court‘s decision to order disclosure of a trade secret in discovery is contemplated by Civ.R. 26(C). Armstrong v. Marusic, 11th Dist. Lake No. 2001-L-232, 2004-Ohio-2594, ¶ 23. This rule provides:
Upon motion by any party or by the person from whom discovery is sought, and for good cause shown, the court in which the action is pending may make any order that justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: (1) that the discovery not be had; * * * (7) that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way * * *.
(Emphasis added). Civ.R. 26(C).
{¶66} The counterpart in the federal rules is similar. See
{¶68} In contrast to cases involving civil discovery and applying Civ.R. 26(C), it must be pointed out that the cited cases involving public records requests involved an automatic result of being exempt from disclosure. A public records request is per se denied if the record meets the trade secret definition because that is the statutorily-required result under the public records act. See Besser II, 89 Ohio St.3d at 396, citing Besser I, 87 Ohio St.3d at 540.
{¶69} In general, a decision on “a motion for a protective order pursuant to Civ.R. 26(C) [is] * * * an exercise by the court of the discretion vested in it by Civ.R. 26(C).” Ruwe v. Board of Twp. Trustees of Springfield Twp., 29 Ohio St.3d 59, 61, 505 N.E.2d 957 (1987). “The standard for ‘abuse of discretion’ is readily defined as more than error of law or judgment, but implies an attitude on the part of the trial court that is unreasonable, arbitrary or unconscionable.” Id. See also Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983) (“The term ‘abuse of discretion’ connotes more than an error of law or judgment; it implies that the court‘s attitude is unreasonable, arbitrary or unconscionable“), quoting State v. Adams, 62 Ohio St.2d 151, 157, 404 N.E.2d 144 (1980).
{¶70} Where the party resisting discovery alleges the requested information is confidential or proprietary: “Courts apply a balancing test in determining whether to grant protective orders, weighing the competing interests to be served by allowing discovery to proceed against the harm that may result.” Eberhard Architects LLC v. Schottenstein, Zox & Dunn Co., 8th Dist. Cuyahoga No. 99867, 2013-Ohio-5319, ¶ 13. See also Merrill, 443 U.S. at 356 (weigh the privacy claim against the need for disclosure); Lima Mem. Hosp.,
{¶71} But first, the party asserting privilege must sufficiently describe the documents “to enable the demanding party to contest the claim” of privilege.” See Civ.R. 26(B)(8)(a). Submission of the documents for in camera review was not necessary. As discussed above on the topic of peer review records, a party claiming privilege can meet its initial burden by: (1) submitting the disputed documents to the trial court for in camera inspection or (2) presenting an affidavit or deposition testimony about the information which would allow the court to determine whether a privilege applied. Cousino, 111 N.E.3d 529, ¶ 16 (6th Dist.); Stewart, 2012-Ohio-228, ¶ 15; Bansal, 2009-Ohio-6845, ¶ 17.
{¶72} Financial statements of a limited liability company (whether annual financial statements of the hospital or profit and loss statements provided to owners showing income based on ownership percentage) are sufficiently explained by the identification in the affidavit and need not be reviewed in camera to understand what information is contained within the documents. The specific monetary amounts lost or generated as profit and distributed based on ownership percentages need not be viewed by a court to determine whether the information is a trade secret or to balance the interests. The plaintiff asked for these specific financial documents in discovery, and there was no actual dispute as to what general information is contained in the documents. See Civ.R. 26(B)(8)(a) (identification sufficient to enable the demanding party to contest the privilege claim); Salemi, 145 Ohio St.3d 408 at ¶ 33-34 (in camera inspection is not required if the general contents of the requested records are not in dispute).
{¶73} Returning to the statutory definition of trade secret in
{¶74} As previously recited, the affidavit of the hospital‘s chief medical officer stated that the disputed financial data is: held in secrecy and not publicized to the general public; stored electronically with limited access password protection; known only to executives, members, and owners of the hospital; and not publicized to other employees, except the accounting department where the documents are prepared. This satisfied the statutory element in (D)(2). It also covered the first three factors (set forth as guides in the case law): extent of the information is not known externally, extent of the information is not known internally, and precautions guarding secrecy. The plaintiff did not dispute the hospital‘s demonstration of this statutory element below, and the plaintiff‘s brief does not contest that the hospital demonstrated this prong of the test was met. Reasonable secrecy was demonstrated.
{¶75} Considering the safeguarding of the information and the fact that this is a limited liability company and not a publicly held company, the inability to duplicate the information in financial statements and profit and loss statements as related to the last factor may be self-evident, as is the difficulty in others to obtain the information. See generally Salemi, 145 Ohio St.3d 408 at ¶ 29 (under the secretive circumstances, it “is reasonable to conclude that others would similarly need to invest time and money to acquire and duplicate the information on the customer list“).
{¶76} Next, the affidavit of the hospital‘s chief medical officer attested that the hospital “has expended substantial time, energy, research, and talent to setting up and maintaining its business model since 2012” and disclosure of the requested financial data “would be detrimental to the business of Southwoods and leave Southwoods open to attacks from competitors.” This attempts to address factors relating to the value in keeping the information from competitors and the effort to develop the information. The parties dispute whether this is sufficient to meet the elements of the statutory trade secret definition in subdivision (D)(1) requiring the record to contain information which: “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use * * *.”
{¶78} The plaintiff suggests the financial information requested here is distinguishable as there is no indication there would be recruitment of a physician who is also an owner. We note that another point in Besser II is that some business documents are presumptively trade secrets (when the business takes measures to prevent disclosure in the ordinary course of business to anyone other than those selected by the business). See id. Still, in a later case considering a protective order during discovery, the Court observed: “Whether information constitutes a trade secret is a question of fact.” In re Review of Alternative Energy Rider, 153 Ohio St.3d 289 at ¶ 35.
{¶79} The plaintiff urges the hospital failed to show the information gains actual or potential independent economic value because it is not easily ascertainable by someone who can benefit financially from it. The plaintiff insists the affidavit was conclusory on this topic as it merely said the disclosure of the secretly held financial data “would be detrimental to the business of Southwoods and leave Southwoods open to attacks from competitors” and the hospital “has expended substantial time, energy, research, and talent to setting up and maintaining its business model since 2012.”
{¶80} As the plaintiff points out, the affiant did not explain how the disclosure would be detrimental to the hospital‘s business or leave the hospital open to attack from competitors. Where a public entity argued that a business plan drafted before its acquisition of a hospital was a trade secret (in a public records case), the Supreme Court found insufficient the following “conclusory” statement in an affidavit: “[r]elease of strategic plans and other negotiation information surrounding [OSU‘s] purchase of [the hospital] even after the conclusion of negotiations would put The Ohio State University
{¶81} We tend to agree with the trial court‘s judgment indicating that the affidavit was too conclusory to demonstrate that the financial information derives actual or potential independent economic value by being not easily ascertainable by those who can benefit financially from it as required by
{¶82} In any event, even if the requested financial information falls within the definition of trade secret, the privilege is not absolute. See, e.g., Armstrong, 2004-Ohio-2594 at ¶ 23; Merrill, 443 U.S. at 362 (there is “no absolute privilege for trade secrets and similar confidential information“). Civ.R. 26(C)(7) applies to a trade secret; this same subdivision also applies to “other confidential * * * commercial information.” The rule allows the trial court to exercise its discretion to issue a protective order stating the information shall not be disclosed or shall be disclosed only in a designated way. See Ruwe, 29 Ohio St.3d at 61 (a motion for a protective order pursuant to Civ.R. 26(C) is an exercise by the court of the discretion vested in it by that rule). An abuse of discretion is “more than error of law or judgment,” and we find no indication of “an attitude on the part of the trial court that is unreasonable, arbitrary or unconscionable.” Id.; Blakemore, 5 Ohio St.3d at 219.
{¶83} The trial court evinced adequate consideration that it balanced the relevant interests. See, e.g., Merrill, 443 U.S. at 362 (the trial court weighs the claim to privacy against the need for disclosure in each case); Eberhard Architects, 2013-Ohio-5319 at ¶ 13 (interests to be served by allowing discovery versus the harm that may result). The trial court recognized the contested discovery contained sensitive information that was kept secret (annual financial statements and profit and loss statements showing
{¶84} The trial court allowed disclosure but also relied on the agreed protective order to protect the information from outsiders to the litigation. “[A] decision is not arbitrary, unreasonable, or unconscionable merely because another judge would have ruled a different way in exercising her discretion.” 84 Lumber Co. v. O.C.H. Constr. LLC, 2015-Ohio-4149, 44 N.E.3d 961, ¶ 21 (7th Dist.) citing Peterson v. Crockett Constr. Inc., 7th Dist. Columbiana No. 99CO2 (Dec. 7, 1999). We refuse to substitute our judgment for that of the trial court in weighing the competing interests and in deciding the existing protective order was sufficient under the totality of the circumstances of this case.
{¶85} In conclusion, even if we assume the affiant‘s statements were sufficiently self-explanatory as to why the financial documents had the requisite value by being kept secret from those who could financially benefit by disclosure, the decision to disclose the documents in discovery was not unreasonable, arbitrary, or unconscionable. In other words, even if the contested financial documents contained trade secrets, the trial court did not abuse its discretion in ordering disclosure here. The trial court acted within its discretion in ordering the disclosure of the contested financial information where it will be subject to the agreed protective order. Accordingly, the hospital‘s third and fourth assignments of error are overruled.
{¶86} For the foregoing reasons, the utilization and case-by-surgeon reports are not subject to disclosure in discovery, and the trial court‘s decision refusing to apply the peer review privilege to those reports is reversed. The trial court‘s decision allowing disclosure of the contested financial information, subject to the existing agreed protective order, is affirmed.
Waite, P.J., concurs.
Trapp, J., concurs.
A certified copy of this opinion and judgment entry shall constitute the mandate in this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that a certified copy be sent by the clerk to the trial court to carry this judgment into execution.
NOTICE TO COUNSEL
This document constitutes a final judgment entry.