ADVANCED SPINE CENTERS, INC. v. COMMERCE INSURANCE COMPANY

COVEN, J. Advanced Spine Centers, Inc. (“Advanced Spine”) brought this action against Commerce Insurance Company (“Commerce”) to recover personal injury protection (“PIP”) payments pursuant to G.L. c. 90, § 34M for chiropractic treatment it provided to Commerce’s insured, and damages for Commerce’s alleged violations of G.L. c. 93A, § 11, G.L. c. 176D, and G.L. c. 93, § 12. On the day of trial, Advanced Spine withdrew its G.L. c. 90, § 34M claim. It also filed a motion in limine, in lieu of a trial, to establish conclusively its G.L. c. 93A, § 11 claim as a sanction for Commerce’s discovery violation in its late disclosure of an investigative report. The motion was allowed. An assessment of damages hearing was later held, and judgment awarding treble damages, costs, and attorney’s fees was entered for Advanced Spine.

The principal issue on this appeal by Commerce is whether the sanction imposed for its late disclosure of the report was an abuse of the court’s discretion. Commerce also asserts error in the court’s award of treble damages, denial of its summary judgment motion, and failure to award it the attorney’s fees and costs associated with its defense of Advanced Spine’s G.L. c. 90, § 34M claim. We conclude that the motion judge erred in the sanction it imposed on Commerce and, as a result, that the court’s judgment must be vacated. We also rule that the claim of error in the denial of summary judgment is moot, and affirm the ruling that Commerce is not entitled to its attorney’s fees and costs in opposing Advanced Spine’s G.L. c. 90, § 34M claim.

On April 17, 2009, Advanced Spine filed its complaint in this action. [Note 1] The record

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indicates that Advanced Spine, a provider of chiropractic services, treated Commerce’s insured from July 8, 2008 to January 5, 2009 for injuries allegedly arising out of a motor vehicle accident on July 1, 2008. Advanced Spine billed $5,955.00 for the chiropractic services it rendered. Commerce submitted those bills for a medical record review by another chiropractor [Note 2] and, as a result of the review, made payment in the amount of $2,320.00 on March 10, 2009 for services provided by Advanced Spine through August 21, 2008. Subsequent to the filing of this suit, Commerce made additional PIP payments, in the amount of $3,155.25, [Note 3] to other providers, and paid an additional $466.22 to Advanced Spine on August 21, 2009 for services it provided to Commerce’s insured from September 3, 2008 to September 11, 2008. The order in which bills were submitted is not shown in the record before us. As of the last payment on August 21, 2009, Commerce paid $8,000.00 in benefits, thereby exhausting all PIP benefits available to its insured. [Note 4] Based on that exhaustion of PIP benefits, Commerce moved for summary judgment on April 26, 2010. The motion was denied, after hearing, on May 6, 2010.

On May 19, 2010, the trial date, Advanced Spine withdrew its G.L. c. 90, § 34M claim [Note 5] and filed a motion in limine to establish its G.L. c. 93A, § 11 claim as a sanction for Commerce’s production the prior day, at approximately 3:00 PM, of a twelve-page investigator’s report. Advanced Spine noted in its motion that, more than a year earlier, it had requested investigator reports in discovery, and that Commerce’s failure to comply timely with its discovery request had “deprived [Advanced Spine] of any meaningful opportunity to prepare its c. 93A case, to obtain discovery on the investigation,

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to meaningfully review the documentation, or if warranted after review of the documentation, to subpoena the investigator and any heretofore undisclosed and unknown documents related to the investigation.” In a pretrial memorandum dated May 11, 2010, Commerce had listed as a witness the investigator whose report it then withheld from Advanced Spine until the very eve of trial.

In oral argument on the motion in limine, counsel for Advanced Spine indicated that his schedule did not allow him an opportunity to prepare the case in light of the investigator’s report disclosed only the previous day. Counsel for Commerce informed the judge that the report was withheld as work product, and ultimately disclosed only out of an “abundance of extreme caution.” Referring to “transcripts and . . . recorded statements,” Commerce added that “the sum and substance” of what was contained in the report had been provided in discovery, and later referred to “claims notes” that had been provided. Based on this level of detail, and recognizing that Advanced Spine was requesting an “extreme” and a “drastic” sanction, the judge allowed the motion in limine and requested the filing of a motion for assessment of damages.

The investigator’s report, which we have reviewed, contains statements made by Advanced Spine’s patient, Commerce’s insured, and her husband about the accident, and details the history of the actions taken by the investigator. The report notes that the attorney for Advanced Spine’s patient did not allow the investigator to question her on the issue of injuries. It contains no opinion on the reasonableness of the treatment Advanced Spine provided.

The motion for assessment of damages was filed and, after hearing on June 2, 2010, allowed. The record does not reflect what evidence, if any, was presented other than supporting documentation for attorney’s fees. [Note 6] Commerce did argue that there was no evidence that would support the trebling of damages.

It is clear, as Advanced Spine argues, that Commerce violated Mass. R. Civ. P. 26(b)(5) [Note 7] in failing to list the investigator’s report as being withheld as its alleged work product when it responded to Advanced Spine’s discovery request. Given Commerce’s failure to comply with Rule 26(b)(5), the existence of the investigator’s report may not have been known to Advanced Spine. Thus, contrary to Commerce’s attempt to blame Advanced Spine, a motion to compel its production could not have been filed since a party cannot move to compel the production of what is not known to exist. Further, we recognize that a trial judge is given wide discretion in sanctioning a party for discovery violations. Global Investors Agent Corp. v. National Fire Ins. Co. of Hartford, 76 Mass. App. Ct. 812, 820 (2010).

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Yet sanctions are subject to an examination under principles of due process. Gos v. Brownstein, 403 Mass. 252, 257 (1988). The report was ultimately produced, albeit in the eleventh hour. And this is not a case in which there was a failure to comply with an existing Mass. R. Civ. P. 37 discovery order. Relevant factors in a due process examination include: “the degree of culpability of the nonproducing party; the degree of actual prejudice to the other party; whether less drastic sanctions could be imposed; the public policy favoring disposition of the case on the merits; and the deterrent effect of the sanction.” Keene v. Brigham & Women’s Hosp., Inc., 56 Mass. App. Ct. 10, 21 (2002), S.C., 439 Mass. 223 (2003). [Note 8] Cf. Short v. Marinas USA Ltd. Partnership, 78 Mass. App. Ct. 848, 853 & n.7 (2011) (Keene factors not relevant where a discovery order is violated and violation results from fault, bad faith, or wilfulness). The judge’s action in this case did not comport with the requirements of due process. Commerce’s eleventh hour production unquestionably warranted a serious examination of Commerce’s conduct and its degree of fault as well as the imposition of an appropriate sanction. Our opinion is not to be understood to condone Commerce’s tactics. But there is nothing in the record that indicates, first, a consideration of even the relevance of the investigator’s report. It appears that Commerce did not pay Advanced Spine for all of its services because, after a medical review, it determined that some of the services were not necessary, and because PIP benefits had been exhausted. The investigator’s report addressed neither of these issues. There existed a disconnect between the report and the reason for nonpayment. Further, the report does not advance Advanced Spine’s G.L. c. 93A claim. The reasonableness of a sanction should be “measured against the pertinence of the requested documents.” Shapiro v. Public Serv. Mut. Ins. Co., 19 Mass. App. Ct. 648, 659 (1985). Finally, nothing in the record supports a finding that the judge weighed any lesser sanctions [Note 9] or considered the strong judicial policy favoring a trial on the merits.

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Monahan v. Washburn, 400 Mass. 126, 129 (1987). The judge articulated no reason for finding that the deterrent effect of imposing the “extreme” or “drastic” sanction was warranted.

Moreover, the award of treble damages pursuant to G.L. c. 93A, without any evidentiary support, also violated principles of due process. There was nothing in the complaint to justify the award of punitive damages. At best, the complaint alleged that Commerce insured Advanced Spine’s patient, medical treatment was provided by Advanced Spine to Commerce’s insured for injuries suffered in an automobile accident for which PIP benefits were available, and Commerce did not reimburse Advanced Spine for the services it provided. In these circumstances, it remained the burden of Advanced Spine to present evidentiary support at the assessment hearing to support a finding that Commerce violated G.L. c. 93A and that the violation was wilful and knowing. We turn to the remaining claims. As noted, Advanced Spine withdrew its G.L. c. 90, § 34M claim on the scheduled trial date. The withdrawal of the claim renders moot Commerce’s argument that the court erred in denying its motion for summary judgment on that claim. [Note 10]

The withdrawal of the claim did, however, prompt Commerce to file a motion for attorney’s fees and costs associated with its defense of the claim. Commerce argues that principles of equity should allow it to recover these costs where the summary judgment motion, in part, was based on exhaustion of benefits. Advanced Spine opposed the motion, and, thereafter, on the date of trial, withdrew its § 34M claim on the basis that Commerce would be able to sustain its burden of proving that PIP benefits had been exhausted. [Note 11] But as Commerce acknowledges, “Massachusetts generally follows the ‘American Rule’ and denies recovery of attorney’s fees absent a contract or statute to the contrary.” Police Comm’r of Boston v. Gows, 429 Mass. 14, 17 (1999). As there is no legal basis for the requested award, there was no error in the denial of Commerce’s request. [Note 12]

The judgment for the plaintiff is vacated, and the case is returned to the Lowell

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Division of the District Court Department for further proceedings consistent with this opinion and for trial.

So ordered.