In a Pennsylvania medical malpractice case in which the plaintiff alleges that Quest Diagnostics misdiagnosed the decedent’s cancer, the non-precedential decsion of the Superior Court of Pennsylvania (“Pennsylvania Appellate Court”) filed on October 3, 2917 stated: “the evidence provided by [Quest Diagnostics] shows that the standard operating procedures are based on statistics, data, and information, which indicates their value to them and that the information could disadvantage them if disseminated to the public. Clearly, [Quest Diagnostics] have taken many measures to safeguard the standard operating procedures and closely held the information contained therein. Given this, we hold that the trial court erred in determining that [Quest Diagnostic] had not shown that the documents in question were a trade secret.”
The Pennsylvania medical malpractice plaintiff alleged that the 63-year-old decedent, who died from complications related to endometrial cancer of the uterus, was harmed because Quest Diagnostics (“Quest”) had misread her biopsy slide of an endometrial tissue biopsy specimen. The plaintiff alleges in her Pennsylvania medical malpractice case that Quest incorrectly interpreted the specimen as atrophic but should have been reported as insufficient tissue.
During the discovery process, the plaintiff requested that Quest produce its internal policies and procedures pertaining to the interpretation of pathology specimens. Quest requested that the plaintiff agree to enter into a stipulated protective order, which stated that the plaintiff and her medical malpractice attorney would not disseminate or use the documents outside of the litigation.
The plaintiff refused to enter into the requested stipulated protective order, and Quest thereafter requested that the trial court issue a protective order. Following a hearing before the trial court, the trial court granted the protective order motion in part and denied it in part, granting the motion only as to documents from the personnel file of the defendant doctor who had interpreted the slide and with respect to various contracts between Quest and some of the co-defendants.
Quest filed an interlocutory appeal, requesting that the Pennsylvania Appellate Court determine if the trial court erred by failing to grant a protective order regarding the production of it’s “secret, proprietary and competitively sensitive documents, which are based on and derived from years of data and analysis unknown to the public,” which order would limit the dissemination of the confidential and proprietary documents.
The Pennsylvania Appellate Court initially had to decide whether it could decide Quest’s interlocutory appeal. The Pennsylvania Appellate Court stated that since the order at issue is not appealable as of right (per Pa.R.A.P. 311) and Quest did not ask for or receive permission to appeal the order (per Pa.R.A.P. 312), the question is whether the order in this case (or any aspect of the order) is appealable under the collateral order doctrine.
Collateral Order Doctrine
The Pennsylvania Appellate Court stated that Pennsylvania Rule of Appellate Procedure 313 defines a collateral order as one that: “1) is separable from and collateral to the main cause of action; 2) involves a right too important to be denied review; and 3) presents a question that, if review is postponed until final judgment in the case, the claim will be irreparably lost.” The collateral order rule’s three-pronged test must be applied independently to each distinct legal issue over which an appellate court is asked to assert jurisdiction pursuant to Rule 313.
An order is “separable from and collateral to the main cause of action” if the order is entirely distinct from the underlying issue in the case and if it can be resolved without an analysis of the merits of the underlying dispute. The Pennsylvania Appellate Court held that Quest had satisfied the first prong because the Pennsylvania Appellate Court could address Quest’s claim that the trial court erred in denying its request for a protective order to preclude any dissemination of its standard operating procedures, without analyzing the plaintiff’s underlying medical malpractice claim.
With regard to the second prong, the Pennsylvania Appellate Court stated that the right to confidentiality in matters involving proprietary and trade secrets is rooted in public policy and impacts on individuals and entities other than those involved in the current litigation. Pennsylvania Rule of Civil Procedure 4012(a)(9), which controls the discovery of trade secrets, permits the trial court to order “that a trade secret or other confidential research, development or commercial information shall not be disclosed or be disclosed only in a designated way.” The Pennsylvania Appellate Court held in the present case that trade-secret protection is entrenched in public policy beyond the present litigation, and is important enough to justify immediate appellate review.
With regard to the irreparable loss prong, the Pennsylvania Appellate Court stated that there is no effective means of reviewing, after a final judgment, an order requiring the production of putatively protected material. The Pennsylvania Appellate Court held that Quest had satisfied the third prong because clearly, if disclosed, the confidentiality of the information in question is lost.
With regard to the merits of Quest’s claim that it was entitled to a protective order, Quest argued that the requested documents included trade secrets such as developmental research that contains detailed information as to Quest’s techniques and methodologies, so if the standard operating procedures are not protected, a competitor could readily compare its procedures with those of Quest and identify those areas needing particular attention to gain improved performance, eliminating its own expenditures associated with the evaluation and development of such policies and procedures.
The Pennsylvania Appellate Court cited a previous appellate court decision in which it was stated that the following factors should be considered in determining whether information is a trade secret: 1) the extent to which the information is known outside of the business; 2) the extent to which it is known by employees and others involved in the business; 3) the extent of measures taken by it to guard the secrecy of the information; 4) the value of the information to it and to its competitors; 5) the amount of effort or money expended by it in developing the information; and 6) the ease or difficulty with which the information could be properly acquired or duplicated by others. The crucial indicia for determining whether certain information constitutes a trade secret are substantial secrecy and competitive value to the owner.
In the present case, the Pennsylvania Appellate Court stated that Quest had met the trade secret requirements and therefore held that the trial court erred in determining that Quest had not shown that the documents in question were a trade secret.
The Pennsylvania Appellate Court held that the trial court was mistaken in denying Quest’s protective order to prevent broad dissemination of the requested documents: Quest was not seeking to prevent the discovery of the documents but rather only sought to protect its legitimate business interest in protecting its standard operating procedures from broad dissemination (Quest had no objection to the use of the requested documents in the litigation and its dissemination to the parties and any expert witnesses, but only wished to protect it from dissemination to the public and their competitors).
Therefore, the Pennsylvania Appellate Court vacated portions of the trial court’s order denying Quest’s motion for protective order and remanded the case to the trial court for entry of an order of confidentiality to prevent dissemination of the information at issue.
Source McLaurin v. Aria Health, No. 2582 EDA 2016
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