Now that the medical and operational records of the typical physician practice are created and stored in electronic format, the duty to take extraordinary steps to preserve the integrity of those records has never been greater. Physician practices and other healthcare businesses must be mindful of the evolving law in the area of electronically stored information, as the failure to preserve the integrity of this information can be fatal to the prosecution or defense of matters litigated in federal or state courts.
Known as "litigation hold policies" a party to litigation is now expected, as a matter of law, to preserve and prevent the destruction of electronically stored records that could arguably be of relevance to the prosecution or defense of a civil matter. Not only can sanctions be imposed for the intentional or even negligent destruction of electronic data, but both claimants and defendants can forfeit their respective rights in litigation if their conduct in permitting the destruction of the data is sufficiently egregious.
The seminal or controlling case in this area, Zubulake v. UBS Warburg, was decided by Judge Shira Scheindlin in the United States District Court for the Southern District of New York in Manhattan. Judge Scheindlin created a four-part analysis to determine when the destruction of records warrants sanctions. To date, the vast majority of case law across the country cites Judge Scheindlin's series of related decisions and the appeals that followed, when analyzing those cases that possess issues of electronic data destruction.
There are three standards of conduct to be considered in connection with the duty to preserve electronically stored information (“ESI”). A litigant's misconduct in failing to preserve ESI is first determined to be misconduct secondary to the standards of negligence, gross negligence or willful misconduct. "Negligence" is behavior that falls below the standard of acceptable conduct. Acceptable conduct is determined by what "the party must do to meet its obligation to participate meaningfully in fairly in the discovery phase of the digital proceeding." One who fails to meet the acceptable conduct standard is considered to have acted negligently, even in the event of honest mistakes and good intentions. Indeed, one must make a diligent and well-considered attempt to immediately design and deploy an ESI preservation program that takes into account the scope of the business enterprise, the complexity of the existing data storage and location facilities and the number of persons who can access the data.
The gross negligence standard implies conduct that includes the ordinary negligence standard plus conduct that could only be said to have been carried out by a careless person. Examples of gross negligence include the failure to issue a written litigation hold policy, the failure to identify the key players and ensure that their electronic and paper records are preserved, the failure to cease the deletion of e-mail and preserve the records of former employees that are still in a party'scontrol, and/or the failure to preserve backup data storage when it is the only reasonably available source of archived information that cannot be obtained from other accessible sources.
Willful, Wanton or Reckless Misconduct contemplates intentional acts of destruction that imply indifference to consequences and would be reasonably considered to knowingly impair the production of otherwise discoverable information. It is no different than the intentional destruction of records. The resulting judicial action can have the severest of consequences to a litigant and, perhaps the attorney.
The duty to preserve evidence starts before litigation has commenced and, indeed, is retroactively imposed to the time when a party should reasonably have anticipated that they may become a participant in litigation. There are many instances of record when parties were found to be subject to the preservation duty sometimes as far as two to three years prior to the commencement of the actual litigation itself.
Since 2004, the Zubilake decision and the cases that followed send a clear message to all entities and persons utilizing electronically stored records. Shockingly, in this day and age, a recent study reported by the New York State Bar Association revealed that 43% of American businesses failed to identify a sufficient means of preserving ESI. Businesses, medical practices and individuals including ones that outsource data to cloud storage and offsite storage frequently find themselves unable to comply with the duty to preserve potentially relevant information. They have no means to suspend the destruction or routine reorganization of electronically stored data. The risk of failing to implement ESI preservation measures creates risks of costly motions, sanctions, the burden of forensic data reconstruction expense and, on occasion, judicially imposed nullification of an otherwise bona fide defense.
If a business or practice fails to implement an archiving system, create an application inventory and data map or plan a procedure for the preservation and lockdown of ESI, it runs the risk of substantial penalties and exposure in the context of a variety of claims sounding in negligence, medical malpractice, employment discrimination, sexual harassment, insurance fraud, commercial fraud, white-collar crime, breach of fiduciary duty, officers’ and directors’ liability, breach of contract, tortious commercial acts and other civil claims.
As such, attorneys at Peter Birzon & Associates have extensive experience in working with large multi-specialty, multi-location medical groups and healthcare systems in designing operational I.T. protocols to both preserve and isolate ESI. We also advise and oversee client implementation of ESI preservation lockdown in contemplation of litigation or once litigation has commenced. Our attorneys are experienced in making application to restrict, limit and otherwise remove those preservation duties not directly relevant to the claims at issue and in successfully burden shifting the cost of preservation to the demanding party.
We invite you to contact us to discuss your present ESI policies and the manner in which policy should be implemented on a routine basis and in the instance of litigation anticipation.