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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Ray v. Draeger (7/17/2015) sp-7020

Ray v. Draeger (7/17/2015) sp-7020

         Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

         Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

         303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

                                                                                        

         corrections@akcourts.us.  



                    THE SUPREME COURT OF THE STATE OF ALASKA  



KIMBER RAY,                                             )  

                                                        )        Supreme Court No. S-15347  

                            Petitioner,                 )  

                                                        )        Superior Court No. 3AN-12-11421 CI  

         v.                                             )        District Court No. 3AN-11-08969 CI  

                                                        )  

MEGAN DRAEGER,                                          )        O P I N I O N  

                                                        )  

                            Respondent.                 )        No. 7020 - July 17, 2015  

                                                        )  



                   Petition for Hearing from the Superior Court of the State of  

                   Alaska, Third Judicial District, Anchorage, John Suddock,  

                   Judge,  on  appeal  from  the  District  Court  of  the  State  of  

                              

                   Alaska, Anchorage, David Wallace, Judge.  



                   Appearances:    Michael  J.  Hanson  and  Barry  Kell,  Call  &  

                                                         

                   Hanson,  P.C.,  Anchorage,  for  Petitioner.    Jeff  Barber,  

                   Barber & Banker, LLC, Anchorage, for Respondent.  



                   Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  

                                                                                     

                   Bolger, Justices.  



                   FABE, Chief Justice.  



I.       INTRODUCTION  



                   In a personal injury trial resulting from a car accident, the plaintiff sought  

                                                                             



to cross-examine the defendant's medical expert about his substantial connection to the  



insurance  industry  in  an  effort  to  prove  bias.    But  in  response  to  defense  counsel's  

                                                                                            



motion in limine, the district court ruled that the plaintiff could not refer to the fact that  

                          


----------------------- Page 2-----------------------

the defendant was insured or that her insurance company and others had hired the expert   



witness numerous times.  The trial court did permit the plaintiff to cross-examine the   



expert witness about his financial interest in continuing to work for "defendants" and  



"defense attorneys."   



                    On appeal from the district court judgment, the superior court concluded  



that the district court had abused its discretion by excluding evidence of the expert's  



                                                                                                        

connections to the insurance industry, reasoning that the expert witness and the company  



which hired him had extensive dealings with the defendant's insurance company and the  



insurance industry more broadly and that this information was relevant to the question  



of bias.  We agree with the superior court that the district court erred in ruling that  



relevant evidence of the expert witness's substantial connection to the insurance industry  



                                  

should be excluded.   But the district court's error was harmless because at trial the  



plaintiff was able to elicit testimony about the witness's connection to the insurance  



                                                                                                    

industry. We therefore vacate the superior court's remand order and reinstate the district  



court's judgment.  



II.       FACTS AND PROCEEDINGS  



          A.        Facts  



                    In  July  2009  Kimber  Ray  rear-ended  an  automobile  in  which  Megan  



Draeger was a passenger.  There was no serious physical damage to either car, and at  



trial the accident was described as a low speed, low impact collision.  



                    Draeger did not complain of any injuries at the accident scene.  But soon  



                                                                                                          

afterward, she experienced pain in her neck and shoulders, and she made an appointment  



                                                                                              

to see a chiropractor six days after the accident.  Draeger had a total of 24 chiropractic  



                                                                                               

treatments between July and November 2009 at a total cost of $5,160.  Nine months  



                                               

later, in August 2010, Draeger sought treatment from a physical therapist for neck pain  



                                                             -2-                                                        7020
  


----------------------- Page 3-----------------------

and  headaches.    The  physical  therapist  treated  Draeger  over  nine  sessions  between  



August and September 2010.  



                                                    

             B.           Proceedings  



                          Draeger  filed  suit  against  Ray  in  the  district  court  in  July  2011.  Ray  



                                                                                                                                     

admitted liability for the accident, so the trial focused on the extent of Draeger's injuries  



and  other  damages  related  to  the  accident.    Ray's  insurer,  Government  Employees  



Insurance Company (GEICO), paid for her defense.  



                                                                                                                                                     1 

                                                                                                                                                        seeking  

                          Ray filed a motion in limine based on Alaska Evidence Rule 411 



                                                                                            

to preclude reference at trial to the fact that Ray was covered by liability insurance with  



                                                                                                                                                       

respect to Draeger's claims.   Draeger partially opposed the motion, arguing that she  



                                                        

wished to cross-examine Dr. John Ballard, an orthopedic surgeon hired by Ray's counsel  



                                                                                                               

to give expert testimony at trial, regarding potential bias.  In particular, Draeger sought  



                                                                         

to examine Dr. Ballard about the fact that a substantial portion of his work as a medical  



expert is derived from referrals from insurance companies and that he had been hired  



many times by GEICO in particular.  



                                                      

                          District Court Judge David Wallace granted Ray's motion.  Judge Wallace  

concluded that under the required Alaska Evidence Rule 403 balancing,2 the "minimal  



                                                                                   

relevance" of the insurance evidence being offered to show bias, which is allowed under  



                                                                                                                                                   

Rule 411, was outweighed by "the prejudicial nature and confusion of issues" that would  



more likely result if Draeger impeached Dr. Ballard by referencing GEICO or the fact  



             1            See Alaska R. Evid. 411 (excluding "[e]vidence that a person was or was                               



not insured against liability" to prove negligence or other wrongdoing, but allowing   

courts to admit evidence of liability insurance to prove "bias or prejudice of a witness").   



             2            See  Alaska  R.  Evid.  403  (providing  that  "relevant[]  evidence  may  be  



                                                              

excluded if its probative value is outweighed by the danger of unfair prejudice, confusion  

of the issues, or misleading the jury," among other factors).  



                                                                                 -3-                                                                         7020
  


----------------------- Page 4-----------------------

                                   

that Ray was insured. The order stated that "witnesses and parties shall be instructed that  



                                              

no reference should be made to the fact that defendant has liability insurance" or to "the  



        

fact  that  persons  investigating  this  matter  may  have  been  employed  by  defendant's  



liability  insurance."    However,  the  order  noted  that  "this  ruling  does  not  preclude  



                                                                                             

plaintiff's counsel's ability to cross examine any witness on the issue of bias that relates  



                                                                                                                        

to the nature of their work for defendants and/or the fact [that] there may be . . . financial  



reasons for the continuation of wanting to work for defendants."  



                     Dr.  Ballard  frequently  performs  independent  medical  evaluations  and  



                                        

medical  record  reviews  for  insurance  companies.    GEICO  retained  Dr.  Ballard  to  



                                                                                                                      

evaluate medical records or conduct independent medical examinations 20 to 30 times  



              

in 2011 alone, though Dr. Ballard stated in a deposition that less than 5% of his work in  



Alaska comes from GEICO.  Dr. Ballard does about 50 to 60 record reviews and 200 to  



                                                            

300 independent medical evaluations per year; 40% of those evaluations are for claims  



                                                                                                          

of injury arising out of automobile collisions.  He also co-founded a medical evaluation  



company  called  The  Independent  Medical  Evaluators  (T.I.M.E.),  which  provides  



                                                                                                                  

medical evaluations.  More than 98% of T.I.M.E.'s clients are insurance companies or  



                                                   

defense attorneys.  Although Dr. Ballard was no longer a co-owner of the company when  



he conducted the evaluation for this case, Ray's counsel hired and paid him through  



                                                                                      

T.I.M.E for this case.  Dr. Ballard made over $100,000 per year from insurance defense  



                                                                                  

referrals and between $300,000 to $350,000 per year from his insurance-related medical  



                                  

exam work. His total annual income is between $700,000 and $800,000, which includes  



                                                        

his private orthopedic practice.  Dr. Ballard testified that his income and the prospect of  



                                                                        

future employment by Ray's counsel's office were irrelevant to the opinions he offered  



regarding Draeger's injuries and treatment.  



                                                                      

                     Dr. Ballard testified that, in his opinion, Draeger's chiropractic treatments  



                                                                                             

in 2009 were reasonable and related to her cervical, thoracic, and lumbar strains resulting  



                                                                 -4-                                                          7020
  


----------------------- Page 5-----------------------

from the accident.  However, he testified that Draeger's later physical therapy in 2010  



was not related to the accident and that, in his opinion, Draeger had recovered from the  

                                                                                              



accident no later than November 2009.  



                    During cross-examination, Dr. Ballard confirmed that he was hired for  



                                                             

evaluation in this case through T.I.M.E., and when asked by Draeger's counsel whether  



                           

"more than 98% of [his evaluations through T.I.M.E] are for insurance companies or  



                                                                                                         

defense attorneys," Dr. Ballard answered, "Correct."  Ray's attorney  objected.  At a  



bench  conference  Judge  Wallace  reiterated  his  order  regarding  testimony  about  



                                                                                   

insurance:  "I thought I made it clear in my decision not to mention insurance.  You can  



say 'defense attorneys,' you can say 'defense.' "  Neither party requested a curative  



                                                                                                        3  

instruction.  There were no further references to insurance during trial.    



                    The jury awarded Draeger $5,160 for past economic loss, equal to the full  

                                                                                                  



amount of her chiropractic treatments from July to November 2009.  It also awarded her  



                                                                                  

$775 for past non-economic damages.  The jury did not award Draeger any damages for  



future economic loss or future non-economic loss.  



                                                                                    

                    Draeger appealed to the superior court. She argued that it was improper for  



the district court to preclude her from questioning Dr. Ballard about the extent to which  



he was paid for his work as an expert witness by insurance companies.  Judge John  



Suddock  issued  an  opinion  reversing  the  district  court's  order  limiting  Draeger's  



                                       

cross-examination of Dr. Ballard and remanding the case to the district court for a new  



          

trial. The superior court concluded that the district court had erred in preventing Draeger  



from cross-examining Dr. Ballard regarding his "relationship with the insurance industry  



          3         At the end of trial, the jury submitted a question regarding whether either   



party  contacted  their  insurance  company  after  the  accident.    The  court  responded:  

"[W]hether or not there was insurance in this matter is not for you to consider.  You are  

                                                                              

to decide this matter on the evidence presented."  



                                                             -5-                                                        7020
  


----------------------- Page 6-----------------------

in  general  and  GEICO  in  particular,"  despite  the  fact  that  the  district  court's  ruling  

                                   



allowed  Draeger  to  impeach  Dr.  Ballard  regarding  his  near-exclusive  work  for  



                                                                     

"defendants" and "defense lawyers."  Ray filed a petition for review, which we granted.  



III.	    STANDARD OF REVIEW  



                                                                                

                   "In an appeal from a judgment of a superior court acting as an intermediate  



                                                                                                               4  

                                                                                                                  "We  

court of appeal, we independently review the judgment of the district court." 

review a trial court's decision to admit or exclude evidence for an abuse of discretion."5  

                                                                       



We review a trial court's Rule 403 ruling for abuse of discretion by "balanc[ing] the  

                                                                                                   



danger  of  unfair  prejudice  against  the  probative  value  of  the  evidence  to  determine  



whether the potential danger predominated so greatly as to leave us firmly convinced that  

                                                                                                       6  We reverse  

admitting the challenged evidence amounted to a clear abuse of discretion." 

only if "the error affected the substantial rights of a party."7  



IV.	     DISCUSSION  



         A.	       The District Court Abused Its Discretion By Not Admitting Evidence  

                   Of Dr. Ballard's Substantial Connection To The Insurance Industry.  

                                                               



                   1.	      Evidence of a witness's connection to the insurance industry is  

                                                                                                          

                            admissible  to  show  bias  if  its  probative  value  outweighs  the  

                                                                                           

                            danger of unfair prejudice.  



                   Alaska Evidence Rule 411 provides that "[e]vidence that a person was or  

                                                                                                    



was not insured against liability is not admissible" to prove "whether the person acted  



         4         Pouzanova v. Morton , 327 P.3d 865, 867 (Alaska 2014).  



         5         Jones v. Bowie Indus., Inc. , 282 P.3d 316, 324 (Alaska 2012).  



         6         Conley v. Alaska Commc'ns Sys.,  323 P.3d 1131,  1136 n.11 (Alaska 2014)  



(alteration in original) (quoting Brandner v. Hudson , 171 P.3d 83, 87 (Alaska 2007)).  



         7         Kingery v. Barrett , 249 P.3d 275, 281 (Alaska 2011) (quoting Bylers Alaska  



Wilderness Adventures, Inc. v. City of Kodiak, 197 P.3d 199, 205 (Alaska 2008)).  



                                                           -6-	                                                   7020
  


----------------------- Page 7-----------------------

                                                         8  

negligently or otherwise wrongfully."   But the rule allows courts to admit this evidence  

when offered for another purpose, such as to show "bias or prejudice of a witness."9  



                                                                              

When Rule 411 does not bar evidence, it may still be excluded under Alaska Evidence  



               10  

                   Rule 403 provides that relevant evidence "may be excluded if its probative  

Rule 403. 



                                                                                          

value  is  outweighed  by  the  danger  of  unfair  prejudice,  confusion  of  the  issues,  or  



misleading the jury," among other factors.  Alaska Evidence Rules 411 and 403 thus  



                                                                                               

work in conjunction:  If the trial court decides that evidence of liability insurance can be  



                                    

admitted despite Rule 411, the court must then perform a Rule 403 balancing analysis  



                                                           

to determine whether the evidence's  probative value outweighs the danger of unfair  



                11  

                                                                                              

prejudice.          "Under Evidence Rule 403, the trial court bears primary responsibility for  



                                                               12  

                                                                     As  we  have  held  previously,  trial  courts  

determining  admissibility  of  evidence." 



                                                                                                                                  13  

                          

generally "have broad discretion in applying [the Evidence Rule 403] balancing test." 



           8         Alaska R. Evid. 411.  



          9         Id.   



           10        See Kingery, 249 P.3d at  285 (recognizing  and upholding  the trial court's  



exclusion of liability insurance evidence under Rule 403 rather than 411); Gibson v.  

 GEICO  Gen.  Ins.  Co.,  153  P.3d  312,  317  (Alaska  2007)  (affirming  exclusion  of  

                                                                                                                

testimony about an insurance contract and an insurance settlement under Rule 403 rather  

                                                                                                     

than Rule 411).  



           11  

                                                                                                                        

                    Accord Todd v. Joyner , 685 S.E.2d 595, 596-97 (S.C. 2009) ("[I]f Rule 411  

                                                                                        

does not require the exclusion of evidence of insurance, the court should then proceed  

to perform Rule 403 analysis and consider whether the probative value of the evidence  

is  substantially   outweighed   by   the   prejudicial   effect   and   potential   for   confusing  the  

jury.").  



           12       Marsingill v. O'Malley , 58 P.3d 495, 502 (Alaska 2002).  



           13  

                                                                

                     Schofield v. City of St. Paul, 238 P.3d 603, 608 (Alaska 2010) (citing Bluel  

v. State, 153 P.3d 982, 986 (Alaska 2007)).  



                                                                -7-                                                         7020
  


----------------------- Page 8-----------------------

                    "When reviewing the exclusion of evidence under Evidence Rule 403 as  



unfairly prejudicial, we first consider the relevance of the [excluded evidence] and then  



                                                                   

determine whether . . .  [the superior court's exclusion of it] constitutes a clear abuse of  



                 14  

discretion."           "The  credibility  of  witnesses  is  always  a  material  issue,  so  the  only  



               

question  of materiality or relevance when evidence is offered to impeach for bias is  



                                                                                                       

whether the evidence tends in reason to demonstrate the existence of some fact, state of  



                                    

mind or condition that a reasonable person would take into account in assessing the  

credibility of the witness under attack."15  



                    Although evidence of bias is relevant and probative, courts sometimes view  



evidence of liability insurance as prejudicial.  Rule 411 "is designed to prevent a jury  



                                                                                                            

from  deciding  a  close  case  on  an  improper  basis  -  i.e.,  whether  or  not  a  party  is  



              16  

                  Courts can exclude evidence of a defendant's insurance "to avoid prejudice  

insured."                                                        



in the verdict, which might result from the jury's knowledge that insurance, and not the  

                                                                                                 

defendant,  would  be  responsible  for  paying  any  resulting  award  of  damages."17  



          14        Kingery , 249 P.3d at 285 (alterations and omission in original) (internal  



quotation marks omitted) (quoting Liimatta v. Vest , 45 P.3d 310, 313 (Alaska 2002)).  



          15        Hutchings v. State , 518 P.2d 767, 769 (Alaska 1974).  



          16        Shane   v.   Rhines,   672   P.2d   895,    900    n.6   (Alaska   1983)   (quoting  



Commentary to Alaska R. Evid. 411); see also id. ("There is a danger that insurance                         

evidence might skew the decision-making process of the jury by making it   regret a  

possibly wrong decision against an uninsured person much more than a similar decision   

under identical facts against a person whose insurance status is unknown, or by making  

the jury regret any erroneous decision against an insured party less than it would an  

                                                                                        

erroneous decision against a person whose insurance status is unknown.").  



          17  

                                                                            

                    Todd v. Joyner, 685 S.E.2d 613, 616 (S.C. App. 2007); see also Vasquez  

v.  Rocco ,  836  A.2d  1158,  1163  (Conn.  2003)  ("[T]he  exclusion  of  evidence  of  a  

                                                                    

defendant's insurance coverage 'prevents the jury from improperly rendering a decision  

                                                                                                            (continued...)  



                                                              -8-                                                        7020
  


----------------------- Page 9-----------------------

                                                                   

However, we have yet to consider whether the danger of unfair prejudice can outweigh  



                                                                                                  

the probative value of evidence offered to show an expert's bias in favor of the insurance  



                                                          18  

industry in an automobile injury case.                         We turn next to that question.  



                                                                                        

                     2.	       The probative value of evidence of a witness's connection to the  

                               insurance industry is likely to outweigh the danger of unfair  

                               prejudice if the connection is substantial.  



                                                                                            

                     We have not previously articulated a steadfast rule to guide the trial court's  



                                                                                                              

determination of whether the probative value of a witness's connection to the insurance  



                                                                                                              

industry offered to show bias outweighs the danger of unfair prejudice under Rule 403.  



                                                   

The majority of jurisdictions that have considered this question allow insurance evidence  



                                                                                                     

to show bias only in cases where a "substantial connection" exists between a witness and  



                                  19 

                                                                 

the insurance industry.                "The substantial connection analysis looks to whether a witness  



          17(...continued)  



or award based upon the existence or nonexistence of liability coverage rather than upon  

                                       

the merits of the case.' " (quoting Conn. Code Evid.  4-10(a), commentary)); Strain v.  

                                        

Heinssen , 434 N.W.2d 640, 642 (Iowa 1989) ("The prejudice stems from concern that  

                                             

a jury's verdict may be increased or decreased depending on the availability of sums  

from which to pay an award, rather than the merits of a plaintiff's case.").  



          18         Though Rule 411 only excludes "[e]vidence that a person was or was not  



                                                                       

insured  against  liability,"  it  is  implicated  in  evidence  regarding  an  expert  witness's  

connection to the insurance industry to the extent that such evidence indicates that the  

party on whose behalf the witness is testifying is "insured against liability."  That is, an  

                                                                                                      

expert witness who has a relationship with an insurance company presumably testifies  

                                         

on  behalf  of  a  party  who  is  insured  and  whose  insurance  carrier  is  providing  

                                                                                                                 

representation in the case.  Thus, Rule 411can be triggered by references to insurance  

that are not directly about whether a party is insured.   



          19  

                                                                                              

                     See, e.g., Bonser v. Shainholtz , 3 P.3d 422, 425 (Colo. 2000) ("A majority  

                                                                                                                      

of jurisdictions addressing this issue have applied a 'substantial connection' analysis in  

                                                                                                 

order to balance the probative value and potential prejudice on the facts of each case.");  

                                                                                                       

 Vasquez, 836 A.2d at 1163-64 ("The majority of courts that have addressed this issue  

                                                                                                                (continued...)  



                                                                -9-	                                                         7020
  


----------------------- Page 10-----------------------

                                                              

has  a  sufficient  degree  of  connection  with  the  liability  insurance  carrier  to  justify  



allowing  proof  of  this  relationship  as  a  means  of  attacking  the  credibility  of  the  



              20  

witness."           



                     Some jurisdictions define what constitutes a substantial connection between  



                                                             

a witness and an insurer in terms of an ownership, agency, or employment relationship  



                                                        

- that is, a relationship in which a witness has a "direct interest in the outcome of the  



                 21  

                                                                     

litigation."         These jurisdictions often limit when a witness's pecuniary interest can be  



                                                                                                            

used  to  establish  a  substantial  connection  by  requiring  something  "[b]eyond  mere  



                                                                           22  

                                                                                  Courts  have  found  a  substantial  

payment  in  exchange  for  testimony  [at]  trial." 



          19(...continued)  



apply a 'substantial connection' test to determine whether evidence of an expert witness'  

                                                            

relationship  to  the  defendant's  insurer  is  more  probative  of  potential  bias  than  it  is  

prejudicial."); Todd, 685 S.E.2d at 597 ("In considering whether an expert's connection  

                                                      

to  a  defendant's  insurer  is  sufficiently  probative  to  outweigh  the  prejudice  to  the  

defendant  resulting  from  the  jury's  knowledge  that  the  defendant  carries  liability  

insurance,  this  Court  adopted  the  'substantial  connection'  analysis  employed  in  a  

                                                                                                              

majority of jurisdictions."); Lombard v. Rohrbaugh, 551 S.E.2d 349, 355 (Va. 2001) ("A  

                                                                                                         

majority of jurisdictions addressing this issue apply a 'substantial connection' analysis  

                                                                                    

to determine whether the relationship between a party and a witness, particularly an  

                                                                                                               

expert witness, is such as to make proof of their financial dealings sufficiently probative  

                                                                                                     

to  outweigh  prejudice  that  arises  from  knowledge  that  the  party  carries  liability  

                     

insurance.").  



          20  

                                                                      

                    Bonser , 3 P.3d at 425 (internal quotation marks omitted) (quoting Otwell  

v.  Bryant ,  497  So.  2d  111,  115  (Ala.  1986));  see  also  Vasquez,  836  A.2d  at  1164  

("Underlying  this  analysis  is  the  premise  that  only  some  relationships  between  a  

                                                                                                                

defendant's expert witness and the defendant's insurance carrier give rise to an inference  

                                                                 

of bias that outweighs the countervailing risk that jurors might use the evidence for an  

improper purpose.").  



          21        Mendoza v. Varon , 563 S.W.2d 646, 649 (Tex. Civ. App. 1978).  



          22  

                                                                                                       

                     Strain v. Heinssen, 434 N.W.2d 640, 643 (Iowa 1989) (holding that, absent  

                                                                                                                (continued...)  



                                                               -10-                                                          7020
  


----------------------- Page 11-----------------------

                      

connection where an expert witness was employed by and consulted for an insurance  



company  and  10-20%  of  the  expert's  practice  consisted  of  reviewing  records  for  

insurance companies,23 and where an expert was employed by a consulting firm that  



derived roughly 30% of its income from insurance companies.24  



                        Importantly, courts have recognized a substantial connection in the absence  



                      

of a formal employment relationship between an expert witness and an insurer.  For  



example, in Lombard v. Rohrbaugh , the Virginia Supreme Court upheld a trial court's  



                                                                                     

decision to admit evidence of a medical expert's relationship with an insurance company  



                                                                                                         

in an automobile accident case because the medical expert had received over $100,000  

annually from the insurance company for at least two years.25  The defendant argued that  



opposing counsel should not have been permitted to mention insurance because the  



                                                                                                  26  

                                                                                                       The Lombard court held that  

witness was not an employee of the insurance company. 



                                              

"[a] witness'[s] status as an employee of an insurance company providing coverage to  



                

a  party  is  evidence  of  potential  bias,  but  the  absence  of  an  employer-employee  



relationship does not define the limits of cross-examination.  At issue is the potential for  



            22(...continued)  



an agency or employment relationship, payment by an insurance company in exchange  

for an expert's testimony at trial was not probative enough to outweigh prejudice).  



            23          See Yoho v. Thompson, 548 S.E.2d 584, 586 (S.C. 2001).  



            24          See Mitchell v. Glimm                 , 819 So. 2d 548, 553 (Miss. App. 2002).  Though the     



Mississippi Court of Appeals did not use the term "substantial connection," its reasoning         

aligns with the analysis employed under the substantial connection test.  



            25          551 S.E.2d 349, 355 (Va. 2001).  



            26         Id.  



                                                                         -11-                                                                    7020
  


----------------------- Page 12-----------------------

                                                                                                                 27  

bias because of the witness'[s] interests in the case, not artificial labels."                                       We agree.  

                                



This is particularly true given the modern corporate structure where employment and  

                                



consulting relationships are often created ad hoc or through an intermediary and do not  

                                       



conform to traditional direct employment relationships.  



                     The Virginia Supreme Court has addressed a fact pattern that is similar to  



the one in this case.  In Henning v. Thomas , a plaintiff in a medical malpractice case  



                                                                                                    

hired an expert witness through a company that "identifies other physicians throughout  



                                                                                                                                   28  

                   

the country who are willing to review medical records and provide medical testimony." 



The witness signed an agreement with the company to assess cases and was to receive  

                     



a set fee for reviewing depositions or transcripts and testifying; the company kept a  



                                                                                       29  

portion  of  the  overall  fee  paid  to  it  by  the  plaintiff.                            The  defendant  sought  to  

                                                                                                                      



cross-examine the witness as to who retained him to testify, but the trial court did not  

                                                                                                           



permit "any question other than whether [the witness] was being paid to come to court  

                                                                                     



                                   30  

to give his testimony."                The Virginia Supreme Court reversed, reasoning:  



                     The  trial  court's  ruling  prevented  defendants  from  doing  

                    precisely what defendants had a right to do.  The defendant  

                     doctors were entitled to attempt to persuade the jury that [the  

                                                                                              

                    plaintiff's witness] was a "doctor for hire," who was part of  

                                                                                         

                     a nationwide group that offered themselves as witnesses, on  

                    behalf of medical malpractice plaintiffs.  Once the jury was  

                    made aware of this information it was for the jury to decide  

                                                                                 

                    what weight, if any, to give to [the witness's] testimony.  This  

                                                                         



          27        Id.
  



          28
        366 S.E.2d 109, 112 (Va. 1988).                      Though Henning did not use the label  



"substantial connection," it applied a similar analysis.  



          29        Id.
  

                           



          30        Id.
  



                                                               -12-                                                          7020
  


----------------------- Page 13-----------------------

                       was a classic case of an effort to establish bias, prejudice, or       

                       relationship.   



                                  The trial court went too far when it limited defendants'         

                       cross examination to the bare question whether [the witness]   

                                                                  [31] 

                       was being paid to testify.  



        

We  similarly  do  not  think  a  party's  cross-examination  should  be  limited  solely  to  



questions regarding whether a witness is being paid to testify.  



                                                                                                                                

                       The trial court's substantial connection analysis should look primarily to  



"whether a witness has a sufficient degree of connection with [a] liability insurance  



                                            

carrier to justify allowing proof of this relationship as a means of attacking the credibility  



                          32  

                                                             

of the witness."               Where an expert witness has significant ties to the insurance industry  



as indicated by receiving a sizable portion of his or her income from insurance work,  



being  hired  by  a  firm  that  derives  a  large  portion  of  its  income  from  insurance  



                                                                                                     

companies, or facts that otherwise suggest an interest in the outcome of the litigation, the  



                                                                                                                                     

probative value of that substantial connection is likely to outweigh the danger of  unfair  



prejudice, and is thus likely admissible to show bias under Rule 411 and Rule 403.   



                                                           

                       3.	        To  establish  a  substantial  connection,  a  party  may  present  

                                                                                   

                                  evidence about a witness's ties to the insurance industry without  

                                                                                                          

                                  necessarily eliciting evidence about the other party's individual  

                                  insurance coverage.  



                                                                                                                   

                       There are two types of testimony regarding insurance that may be at issue  



                         

in this type of case.  The first is whether the defendant was insured against liability, and  



                                                                                         

if so, by which company.  The second is whether an expert witness hired by the defense  



                                                           

may have a substantial connection to the insurance industry and possibly a small number  



           31          Id. at 113.  



           32          Bonser v. Shainholtz , 3 P.3d 422, 425 (Colo. 2000) (internal quotation  



marks omitted) (quoting Otwell v. Bryant, 497 So. 2d 111, 115 (Ala. 1986)).  



                                                                      -13-	                                                                7020
  


----------------------- Page 14-----------------------

of companies in particular, which may be evidence of bias.  At trial Draeger focused  



primarily on this second category:  Dr. Ballard's connection to the insurance industry.  



Her opposition to Ray's motion in limine argued that "[s]tating merely that these experts  



                                                                                                                     

do most of their work for the defense, or for defense attorneys, only exposes the tip of  



                                   

the iceberg.  Working for a particular entity with a singular incentive to minimize the  



                                                                                                           

harm resulting from auto collisions implies a stronger incentive for bias than working for  



                           

different defense attorneys or 'the defense.' "  Because Draeger's primary interest was  



to explore Dr. Ballard's connection to the insurance industry, admission of such evidence  



                                                                                                   

as  how  often  Dr.  Ballard  worked  for  insurance  companies  or  firms  that  serve  the  



                                                                                                                           33  

insurance industry and what percentage of his income was from his insurance work                                              -  



without revealing details about Ray's coverage - would have satisfied Draeger's goal  



of attempting to demonstrate Dr. Ballard's potential bias.  



                    The district court, however, only allowed Draeger to probe the expert's  



                                                                                                              

potential bias with a limited set of terms revolving around "the defense": Its order stated  



                                                                                                  

that "this ruling does not preclude plaintiff's counsel's ability  to cross examine any  



                                                                     

witness on the issue of bias that relates to the nature of their work for defendants and/or  



the fact [that] there may be . . . financial reasons for the continuation of wanting to work  



                                                                         

for defendants." This ruling excluded the use of the word "insurance" in any regard.  But  



restricting cross-examination to the use of the terms "defendants," "defense counsel," or  



                                                        

"defense expert" may not convey the witness's potential bias to a juror who may assume  



                                                                                                                   

that  attorneys  represent  both  personal  injury  plaintiffs  and  defendants.                                  The  South  



                                                                                                                      

Carolina Supreme Court addressed this specific question in Yoho v. Thompson, when the  



        

trial court had "informed [the plaintiff] that she could discuss [the expert witness's] bias  



          33        See Noffke v. Perez, 178 P.3d 1141, 1150-51 (Alaska 2008) (upholding trial  



court's  ruling  requiring  an  expert  witness  employed  by  T.I.M.E.  to  produce  his  tax  

returns in order to ascertain the witness's income from his insurance work).  



                                                              -14-                                                         7020
  


----------------------- Page 15-----------------------

                                              

by using generic terms such as 'defense,' 'defendants,' and 'defense lawyer,' but that she  



                                                                                                     34  

could not discuss his possible bias by using the word 'insurance.' "                                     The  Yoho court  



                                                                                                       

rejected this approach, reasoning that references to insurance work are "qualitatively  



                       

different from showing [that the witness] works for 'the defense' generally, and [are]  

much more indicative of possible bias."35  



                                                                                     

                    Parties should not have to couch a witness's relationship with the insurance  



industry  in  code  by  referencing  only  "defense  attorneys"  or  "defense  work"  when  



                                                                                                         

presenting  evidence  of  an  expert  witness's  bias.    Jurors  may  not  understand  this  



reference.    And  the  point  is  that  an  expert  witness  with  a  substantial  connection  to  



                                                                   

insurance companies is working for the side with an interest in minimizing claims, and  



                                                                                                                  

describing the witness's relationship with insurers in clear terms is the most direct way  



                                                                       36  

                                                                                            

to relay the entirety of that message to the jury.                          Though a jury may infer from this  



evidence that a party is insured, this inference presents a low risk of unfair prejudice  



                        

because  jurors  will  be  aware  that  Alaska  law  requires  drivers  to  carry  automobile  

insurance.37  The opposing attorney should be able to elicit evidence about the witness's  



          34        548 S.E.2d 584, 585 (S.C. 2001).  



          35        Id. at 586.  



          36        See  Myers v. Robertson , 891 P.2d 199, 208 (Alaska 1995) ("[T]he  jury  



should be provided with some context in order to fully and fairly evaluate the case and  

the testimony before it.  Here, the fact of insurance could have been admitted consistent  

                                                         

with Evidence Rule 411 because that information would tend to show the potential bias  

or prejudice of the . . . witnesses.").  



          37        See AS 28.22.011 ("The operator or owner of a motor vehicle . . . shall be  



insured under a motor vehicle liability policy."); Nelson v. Progressive Cas. Ins. Co., 162  

                                                                                                        

P.3d 1228, 1231 (Alaska 2007) ("Alaska law generally requires Alaska drivers to carry  

                                                                                                                      

automobile insurance."); see also Mitchell v. Glimm , 819 So. 2d 548, 553 (Miss. App.  

2002) ("[I]n today's society given the new mandates from our state legislature requiring  

                                                                                            

                                                                                                            (continued...)  



                                                             -15-                                                        7020
  


----------------------- Page 16-----------------------

                                                                                       

connection to an institutional set of insurance clients and to argue that the expert witness  



may wish to ensure repeat business.  



                                                

                    But a party may not need to specify any insurance company by name in  



                                                                 

order to establish a substantial connection to insurance clients.  In many cases, evidence  



                                                       

of  a  witness's  frequency  of  work  for  the  insurance  industry  more  broadly  and  the  



percentage   of   the   witness's   income   derived   from   insurance   work   sufficiently  



demonstrates the potential bias.  Thus, in many cases, the trial court will not need to  



admit  details  of  a  party's  individual  insurance  coverage  or  information  about  any  



insurance  company  by  name.  The  opposing  party  can  often  adequately  expose  the  



                                                                                                         

potential bias of an expert witness by showing that he has a close connection to the  

insurance industry.38  



          37(...continued)  



mandatory insurance[,] . . . juries in many personal injury cases are aware that insurance  

                                                   

companies  are  involved  in  the  litigation.    Otherwise,  the  jury  is  to  assume  that  a  

                                                                                       

defendant is breaking the law by not having insurance coverage.").  To mitigate any  

prejudice that might result from the jury knowing that a party is insured, the trial court  

                                          

can give a jury limiting instructions as to how to consider or not consider evidence of  

                                                                                                                   

insurance.  See Alaska R. Evid. 105 ("When evidence which is admissible as to one party  

                                                                                                                       

or  for  one  purpose  but not admissible  as  to  another  party  or  for  another  purpose  is  

                                                                                             

admitted, the court, upon  request, shall restrict the evidence to its proper scope and  

                                          

instruct the jury accordingly.").  



          38  

                                                                     

                    We do not decide the question whether a particular insurance company's  

                                                                                                    

identity may be probative where an expert works primarily for a certain insurer, raising  

                                                                                                                 

an inference that the witness would wish to please that primary client to secure repeat  

                                                                                                                            

business.  Here, Dr. Ballard stated in his deposition that "less than five percent" of his  

insurance work in Alaska is for Ray's insurer, GEICO.  



                                                               -16-                                                         7020
  


----------------------- Page 17-----------------------

                   4.	       Dr.   Ballard  has  a  substantial  connection  to  the  insurance  

                             industry  and  the  district  court  abused  its  discretion  by  not  

                             admitting evidence of that connection.  



                   There is a substantial connection between Dr. Ballard and the insurance  

                                                                          39 Dr. Ballard is highly compensated  

industry. Like the expert in           Lombard v. Rohrbaugh ,  



by the industry; he receives between $300,000 to $350,000 a year for his insurance  

                                                                        



reviews.  This represents a large percentage of his total yearly income of up to $800,000,  

                                                                               



which includes his private orthopedic practice.  And like the expert witness in Mitchell  

                                                        



v. Glimm who was hired by a consulting firm that derives a sizable portion of its income  

                                                                                                 

from insurance companies,40 Dr. Ballard was hired for this case by a company that does  



98%  of  its  work  for  insurance  companies  or  defense  attorneys.    The  financial  



entanglements of both Dr. Ballard and the consultancy through which he was hired create  

                                                                                                    



a substantial connection to the insurance industry.   



                   Here,  the  district  court  excluded  all  reference  to  insurance  as  more  



prejudicial than probative, ordering that "witnesses and parties shall be instructed that  



                                                          

no reference should be made to the fact that persons investigating this matter may have  



been  employed  by  defendant's  liability  insurance."    On  appeal  the  superior  court  



                                                           

reversed the district court's exclusion of insurance evidence and suggested that evidence  



of a substantial connection is invariably more probative than prejudicial.  The trial court  



                                                                                                   

has broad discretion under Rule 403 balancing to determine whether the probative value  

                                                                                          41  But if evidence of an  

                                                                                                                      

of evidence outweighs its potential to create unfair prejudice.  



expert witness's substantial connection to the insurance industry is available, the weight  

                                         



          39       See 551 S.E.2d 349, 355 (Va. 2001).  



          40       See 819 So. 2d at 553.  



          41       See Marsingill v. O'Malley, 58 P.3d 495, 502 (Alaska 2002).  



                                                            -17-	                                                     7020
  


----------------------- Page 18-----------------------

                                                                     

of factors that the trial court must balance will generally be static because the potential  



for unfair prejudice will probably not vary and thus should tilt in favor of admission,  



absent unusual factual circumstances.  Because evidence of Dr. Ballard's substantial  



                                                             

connection to the insurance industry was available and was probative of bias, and there  



                                                                                                          

were no unusual factual circumstances in this case to suggest that  the  risk of unfair  



prejudice  outweighs  its  probative  value,  the  district  court  abused  its  discretion  by  



excluding direct evidence of the connection.   



          B.	      Because  The  Jury  Heard  Evidence  Of  Dr.  Ballard's  Substantial  

                   Connection To The Insurance Industry, The District Court's Error  

                   Was Harmless.  



                                                 

                   Although it was an abuse of discretion for the district court to attempt to  



                                                                          

exclude direct evidence of Dr. Ballard's substantial connection to the insurance industry,  



                                                   

the error was harmless.  "When the trial court has erroneously excluded evidence, a party  



                                                                                                                

must show that the error was harmful or prejudicial before we will reverse the trial court.  



             

The test for determining whether an error was harmless is whether on the whole record  



the error would have had a substantial influence on the verdict of a jury of reasonable lay  

            42  Thus, "[a]n erroneous ruling requires reversal only if our review of the record  

people."                                                  

convinces us that it probably had a substantial effect on the jury."43  

                                                                                                   



                   Though the district court aimed to exclude all evidence about insurance  

                                 



through its order granting Ray's motion in limine, the jury ultimately did hear evidence  

                                                           



          42       Barton v. N. Slope Borough Sch. Dist. , 268 P.3d 346, 353 (Alaska 2012)   



(alteration and internal quotation marks omitted) (quoting Noffke v. Perez , 178 P.3d  

1141, 1147-48 (Alaska 2008)).  



          43       Crosby v. Hummell, 63 P.3d 1022, 1028 n.23 (Alaska 2003); see also id.  



at 1028 ("[W]e find no reasonable likelihood that [the] exclusion . . . had any appreciable  

effect on the verdict.  Even if error, then, exclusion of this evidence would have been  

                                             

harmless at most and would not warrant reversal.").  



                                                            -18-	                                                     7020
  


----------------------- Page 19-----------------------

about   Dr.   Ballard's   substantial   connection   to   the   insurance   industry.      During  



cross-examination  Draeger's  counsel  established  that  Dr.  Ballard  was  hired  for  



evaluation in this case through T.I.M.E. and that he performs more than 100 medical  



examinations per year through T.I.M.E. in auto injury cases.  When Draeger's lawyer  



                                

asked Dr. Ballard to confirm that nearly all "evaluations through T.I.M.E.[,] like what  



                                                             

[he] did in this case, more than 98% of [evaluations] are for insurance companies or  



                                    

defense attorneys," Dr. Ballard answered, "Correct."  Though Ray's attorney objected  



                                                                 

and during a bench conference the district court instructed the parties not to mention  



insurance  again,  the  trial  court  did  not  strike  the  testimony  or  give  any  curative  or  



                                                  

limiting  instruction  to  the  jury  after  Dr.  Ballard's  testimony  regarding  T.I.M.E.'s  



                                                                                                            

primarily insurance-based clientele.  Thus, the jury did hear some of the evidence that  



                                                          

Draeger's attorney advocates for here.  Because the district court's attempted exclusion  



                                      

of all insurance evidence was unsuccessful, it could not have had a substantial effect on  



                                                                        

the jury.  And because Dr. Ballard provided an answer to a question that should have  



been allowed, the district court's error was harmless.   



V.        CONCLUSION  



                    Although  it  was  error  to  fail  to  admit  evidence  of  the  expert  witness's  



                                                                                                          

substantial connection to the insurance industry, which was not unfairly prejudicial, this  



error  was  harmless  because  the  jury  ultimately  did  hear  some  testimony  about  that  



                                                                                                          

connection.  We thus AFFIRM in part the superior court's reasoning but REVERSE and  



                                                                                        

VACATE  the  superior  court's  order  remanding  for  new  trial  and  REINSTATE  the  



district court's judgment.  



                                                             -19-                                                       7020
  

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