#27615, #27626, #27631-r-GAS
2016 S.D. 75

                                      IN THE SUPREME COURT
                                              OF THE
                                     STATE OF SOUTH DAKOTA
                                                     ****
                                                    (#27615)
RYAN NOVOTNY,                                                          Plaintiff and Appellee,

        v.

SACRED HEART HEALTH
SERVICES, a South Dakota
Corporation d/b/a AVERA SACRED
HEART HOSPITAL, AVERA HEALTH,
a South Dakota Corporation,                                            Defendants and Appellants,

        and

ALLEN A. SOSSAN, D.O. also known
as ALAN A. SOOSAN, also known as
ALLEN A. SOOSAN, RECONSTRUCTIVE
SPINAL SURGERY AND ORTHOPEDIC
SURGERY, P.C., a New York Professional
Corporation, LEWIS & CLARK
SPECIALTY HOSPITAL, LLC, a South
Dakota Limited Liability Company,                                      Defendants.
---------------------------------------------------------------------------------------------------------------------
                                                     (#27626)
CLAIR ARENS and DIANE ARENS,                                           Plaintiffs and Appellees,

        v.

CURTIS ADAMS, DAVID BARNES,
MARY MILROY, ROBERT NEUMAYR,
MICHAEL PIETILA, and DAVID WITHROW,                                    Defendants and Appellants,

                                         ****
                           APPEAL FROM THE CIRCUIT COURT OF
                              THE FIRST JUDICIAL CIRCUIT
                            YANKTON COUNTY, SOUTH DAKOTA
                                       ****
                          THE HONORABLE BRUCE V. ANDERSON
                                       Judge
                                                     ****
                                                                       ARGUED OCTOBER 4, 2016
                                                                       OPINION FILED 10/26/16
        and

ALAN A. SOSSAN, also known as
ALLEN A. SOOSAN, also known as
ALLEN A. SOOSAN, D.O., SACRED
HEART HEALTH SERVICES, a South
Dakota Corporation d/b/a AVERA SACRED
HEART HOSPITAL, AVERA HEALTH, a
South Dakota Corporation, MATTHEW
MICHELS, THOMAS BUTTOLPH, DOUGLAS
NEILSON, CHARLES CAMMOCK, LEWIS
& CLARK SPECIALTY HOSPITAL, LLC, a
South Dakota Limited Liability Company,
DON SWIFT, DAVID ABBOTT, JOSEPH
BOUDREAU, PAULA HICKS, KYNAN TRAIL,
SCOTT SHINDLER, TOM POSCH,
DANIEL JOHNSON, NUETERRA
HEALTHCARE MANAGEMENT, LLC,
VARIOUS JOHN DOES and
VARIOUS JANE DOES,                                                     Defendants.

---------------------------------------------------------------------------------------------------------------------
                                                     (#27631)

CLAIR ARENS and DIANE ARENS,                                           Plaintiffs and Appellees,
        v.

LEWIS & CLARK SPECIALTY HOSPITAL,
LLC, a South Dakota Limited Liability
Company,                                                               Defendant and Appellant,

        and

ALLEN A. SOSSAN, D.O. also known as
ALAN A. SOOSAN, also known as
ALLEN A. SOOSAN, RECONSTRUCTIVE
SPINAL SURGERY AND ORTHOPEDIC
SURGERY, P.C., a New York Professional
Corporation, SACRED HEART HEALTH
SERVICES, a South Dakota Corporation,
d/b/a AVERA SACRED HEART HOSPITAL,
AVERA HEALTH, a South Dakota Corporation,
DON SWIFT, D.M., KYNAN TRAIL, M.D.
CURTIS ADAMS, DAVID BARNES,
THOMAS BUTTOLPH, MARY MILROY,
DOUGLAS NEILSON, ROBERT NEUMAYR,
MICHAEL PIETILA, CHARLES CAMMOCK,
DAVID WITHROW, VARIOUS JOHN DOES,
and VARIOUS JANE DOES,                                                 Defendants.
                             ****

LESLIE A. BRUECKNER of
Public Justice, P.C.
Oakland, California

MICHAEL D. BORNITZ
ROBERT D. TRZYNKA
BRENDAN F. PONS of
Cutler Law Firm, LLP
Sioux Falls, South Dakota

      and

TIMOTHY L. JAMES of
James & Larson Law
Yankton, South Dakota               Attorneys for plaintiffs and
                                    appellees.
EDWIN E. EVANS
MARK HAIGH of
Evans, Haigh & Hinton, LLP
Sioux Falls, South Dakota           Attorneys for defendants and
                                    appellants Curtis Adams, David
                                    Barnes, Mary Milroy, Robert
                                    Neumayr, Michael Pietila &
                                    David Withrow #27626.

ROGER A. SUDBECK
MATTHEW D. MURPHY of
Boyce Law Firm, LLP
Sioux Falls, South Dakota           Attorneys for defendants and
                                    appellants Sacred Heart Health
                                    Services & Avera Health
                                    #27615.

JEFF WRIGHT
JOHN GRAY of
Heidman Law Firm, LLP
Sioux City, Iowa                    Attorneys for defendant and
                                    appellant Lewis & Clark
                                    Specialty Hospital, LLC
                                    #27631.

GREGORY J. BERNARD of
Thomas Braun
 Bernard & Burke, LLP
Rapid City, South Dakota            Attorneys for defendant and
                                    appellant Kynan Trail joining
                                    #27631.
#27615, #27626, #27631

SEVERSON, Justice

[¶1.]        In this action against various health organizations and individuals

involved at those organizations, Plaintiffs moved to compel production of peer

review materials and asked the circuit court to find SDCL 36-4-26.1, which grants

privilege to peer review materials, unconstitutional. The circuit court determined

that the statute was constitutional but only if it applied a “crime-fraud exception.”

It determined that the exception had been met and ordered Defendants to produce,

without in camera review, “objective information gathered or considered by the peer

review committees.” The court also ordered any other “remaining materials” to be

submitted to the court for in camera review. We granted Defendants’ petition for

intermediate appeal. Defendants assert that the court erred by compelling

production of third-party items held by a peer review committee and by creating a

crime-fraud exception to SDCL 36-4-26.1. We reverse and remand.

                                    Background

[¶2.]        Plaintiffs in this action, Ryan Novotny and Clair Arens, were treated

by Dr. Alan Sossan. After treatment, Plaintiffs filed lawsuits against Dr. Sossan,

his medical clinic, Avera Sacred Heart Hospital, Lewis & Clark Specialty Hospital,

and other individual defendants, collectively referred to throughout this opinion as

Defendants. The Plaintiffs alleged various causes of action including negligence,

negligent credentialing, fraud, deceit, bad faith peer review, unjust enrichment,

racketeering, and conspiracy. When Plaintiffs sought production of documents from

Defendants, Defendants asserted that some of the materials sought were peer

review materials protected under SDCL 36-4-26.1. Plaintiffs moved to compel


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production and asked the circuit court to determine that SDCL 36-4-26.1, protecting

“[t]he proceedings, records, reports, statements, minutes, or any other data

whatsoever, of any committee described in § 36-4-42[,]” is unconstitutional.

[¶3.]         The court held a hearing on the matter and issued a memorandum

decision. 1 It determined that SDCL 36-4-26.1 is constitutional only if an exception

applies. Therefore, it created and applied a “crime-fraud exception.” Under its

exception, the court determined that Plaintiffs “submitted sufficient evidence to

make out a prima facie case of fraud and deceit sufficient for [the] court to allow

access to the peer review records of the Defendants.” It determined that an in

camera review was not necessary before production of some peer review material to

Plaintiffs. It directed that the “objective information gathered or considered by the

peer review committees . . . shall be disclosed and copies provided to Plaintiff’s

counsel under a protective order without in camera inspection, as that information

is not considered private deliberative information as contemplated by the statute.” 2




1.      The court directed the memorandum decision to be filed in all of the cases
        that it collectively referred to as the “Sossan Litigation.” There are multiple
        cases pending before the circuit court that involve the peer review question.

2.      The court ordered production of the following documents from the peer review
        committees under the theory that they contained objective information not
        subject to protection:
              (1) [T]he applications submitted by Dr. Sossan in order to obtain
                  privileges
              (2) [A]ll attachments and collateral information that were attached to
                  those applications
              (3) [A]ll documents that were generated or obtained by the peer review
                  committees to obtain other background information of Dr. Sossan,
                  including any criminal background checks . . . and all materials
                                                                   (continued . . .)
                                          -2-
#27615, #27626, #27631

It further directed that the remaining materials be submitted to the circuit court for

in camera review with a privilege log as required.

[¶4.]         We granted Defendants’ petition for an intermediate appeal from the

circuit court’s order. Defendants contend that the court erred in two aspects. First,

Defendants assert that the court erred by compelling peer review committees to

produce documents obtained by the committees from independent sources. Second,

Defendants maintain that the court erred by judicially creating a crime-fraud

exception to SDCL 36-4-26.1. 3




_________________________________________________
(. . . continued)
                  received by the peer review committees from the National Medical
                  Practitioners Databank, if any
              (4) [A]ny other objective information they received in their due
                  diligence endeavor to make ‘reasonable effort to obtain the facts of
                  the matter under consideration’
              (5) [A]ll complaints filed against Dr. Sossan by any person or other
                  medical provider . . . between the time Dr. Sossan was granted
                  privileges at their facilities and his termination, and any final
                  resolution or other action taken as a result of such complaint.

3.      In the course of these cases, the circuit court addressed a number of issues of
        first impression and made various determinations that we are not deciding in
        this intermediate appeal. The circuit court determined that this Court would
        recognize a common law action of negligent credentialing. Although we are
        addressing discovery issues on such a claim, we offer no decision on whether
        we would recognize that claim in this State. In addition, Defendants have
        indicated that they may appeal the circuit court’s determination “that
        hospitals owe an independent physician’s patients more than a reasonable
        hospital duty, but actually owe those patients a fiduciary duty.” We do not
        decide that matter. Nor do we decide whether the claims presented by
        Plaintiffs are medical malpractice ones barred by the statute of limitations.
        Finally, we do not consider whether the information in dispute is protected by
        any federal provisions.

                                          -3-
#27615, #27626, #27631

                                Standard of Review

[¶5.]        “Ordinarily, ‘we review the circuit court’s rulings on discovery matters

under an abuse of discretion standard.’” Milstead v. Smith, 2016 S.D. 55, ¶ 7, 883

N.W.2d 711, 716 (quoting Anderson v. Keller, 2007 S.D. 89, ¶ 5, 739 N.W.2d 35, 37).

“However, when we are asked to determine whether the circuit court’s order

violated a statutory privilege, it raises a question of statutory interpretation

requiring de novo review.” State v. Vargas, 2015 S.D. 72, ¶ 19, 869 N.W.2d 150, 158

(quoting Andrews v. Ridco, 2015 S.D. 24, ¶ 14, 863 N.W.2d 540, 546).

                                       Analysis

[¶6.]        We have not previously addressed the questions whether litigants may

discover independent–source material directly from a peer review committee or

whether an exception to SDCL 36-4-26.1 exists. We address these narrow issues in

this intermediate appeal. First, we consider whether Plaintiffs may obtain

materials directly from peer review committees.

[¶7.]        SDCL 36-4-42 establishes that:

             a peer review committee is one or more persons acting as any
             committee of a state or local professional association or society,
             any committee of a licensed health care facility or the medical
             staff of a licensed health care facility, or any committee
             comprised of physicians within a medical care foundation,
             health maintenance organization, preferred provider
             organization, independent practice association, group medical
             practice, provider sponsored organization, or any other
             organization of physicians formed pursuant to state or federal
             law, that engages in peer review activity. For the purposes of
             this section, a peer review committee is also one or more persons
             acting as an administrative or medical committee, department,
             section, board of directors, shareholder or corporate member, or
             audit group, including the medical audit committee, of a licensed
             health care facility.


                                          -4-
#27615, #27626, #27631

Peer review committees engage in activities defined by SDCL 36-4-43:

             For the purposes of §§ 36-4-25, 36-4-26.1 and 36-4-42, peer
             review activity is the procedure by which peer review
             committees monitor, evaluate, and recommend actions to
             improve the delivery and quality of services within their
             respective facilities, agencies, and professions, including
             recommendations, consideration of recommendations, actions
             with regard to recommendations, and implementation of
             actions. Peer review activity and acts or proceedings
             undertaken or performed within the scope of the functions of a
             peer review committee include:

            (1) Matters affecting membership of a health professional on the
            staff of a health care facility or agency;

            (2) The grant, delineation, renewal, denial, modification,
            limitation, or suspension of clinical privileges to provide health
            care services at a licensed health care facility;

            (3) Matters affecting employment and terms of employment of a
            health professional by a health maintenance organization,
            preferred provider organization, independent practice
            association, or any other organization of physicians formed
            pursuant to state or federal law;

            (4) Matters affecting the membership and terms of membership
            in a health professional association, including decisions to
            suspend membership privileges, expel from membership,
            reprimand, or censure a member, or other disciplinary actions;

            (5) Review and evaluation of qualifications, competency,
            character, experience, activities, conduct, or performance of any
            health professional, including the medical residents of health
            care facility; and

            (6) Review of the quality, type, or necessity of services provided
            by one or more health professionals or medical residents,
            individually or as a statistically significant group, or both.


[¶8.]       The privilege granted to materials of a peer review committee is found

in SDCL 36-4-26.1. It provides:



                                         -5-
#27615, #27626, #27631

             The proceedings, records, reports, statements, minutes, or any
             other data whatsoever, of any committee described in § 36-4-42,
             relating to peer review activities defined in § 36-4-43, are not
             subject to discovery or disclosure under chapter 15-6 or any
             other provision of law, and are not admissible as evidence in any
             action of any kind in any court or arbitration forum, except as
             hereinafter provided. No person in attendance at any meeting of
             any committee described in § 36-4-42 is required to testify as to
             what transpired at such meeting. The prohibition relating to
             discovery of evidence does not apply to deny a physician access
             to or use of information upon which a decision regarding the
             person’s staff privileges or employment was based. The
             prohibition relating to discovery of evidence does not apply to
             deny any person or the person’s counsel in the defense of an
             action against that person access to the materials covered under
             this section.

The circuit court determined that the statute contemplates deliberative information

and therefore objective information within the committee’s possession was not

subject to the privilege.

[¶9.]        The statute’s language “of any committee” encompasses and protects

“[t]he proceedings, records, reports, statements, minutes, or any other data

whatsoever” that is within the committee’s possession if it “relat[es] to peer review

activities defined in § 36-4-43,” regardless of its origin. SDCL 36-4-26.1; 36-4-43.

The circuit court was correct that the statute protects deliberative information.

However, the broad language protects more than deliberative materials. See

Shamburger v. Behrens, 380 N.W.2d 659, 665 (S.D. 1986) (“[S]taff competency

evaluations are not discoverable materials” under SDCL 36-4-26.1.). Peer review

activity is broader than deliberation as it is defined as “the procedure by which peer

review committees monitor, evaluate, and recommend actions to improve the

delivery and quality of services within their respective facilities, agencies, and

professions, including recommendations, consideration of recommendations, actions

                                          -6-
#27615, #27626, #27631

with regard to recommendations, and implementation of actions.” SDCL 36-4-43

(emphasis added).

[¶10.]       Furthermore, the ordinary meaning of the statutory terms records and

any other data whatsoever encompasses objective facts. See Krusac v. Covenant

Med. Ctr., Inc., 865 N.W.2d 908, 913 (determining that the ordinary meaning of the

statutory terms record and data encompass objective facts). Such an interpretation

is further supported by the statute’s exceptions. Although the exceptions are not

issues in this appeal, the language of the exceptions is important when construing

the language in SDCL 36-4-26.1. See In re Petition for Declaratory Ruling re SDCL

62-1-1(6), 2016 S.D. 21, ¶ 9, 877 N.W.2d 340, 344 (“[W]e give words their plain

meaning and effect, and read statutes as a whole, as well as enactments relating to

the same subject.”). One of the two exceptions to the privilege allows a physician

“access to or use of information upon which a decision regarding the person’s staff

privileges or employment was based.” SDCL 36-4-26.1; SDCL 36-4-26.2. The

ordinary meaning of information includes objective facts. Thus, if the Legislature

did not contemplate or intend that the statute protect objective facts then it would

not have needed to create such an exception.

[¶11.]       Defendants concede that some documents within the possession of a

peer review committee may be discovered from other sources. Defendants have

referred this Court to numerous decisions from other jurisdictions generally holding

that litigants may obtain, from independent sources, some documents given to peer

review committees. Many of those cases interpret state statutes that explicitly




                                         -7-
#27615, #27626, #27631

address the issue. 4 South Dakota does not have a similar provision. Our statutes

are silent on documents that peer review committees obtain from other sources.

[¶12.]         Relying on and quoting Wheeling Hospital, Sacred Heart advocates for

the following rule:

               information created by or at the behest of a peer review
               committee, including a physician’s application for privileges, is
               protected and remains protected at all times, regardless of who
               obtains it; items from independent sources, not generated at the
               behest of a committee, which were gathered and/or reviewed by
               a peer review committee do not become privileged simply
               because a committee gathered and/or reviewed them; and such
               independent source items are discoverable “from the original,
               external sources, but not from the peer review committee, itself.”

According to Defendants, information “not generated [by or] at the behest of a

committee” falls outside of the protection of SDCL 36-4-26.1.




4.       See Ex parte Qureshi, 768 So.2d 374, 378 (Ala. 2000) (addressing Ala. Code §
         22-21-8(b), which stated in part that “[i]nformation, documents, or records
         otherwise available from original sources are not to be construed as being
         unavailable for discovery or for use in any civil action merely because they
         were presented or used in preparation of [peer review activities]”); McGee v.
         Bruce Hosp. Sys., 439 S.E.2d 257, 259 (S.C. 1993) (interpreting S.C. Code
         Ann. § 40-71-20 providing, “[i]nformation, documents, or records which are
         otherwise available from original sources are not immune from discovery or
         use in a civil action merely because they were presented during the
         committee proceedings”); Day v. Finley Hosp., 769 N.W.2d 898, 901 (Iowa Ct.
         App. 2009) (construing Iowa Code § 147.135(2), which provided that
         “[i]nformation or documents discoverable from sources other than the peer
         review committee do not become nondiscoverable from the other sources
         merely because they are made available to or are in the possession of a peer
         review committee”); State ex rel. Wheeling Hosp., Inc. v. Wilson, 782 S.E.2d
         622, 630 (W. Va. Ct. App. 2016) (determining scope of discovery under W. Va.
         Code § 30-3C-3 (1980) providing in part that “information, documents or
         records otherwise available from original sources are not to be construed as
         immune from discovery or use in any civil action merely because they were
         presented during the proceedings of such organization”).

                                           -8-
#27615, #27626, #27631

[¶13.]       Such a rule is consistent with our broad statutory scheme. By their

plain language, the statutes protect the “proceedings, records, reports, statements,

minutes, or any other data whatsoever . . . relating to” the “procedure by which [a]

peer review committee” engages in its functions. SDCL 36-4-26.1; SDCL 36-4-42;

SDCL 36-4-43. Protection of information generated “by or at the behest of a peer

review committee” protects the peer review process as contemplated by the

statutory scheme. At the same time, it prevents an unreasonably broad application

of the privilege, such as protecting documents simply because the committee

received them. See State v. Karlen, 1999 S.D. 12, ¶ 31, 589 N.W.2d 594, 601

(“[P]rivileges are to be construed narrowly as they constitute a barrier to the search

for truth.”). The rule balances the interests that the medical community and the

public have in both allowing frank and effective peer review and in uncovering and

recovering from acts of fraud, deceit, and the like. See Pawlovich v. Linke, 2004

S.D. 109, ¶ 14, 688 N.W.2d 218, 223 (recognizing “the important role played by

doctors, attorneys[,] and other professionals in reviewing members of their

respective profession. Professional societies, through peer review, can and do

perform a great public service by exercising control over those persons placed in a

position of public trust.”). It is evident that the purpose of the peer review statute is

to encourage full candor in the peer review process, and that policy is advanced

when information created by or at the behest of a peer review committee is

protected. Although Plaintiffs are not entitled to discover any of the materials

within the peer review committee’s possession, Plaintiffs and Defendants may

obtain information from other sources in accordance with the rule stated above.


                                           -9-
#27615, #27626, #27631

The constitutionality of SDCL 36-4-26.1

[¶14.]       In light of the broad protection granted under SDCL 36-4-26.1, the

circuit court determined that the statute did not pass constitutional scrutiny unless

it applied an exception. Accordingly, it crafted and applied a “crime-fraud

exception.” It appears that the circuit court determined that the exception was

necessary in order to protect Plaintiffs’ constitutional right to open courts.

Plaintiffs also seem to assert that the exception is necessary to guarantee their

right to procedural due process. The court determined that the statute survived a

substantive due process challenge, and the parties have not asked us to reconsider

that determination in this intermediate appeal.

[¶15.]       First, we consider Plaintiffs’ right to procedural due process. “To

establish a procedural due process violation, a plaintiff must demonstrate that he

has a protected property or liberty interest at stake and that he was deprived of

that interest without due process of law.” Osloond v. Farrier, 2003 S.D. 28, ¶ 16,

659 N.W.2d 20, 24 (quoting Hopkins v. Saunders, 199 F.3d 968, 975 (8th Cir. 1999)).

“[T]he individual must be deprived of this right by a state actor.” Id..

[¶16.]       Plaintiffs invite us to weigh the public policy of peer review

confidentiality against their need for evidence and of revealing instances of bad

faith peer review. However, neither the circuit court nor Plaintiffs have identified a

protected liberty or property interest at stake that has been deprived by the State.

Instead, it appears that Plaintiffs assert that their due process is violated by the

privilege because it violates their constitutional right to have a remedy by due

course of law. The right to have a remedy by due course of law is a separate


                                          -10-
#27615, #27626, #27631

constitutional right under S.D. Const. art. VI, § 20. See infra ¶ 19. “A property

interest worthy of due process protection must be granted or defined by a source

independent from the Constitution, such as state law.” Hollander v. Douglas Cty,

2000 S.D. 159, ¶ 12, 620 N.W.2d 181, 185.

[¶17.]       Plaintiffs primarily rely on Adams v. St. Francis Regional Medical

Center, 955 P.2d 1169, 1184 (Kan. 1998), to contend that their constitutional rights

are violated under SDCL 36-4-26.1 and that the privilege must yield to their

interest in peer review materials. Adams is distinguishable. In Adams, parents

alleged that their daughter died due to negligent treatment provided by a doctor

and medical center. Adams, 955 P.2d at 1171. Plaintiffs’ attorney obtained an

investigation file, including disciplinary forms, from the State Board of Nursing and

used the information within those documents in depositions. Id. at 1172. The

medical center sought a protective order limiting the use of the documents. It

contended that the Board had violated confidentiality statutes and that disciplinary

forms “were prepared in conjunction with peer review” and thus protected. Id. The

lower court determined that the documents were “privileged and [it] quashed

depositions of persons named in them[.]” Id. at 1180. The Kansas Supreme Court

explained that this effectively prevented plaintiffs “from developing facts that they

could have and probably would have developed had it not been for plaintiffs’

obtaining information from the Board’s documents.” Id. The court noted that “[t]he

dilemma thus created for the plaintiffs runs counter to at least one of the principles

that traditionally guide courts in making decisions concerning confidential

material—that a party is required to exhaust available alternative sources of


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#27615, #27626, #27631

information before seeking a court’s order compelling discovery.” Id. After

weighing plaintiffs’ right to due process and the interest in creating a peer review

privilege, the court determined that the lower “court’s protective order and order

granting other discovery relief denied plaintiff . . . access [(to relevant facts)] and

thus violated plaintiffs’ right to due process and a fair determination of their

malpractice action against the defendants.” Id. at 1187.

[¶18.]       The situation that existed in Adams does not exist in this case.

Plaintiffs have not demonstrated that they have no other access to information

necessary for the causes of action that they are claiming. Plaintiffs’ causes of action

of fraud and deceit and negligent credentialing do not require evidence directly from

the peer review committee. Minnesota’s Supreme Court has explained that

“negligence [can] be shown on the basis of what was actually known or what should

have been known at the time of the credentialing decision.” Larson v. Wasemiller,

738 N.W.2d 300, 310 (Minn. 2007) (determining that because “the confidentiality

provisions of the peer review statute do not preclude the presentation of evidence in

defense of a negligent–credentialing claim, . . . the confidentiality provision is not

facially unconstitutional”). Similarly, deceit includes “[t]he assertion, as a fact, of

that which is not true, by one who has no reasonable ground for believing it to be

true[.]” SDCL 20-10-2 (2). Thus, Plaintiffs, who have provided the circuit court

with affidavits that set forth information given to the committee, have

demonstrated that they are able to obtain evidence that goes to the heart of their

claims. In addition, we have explained what information Plaintiffs may obtain from

sources other than a peer review committee.


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#27615, #27626, #27631

[¶19.]       We next address the circuit court’s determination that a “crime-fraud

exception” is necessary to protect Plaintiffs’ constitutional right to open courts. S.D.

Const. art. VI, § 20 provides: “All courts shall be open, and every man for an injury

done him in his property, person or reputation, shall have remedy by due course of

law, and right and justice, administered without denial or delay.” According to the

court, Plaintiffs asserted that the privilege violates their right of access to the

courts “by depriving them of the best and most relevant information to establish

their claim of fraud and deceit or that the peer review committees here acted

improperly or in bad faith.” Notably, the Plaintiffs have not provided authority for

the proposition that their right under S.D. Const. art. VI, § 20 is violated when a

litigant is denied access to the best and most relevant information to establish their

claim. “We have interpreted the ‘open courts’ provision as a ‘guarantee that for

such wrongs as are recognized by the laws of the land the courts shall be open and

afford a remedy.’” Green v. Siegel, Barnett & Schutz, 1996 S.D. 146, ¶ 13, 557

N.W.2d 396, 399-400 (quoting Kyllo v. Panzer, 535 N.W.2d 896, 901). “We have held

that reasonable conditions on a cause of action are not unconstitutional.” Id.

[¶20.]       The Connecticut Supreme Court has addressed this issue in the

context of its psychiatrist-patient privilege. See Falco v. Institute of Living, 757

A.2d 571, 577 (Conn. 2000). Similar to South Dakota, Connecticut’s constitution

provides: “All courts shall be open, and every person, for an injury done to him in

his person, property or reputation, shall have remedy by due course of law, and

right and justice administered without sale, denial or delay.” Conn. Const. art. I, §

10. In Falco, the Connecticut Supreme Court determined that its “right to redress”


                                           -13-
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provision does not permit the court to override the psychiatrist-patient privilege.

Id. at 577. It further explained that it was “unpersuaded that the right to redress is

implicated at all,” finding that “[t]he psychiatrist-patient privilege merely restricts

the discovery and the availability of evidence . . . the . . . privilege is no different

from other common privileges such as the attorney-client or spousal privileges” and

plaintiff “failed to demonstrate that the privilege limits or impairs the cause of

action itself.” Id.

[¶21.]        Likewise, South Dakota’s peer review privilege does not restrict or

destroy Plaintiffs’ ability to bring their causes of action. See Green, 1996 S.D. 146, ¶

33, 557 NW.2d at 405 (holding that statute of limitations did not “restrict or destroy

the right to bring a cause of action for legal malpractice, but rather, only

establish[ed] the period of time in which a plaintiff must assert this right.”).

Although the peer review privilege prevents Plaintiffs from discovering material

directly from a peer review committee, it does not bar causes of action or abolish the

remedy for those actions. Additionally, as we now hold, Plaintiffs may obtain some

of the information given to the peer review committees from independent sources.

[¶22.]        The circuit court and Plaintiffs note that the “crime-fraud exception” is

necessary to ensure that the privilege is not abused. They point out that other

privileges have a similar exception, such as the crime or fraud exception to the

attorney-client privilege. That exception is a codified one. See SDCL 19-19-

502(d)(1) (“There is no privilege under this section: (1) Furtherance of crime or

fraud. If the services of the lawyer were sought or obtained to enable or aid anyone

to commit or plan to commit what the client knew or reasonably should have known


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#27615, #27626, #27631

to be a crime or fraud[.]”). This Court has recognized a limited exception to the

spousal privilege. In State v. Witchey, 388 N.W.2d 893 (S.D. 1986), we determined

that where a witness spouse is an active participant in patently criminal activity,

the defendant may not prevent the “spouse’s voluntary testimony about a

communication during joint participation in a crime because that communication

does not fall within the definition of SDCL [19-19-504].” We created such an

exception despite the fact that the Legislature has recognized other exceptions to

the privilege and the joint-participant exception is not among them. See SDCL 19-

19-504.

[¶23.]       Nevertheless, carving out an exception in this case is a task better left

for the Legislature, which by statute created the peer review privilege. Despite the

existence of crime or fraud exceptions to other privileges, in this case, we need not

recognize ones in addition to the statutory ones found in SDCL 36-4-26.1 and SDCL

36-4-26.2. Plaintiffs may obtain certain information from independent sources. The

availability of that information from sources outside the peer review committees

allows Plaintiffs access to information that may expose alleged fraudulent activity

and allow Plaintiffs to present their case. Their right to open courts is not violated.

                                     Conclusion

[¶24.]       The circuit court erred when it ordered Defendants to produce

materials in the possession of medical peer review committees. Furthermore, no

crime-fraud exception exists to SDCL 36-4-26.1. We reverse and remand with

instructions to vacate the circuit court’s order compelling production of documents

protected by peer review.


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#27615, #27626, #27631

[¶25.]          GILBERTSON, Chief Justice, and MYREN and CUTLER, Circuit

Court Judges, and STEELE, Retired Circuit Court Judge, concur.

[¶26.]          MYREN, Circuit Court Judge, sitting for ZINTER, Justice,

disqualified.

[¶27.]          CUTLER, Circuit Court Judge, sitting for WILBUR, Justice,

disqualified.

[¶28.]          STEELE, Retired Circuit Court Judge, sitting for KERN, Justice,

disqualified.




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