Do statutory confidentiality provisions mandate that information designated “confidential” is also non-discoverable? No, the Illinois Supreme Court recently held in Klaine v. Southern Illinois Hospital Services, 2016 IL 118217. Rather, “the confidential nature of information does not prevent it from being discoverable unless the plain language of the statute so provides.” The Supreme Court’s ruling serves as a reminder that confidentiality, discoverability, and admissibility are distinct concepts, and that attorneys cannot rely on a confidentiality provision to successfully assert a privilege.
Prior to Klaine, the First District addressed the issue of whether a “confidentiality” provision bestowed a privilege on confidential information in TTX Co. v. Whitley, 692 N.E.2d 790 (Ill. App. Ct. 1998). In TTX, the Circuit Court ordered the Illinois Department of Revenue to disclose the identities of certain non-party taxpayers to the plaintiff. The Department refused, claiming that the information was privileged under section 917(a) of the Income Tax Act, 35 ILCS 5/917(a), which states, “Except as provided in this Section, all information received by the Department from returns filed under this Act . . . shall be confidential.” The Circuit Court held the Department in contempt, and the Department appealed.
The First District reversed, finding that the taxpayers “identities were confidential” as defined in section 917(a) and that such confidential information was non-discoverable. Notably, section 917(a) does not explicitly state that information designated “confidential”is also privileged. The First District addressed this point directly in TTX, stating that, “[a]lthough section 917 does not contain a . . . provision stating that information in tax returns are inadmissible or nondiscoverable, its language requires confidentiality, and does not create an exception for disclosure pursuant to a court order.” It explained that, in the absence of a statutory exception to the confidentiality rule, permitting disclosure of the tax return information would violate section 917(a)’s explicit prohibition against such disclosure.
Six years later, the Fifth District’s opinion in Klaine appeared to create a split among the appellate courts. In Klaine, the plaintiffs filed suit against Southern Illinois Hospital Services (SIHS) for negligently credentialing a physician. During discovery, the Circuit Court ordered SIHS to produce the physician’s three applications to SIHS for staff privileges. SIHS refused, asserting the applications were non-discoverable pursuant to section 15(h) of the Credentials Act, 410 ILCS 517/15(h). Section 15(h) provides that “any credentials data collected or obtained by the . . . hospital shall be confidential.” Like the Income Tax Act, section 15(h) lacks a provision stating that information designated confidential is also non-discoverable.
The Circuit Court held SIHS in friendly contempt, and SIHS appealed. The Fifth District affirmed the Circuit Court’s order, concluding that, to create a privilege, the plain language of the statute must explicitly state that the information that is “confidential” is also “privileged.” 15 N.E.3d 525 (Ill. App. Ct. 2014). SIHS again appealed, and on January 22, 2016, the Supreme Court affirmed the Fifth District’s opinion.
The Supreme Court first made clear that, because privileges are designed to protect interests outside the truth-seeking process, they should be “strictly construed as exceptions to the general duty to disclose.” The court then explained that, when information is identified as “confidential,” disclosure will depend on whether applying a “privilege” promotes sufficiently important interests to outweigh the need for probative evidence.
SIHS contended that the physician’s credentialing forms were privileged. The court pointed out that the credentialing forms were established by the Credentials Act to be the only information a physician needs to submit when applying for staff privileges. The forms therefore are the only information a hospital is required to consider in determining whether to credential a physician. Accordingly, the forms were “highly relevant” to the Klaines’ negligent credentialing claim, and the court found that SIHS could not demonstrate any interests that outweighed the Klaines’ need for this information. Indeed, the court “fail[ed] to see how a cause of action for negligent credentialing could proceed” without this information.
The court acknowledged that, when the plain language of a statute creates a privilege, the information may not be disclosed regardless of its relevance. In those situations, however, the legislature has already determined that other interests outside the truth-seeking process must be protected. Consequently, the court rejected SIHS’s premise, based on TTX, that “confidential” information is “implicitly privileged” and instead found that “the confidential nature of information does not prevent it from being discoverable unless the plain language of the statute so provides.”
Klaine should not be read as an absolute bar to asserting a privilege where a statute does not expressly grant one. The court qualified its holding by explaining that “a confidentiality provision in a statute or rule does not necessarily mean that an impenetrable barrier to disclosure has been erected” (emphasis added). The court also declined to overrule TTX, instead finding it “inapposite” to Klaine and finding SIHS’s reliance on it “misplaced” because TTX did not rely solely on the Income Tax Act’s confidentiality provision to deny discovery. (The First District also found that the information TTX sought was irrelevant to its claims.) What Klaine makes clear is that attorneys must be prepared to point to more than a mere label of “confidentiality” to successfully assert a privilege.