Kloster v. Hancock (In Re Rockhill Pain Specialists, P.A.) , 55 Kan. App. 2d 161 ( 2017 )

No. 115,620
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
IN RE ROCKHILL PAIN SPECIALISTS, P.A.,
DANIEL R. KLOSTER, M.D.,
Appellee,
v.
DAN L. HANCOCK, M.D.,
Appellant.
SYLLABUS BY THE COURT
1.
The restrictions regarding dissemination of reports and records of public health
care licensing agencies contained in K.S.A. 65-4925 are a statutory exception to the
general rule contained in K.S.A. 60-407 that all relevant evidence is admissible.
2.
A strict or narrow interpretation is applied to statutory exceptions to the rule
contained in K.S.A. 60-407 that all relevant evidence is admissible.
3.
The plain language of K.S.A. 65-4925 does not prohibit the admission into
evidence of the ultimate result of investigations by public health care licensing agencies.
4.
The good-faith immunity provided under K.S.A. 65-2898 for persons that report
information regarding incidents of malpractice, or the qualifications, fitness or character
of, or disciplinary action taken against, a person licensed, registered or certified by the
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board of healing arts adequately protects the public interest in encouraging reporting of
unfitness.
5.
Unless otherwise limited by court order, parties may obtain discovery regarding
any nonprivileged matter that is relevant to a party's claim or defense and proportional to
the needs of the case.
6.
A privilege is a rule of evidence that allows a person to shield confidential
communications or information from compelled disclosure during litigation.
7.
Because they are exceptions to the general rule that parties may obtain discovery
regarding any matter that is relevant to a party's claim or defense, evidentiary privileges
are to be strictly construed.
8.
The fact that a statute identifies information as confidential does not necessarily
mean that the statute has created an evidentiary privilege.
9.
The trial court is vested with broad discretion in supervising the course and scope
of discovery.
10.
In discovery proceedings when a claim of privilege, confidentiality, or irrelevance
is raised by a litigant, the court has a duty to conduct an in camera inspection to permit
discovery of only relevant documents to protect against unnecessary and damaging
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disclosure of irrelevant confidential material. The court must balance the interests of the
litigants as well as the public interest in maintaining the confidentiality of the material.
11.
Findings and other records submitted to or generated by hospital peer review
committees or officers are privileged and are not subject to discovery. But by statute, the
holder of the privilege is the hospital peer review officer or committee creating or
initially receiving the record, not the individual doctors or medical professionals
submitting the record.
12.
A doctor's responses to a Kansas Board of Healing Arts investigation are
confidential but not privileged under K.S.A. 65-2839a(d).
13.
Damages recoverable for defamation cannot be presumed but must be proven.
14.
Defamation is not a personal injury action as contemplated by K.S.A. 2016 Supp.
60-19a02(a).
15.
Failure to request an itemization of noneconomic damages prior to the discharge
of the jury waives any claim to apply the caps on noneconomic damages in K.S.A. 2016
Supp. 60-19a02.
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16.
A verdict for actual damages will not be disturbed merely because the court cannot
definitely ascertain the precise method by which the jury arrived at the exact amount of
its verdict when such an amount is reasonably within the range of the evidence.
Appeal from Johnson District Court; JAMES CHARLES DROEGE, judge. Opinion filed December
22, 2017. Affirmed.
Eric G. Kraft, of Eric Kraft Law, LLC, of Olathe, for appellant.
Timothy R. West and Nick J. Kurt, of Berkowitz Oliver LLP, of Kansas City, Missouri, for
appellee.
Before ARNOLD-BURGER, C.J., PIERRON and GREEN, JJ.
ARNOLD-BURGER, C.J.: This case represents a tragic story of two highly gifted
and respected physicians, Dr. Dan Hancock and Dr. Daniel Kloster, who specialize in
pain management care. They maintained a highly successful practice and each made over
a half million dollars a year. They were like brothers to each other, until a dispute over
money sent their friendship and their practice into a death spiral.
Following a dispute over the proposed distribution of income, Hancock began
broadcasting complaints regarding Kloster's patient care to several state agencies,
hospitals, and ultimately—when he believed the other entities were not responding
quickly enough or in the manner he hoped—to the Kansas City Star. He alleged that
Kloster was either killing or hastening the death of his patients. None of the complaints
bore fruit. After hundreds of hours defending his reputation Kloster successfully sued
Hancock for defamation, breach of fiduciary duty, fraud, and conversion. Hancock
appeals that verdict.
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On appeal, Hancock argues that the district court misapplied the statutory privilege
in K.S.A. 65-4925, which provides that reports and records of state licensing agencies are
confidential, by admitting evidence that two state agencies had cleared Kloster of any
wrongdoing. Although we find that the district court did not err in admitting evidence
that the state licensing agencies cleared Kloster of wrongdoing, it did err in holding that
Kloster's submissions to the state licensing agencies were privileged. However, the error
was harmless because Hancock had other ways of discovering the information. Hancock
also argues that there was insufficient evidence to support the jury's damages awards for
Kloster's defamation and nondefamation claims. But, the jury had a sufficient evidentiary
basis to support its award of damages on all claims. Finally, Hancock argues that the
damages for Kloster's defamation claim should have been capped under K.S.A. 2016
Supp. 60-19a02(b), which provides a statutory cap of $250,000 for noneconomic
damages in personal injury cases. However, defamation is not a personal injury action.
Additionally, he did not object to the jury's failure to itemize damages, a failure that is
fatal to his claim. Accordingly, we affirm.
FACTUAL AND PROCEDURAL HISTORY
Dr. Daniel Kloster and Dr. Dan Hancock are anesthesiologists specializing in pain
management. They formed Rockhill Pain Specialists, P.A. (Rockhill) in 2001. Their
practice included, among other pain management procedures, the implantation of pain
pumps in terminally ill cancer patients for end-of-life pain management. At that time,
they were "good friends, like brothers." Rockhill was an S-corporation, and as Kloster
and Hancock were the only two shareholders of Rockhill they split all profits evenly.
Kloster brought in about two-thirds of the patients while Hancock brought in the other
third. Hancock handled Rockhill's business, and served as Rockhill's president, director,
and compliance officer.
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The doctors' relationship began deteriorating in 2011. The doctors had different
ideas about why this occurred. Hancock maintained that he was concerned about
Kloster's patient care. Kloster argued that the doctors had a monetary dispute sparked by
a job offer he received from a company called Assured Pharmacy.
In 2011, Assured Pharmacy approached Kloster about a potential position as its
national medical director. Kloster described the position as a business advisory role. The
position entailed about 35 to 40 hours of work per month. Kloster thought he would not
be expected to split profits from this position with Hancock because their agreement was
only to split money earned in the practice of medicine. Hancock, however, thought that
the position entailed the practice of medicine because the employment contract specified
that the employee had to be a licensed physician and anesthesiologist who specialized in
pain management. Kloster asked Rockhill's corporate counsel, Randy Schultz, whether he
would have to share profits from the Assured Pharmacy position with Hancock. Schultz
told him that he would not have to share because the position was unrelated to the
practice of medicine.
Kloster and Hancock went out to dinner in December 2011. They continued to
disagree over whether Kloster's earnings from Assured Pharmacy should go to Kloster or
to Rockhill. Kloster said he would look at Rockhill's books and discuss the issue again
with Hancock at a later point in time. Kloster had not looked at Rockhill's books before
because that aspect of the business was managed by Hancock. When Kloster looked at
Rockhill's books, he realized that he had brought in twice as much business as Hancock
had for the previous five years.
The doctors met for another dinner in January 2012. Kloster alleges that Hancock
"just went off" and started screaming at him. Kloster said that Hancock accused him of
working with Schultz to deprive Rockhill of the Assured Pharmacy money and that
Hancock screamed, "Oh, you're going down. Randy [Schultz] is going down." Hancock
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denied threatening Kloster or Schultz at this meeting, and said that Kloster actually
threatened him by saying he would kill Hancock if he did anything to injure Kloster's
wife or children.
The parties met again briefly in March or April of 2012. Kloster asked Hancock if
he would be open to a different compensation system where, instead of splitting profits
evenly, they would split profits based on production. Hancock refused.
Due to the parties' disagreement on compensation, Kloster recommended that they
cease receiving any distributions from Rockhill beyond their base pay. Direct deposits of
$15,000 per month were given to Kloster during this time period, just like Hancock, but
Kloster returned them to the corporation. Hancock continued to take distributions from
Rockhill. Schultz instructed Rockhill's bookkeeper to cease making distributions until the
doctors could agree on a compensation model. But Hancock emailed the bookkeeper and
said that "as president of Rockhill Pain Specialists, I am instructing you to make the
monthly distributions for May as you have every month for the past 4-5 years."
On June 14, 2012, Kloster called a special meeting of Rockhill's board of
directors. Kloster, Hancock, and Schultz attended. Kloster and Hancock each brought a
private attorney as well. Kloster raised the issue of distributions again, but Hancock
continued to receive them. The parties also discussed a production-based compensation
arrangement, and Kloster's attorney agreed to "prepare a proposed compensation
arrangement that was partially based upon a production formula while taking into
consideration any special administrative duties being provided by the parties."
After discussing compensation, Hancock raised the issue of Rockhill's billing and
coding practices. The special meeting minutes state that Hancock requested a third-party
review of Rockhill's billing and coding activities. The minutes also state that Hancock
agreed to provide Schultz with the names of two to three physicians who could conduct
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an independent review of Rockhill's practice. During the trial, Hancock denied that he
agreed to do this. At the time of the special shareholder's meeting, neither Kloster nor
Schultz knew why Hancock raised an issue with Rockhill's billing.
Although he did not disclose it at the special shareholder's meeting, Hancock had
been investigating Rockhill's billing practices for several months. Hancock testified that
he began having concerns with Kloster's patient care in 2011. Hancock's primary concern
was with Kloster's implantation of intrathecal pain pumps in patients. These pumps are
about the size of a hockey puck and are inserted under a patient's skin. Pumps provide a
powerful way to deliver medicine into patients with severe pain. Hancock thought that
patients receiving pumps were dying at a faster rate than usual. He thought Kloster was
"either choosing patients that [were] inappropriate to receive pumps or that the
concoction that he was using was hastening their demise."
Hancock was also concerned with the pain pump issue from a compliance
standpoint. Medicare asks doctors to certify that they have a reasonable certainty that a
patient will survive for 90 days after implantation of a pump. Hancock thought that if
Kloster was selecting inappropriate patients for pump procedures that Rockhill might be
subject to a Medicare audit or sanction.
In January 2012, shortly after the doctors' monetary dispute began, Hancock met
Vicki Myckowiak at a conference in Scottsdale, Arizona. Myckowiak is an expert in
fraud and abuse in medical billing. Hancock told Myckowiak that he had concerns over
Rockhill's billing practices and Kloster's use of pain pumps. Hancock hired Myckowiak
on behalf of Rockhill to conduct a review of some of Rockhill's files. Hancock sent
Myckowiak records from 12 patients of Kloster's who had died within 90 days of their
pump placements. These were records that Rockhill maintained for billing purposes, and
did not include operating room notes or nursing notes.
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On June 6, 2012, Hancock provided Kloster with a peer review reference.
Hancock certified that he would recommend Kloster without reservations. Hancock
strongly agreed that Kloster provided appropriate patient assessments, evaluations, and
surgical procedures.
Shortly after the June 2012 special shareholder meeting, Myckowiak hired Dr.
Andrea Trescot as an expert to conduct additional review of the records. After reviewing
the records, Trescot prepared an expert report. She stated that "[a]lthough these were
cancer patients, presumably with a limited life span, I am seriously concerned that the
medicines that Dr. Kloster chose for the pump hastened if not caused these patients'
deaths." She also said that "[r]eview of these cases force[s] me to conclude that an
emergency suspension of pump implantations is necessary to protect patient welfare."
Hancock did not contact Schultz throughout his consultations with Myckowiak or
Trescot. He also did not discuss Trescot's findings with Kloster. Hancock testified that he
raised concerns regarding the pain pumps with Kloster as early as August 2011. He said
that Kloster told him "that he could justify all of the pumps that he put in, that [Hancock]
needed to be more aggressive in patient treatment and that [Hancock] should not be
lecturing him about how to treat pump patients." Hancock testified that he discussed the
issue with Kloster again in December 2011 or January 2012 to reinforce his previous
concern that Kloster was choosing the wrong patients or being too aggressive in his
treatment. Hancock alleged that Kloster said, "I'm telling you that these patients are going
to die anyway and I'm going to make as much money off of them before they die as I
can." At trial, Kloster denied that Hancock ever expressed any concerns over his patient
care.
On August 8, 2012, Myckowiak filed complaints against Kloster with the Kansas
State Board of Healing Arts and Missouri Board of Registration for the Healing Arts.
These complaints stated that she was writing "on Dr. Hancock's request to provide you
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with information showing that his partner, Daniel L. Kloster, M.D. is providing services
to patients . . . that are below the standard of care and which, it appears, caused the death
of at least one patient." The primary concern in the complaints regarded the implantation
of intrathecal pain pumps.
Later that month, Hancock sent letters to several people at Menorah Medical
Center and Research Medical Center, including the CEOs, credentials committees, and
peer review committees regarding his concerns over Kloster's patient care. Hancock
asked Myckowiak to send complaints to the attorneys general and governors of Missouri
and Kansas, the federal Drug Enforcement Administration, the Missouri Bureau of
Narcotics and Dangerous Drugs, and the Kansas Bureau of Investigation. Hancock also
made an anonymous call to the Overland Park Police Department.
Kloster began thinking about dissolving Rockhill when Hancock lodged
complaints against him. The doctors' business dispute continued, with Hancock accepting
distributions and Kloster continuing to reject them. This led to Hancock accruing
approximately $100,000 more than Kloster by September 2012. At that time, Kloster's
attorney wrote a letter informing Hancock that his acceptance of the distributions
breached his fiduciary duty to Rockhill and put Rockhill's S-corporation status at risk.
Kloster also discovered that Hancock had used Rockhill funds to pay his personal
attorney, Myckowiak, and Trescot. Kloster asked Hancock to reimburse those funds, and
Hancock refused. In early 2013, Kloster withdrew $38,515.15 to equalize the doctors'
distributions. Hancock responded by taking an equal amount out of Rockhill's account.
Kloster responded to this by withdrawing about $42,830.13 from Rockhill—some to
equalize distributions and the rest for routine expenses like gasoline and continuing
medical education credits.
Throughout the business dispute, Hancock continued investigating Kloster's
patient care. Hancock provided Trescot with 33 more of Kloster's patient billing records
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to review. Trescot issued a second opinion in January 2013. She concluded: "This review
identifies multiple cases of treatment below the standard of care, probable Medicare
fraud, and, I am afraid, possibly manslaughter. In my many years of reviewing medical
cases, I have rarely seen a magnitude of cases this egregious." Hancock sent Trescot's
second report to the state licensing agencies to supplement his complaints against
Kloster.
In March 2013, Kloster filed suit against Hancock. Kloster sued for breach of
fiduciary duty, fraud, fraud through silence, conversion, defamation, and invasion of
privacy by false light. Kloster also asked for judicial dissolution of Rockhill as well as an
accounting and appointment of a receiver. Hancock counterclaimed for breach of
fiduciary duty. Later that month the district court appointed Craig Chance as receiver for
Rockhill for the pendency of the dissolution. Chance's duty was to preserve Rockhill's
assets during the winding down of the company. Chance was also tasked with
determining whether Kloster or Hancock made inappropriate disbursements of Rockhill
funds.
At the end of March 2013, Hancock began talking to a reporter from the Kansas
City Star. Hancock was frustrated when he talked to the reporter because none of the state
licensing agencies, hospitals, or other parties to whom Hancock had transmitted
complaints about Kloster had taken action. Hancock deemed this a "government failure"
and thought that he needed to "alert the general public" to the dangers posed by Kloster's
patient care. The Kansas City Star published an article titled, "When doctors divorce, the
breakup can be as messy as a marital split" in June 2013. The article begins, "It sounds
like the lead-in to any of 101 divorces. One partner is accused of outrageous misconduct,
the other of not doing his share. There are threats, maybe shouting. The silent treatment.
And underneath it all, a simmering dispute over money." The article goes on to discuss
Hancock's allegations that Kloster was "practicing so far below the standard of care that
two of his patients died through massive overdoses of pain medications." It also
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contained Hancock's allegations that patients were dying too quickly after implantation of
pain pumps.
Eventually, both the Missouri and Kansas licensing agencies concluded their
investigations of Kloster and found that he did not violate the standard of care. In May
2014, Hancock made a motion to compel discovery responses from Kloster. Hancock
sought "Kloster's written responses to the different medical boards and regulatory boards
of the various hospitals and the boards of health for [the] states of Kansas and Missouri."
Kloster objected, arguing that the records were confidential. The district court agreed
with Kloster and held that Kloster's responses to the licensing agencies were confidential.
A couple of weeks before trial, Hancock filed a motion in limine asking the court
to exclude "[e]vidence, testimony, exhibits, and/or statements regarding the conclusions,
results, or any other determinations of Dr. Kloster's conduct or practice methods from any
peer review process of any hospital, the Kansas Board of Healing Arts, or the Missouri
State Board of Registration for the Healing Arts." Hancock argued that the conclusions of
the investigations were confidential and inadmissible in court. Kloster replied, arguing
that Hancock waived any right to the privilege of confidentiality in the content of the
administrative proceedings when Hancock publicized the proceedings in court documents
and in the newspaper. The district court denied Hancock's motion in limine, holding that
Hancock waived any confidentiality that may exist in the conclusions.
At trial, Kloster and Hancock both testified. Chance, the court-appointed receiver,
presented his findings. Chance testified that Hancock had incurred unsubstantiated travel
costs, fuel charges, and other expenses. Chance also thought it was inappropriate for
Rockhill to pay Myckowiak, Trescot, and Hancock's personal attorney fees.
The jury found in favor of Kloster on all counts. It awarded Kloster $925,000 for
defamation, $63,343.11 for breach of fiduciary duty, $9,083.75 for fraud, and $9,269.60
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for conversion. The jury also found that Hancock should pay punitive damages. The
district court later awarded Kloster $200,000 in punitive damages and $9,337.02 in costs.
The jury also found that Kloster breached his fiduciary duty to Hancock. However, it did
not award Hancock damages for the breach.
Hancock filed a motion for a new trial. He argued that there was no evidence to
support the jury's award for defamation. Alternatively, he argued that the district court
should reduce the jury's defamation award because there is a $250,000 statutory cap on
damages for actions involving personal injury. Hancock also argued that the jury failed to
acknowledge the distinction between Kloster and Rockhill when apportioning damages.
Finally, he reiterated his evidentiary arguments about the admission and exclusion of
certain documents generated by the state health boards when they investigated Kloster.
The district court denied Hancock's motion.
Hancock appealed.
ANALYSIS
The district court did not err in admitting the final results of the investigations by the
Kansas and Missouri boards of health.
Hancock's first argument is that the district court erred by permitting Kloster to
admit evidence that the Kansas and Missouri boards of health dismissed Hancock's
complaint against him. Hancock argues that the district court's ruling "contravened well-
established Kansas and Missouri public policy." He argues that Kansas and Missouri law
provide civil immunity for persons who report malpractice to the state boards of health.
Additionally, he argues that Kansas law prohibits admitting reports generated during the
administrative disciplinary process into evidence. In sum, he contends that the letters
from the disciplinary boards are inadmissible as a matter of law.
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Generally speaking, all relevant evidence is admissible. K.S.A. 60-407(f); see
K.S.A. 60-401(b). But a court's consideration of the admissibility of evidence can also
require application of statutory rules controlling the admission and exclusion of certain
types of evidence. State v. Bowen, 299 Kan. 339, 348, 323 P.3d 853 (2014). Accordingly,
an appellate court exercises de novo review of a challenge to the adequacy of the legal
basis of a district judge's decision on admission or exclusion of evidence. 299 Kan. at
349.
Preservation
Before reaching the substantive issue, we must address a preservation issue.
Kloster argues that this court is precluded from reviewing Hancock's evidentiary
argument because Hancock failed to lodge a timely objection to Kloster's testimony
regarding the results of the boards' investigations. Kloster relies on the following line of
questioning from his direct examination on the first day of trial:
"Q: Besides the complaints that were lodged by Dr. Hancock that we'll hear about, do
you have any other complaints made to the State Boards of Healing Arts concerning
your patient care?
"A: I have not.
"Q: Okay.
Are you currently under investigation by either Missouri or Kansas State Boards
of Healing Arts?
"A: I am not.
"Q: Have your licenses to practice medicine ever been suspended or limited in any way
or restricted?
"A: No.
"Q: You remain in good standing both with the State of Missouri and the State of
Kansas?
"A: Correct.
"Q: Have you ever had your privileges suspended at any hospital?
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"A: Never."
Hancock did not object to this line of questioning. While this discussion approaches the
topic of the boards' results, the boards' conclusions were not directly addressed. Thus,
Hancock was not required to object at that point to preserve this issue for appeal. On the
second day of trial, Kloster's attorney was still examining him. The attorney stated: "I
want to talk to you about the conclusion of the state board investigations into Dr.
Trescot's report." Hancock's attorney objected, and the court said that the objection was
preserved but overruled. Because Hancock objected when the conclusions of the boards'
investigations were raised, Hancock has properly preserved it for our review.
Statutory Interpretation
Hancock relies on K.S.A. 65-4925 to support his argument that the results of the
Kansas and Missouri boards' investigations were inadmissible as evidence in his case.
This statute provides:
"(a) The reports and records made pursuant to K.S.A. 65-4923 or 65-4924, and
amendments thereto, shall be confidential and privileged, including:
(1) Reports and records of executive or review committees of medical care
facilities or of a professional society or organization;
(2) reports and records of the chief of the medical staff, chief administrative
officer or risk manager of a medical care facility;
(3) reports and records of any state licensing agency or impaired provider
committee of a professional society or organization; and
(4) reports made pursuant to this act to or by a medical care facility risk manager,
any committee, the board of directors, administrative officer or any consultant.
"Such reports and records shall not be subject to discovery, subpoena or other
means of legal compulsion for their release to any person or entity and shall not be
admissible in any civil or administrative action other than a disciplinary proceeding by
the appropriate state licensing agency." K.S.A. 65-4925.
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The statute clearly establishes a privilege regarding the use of reports and records
generated by a state licensing agency during the agency's investigatory process.
Additionally, the statute protects reports and records from "any state licensing agency" so
both Kansas' and Missouri's board reports and records are protected. K.S.A. 65-
4925(a)(3).
At trial, Kloster testified that the Kansas board "exonerated" him, and that it did
not find evidence that Kloster had violated the standard of care. He also testified that the
Missouri board closed his case because there was insufficient evidence that he violated
the rules of his profession. Kloster introduced a letter from the Missouri, but not Kansas,
board as an exhibit. It read:
"Dear Licensee:
"The Missouri State Board of Registration for the Healing Arts has completed its review
of the complaint filed against you by Vicki Myckowiak, Esq. After careful consideration
of the information available to the Board at this time, the Board has voted to close this
case since there appears to be insufficient evidence of a violation of the statutes and rules
regulating your profession."
The issue is determining whether Kloster's testimony or the letter violate the
prohibition on admitting reports and records of a state licensing agency. Kansas courts
have not had an opportunity to address this issue. Few courts have discussed the privilege
in K.S.A. 65-4925 at all, and most references to the statute are in federal court decisions.
The general rule regarding the admission of evidence in Kansas courts is
longstanding and clear. "Except as otherwise provided by statute . . . all relevant evidence
is admissible." K.S.A. 60-407. The restrictions contained in K.S.A. 65-4925 are a
statutory exception to this general rule. "[O]rdinarily a strict or narrow interpretation is
applied to statutory exceptions." Broadhurst Foundation v. New Hope Baptist Society,
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194 Kan. 40, 44, 397 P.2d 360 (1964). The United States Supreme Court has explained
that evidentiary privileges should be "strictly construed and accepted 'only to the very
limited extent that permitting a refusal to testify or excluding relevant evidence has a
public good transcending the normally predominant principle of utilizing all rational
means for ascertaining truth.'" Trammel v. United States, 445 U.S. 40, 50, 100 S. Ct. 906,
63 L. Ed. 2d 186 (1980). This is because "'the public . . . has a right to every man's
evidence.'" United States v. Bryan, 339 U.S. 323, 331, 70 S. Ct. 724, 94 L. Ed. 884(1950) (quoting Wigmore, Evidence § 2192 [3d ed.]).
Kloster argues that K.S.A. 65-4925 "does not prohibit testimony about the
ultimate outcome of the investigation." We agree. The plain language of K.S.A. 65-4925
does not prohibit the discussion of the ultimate result of an investigation by a public
health care licensing agency. K.S.A. 65-4925 does not define the words "report" or
"record." Given the public policy behind statutory evidentiary exceptions, the terms
should be interpreted narrowly. Black's Law Dictionary defines "report" as "[a] formal
oral or written presentation of facts or a recommendation for action." Black's Law
Dictionary 1492 (10th ed. 2014). It defines "record" as "[a] documentary account of past
events, usu. designed to memorialize those events." Black's Law Dictionary 1465 (10th
ed. 2014). There were no specific facts or recommendations in the boards'
communications to Kloster. The letters also did not document the proceedings of the
boards. Rather, the boards simply informed Kloster that there was insufficient evidence to
continue investigating Hancock's complaints.
Moreover, the argument that the boards' conclusions are not protected by K.S.A.
65-4925 is supported by the boards' websites. Both Kansas and Missouri publish
disciplinary actions taken against doctors. See 2017 Board Actions, Kansas State Board
of Healing Arts, 2017 Board Actions,
http://www.ksbha.org/boardactions/boardactions.shtml (last visited Sept. 11, 2017);
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Missouri State Board of Registration for the Healing Arts, Disciplinary/Miscellaneous
Actions Taken
http://pr.mo.gov/boards/healingarts/Disciplinary%20Miscellaneous%20Report.pdf (last
visited Sept. 11, 2017). See K.S.A. 60-409(b)(4) (judicial notice may be taken of specific
facts capable of immediate and accurate determination by resort to easily accessible
sources of indisputable accuracy); K.S.A. 60-412(c) (reviewing court in its discretion
may take judicial notice of any matter specified in K.S.A. 60-409 whether or not
judicially noticed by district court). If publicizing the boards' negative findings is not
prohibited by K.S.A. 65-4925, it follows that publicizing the boards' positive findings is
also not prohibited.
Hancock argues that the district court's decision violates public policy because
"[a]llowing the statute prohibiting disclosure of these records to be so easily disregarded
will chill all future complainants against physicians." However, this argument is
misguided. K.S.A. 65-2898 provides civil immunity to any "person reporting to the state
board of healing arts in good faith." This statute provides ample protection to persons
reporting misconduct, as long as the report is made in good faith. The district court
instructed the jury on good faith as follows:
"If you believe that Dr. Hancock reported to the State Board of Healing Arts in good faith
any information that he had relating to alleged incidents of malpractice, or the
qualifications, fitness or character of Dr. Kloster, then that report cannot be the basis for
any damages awarded to Dr. Kloster."
The good-faith immunity provided under K.S.A. 65-2898 for persons that report
information regarding incidents of malpractice, or the qualifications, fitness or character
of, or disciplinary action taken against, a person licensed, registered or certified by the
board of healing arts adequately protects the public interest in encouraging reporting of
unfitness.
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The plain language of K.S.A. 65-4925 does not prohibit Kloster from testifying
that the state boards dismissed Hancock's complaints against him. Thus, the district court
did not err by admitting the evidence.
However, even if we were to conclude that the boards' results are privileged the
error is subject to the harmless error analysis. K.S.A. 2016 Supp. 60-261. Where an error
implicates a statutory right, the party benefiting from the error must persuade the court
that there is no reasonable probability that the error affected the trial's outcome in light of
the entire record for it to be deemed harmless. State v. McCullough, 293 Kan. 970, 983,
270 P.3d 1142 (2012).
Hancock does not attempt to explain why this purported error entitled him to a
new trial. Kloster, however, has provided persuasive reasons why any error in admitting
the boards' conclusions is harmless in this case. Throughout the trial, Hancock made
references to his displeasure with the boards' findings. For example, he stated that he had
a difficult time "comprehending and accepting" the fact that Missouri would not be
"concerned about the deaths of several patients after they had had an implantable pump
surgically implanted in their body." Hancock also testified that he disagreed with the
conclusions of the Kansas board and that its members were not qualified to review
patients who were treated with pain pumps. Additionally, Hancock accused the CEO of
Menorah Hospital of being biased in favor of Kloster when it did not restrict Kloster's
privileges. Hancock also testified that he went to the Kansas City Star in March 2013
because he was frustrated that none of the organizations and persons to whom Hancock
had transmitted complaints about Kloster had taken action. Even without the letters, a
jury listening to Hancock's testimony could have deduced that the state boards did not
sanction Kloster.
Furthermore, Kloster testified that (1) he was not currently under investigation by
the Missouri or Kansas State boards of health; (2) his licenses to practice medicine had
19
never been suspended, limited, or restricted in any way; (3) he remained in good standing
in both Kansas and Missouri; and (4) he had never had his privileges suspended from any
hospital. This testimony also gave the jury a reasonable basis to conclude that Kloster
was not sanctioned by the state boards, regardless of whether the boards' direct
conclusions were admitted at trial.
Conclusion
The results of the Kansas and Missouri boards' investigations are not privileged
reports or records under K.S.A. 65-4925. Even if they were and their admission was in
error, the error is harmless in light of testimony from both parties from which the jury
could reasonably infer that Kloster was cleared of wrongdoing by the boards.
The district court erred in denying Hancock's discovery request, but the error was
harmless.
Hancock's next argument is that the district court erred by refusing to allow him to
discover the documents Kloster provided to the Kansas and Missouri boards of health. He
argues that exclusion of this evidence was unfair because "Dr. Kloster was able to use the
boards' favorable conclusions to buttress his argument that Dr. Hancock defamed him,
while blocking any inquiry into the boards' deliberations that led to that conclusion."
Hancock maintains his position that neither the boards' conclusions nor Kloster's
disclosures to the boards should have been admitted into evidence. However, he argues
that "having disregarded the statute and allowed the conclusions into evidence, simple
fairness dictated that the court allow Dr. Hancock to discover what information Dr.
Kloster was providing the boards" that resulted in their respective conclusions.
20
Standard of review and preservation
The standard of review for discovery issues is abuse of discretion. Hill v. Farm
Bur. Mut. Ins. Co., 263 Kan. 703, 704, 952 P.2d 1286 (1998). A judicial action
constitutes an abuse of discretion if (1) no reasonable person would take the view adopted
by the trial court; (2) it is based on an error of law; or (3) it is based on an error of fact.
Wiles v. American Family Life Assurance Co., 302 Kan. 66, 74, 350 P.3d 1071 (2015).
But "even under the deferential abuse of discretion standard of review, an appellate court
has unlimited review of legal conclusions upon which a district court's discretionary
decision is based. State v. Ernesti, 291 Kan. 54, 65, 239 P.3d 40 (2010). The district court
held that Kloster's communications with the boards were protected by K.S.A. 65-2898(a).
Whether the communications were protected by statute is an issue of law which we
review de novo.
Kloster argues that this court should refuse to consider Hancock's argument
because he failed to specify the place in the record where the district court ruled on this
issue. Supreme Court Rule 6.02(a)(5) (2017 Kan. S. Ct. R. 35) states that each issue in an
appellant's brief "must begin with . . . a pinpoint reference to the location in the record on
appeal where the issue was raised and ruled on." It is true that Hancock's discussion of
this issue in his brief does not include a citation to the record where the district court
ruled on the issue. However, he does include such a citation in his statement of facts. This
court has previously held that lack of pinpoint citations is not fatal to appellate review of
an issue. State v. Allen, 49 Kan. App. 2d 162, 168, 305 P.3d 702 (2013) ("[T]he State
made the necessary citations to the record for each issue in the fact statement of its brief,
rather than under the discussion of each issue. . . . [H]owever, the State provided
extensive argument and relevant legal authority from which this court can research and
analyze the issues."); Davis v. State, No. 114,436, 2016 WL 5344256, at *6 (Kan. App.
2016) (unpublished opinion), rev. denied 306 Kan. ___ (August 29, 2017); State v.
Briscoe, No. 114,278, 2016 WL 2775676, at *2 (Kan. App. 2016) (unpublished opinion).
21
Hancock provides sufficient citations and argument to enable appellate review of this
issue.
Discussion
Hancock sought to discover Kloster's "responses to the various medical and ethical
boards" to which Hancock sent complaints. Hancock argued that he had a right to these
documents because Kloster was alleging that Hancock made the complaints in bad faith.
He argued that "[t]heoretically, Dr. Kloster's responses to the complaints could admit
wrongdoing, which would be highly relevant to a determination of whether Dr.
Hancock's complaints were in good faith." Kloster argued that the records were
confidential under K.S.A. 65-2898(a). The district court held that the documents were
confidential and protected by K.S.A. 65-2898(a), and that Kloster did not waive the
confidentiality by discussing his responses to the boards with third parties. The district
judge rejected Hancock's argument that he needed the documents to discover whether
Kloster had admitted to wrongdoing, adding that it would be counterintuitive for the
boards to clear Kloster of wrongdoing if he had admitted fault in his responses to the
boards. The judge suggested that if Hancock wanted to discover this information he could
ask Kloster what the basis of his bad-faith allegations were, whether Kloster has ever
admitted to wrongdoing, or whether Kloster had ever taken diversion.
The statute cited by Kloster and the district court as the basis of the documents'
confidentiality, K.S.A. 65-2898(a), does not mention confidentiality or privilege at all. It
provides civil immunity to persons reporting to the state board of healing arts in good
faith. K.S.A. 65-2898(a). So to determine if Kloster's responses are discoverable, we
must examine several other statutes relevant to state health board and peer review
committee investigations.
22
"A privilege is a rule of evidence that allows a person 'to shield [a] confidential
communication or information from compelled disclosure during litigation.'" State v.
Gonzalez, 290 Kan. 747, 757, 234 P.3d 1 (2010) (quoting Imwinkelried, The New
Wigmore: Evidentiary Privileges § 1.1, p. 2 [2d ed. 2009]). Unless otherwise limited by
court order, parties may obtain discovery regarding any nonprivileged matter that is
relevant to a party's claim or defense and proportional to the needs of the case, K.S.A.
2016 Supp. 60-226(b). Because Kloster does not argue on appeal that the information is
not relevant, we are left with a determination as to whether the information is privileged
and not subject to disclosure by operation of law.
Responses to peer review committees
Kloster's responses to the peer review committees are protected by K.S.A. 2016
Supp. 65-4915(b). This statute provides that "the reports, statements, memoranda,
proceedings, findings and other records submitted to or generated by peer review
committees or officers shall be privileged and shall not be subject to discovery . . . ."
K.S.A. 2016 Supp. 65-4915(b). However, the statute specifies that the holder of the
privilege is "[t]he peer review officer or committee creating or initially receiving the
record." K.S.A. 2016 Supp. 65-4915(b). Because Kloster is not the holder of the
privilege, he cannot assert it as a basis for refusing to reveal his responses to the peer
review committees.
Therefore, it was error for the district court to prohibit Hancock from discovering
Kloster's responses to the peer review committees absent an assertion of the privilege by
the peer review committees or some separate and supportable claim of confidentiality by
Kloster.
23
Reports of state health boards
The state health boards also enjoy an evidentiary privilege. The statute discussed
in the previous section, K.S.A. 65-4925(a), provides that "reports and records made
pursuant to K.S.A. 65-4923 or 65-4924, and amendments thereto, shall be confidential
and privileged, including: . . . (3) reports and records of any state licensing agency . . . ."
However, Kloster's responses were not made pursuant to K.S.A. 65-4923 or 65-4924, and
they do not constitute reports or records of the state board as those terms have been
interpreted by our Supreme Court. See Adams v. St. Francis Regional Med. Center, 264
Kan. 144, 164-66, 955 P.2d 1169 (1998) (citing with approval Hill v. Sandhu, 129 F.R.D.
548, 550 [D. Kan. 1990]; Porter v. Snyder, 115 F.R.D. 77, 78 [D. Kan. 1987]). We will
explain further.
K.S.A. 65-4923(a) requires health care workers to report knowledge that a health
care provider has committed a reportable incident. The statute does not require the health
care provider accused of the reportable incident to answer the complaint. See K.S.A. 65-
4923. K.S.A. 65-4924 is not relevant because it relates to physical or mental impairment
of a health care provider. Finally, the information Kloster sent to the state licensing
agency is not a report or record of that licensing agency. In Porter, the court examined
K.S.A. 1986 Supp. 65-4925(a), which provided that "[r]eports and records of executive or
review committees" were privileged. 115 F.R.D. 77-78. The court held that "[b]y its plain
meaning, this does not include incident reports which are not reports of the review
committee, but rather are contemporaneous statements of facts relating to incidents which
are reviewed by the committee." 115 F.R.D. at 78; see also Hill, 129 F.R.D. at 550 (1990)
(holding that the peer review privilege statute, which provided that "'the reports,
statements, memorandums, proceedings, findings, and other records of peer review
committees or officers shall be privileged' . . . clearly [did] not include reports reviewed
by the committee").
24
Nor are Kloster's responses to the Kansas board privileged under K.S.A. 65-2839a.
This statute specifically protects information submitted to the Kansas Board of Healing
Arts. The statute provides:
"Patient records, including clinical records, medical reports, laboratory
statements and reports, files, films, other reports or oral statements relating to diagnostic
findings or treatment of patients, information from which a patient or a patient's family
might be identified, peer review or risk management records or information received and
records kept by the board as a result of the investigation procedure outlined in this section
shall be confidential and shall not be disclosed." K.S.A. 65-2839a(d).
Kloster's responses to the Kansas Board of Healing Arts investigation falls under this
statute as "information received . . . by the board as a result of the investigation."
However, the fact that such information is confidential and shall not be disclosed does
not necessarily mean that the statute has created an evidentiary privilege. The other
statutes we have discussed, K.S.A. 2016 Supp. 65-4915 and K.S.A. 65-4925, explicitly
mention privilege and state that the information protected by the statutes is not subject to
discovery. Other Kansas privilege statutes, located at K.S.A. 60-423 through K.S.A. 60-
436, also specifically state that a privilege exists. The fact that K.S.A. 65-2839a does not
specify that a person or entity holds the privilege further suggests that the statute does not
create a privilege at all. Evidentiary privileges "are not lightly created nor expansively
construed, for they are in derogation of the search for truth." United States v. Nixon, 418
U.S. 683, 710, 94 S. Ct. 3090, 41 L. Ed. 2d 1039 (1974). As is evident from the language
in K.S.A. 2016 Supp. 65-4915 and K.S.A. 65-4925, the Legislature clearly knows how to
create a privilege and protect information from discovery. Moreover, the Legislature uses
the terms confidential and privileged separately, indicating distinct meanings.
Accordingly, because K.S.A. 65-2839a does not explicitly create a privilege it does not
automatically protect Kloster's responses from discovery. See Pearson v. Miller, 211 F.3d
57, 68 (3d Cir. 2000) ("Statutory provisions providing for duties of confidentiality do not
automatically imply the creation of evidentiary privileges binding on courts."); In re
25
Grand Jury Subpoena Dated December 17, 1996, 148 F.3d 487, 492 (5th Cir. 1998)
(holding that a statute requiring a state's agricultural loan mediation program sessions to
remain confidential did not mean that the sessions were privileged); Nguyen Da Yen v.
Kissinger, 528 F.2d 1194, 1205 (9th Cir. 1975) (holding that Immigration and
Naturalization Service records were "confidential but not privileged").
We pause to note that we are not suggesting that all confidential information is
discoverable. The Kansas Supreme Court has held that "the existence of a privilege is not
necessary in order to limit discovery" because "[t]his is done under the court's
supervisory powers over discovery pursuant to K.S.A. 60-226." Berst v. Chipman, 232
Kan. 180, 187, 653 P.2d 107 (1982). Under this provision, the district court "may, for
good cause, issue an order to protect a party or person from annoyance, embarrassment,
oppression or undue burden or expense, including . . . forbidding inquiry into certain
matters, or limiting the scope of disclosure or discovery to certain matters." K.S.A. 2016
Supp. 60-226(c)(1)(D). In striking a balance between discovery and nondisclosure, courts
should consider "'the nature of the proceeding, whether the deponent is a party, whether
the information sought is available from other sources, and whether the information
sought goes to the heart of the claim.'" Berst, 232 Kan. at 188 (quoting Richards of
Rockford, Inc. v. Pacific Gas & Electric, 71 F.R.D. 388, 390 [N.D. Cal. 1976]).
Additional factors to conclude are the degree of harm that would be caused by disclosure,
the type of controversy before the court, and the public interest in forbidding discovery.
Berst, 232 Kan. at 188-89. "[W]hen a claim of privilege, confidentiality or irrelevance is
raised the court has a duty to conduct an in camera inspection to separate and permit
discovery of only the relevant documents, thereby protecting against unnecessary and
damaging disclosure of irrelevant confidential material." 232 Kan. at 187.
In sum, given the facts as presented here, the district court abused its discretion by
its blanket refusal to allow Hancock to discover Kloster's responses to the peer review
committees and state boards. When faced with Hancock's discovery request and Kloster's
26
objection on the basis of confidentiality of the records, the district judge should have
conducted an in camera inspection to determine the relevance and discoverability of the
requested documents. But an error by the court is not grounds for disturbing a judgment
unless the error affects a party's substantial rights. See K.S.A. 2016 Supp. 60-261.
The district court provided a couple of reasons why Hancock's substantial rights
are not affected by exclusion of this evidence. First, the district court suggested that
Hancock was free to ask Kloster whether he admitted wrongdoing to the boards in a
deposition. While the court held that the actual records Kloster submitted to the boards
were privileged, the underlying facts in those responses were not. At the hearing on the
motion to compel discovery Hancock admitted that he had not asked Kloster directly
whether Kloster had ever admitted to wrongdoing. Kloster's attorney was adamant that
Kloster would deny admitting to any wrongdoing if asked about it in a deposition.
Second, the district judge said that it would be "counterintuitive" for the state boards to
clear Kloster of wrongdoing if he had admitted that he violated state regulations.
We agree with the district court's comments supporting a finding that it was
harmless error to exclude discovery of Kloster's factual responses to the boards'
investigations. Hancock had other ways of discovering the information even though he
failed to pursue them. He could have asked Kloster how he responded to the complaints,
in other words, what his justifications were for each challenged pump insertion. Hancock
could have asked Kloster if he admitted or admits to any wrongdoing in any of the
individual patient cases referred for review. He could have asked Kloster if Kloster had
been placed on diversion or received any admonishments, albeit informal, related to
Hancock's complaints. But there is nothing in the record to suggest that Kloster ever
admitted to any wrongdoing, nor was he asked. In the absence of such fundamental
requests, we cannot find that the error in disallowing discovery of the requested
documents affects Hancock's substantial rights.
27
Conclusion
It was error for the district court to refuse to allow Hancock to discover Kloster's
submissions to the state boards. However, the error was harmless in light of the fact that
Hancock had other ways of discovering the information.
Kloster sufficiently proved damages related to his defamation claim.
Hancock argues that Kloster failed to prove damages on his defamation claim.
Hancock raised this issue in his motion for a new trial. He argued that there was not "any
kind of a quantifiable testimony that . . . can be used to establish how [the jury] achieved
the $925,000 figure," and that the large judgment indicated passion or prejudice on behalf
of the jurors. Hancock "[thought] what the jury was doing was punishing Dr. Hancock
rather than remurating [sic] Dr. Kloster for his loss because there is just no evidence to
suggest that he lost $925,000 due to this defamation." The judge then denied Hancock's
motion, holding that he did not prove that the jury verdict was a result of passion or
prejudice.
An appellate court reviews the trial court's decision on a motion for new trial for
an abuse of discretion. City of Mission Hills v. Sexton, 284 Kan. 414, 421, 160 P.3d 812(2007). An abuse of discretion occurs if judicial action is either: (1) arbitrary, fanciful, or
unreasonable; (2) based on an error of law; or (3) based on an error of fact. State v. Ward,
292 Kan. 541, 550, 256 P.3d 801 (2011).
Generally, "a verdict will be set aside as contrary to law where, under the
evidence, the verdict is contrary to the instructions given by the trial court." City of
Mission Hills, 284 Kan. at 421. "A new trial will not be granted, however, on mere
allegations. There must be evidence that 'the jury consciously conspired to undermine the
jury process by ignoring the instructions. Otherwise, it must be presumed that the jury has
28
properly determined the before and after values before arriving at damages.'" 284 Kan. at
422.
Here, the jury was instructed:
"Instruction No. 18. Defamation is communication to a person of false
information tending to deprive another of the benefits of public confidence and social
acceptance.
"Instruction No. 19. If you find that the communication was defamatory and the
facts and circumstances surrounding the making of it resulted in injury and harm to the
reputation of the plaintiff, then you should award the plaintiff such amount that will
compensate plaintiff for the damage the evidence shows plaintiff sustained." (Emphasis
added.)
Hancock argues that the jury failed to follow the jury instructions because it
compensated Kloster for damages that Kloster failed to prove.
"The elements of defamation include false and defamatory words, communicated
to a third person, which result in harm to the reputation of the person defamed." Hall v.
Kansas Farm Bureau, 274 Kan. 263, 276, 50 P.3d 495 (2002). "[D]amage to one's
reputation is the essence and gravamen of an action for defamation." Gobin v. Globe
Publishing Co., 232 Kan. 1, 6, 649 P.2d 1239 (1982). "Proof of such damages typically
entails showing that persons were deterred from associating with the plaintiff, that the
plaintiff's reputation had been lowered in the community, or that the plaintiff's profession
suffered." Ali v. Douglas Cable Communications, 929 F. Supp. 1362, 1385 (D. Kan.
1996). "Damage to reputation can be inferred from the evidence so long as the inference
is reasonable." Sunlight Saunas, Inc. v. Sundance Sauna, Inc., 427 F. Supp. 2d 1032,
1072 (D. Kan. 2006) (citing Moran v. State, 267 Kan. 583, 590, 985 P.2d 127 [1999]).
Additionally, "[a] victim's own observations may be suitable as proof of harm to his
29
reputation for defamation cases in Kansas . . . but they must raise a reasonable inference
that the damage was caused by the plaintiff's statements. [Citation omitted.]" Debord v.
Mercy Health System of Kansas, Inc., 860 F. Supp. 2d 1263, 1283 (D. Kan. 2012).
However, "[b]road and factually unsupported allegations . . . do not support a claim for
damages for alleged defamation." Davis v. Hildyard, 34 Kan. App. 2d 22, 30, 113 P.3d
827 (2005).
The parties first dispute whether Kloster had to prove actual damages, or whether
he could rely on a theory of presumed damages. Kloster argues that plaintiffs can rely on
a theory of presumed damages. He cites Moran, in which the Kansas Supreme Court
stated that it "ha[d] not squarely decided whether in Kansas any and all defamation
plaintiffs must allege and prove actual damages rather than relying on the theory of
presumed damages." Moran, 267 Kan. at 598. However, on the next page of the Moran
opinion the court did decide the issue. The court held that in light of Gertz v. Robert
Welch, Inc., 418 U.S. 323, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974), "[d]amages
recoverable for defamation, whether per se or not, could no longer be presumed but must
be proven." 267 Kan. at 599; see also Wright v. Bachmurski, 29 Kan. App. 2d 595, 600,
29 P.3d 979 (2001) ("In Kansas, any plaintiff in a defamation action must allege and
prove actual damages and may no longer rely on the theory of presumed damages.");
Debord, 860 F. Supp. 2d at 1280 ("Damages recoverable for defamation cannot be
presumed but must be proven."); Sunlight Saunas, Inc., 427 F. Supp. 2d at 1072 ("In
Kansas, damages for defamation may not be presumed but must be established by proof
of actual damages.").
Although the trial was five days long, Kloster's testimony regarding damages from
defamation was brief. Kloster testified that he had to take time out of his practice to
respond to Hancock's complaints to the state boards and others. Kloster did not keep track
of the time it took him to deal with the complaints, but he would "guess in the hundreds
of hours." He testified that even though Hancock's expert witness only spent six hours
30
reviewing the audited cases, Kloster went through numerous boxes of medical records,
met with the Chief Executive Officers of each hospital, the peer review committees, and
the state licensing boards. As to the value of his time, it was undisputed that each doctor
earned in excess of $500,000 per year. Kloster also testified that he received questions
from patients about the Kansas City Star article and that his patients "felt bad for [him]"
and "wanted to make sure [he] was okay." Kloster went to Florida to serve on an advisory
panel and said that his colleagues, including physicians from the Cleveland Clinic and
Johns Hopkins, were aware of the article. Kloster said he was unable to determine the
impact of the article on his practice because there was no way for him to determine
whether people were intimidated by the article. However, he did present a letter from his
malpractice insurer showing that the insurer refused to renew Rockhill's insurance
because of the article and indicating that other anesthesiologists would not be
comfortable sharing the insurance risk with him. This letter states in part:
"Moreover, in our opinion, Dr. Hancock has unnecessarily undermined PPM's
defense of his former partner, Daniel Kloster, M.D., due to what we would characterize
as a bitter business dispute surrounding the dissolution of Rockhill Pain Specialists, P.A.
As you are undoubtedly aware, this dispute was the subject of an article in the Kansas
City Star dated June 30, 2013 entitled, 'When Doctors Divorce, the Breakup can be as
Messy as a Marital Split.' The content of this article casts both Drs. Hancock and Kloster
in a negative light and, in our opinion, increases the likelihood of future litigation against
both physicians and their former group.
"Finally, our underwriting standards at PPM focus on insuring 'preferred
physicians', individuals with whom other anesthesiologists are comfortable sharing risk.
Regardless of Dr. Hancock's motives, we do not believe the atmosphere surrounding their
former practice presents a risk profile that other anesthesiologists we insure should be
asked to share."
Finally, Kloster testified that he had never had any complaints or malpractice claims filed
against him prior to Hancock's accusations. But after the accusations, the heirs of one of
31
the patients Hancock reported on filed a malpractice claim against Kloster. Hancock
testified that despite his reports to various boards, he did not know whether the
installation of the pump was found to have caused the patient's death. The jury could
easily and properly infer that this claim would not have been made but for Hancock's
accusations against Kloster in a variety of forms.
Hancock propounds several ways that Kloster's evidence is too weak to support an
award of actual damages. He notes that Kloster could not specify exactly how much time
he spent responding to Hancock's complaints. Kloster did not testify that he lost patients
or referrals. In fact, Kloster's testimony about his patients' reactions to the Kansas City
Star article showed that they all still held him in high esteem. The same is true regarding
the reactions of other doctors with whom Kloster interacted. Hancock also notes that
Kloster did not lose any privileges from hospitals or the state licensing boards, which
further shows that his reputation was not damaged. Finally, Hancock discounts the letter
from Rockhill's malpractice insurer by noting that Kloster was later able to secure new
malpractice insurance.
The issue is determining whether the district court abused its discretion in finding
that the jury followed its instruction to award damages that the evidence shows Kloster
sustained. Hancock makes good points about Kloster's testimony regarding comments
from his patients and other physicians. From this testimony alone, it would appear that
Kloster did not prove harm to his reputation. However, the testimony did help establish
that knowledge of Hancock's allegations was widespread. A jury could make a reasonable
inference that widespread accusations that Kloster killed patients could harm Kloster's
reputation. As Kloster explained at trial, it would be difficult for him to present direct
evidence that patients were deterred from seeking him out because he would not have
come into contact with those patients.
32
Kloster's evidence regarding the time it took him to respond to Hancock's
complaints could have been stronger. He did testify that it probably took him hundreds of
hours to respond to the complaints, but he did not quantify his time or translate the time
into lost earnings. But, in Gertz the Supreme Court said that "all awards must be
supported by competent evidence concerning the injury, although there need be no
evidence which assigns an actual dollar value to the injury." 418 U.S. at 350. Kloster's
testimony provided the jury with competent evidence to conclude that Kloster suffered
damages. Kloster was an anesthesiologist in a lucrative industry—it was reasonable for
the jury to conclude that he suffered damages as a result of lost time dealing with
Hancock's complaints.
Kloster's letter from his malpractice insurer was the clearest evidence that his
reputation had been harmed and that the harm was caused by Hancock. The letter directly
states that Hancock "unnecessarily undermined" the insurer's defense of Kloster. The
letter also shows that the Kansas City Star article "casts both Drs. Hancock and Kloster in
a negative light." Finally, the insurer did not think that other anesthesiologists would feel
comfortable sharing risk with Kloster and Hancock. The letter demonstrates that
Hancock's complaints caused actual harm to Kloster's reputation.
Finally, the fact that no malpractice cases had been filed against Kloster before the
accusations, but a malpractice suit was filed by one of Kloster's patients who Hancock
targeted after his accusations, would also lead the jury to conclude that there was actual
damage to Kloster's reputation.
Conclusion
The district court did not abuse its discretion in refusing to grant Hancock a new
trial on this issue. The jury heard sufficient evidence to support an award of actual
damages to Kloster.
33
Because Hancock fails to establish that defamation is a personal injury action, the
district court did not err in failing to reduce Kloster's award to the $250,000 statutory
cap established in K.S.A. 2016 Supp. 60-19a02.
Hancock argued for the first time in his motion for a new trial that the jury's award
for defamation should be reduced to $250,000. He bases his argument on K.S.A. 2016
Supp. 60-19a02, which provides a statutory cap of $250,000 on noneconomic damages in
personal injury actions. Kloster argues that defamation is not a personal injury action
covered by K.S.A. 2016 Supp. 60-19a02, and that even if it was Hancock failed to
request an itemization of damages.
This court reviews the trial court's decision on a motion for new trial for an abuse
of discretion. City of Mission Hills, 284 Kan. at 421. An abuse of discretion occurs if
judicial action is either: (1) arbitrary, fanciful, or unreasonable; (2) based on an error of
law; or (3) based on an error of fact. Ward, 292 Kan. at 550.
A "personal injury action" is defined as "any action seeking damages for personal
injury or death." K.S.A. 2016 Supp. 60-19a02(a). It does not appear that Kansas courts
have decided whether defamation constitutes a personal injury action for the purposes of
K.S.A. 2016 Supp. 60-19a02.
Hancock provides no citation for his contention that defamation constitutes a
personal injury action. His argument is limited to the following: "A defamation action
qualifies as a 'personal injury action.' Kansas law makes clear that 'personal injury
actions' are not restricted to negligence." He cites Cott v. Peppermint Twist Mgt. Co., 253
Kan. 452, 493-94, 856 P.2d 906 (1993), which held that "personal injury actions" were
not restricted to negligence. Peppermint Twist does not stand for the proposition that
defamation is a personal injury action. "A failure to support an argument with pertinent
authority or to show why the argument is sound despite a lack of supporting authority . . .
34
is akin to failing to brief the issue. Therefore, an argument that is not supported with
pertinent authority is deemed waived and abandoned." State v. Tague, 296 Kan. 993,
1001, 298 P.3d 273 (2013). It cannot be said that the district court abused its discretion in
refusing to apply K.S.A. 2016 Supp. 60-19a02 when Hancock failed to provide the court
with authority that defamation is a personal injury action as that term is used in K.S.A.
2016 Supp. 60-19a02(a).
Furthermore, the Kansas Supreme Court has suggested that defamation is not a
personal injury action. In Valadez v. Emmis Communications, 290 Kan. 472, 229 P.3d
389 (2010), the Kansas Supreme Court had to determine whether a claim for defamation
survived the death of the plaintiff making the claim. The court examined K.S.A. 60-1801,
which provided that a cause of action for injury to the person survives that person's death.
It then held that "[d]efamation is similar to invasion of privacy, in that there is no
requirement of proof of personal injury that would allow the action to survive under
K.S.A. 60-1801." 290 Kan. at 480.
Finally, when examined in the criminal context, the crime of criminal false
communication, which is the equivalent of civil defamation, has been designated by the
Legislature as a nonperson misdemeanor, indicating it is not a crime which would inflict,
or could inflict, physical or emotional harm to another generally. K.S.A. 2016 Supp. 21-
6103(b); State v. Waggoner, 51 Kan. App. 2d 144, 154-55, 343 P.3d 530 (2015), rev.
denied 303 Kan. 1081 (2015).
Accordingly, we conclude that defamation is not a personal injury action as
contemplated by K.S.A. 2016 Supp. 60-19a02(a).
But even assuming K.S.A. 2016 Supp. 60-19a02 did apply to defamation,
Hancock faces another hurdle to his claim that Kloster's damages should be capped under
the statute—he failed to request an itemization of noneconomic damages. K.S.A. 2016
35
Supp. 60-19a02(c) provides: "In every personal injury action, the verdict shall be
itemized by the trier of fact to reflect the amount awarded for noneconomic loss." In
cases applying the statute, the jury itemized the damages. See, e.g., Natalini v. Little, 278
Kan. 140, 142, 92 P.3d 567 (2004); Hilburn v. Enerpipe, Ltd., 52 Kan. App. 2d 546, 548-
49, 370 P.3d 428 (2016) ("After hearing all the evidence, the jury returned a verdict of
$335,000 in total damages for Hilburn; $301,509.14 constituted noneconomic loss
damages. Pursuant to our Kansas damages cap statute, K.S.A. 2016 Supp. 60-19a02, the
district court reduced the amount of noneconomic loss damages to $250,000."), rev.
granted 306 Kan. ___ (August 24, 2017); Lundeen v. Lentell, No. 114,494, 2017 WL
2833984, at *5 (Kan. App. 2017) (unpublished opinion) ("The jury awarded damages of
$85,514.33 for medical expenses, $35,000 for economic loss, and $2,000,000 for
noneconomic loss. The court reduced the verdict to $322,308.59 after applying the
comparative fault of the parties and the statutory cap of $250,000 for noneconomic
damages.").
Kloster cites Sultani v. Bungard, 35 Kan. App. 2d 495, 497, 131 P.3d 1264 (2006),
to support his argument that Hancock waived the right to assert the statute. There, the
Sultanis brought a wrongful death action against April Bungard. The jury awarded
$11,000 in damages to the Sultanis but found that they should receive $0 in noneconomic
damages. The district court "offered the Sultanis the option to require the jury to resume
deliberations to consider an award for noneconomic damages." 35 Kan. App. 2d at 496.
The Sultanis declined the district court's offer and accepted the jury verdict. Later, the
Sultanis moved for a new trial, "arguing that the jury's failure to award noneconomic
damages was contrary to the evidence presented at trial." 35 Kan. App. 2d at 497. The
trial court denied the Sultanis' motion, holding "that they had waived their right to a new
trial by declining to require the jury to resume deliberations for an award of noneconomic
damages." 35 Kan. App. 2d at 497. The Sultanis appealed. The Court of Appeals affirmed
the district court, holding that "[t]he Sultanis' conduct in declining to have the jury return
to deliberations and in accepting the verdict constituted a waiver of any right they might
36
have had to recover noneconomic damages in their wrongful death action." 35 Kan. App.
2d at 498.
It does not appear that Kansas courts have determined whether waiver applies to
K.S.A. 2016 Supp. 60-19a02. However, the caselaw related to waiver of other verdict
issues suggests that Hancock waived his right to request a new trial on this issue by
failing to object to the jury's verdict before the jury was discharged.
Banbery v. Lewis, 173 Kan. 59, 244 P.2d 202 (1952), involved a three-way car
collision. The plaintiff, Frederick Banbery, sued J.A. Lewis and Alfred Noone, alleging
that their negligence caused the collision. Noone had struck Lewis, causing Lewis' car
and trailer to swerve into Banbery's lane on the highway. Noone and Lewis filed cross-
petitions against each other, each alleging that the other acted negligently. The court
submitted seven verdict forms to the jury, "some of which related to the liability of
[Lewis] and [Noone] as between themselves," but "the jury returned but one general
verdict in which it found [Lewis] and [Noone] jointly liable." 173 Kan. at 68. Lewis did
not object to the verdict. On appeal, Lewis argued that he should be granted a new trial
against Noone because the jury never decided his cross-petition against Noone. The
Kansas Supreme Court rejected this argument, holding: "The record fails to disclose
[Lewis] made any objection to the verdict until after the jury was discharged. In that
situation he is deemed to have waived any objections he might have thereto and cannot
urge them for the first time upon a motion for a new trial or on appeal." 173 Kan. at 68.
This rule was reiterated in several later cases. See, e.g., City of Olathe v. Stott, 253
Kan. 687, 703, 861 P.2d 1287 (1993) ("The landowners did not object to the verdict at
trial and did not preserve this issue for appeal. We have held that absent an objection
before the jury is discharged, a party cannot later assert an objection to the verdict.");
Kitchen v. Lasley Co., 186 Kan. 24, 28, 348 P.2d 588 (1960) (holding that it is an
"established rule of this jurisdiction that, absent any objection to a verdict until after the
37
jury is discharged, a litigant is deemed to have waived any objections he might have
thereto and cannot urge them for the first time upon a motion for a new trial or on
appeal"); Watkins Co. v. Hanson, 185 Kan. 758, 763, 347 P.2d 447 (1959) ("[T]his court
is committed to the rule that, absent any objections to a verdict until after the jury is
discharged, a litigant is deemed to have waived any objections he might have thereto and
cannot urge them for the first time upon a motion for a new trial or on appeal."). "The
rule requiring an objection if there is some ambiguity serves the objective of avoiding the
expense and additional time for a new trial by having the jury which heard the facts
clarify the ambiguity while it is able to do so." Bennion v. LeGrand Johnson Constr. Co.,
701 P.2d 1078, 1083 (Utah 1985); see Kitchen, 186 Kan. at 28-29.
Issues of alleged juror misconduct can also be waived. "'[W]here alleged juror
misconduct claimed as prejudicial is known by the party or his counsel before the verdict
is rendered, and no objection is made nor is the matter brought to the court's attention, the
party cannot later assert the misconduct as grounds for a new trial.'" State v. Wheaton,
240 Kan. 345, 354, 729 P.2d 1183 (1986). The reasons for this rule are as follows:
"'If the alleged misconduct is brought to the court's attention a hearing may be held and
the situation remedied, if that is possible. If not, a mistrial may be declared immediately
without wasting the time and expense required to complete the trial. The rule is a
corollary of the contemporaneous objection rule as to evidence and the requirement of an
objection to erroneous instructions. A party is not permitted to remain silent in the face of
known error, gamble on the verdict, and show his hole card only if he loses. [Citations
omitted.]'" 240 Kan. at 354 (quoting State v. Buggs, 219 Kan. 203, 208, 547 P.2d 720[1976]).
Similar principles are at play here. If Hancock had an objection to the court's failure to
itemize the jury's verdict form, he should have objected before the jury was discharged.
He should not now receive a new trial, and thus a chance at reducing the damages award,
because of his failure to object to the verdict at the appropriate time.
38
Conclusion
While Hancock argues that defamation is a personal injury action, and thus subject
to the statutory cap in K.S.A. 2016 Supp. 60-19a02, he fails to support his argument with
pertinent authority. Thus, he has failed to adequately brief this issue. Furthermore,
defamation does not require proof of personal injury so the statute does not apply to
defamation claims. Even if K.S.A. 2016 Supp. 60-19a02 applied to defamation claims,
Hancock did not object to the jury's failure to itemize damages in the verdict. By failing
to request that the jury itemize damages, Hancock waived his right to apply K.S.A. 2016
Supp. 60-19a02.
The damages award for nondefamation claims did not ignore the distinction between
Kloster and Rockhill.
Hancock's final argument is that the jury's award for Kloster's claims of breach of
fiduciary duty, fraud, fraud by silence, and conversion ignored the distinction between
Kloster and Rockhill. The jury awarded Kloster $63,343.11 for breach of fiduciary duty,
$9,083.75 for fraud, and $9,269.60 for conversion. Hancock argues that Kloster's
"evidence of damages rested on calculations made by the receiver . . . [b]ut the receiver's
report plainly indicates the amounts used to calculate damages were in fact owed to
Rockhill, not Dr. Kloster personally." He points to the fact that the jury's award for fraud
was $9,083.75 and argues that the number "almost certainly is based" on Hancock's
$5,083.75 payment for his personal health insurance plus $4,000 obtained from a
severance payment Hancock made. Because these sums were due to Rockhill, based on
the 50-50 distribution of income and expenses, Hancock contends that Kloster would
only be entitled to half those amounts. Accordingly, he asserts that the jury ignored the
distinction between Kloster and Rockhill. Kloster argues that the jury's award was "well
within the range of proof offered" at trial.
39
Hancock first raised this issue in his motion for a new trial. As stated above, this
court reviews the trial court's decision on a motion for new trial for an abuse of
discretion. City of Mission Hills, 284 Kan. at 421. An abuse of discretion occurs if
judicial action is either: (1) arbitrary, fanciful, or unreasonable; (2) based on an error of
law; or (3) based on an error of fact. Ward, 292 Kan. at 550.
Kloster presented several bases for damages on each of his claims. For breach of
fiduciary duty, Kloster argued that he should receive damages for Hancock's
(1) distribution of Rockhill's profits in 2012 and 2013 when the parties did not agree how
to distribute the profits, (2) diversion of Rockhill funds for his own benefit, (3) making
bonus and severance payments to his wife when Rockhill was winding down,
(4) concealing his improper use of Rockhill's funds, and (5) making malicious attacks
against Kloster. Kloster argued similar bases for damages in his conversion claim. For
fraud and fraud by silence, Kloster argued that he was damaged when Hancock used
Rockhill funds for personal expenses and concealed that fact from Kloster.
Kloster relied on the receiver's report as evidence of his damages. The report
contained an analysis of the doctors' credit card charges, and determined that between
2010 and 2012 Hancock accrued $32,609.50 in disallowed expenses for office supplies,
automobile expenses, clothing, meals and entertainment, and travel. The receiver also
disallowed $24,827.96 in expenses for Hancock's payments to Myckowiak, Trescott, and
his personal law firm. The receiver also took issue with bonus and severance payments
that Hancock made to various employees during Rockhill's winding down process. The
doctors had not agreed on severance payments, but Hancock paid $34,704 in severance to
three employees. Hancock also made $37,223.38 in bonus payments that were not
approved by Kloster. Assuming these funds were paid back to Rockhill and split between
the partners, Kloster would receive $64,682.42. Kloster also asked for damages that were
not quantified in the receiver's report, such as damages for Hancock's concealment of his
use of Rockhill funds.
40
"[I]f a verdict is supported by substantial evidence it will not be disturbed on
appeal." Diefenbach v. State Highway Commission, 195 Kan. 445, 447, 407 P.2d 228(1965). A verdict for actual damages will not be "disturbed merely because this court
cannot definitely ascertain the precise method by which the jury arrived at the exact
amount of its verdict when such an amount is reasonably within the range of the
evidence." 195 Kan. at 447. The jury's total award of $81,696.46 for Kloster's
nondefamation claims is supported by the evidence. The receiver's report, the doctors'
dispute over compensation, and Kloster's claims for damages outside the scope of the
receiver's report provide sufficient evidence to conclude that the district court did not
abuse its discretion in refusing to grant Hancock a new trial on this basis.
Affirmed.
41