The Virginia Supreme Court Expands the Admissibility of Insurance Information and Expert Bias

Under Virginia Rule of Evidence 2:411, “evidence that a person was or was not insured is generally inadmissible, but exclusion is ‘not required when offered for another purpose, such as proof of . . . bias or prejudice of a witness.’” Graves v. Shoemaker, 851 S.E.2d 65, 66 (2020); see Va. R. Evid. 2:411. In a recent Supreme Court of Virginia decision, the Court rejected a “direct relationship” standard for the admission of an expert’s bias under Virginia Rule of Evidence 2:411.

In Graves v. Shoemaker, the Court was asked to determine whether a “direct relationship” between an expert and an insurance company is required before cross-examining the expert on previous payments from the insurance company. 851 S.E.2d at 66. The facts underlying Graves involved a motor vehicle collision in Albemarle County, Virginia. Id. 65-66. As a result of the collision, Deborah Graves brought suit against Samantha Shoemaker. State Farm insured Ms. Shoemaker and hired John P. Cattano to represent Ms. Shoemaker who, in turn, retained an orthopedic surgeon, Dr. William C. Andrews, as an expert witness. During his deposition, Dr. Andrews stated that he had been hired by Cattano or his firm ’30 to 35’ times over the past 10 to 12 years and that on only one of those occasions did he testify on behalf of a plaintiff. He acknowledged that State Farm has paid him $793,198 for testimony he provided for their insureds from 2012 to 2018. However, he claimed that he was not aware that Shoemaker was insured by State Farm until her counsel told him during the deposition. He explained that he had been retained by Cattano, not by State Farm directly. Id. at 66.

The case went to trial on the issue of damages only. In a pretrial motion in limine, Ms. Graves moved the trial court to allow the introduction of Dr. Andrews’ previous relationship with Cattano’s firm and State Farm. Based on Lombard v. Rohrbaugh, 262 Va. 484, 551 S.E.2d 349 (2001), the trial court “determined that Graves could introduce evidence that Dr. Andrews had testified on behalf of Cattano’s clients 30 to 35 times in the past. However, she would not be allowed to ask him about his prior work for State Farm because there was no ‘direct relationship’ between Dr. Andrews and the insurance company.” Graves, 851 S.E.2d at 66. “In reaching this decision, the court cited the fact that Cattano, not State Farm, hired Dr. Andrews and was billed for his work. The court also noted Dr. Andrews’ contention that he did not know State Farm would ultimately pay his bill when he wrote his report.” Id.

The Supreme Court of Virginia reversed and found the trial court abused its discretion in deciding to exclude evidence of Dr. Andrews’ relationship with State Farm and “by requiring a ‘direct relationship’ between Dr. Andrews and State Farm.” Id. at 67. The Court emphasized that “in determining whether there is a ‘substantial relationship’ between an insurer and an expert, the central issue is not ‘artificial labels,’ but the ‘potential for bias because of the witness’s interest in the case.’” Id. Accordingly, an “insurer’s payment of a considerable sum of money to an expert for his prior testimony favorable to its insureds can be enough to establish a ‘substantial relationship’ on its own.” Id. In this case specifically, the Court found that “[t]he receipt of such a substantial amount by an expert is enough to create a potential for bias that outweighs any potential harm from the mention of insurance to a defendant.” Id. Even though it was dicta, the Court also stated that “as we emphasized in Lombard, any potential prejudice to a defendant posed by the mention of insurance can be mitigated by giving a limiting instruction to the jury.” Id.

The Supreme Court of Virginia rejected the trial court’s “direct relationship” standard in favor of its previously articulated “substantial relationship” standard. However, the Court provided little guidance on how to determine whether a “substantial relationship” exists. The Court has indicated that the receipt of “nearly $800,000 over the course of seven years” and “more than $100,000 per year for two years” both constituted a “substantial relationship” between an expert and an insurer. Id. at 67. Thus, the Court found that “an annualized amount similar to what the expert in Lombard received” creates a “substantial relationship” between an expert and an insurer that “is enough to create a potential for bias that outweighs any potential harm from the mention of insurance to a defendant.” Id. However, it remains unclear whether annualized payments of less than $100,000 per year can constitute a “substantial relationship.”

The Court’s decision in Graves is a worrisome development for insurers. After Graves, the financial relationship between an insurer and an expert will be subject to discovery and may be admissible at trial for the purpose of showing bias. Insurers and defense counsel must be aware of the financial relationship between a potential expert and a carrier before retention, and defense counsel must be prepared to defend against arguments of expert bias. In addition, insurers and counsel should identify additional qualified experts and keep careful records of amounts paid to experts to reduce the potential for the admission of insurance information in the guise of expert bias.

For more information about this and other similar cases, please contact Robert Tayloe Ross, Esq., Robert Best, Esq., or Daniel Laws, Esq. of MMR.