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In Gadeco, LLC v. Grynberg, No. 17SA247, (2018 CO 22), the Colorado Supreme Court considered whether the defendant Jack Grynberg (“Grynberg”) impliedly waived the physician–patient privilege by either requesting specific performance of a contract, or denying the plaintiffs’ allegations that he made irrational decisions.

This original proceeding arises out of a dispute between Grynberg, who founded multiple businesses, and his family, the owners and directors of those businesses. According to Grynberg, he transferred his ownership interests in the businesses to the plaintiffs, his children, and former wife (“the Family”) on the condition that he would remain in control of the businesses until his death. Grynberg alleges that the Family members expressed agreement to these terms either orally, in writing, or implicitly through their conduct. In 2016, however, the Family voted to remove Grynberg as president of each business, citing his declining mental health. Grynberg refused to comply.

The Family then filed this lawsuit, seeking a declaration that Grynberg no longer controlled the businesses and an injunction preventing him from representing the businesses. The Family asserted that Grynberg was exhibiting erratic behavior, making irrational decisions, and committing significant company funds to obviously fraudulent scam operations. In his amended answer, Grynberg denied the Family’s allegations and asserted counterclaims, including claims for breach of the lifetime-control agreement.

In its order adopting the special master’s conclusions, the trial court determined that Grynberg injected his mental condition into the case and thereby waived the physician–patient privilege in two ways: by asserting counterclaims for breach of the lifetime-control agreement and seeking specific performance as a remedy; and by denying the allegations in the Family’s complaint that he is incapable of running the companies. After reviewing the law governing the physician–patient privilege, this Court addressed each of these potential waivers in turn. The Court concluded that Grynberg did not waive the physician–patient privilege either by alleging that the Family breached the lifetime-control agreement and requesting specific performance or by denying the allegations in the Family’s complaint.

The purpose of the physician–patient privilege is to enhance the effective diagnosis and treatment of illness by protecting the patient from the embarrassment and humiliation that might be caused by the physician’s disclosure of information imparted to him by the patient during the course of a consultation for purposes of medical treatment. Privilege applies to both in-court testimony and the pretrial discovery of information. However, the privilege does not protect against the disclosure of medical records when the patient has made an express or implied waiver, both of which constitute “consent”. Because the statutory privilege belongs to the patient, only the patient may waive it.

Once privilege has been established, the party seeking to overcome the privilege must demonstrate waiver. One way a party can demonstrate waiver is by showing that the privilege holder injected his physical or mental condition into the case as the basis of a claim or an affirmative defense. Practically speaking, a litigant who uses a physical or mental condition as the predicate for relief must eventually waive the privilege to prove his case or his defense.

The Family asserts that Grynberg injected his mental condition into the case by asserting his breach of contract claim and accompanying that claim with a request for specific performance. The Family raises two arguments to support this position. The Court found neither persuasive.

To prove his breach of contract claim, Grynberg will not need to waive the privilege, meaning he has not injected his mental condition into the case. In order to prove that the Family breached the agreement by ousting him as president, Grynberg need only prove that the Family agreed to a valid contract that included his terms, Grynberg transferred ownership of the companies, and the Family subsequently removed him as president. Because Grynberg’s breach of contract claim does not require him to demonstrate anything about his mental or physical health, he did not inject his mental condition into the case by bringing that claim.

The Court held that Grynberg did not impliedly waive the physician–patient privilege either by alleging that the Family breached the lifetime-control agreement and requesting specific performance or by denying the allegations in the Family’s complaint. Therefore, the trial court abused its discretion when it ordered Grynberg to produce his medical records for in-camera review. Accordingly, the Court returned this case to the trial court for further proceedings.

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