Opinion from federal judge underscores the importance of the Federal Rules of Evidence at the Summary Judgment stage

Many civil cases never make it to trial, instead getting resolved at an earlier stage, including the summary judgment stage. But, still, the Federal Rules of Evidence—which govern the admissibility of evidence at trial—can play an important role at the summary judgment stage. A recent decision from the Honorable Roy K. Altman--RLI Insurance Company v. Alfonso and Sunrise Transportation, Inc., No. 19-60432-CIV, 2021 WL 430720, at *16 (S.D. Fla. Feb. 8, 2021)--underscores this point. It also helps illustrate nuances about the business records exception to the rule against hearsay.

A. Background

The fact pattern of the Alfonso case is unusual and generally worth a read. But, for our purposes, we need only focus on a few facts. An insurance company, RLI, had filed a declaratory judgment action, asking the Court to declare that RLI had no duty to indemnify its insured—a transportation company named Sunrise—for injuries suffered by Raymond Alfonso. Ultimately, insurance coverage hinged on whether Alfonso had been transported in a van, as the RLI insurance policy covered a discrete number of vans, all of which were white. This posed a problem for Alfonso. In a prior state court action against Sunrise (the transportation company), Alfonso had testified that he had been injured in a black BMW, not a white van.  And he succeeded in that state court action, obtaining a $1,391,000 verdict. Now, though, his ability to collect depended on showing that he had been injured in a white van.

B. The Court declines to rely on hearsay evidence.

With Alfonso’s prior “black BMW” testimony seeming to doom his collection case, Alfonso had to stitch together evidence to support a “white van” theory. One piece of evidence that he seized upon was an “Explanation of Benefits” letter that his health insurance company (which was not RLI) had mailed him. In that letter, his health insurance company agreed to pay for Alfonso’s transportation. The health insurer company wrote that it had reimbursed Sunrise for a “Nonemergency transportation: wheelchair van.” Alfonso pushed forward that “van” statement to support his white van theory. 

Ultimately, however, the Court ruled that it could not consider the Explanation of Benefits as part of its summary judgment analysis because of a hearsay issue. By way of brief background, “[t]he general rule is that inadmissible hearsay cannot be considered on a motion for summary judgment[.]” Macuba v. Deboer, 193 F.3d 1316, 1323 (11th Cir. 1999). That said, “[s]ome courts, including [the Eleventh Circuit], appear to have restated the general rule to hold that a district court may consider a hearsay statement in passing on a motion for summary judgment if the statement could be reduced to admissible evidence at trial or reduced to admissible form.” Id. (citations omitted). 

With that background in place, the Court analyzed whether the Explanation of Benefits letter—and more specifically, the statement about the “wheelchair van”—could be considered in the summary judgment analysis. The Court held that it could not be. As an initial matter, it was clear that the “wheelchair van” statement was hearsay—it was an out-of-court statement being offered for the truth. So the question was whether an exception applied. The Court initially noted that Alfonso had failed to establish that the Explanation of Benefits letter itself qualified as a business record. But, more importantly for our purposes, the Court noted that, even if the Explanation of Benefits letter had qualified as a business record generally, there would still be a hearsay issue. As the Court noted, under Federal Rule of Evidence 805, when you have “hearsay within hearsay,” you have to establish that “each part of the combined statements conforms with an exception to the rule.” Fed. R. Evid. 805. And, although this may not have been readily apparent to everyone, the Explanation of Benefits letter presented a “hearsay within hearsay” situation.  In the letter, you had one declarant (the employee of the health insurance company who wrote the letter) relaying the statement of a separate declarant (someone from Sunrise, the transportation company). As the Court explained:

“[W]hat [Alfonso] really wants is the part of the [Explanation of Benefits] that describes the service [the health insurance company] paid for: a ‘wheelchair van.’ And this second, relevant portion of the [Explanation of Benefits] is plainly hearsay within hearsay. The [health insurance company] employee, after all, could only have learned about the mode of transport by calling (or emailing) and asking. Sunrise's response—which the [health insurance company] rep plugged into the [Explanation of Benefits]—is thus hearsay within hearsay.”

The Court’s point here is something that other courts have noted when explaining limits of the business records exception. Where the business record at issue memorializes third-party statements (i.e., statements from business outsiders who owe no duty to the business to speak accurately), the business records exception cannot extend to those statements. As the D.C. Circuit once wrote: “If the source of the information is an outsider, Rule 803(6) does not, by itself, permit the admission of the business record. The outsider's statement must fall within another hearsay exception to be admissible because it does not have the presumption of accuracy that statements made during the regular course of business have.” United States v. Baker, 693 F.2d 183, 188 (D.C. Cir. 1982).

C. Takeaways

The Alfonso case is a good reminder that the Federal Rules of Evidence are not just relevant at the trial stage. Even at earlier stages of a case, we need to think about how we can identify admissible evidence that supports our positions. If we fail to do that, our case may never get to trial.