919 F.2d 981 (5th Cir. 1990).
ONE-SENTENCE TAKEAWAY:
Under the business records exception to the hearsay rule, it is not required that the witness who lays the foundation be the author of the business record or be able to personally attest to its accuracy, and, furthermore, there is no requirement that the records be created by the business which has custody of them.
SUMMARY:
Defendants were accused of a scheme to defraud insurance companies under which they purchased numerous hospitalization policies that provided the insureds a predetermined sum of money for each day spent in the hospital. On numerous occasions, Defendants sought admission to hospitals after reporting accidents that never occurred or were staged.
During trial, the court permitted the prosecution to admit into evidence the records of the insurance companies that consisted of medical records originally prepared by the hospitals under the business records exception to the hearsay rule. The records were authenticated by the representatives of the insurance companies. The jury found Defendants guilty of mail fraud and conspiracy.
On appeal, Defendants argued that the medical records should not have been admitted into evidence under the business records exception to the hearsay rule because: (1) they were not sufficiently authenticated; (2) they are not proper business records under the business records exception; and (3) they were made by a person without personal knowledge of the matters set forth therein. Defendants claimed that the insurance companies’ records contained medical records and statements by doctors and the insurance company representatives could not authenticate such records.
The appellate court rejected Defendants’ arguments. The court reasoned that, “[t]he insurance companies compiled their records from the business records of hospitals. Because the medical records from which the insurance company records were made were themselves business records, there was no accumulation of inadmissible hearsay.”
Moreover, the court held that, “[t]here is no requirement that the witness who lays the foundation be the author of the record or be able to personally attest to its accuracy. Furthermore, there is no requirement that the records be created by the business having custody of them.” Rather, the primary emphasis of the business records exception is on the reliability or trustworthiness of the records at issue. The court reasoned that the trial court (which had broad discretion on the issue of admissibility) did not err by determining that the records at issue were trustworthy because, inter alia, hospitals and insurance companies rely on these records in conducting business.
Moreover, the court reasoned that, “even if the insurance company records contained some medical information not taken from actual hospital records, that information was admissible as nonhearsay evidence. The Federal Rules of Evidence exclude from the category of hearsay any ‘statement by a person authorized by the party to make a statement concerning the subject’ and any ‘statement by the party’s agent … concerning a matter within the scope of the agency.’ A patient routinely authorizes the release of medical records for use by insurance companies. A medical provider without express authority to release information would be acting as the patient’s agent in obtaining payment of medical expenses from insurance companies.”
Thus, the court held that all information in the insurance company records was admissible either under the business records exception or as nonhearsay evidence.
REFERENCE DESK
Sheppard v. Liberty Mutual Ins. Co., No. 16-2401 (E.D. La. Feb. 2, 2017):
In Duncan, the court considered insurance company records, which had been authenticated by a representative of the insurance company. The insurance file contained medical records produced by hospitals unaffiliated with the insurance company. The Duncan defendants argued that because the insurance company records contained other unauthenticated medical records and statements by doctors, the business records exception did not apply and the records could not be sufficiently authenticated.
The Fifth Circuit squarely rejected this argument. In doing so, the court found that the insurance companies compiled their records from the business records of hospitals, and because the medical records from which the insurance company records were made were themselves business records, there was no accumulation of inadmissible hearsay. The court mentioned no need for testimony regarding the practices of the hospitals which produced the records, and the opinion’s discussion of the relevant testimony suggests that none was offered.
In re Couture Hotel Corp., 554 B.R. 369, 375-76 (Bankr. N.D.Tex. 2016):
The Fifth Circuit has ruled that — in certain circumstances — documents that are prepared by outside entities and are then incorporated into a testifying organization’s business records can be proven up as business records by a witness from the testifying organization rather than a witness from the outside entity that actually created the records. For example, U.S. v. Ullrich involved a defendant convicted of transporting a stolen car in interstate commerce.[23] During Ullrich’s trial, the United States was able to introduce two exhibits — i.e., an inventory schedule and a manufacturer’s statement of origin — through the general manager of the car dealership from which the car the defendant was transporting had been stolen.[24] Neither of these documents were prepared by the car dealership, but were instead prepared by the Ford Motor Company.[25] The Fifth Circuit held that the district court had not committed an error by allowing the inventory schedule and the manufacturer’s statement of origin to be admitted as business records of the car dealership on the basis of the dealership’s general manager’s testimony rather than the testimony of someone from Ford.[26] The Fifth Circuit stated that “[a]lthough these documents were furnished originally from other sources, [the general manager] testified that they were kept in the regular course of the dealership’s business. In effect, they were integrated into the records of the dealership and were used by it.”[27] The Fifth Circuit noted that trial testimony had shown that these documents were heavily relied upon by the car dealership, and that they were accounting and title documents in the dealership’s hands.[28]
Another illustrative Fifth Circuit case is United States v. Duncan.[29] Duncan involved a group of defendants who ran an insurance fraud scheme where they staged accidents to collect under insurance policies that paid out a predetermined sum of money for each day spent in the hospital.[30] A hearsay objection similar to the one in Ullrich was at issue. Specifically, representatives of the insurance companies proved up as business records insurance company documents that also contained medical records and statements made by doctors.[31] The Fifth Circuit held that the district court had not committed error in admitting these documents as business records despite the fact that they contained records that did not originate with the insurance company, stating that:[32]
The insurance companies compiled their records from the business records of hospitals. Because the medical records from which the insurance company records were made were themselves business records, there was no accumulation of inadmissible hearsay.
There is no requirement that the witness who lays the foundation be the author of the record or be able to personally attest to its accuracy. Furthermore, there is no requirement that the records be created by the business having custody of them.
Instead, the “primary emphasis of rule 803(6) is on the reliability or trustworthiness of the records sought to be introduced.” The district court has great latitude on the issue of trustworthiness. Hospitals and insurance companies rely on these records in conducting business. We hold, therefore, that the district court did not err in admitting them under Federal Rule of Evidence 803(6) upon proper authentication by their custodian.
These cases indicate that the witness who lays the foundation that documents are business records does not necessarily need to be the author of the record, be a part of the same organization as the author of the record, or be able to personally testify to the accuracy of the record.