NJ Appeals Court Allows Limited Disclosure of Notes by a Psychiatrist in Case Challenging Creation of a Supplemental Needs Trust

A New Jersey appeals court overturned the dismissal of a lawsuit alleging that the defendants improperly created a supplemental needs trust, allowing the defendants limited access to the plaintiff’s psychotherapy records in order to rebut her claim that the trust’s settlor did not think she needed a trust. Laubach v. Quinn (N.J. Super. Ct. App. Div., No. A-0660-07T1927-07T3, August 28, 2008).

When Charles Laubach died in 2002, he left 29 percent of his estate in a supplemental needs trust for the benefit of his daughter, Susan Laubach. Mr. Laubach named his other daughter, Patricia Sciaretta, her husband, and a financial institution as trustees, and left the remainder of the trust to Patricia and her children. The estate planning documents at issue were created three months prior to Mr. Laubach’s death, and altered his previous will, which did not include the trust. In 2006, Susan filed suit against her sister, brother-in-law, and the attorney who drafted the trust, alleging that they conspired to force her father to execute the trust in order to prevent her from obtaining her full inheritance.

As part of her complaint, Susan argued that she was not under guardianship and that her mental health issues were not serious enough to warrant the creation of the trust. In response, the defendants requested that Susan turn over her psychiatrist’s notes as part of discovery. Susan refused to comply with the request, contending that the notes fell under a restrictive psychologist-patient privilege that prevents discovery of the notes. The defendants argued that the notes were actually covered by the less restrictive physician-patient privilege (since Susan’s therapist was a medical doctor, not a psychologist). The trial court dismissed the lawsuit after Susan continued to deny the defense request for production, and Susan appealed the dismissal.

Finding that the less restrictive physician-patient privilege applies to the notes, the Superior Court of New Jersey, Appellate Division, overturned the trial court’s dismissal of the lawsuit and forced Susan to turn over a small portion of the notes for in camera review by the trial court and eventual production to the defense. The court ordered that the notes “should not be subject to discovery except to the extent that discrete sections directly touching on [Mr. Laubach] and his alleged concerns about [Susan’s] ability to care for herself and handle money.”

For the full text of this decision, go to: http://lawlibrary.rutgers.edu/courts/appellate/a0927-07.opn.html