Experts Must Now Disclose Their 1099 Income (11/1/04)

In Pennsylvania, expert witnesses may now be required to divulge the sources and amounts of income that they receive from the attorneys, parties and/or insurance companies who retain them. In an October 20, 2004 decision with potentially sweeping consequences, a three-judge panel of the Pennsylvania Superior Court ruled in J.S. and C.S., et. al. v. Whetzel (No. 1649 MDA 2003) that a party may impeach an expert witness by examining his relationship with the counsel calling him and any previous participation the expert has had in certain types of litigation, as long as this inquiry is "relevant to the main issue before a court." The purpose of this type of impeachment evidence is to establish an expert's bias or partiality in favor of the retaining attorney, an insurance company, defendants or plaintiffs generally, or a particular type of litigation, such as personal injury, asbestos, etc. Because it found such impeachment evidence relevant to cross-examination of an expert, the Superior Court specifically ruled that an opposing party may obtain, through standard discovery, copies of an expert's 1099 forms, so long as they are relevant to the main issue in the case.

This decision could have a chilling effect on an attorney's or insurer's ability to retain experts on liability and/or damages issues, particularly those experts who work mostly, or exclusively, for plaintiffs or defendants. Experts will be reluctant to prepare reports and testify in litigation in which they may be required to disclose their income information, and attorneys and insurers will have real difficulty in finding experts with balanced caseloads from a shrinking pool of experts. For example, a cross-examining attorney armed with an expert's 1099 forms will now be permitted to impeach the witness by demonstrating that 90 percent of the expert's income over time has been derived from work he/she received from the retaining attorney, law firm or insurance company. The amount of that income will also be a permissible inquiry. Of course, if an expert is regularly employed by both plaintiffs and defendants, the significance of Whetzel is diminished.

We anticipate that the Superior Court's decision will be appealed to the Pennsylvania Supreme Court. We will keep you updated on any developments in that regard. Whetzel will probably spawn numerous disputes concerning, among other things, what constitutes the "main issue" in the case, and what matters are "relevant" to that issue. If and until different guidance is offered by the Pennsylvania Supreme Court, attorneys and their experts will need to confront the impact of this ruling in each case.

For a copy of the above opinion, or questions about it, please feel free to contact us at 215-587-9400.