Not all hearsay is inadmissible. Cops use it all the time in criminal cases. "When I approached the suspect, he told me that he had just shot the victim." This is admissible hearsay because it's a statement by a party in the litigation, plus it's a statement most people wouldn't make under those circumstances. It's classified as a statement against interest by a party. The jury decides whether to believe the statement or not. Same thing in this case. If Gail is a defendant in the lawsuit, her alleged statements can be admissible hearsay.