What is an Examination Under Oath?
What is an Examination Under Oath?
The number one trigger that drives clients to my office is that dreaded lawyer from some fancy law firm, usually with lots of names at the top of the letterhead, that directs the insured to show up at a designated time and place for an “examination under oath.” The letter usually will also request the insured to bring numerous documents with him or her to the examination under oath. Those receiving the letter are usually frightened by the formality of it all, and then that fear turns into anger because the company they've been paying premiums to all these years is now treating them like a criminal. My next few posts will deal with common issues and questions surrounding examinations under oath. Hopefully it will help a few insureds understand what an examination under oath is, and why, in my opinion, a request for an examination under oath should be a red flag that the insurance company believes something is afoul.
An examination under oath, commonly referred to as an “EUO”, is a formal statement taken by the insured on issues related to the insurance claim or insurance policy at issue. EUOs are typically, although not always, conducted by an attorney representing the insurance company. A court reporter will be present, typing every question and answer verbatim. There is sometimes a videographer present as well. Examinations under oath usually last only a few hours, but I’ve been involved in a few that have taken multiple days.
The subject matter of the questions in an EUO varies depending on the issues at hand. For example, in a fire damage case, an insured should anticipate questions about the cause and origin of the fire, the financial condition of the insured leading up to the fire (motive), the insured’s whereabouts at the time of the fire (opportunity), the nature and extent of the loss, particular items claimed to have been damaged or destroyed, and the accuracy of answers provided in the insurance application. This is just a small sampling of the multitude of pitfalls for the unwary, and an insured would be wise to seek qualified legal counsel well before appearing for the examination under oath.
An insurance company’s authority to take an examination under oath comes from the insurance contract, which typically contains a provision, under the section “Duties of the Insured,” that the insured must answer questions under oath when requested by the insurer. Even without such a provision, there is almost always a “duty of cooperation” provision in the policy which would also require the insured’s participation in an examination under oath. If an insured refuses, it could result in the insurance company’s denial of the claim based on its assertion that the insured breached the insurance policy by refusing to cooperate. See Spears v. Tenn. Farmers Mut. Ins. Co., 300 S.W.3d 671 (Tenn. Ct. App. 2009).
Tennessee courts have consistently recognized an insurer’s right to take an examination under oath. See Shelter Ins. Co. v. Spence, 656 S.W.2d 36 (Tenn. Ct. App. 1983) (holding insurer was entitled under cooperation clause of policy to take sworn statement from each insured privately and out of each other’s presence); Widener v. Tenn. Farmers Mut. Ins. Co., 1995 WL 571868 (Tenn. Ct. App. 1995) (recognizing an insurer’s right to take an insured’s examination under oath); Jones v. Tenn. Farmers Mutl. Ins. Co., 2004 WL 170359, at *2 (Tenn. Ct. App. 2004).
Examinations under oath are certainly valid tools in an insurance company’s vast arsenal of weaponry to be used to deny claims, but there are several nuances which most insureds and many lawyers who represent them are unaware. Over the next few posts, I’ll try to identify those to better equip those unfortunate souls who receive the dreaded letter requesting an EUO.
Litigation Tactics - Solidifying Your Bad Faith Claim
So you finally got a case in which you're just certain the insurance company is acting in bad faith . . . What do you do now? Protect it! In a case where you think you've caught the insurance company red-handed for acting in bad faith, it is crucial that you take the steps to document the insurance company's actions from the insured's perspective before a lawsuit is filed.
First, obtain a certified copy of the insurance policy and read it thoroughly. In every insurance policy I've ever read, there will be a section entitled "Duties After Loss" or something similar. These apply to the insureds. For example, insureds have a duty to cooperate, a duty to protect the property from further loss, etc. Confirm that the insured has complied with all such duties and then send a letter to the insurance company to document the fact that the insurance company does not contend that the insured has failed to fulfill his or her contractual duties. If the company disputes the contention, resolve the problem and then send another letter.
Second, don't forget to instruct your client to keep a timeline recording all of the relevant events that lead to the conclusion that the insurance company is acting in bad faith. Third, send a very nice, personable letter to the insurance company stating that your client is willing to do whatever is necessary to assist with the speedy adjustment and resolution of the claim. Pour it on thick - - and mean it. Finally, send a bad faith demand letter to the insurance company via certified mail.
All of the communications to the insurance company should be professional and display patient cooperation. Be courteous, yet firm. If anyone is going to use ugly language or overbearing settlement tactics, make sure its the insurance company. Remember that the letters will be read by not only the insurance adjuster, but also by the judge or jury if litigation becomes necessary. And there is nothing that an insurance company hates worse than to have a nice, super-helpful and cooperative letter from the insured to the adjuster read to a jury when it knows it really screwed a case up.
