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.
Tennessee Court Of Appeals Rules That Submission To Examination Under Oath Is Condition Precedent To Recovery
I commend to your reading the recent case of Spears v. Tennessee Farmers Mutual Insurance Company, No. M2008-00842-COA-R3-CV (Tenn. Ct. App. Middle Section), filed July 17, 2009. For a PDF copy of this case, download here (pdf). In this case, the Court was presented with the question of whether the failure of an insured to answer questions in an examination under oath was a material breach of the policy terms, and whether compliance with an EUO request was a condition precedent to the insured’s recovery under the policy. The Court noted:
We likewise find that submission to answer questions under oath when requested as provided for in the insurance policy at issue is a condition precedent to an insured’s recovery under that policy.
As an aside, the court also acknowledged that depositions are different than examination under oath (see my post of June 18, 2009 under “Claim Tips”). The Court found that:
Giving a deposition after having filed suit against the insurer for failing to pay an insurance claim does not constitute cooperation under the terms of the policy.
The Court noted that Tennessee Farmers’ decision to seek an examination under oath was discretionary, but once the carrier made such a request, the policyholder was under an obligation to submit.
Examinations Under Oath and Depositions are Different
I cannot count the number of times I have had an insured’s lawyer misunderstand the difference between these two proceedings. Depositions and examinations under oath are different activities. Cases recognize that “depositions and examinations under oath serve different purposes.” Nationwide Ins. Co. v. Nilsen, 745 So. 2d 264, 268 (Ala. 1999); accord Goldman v. State Farm Fire Gen. Ins. Co., 660 So. 2d 300, 305 (Fla. 4th DCA 1995). The Supreme Court of Alabama explained:
[A]n examination under oath is a part of the claims investigation process. In contrast, a deposition is not part of the claims investigation process; it is designed to facilitate the gathering of information once an insured has denied the insured’s claim.
Nationwide Ins. Co., 745 So. 2d 269; accord Goldman, 660 So. 2d 305 (listing numerous distinctions between EUO’s and depositions, one of which explains that “examinations under oath are taken before litigation to augment the insurer’s investigation of the claim while a deposition is not part of the claim process”); see also Archie v. State Farm Fire & Cas. Co., 813 F. Supp. 1208, 1213 (S.D. Miss. 1992) (holding that depositions are different from examinations under oath); Craft v. Western Mut. Ins. Co., No. E030318, 2002 WL 225947, at *3 (Cal. Ct. App. Feb. 14, 2002) (“A deposition is not the examination under oath which the policy required.”)
In Tennessee, an insured may have a lawyer present at the Examination Under Oath, but the lawyer cannot participate in the Examination, either by asking questions or lodging objections. See e.g. Shelter Ins. Companies v. Spence 656 S.W.2d 36, 38 (Tenn.App.,1983)
Also, keep in mind that the mere filing of suit may not terminate the carrier’s right to demand an Examination Under Oath. There are many cases, mainly from other jurisdictions, that allow a carrier to take an Examination Under Oath even after litigation has been filed. Of course, it depends upon the status of the case, but even in those post-litigation situations, an attorney for the insured may not be able to participate.
