Discovery in Bad Faith and Consumer Protection Act Cases, Part I

In bad faith and Tennessee Consumer Protection Act cases, I routinely run into work product objections during discovery. Often these objections are made even as to reports and documents generated before the claim was denied. I believe work-product objections as to pre-denial materials are improper. As we know, Rule 26.02(3) protects against disclosure of materials prepared in anticipation of litigation. In general, courts seek to distinguish those materials that are generated “in the ordinary course of business” from those prepared “in anticipation of litigation.” The work product doctrine does not protect documents prepared in the ordinary course of business. See Boyd v. Comdata Network, Inc., 88 S.W.3d 203, 225 n.33 (Tenn. Ct. App. 2002) (citing Simon v. G.D. Searle & Co., 816 F.2d 397, 401 (8th Cir. 1987). In light of the above, the obvious question in litigation involving an insurance claim is when the insurance company begins investigating and acting “in anticipation of litigation” as opposed to doing so in the ordinary course of its business. Fortunately, there is case law to help, and I’ve compiled a few helpful citations below for use by lawyers fighting this decades old battle:

 

  • “The investigation and evaluation of claims is part of the regular, ordinary and principal business of insurance companies." Fine v. Bellefonte Underwriters Ins. Co., 91 F.R.D. 420, 422 (S.D.N.Y. 1981).
  • “It is . . . well established that insurance companies have an independent obligation to review and follow up on claims, and their reports are thus not protected, although they are usually prepared with an eye toward litigation." Fru-Con Constr. Corp. v. Sacramento Mun. Util. Dist., 2006 U.S. Dist. LEXIS 53763 at *4 fn. 3 (E.D. Cal. July 20, 2006) (citing Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655 (S.D. Ind. 1991)).
  • Any investigation, including statements obtained as part of this process, would fall within the insurance company's ordinary business and independent duty to investigate and evaluate claims. Accordingly, it can be presumed that "documents which were produced by an insurer for concurrent purposes before making a claims decision would have been produced regardless of litigation purposes . . . ." Stout v. Illinois Farmers Ins. Co., 150 F.R.D. 594, 605 (S.D. Ind. 1993).

If any Tennessee practitioners have dealt with this issue and received rulings from trial courts, I keep a database of such Orders and would love to hear from you.  

 

The "Draft" expert report - is it still discoverable in federal court?

The U.S. Supreme Court has apparently approved changes to the rules governing expert discovery in federal court. These changes are set to take effect December 1, 2010.  The most interesting, and the one drawing attention at this time, is the Supreme Court‘s exempting of drafts of expert reports from discovery. The Committee on Rules of Practice and Procedure proposed changing Fed. R. Civ. P. 26(a)(2)(B) so that only the "facts or data considered by the witness" in forming the expert opinions must be disclosed, instead of all "data or other information" upon which the expert relied.  Drafts of expert reports will be immune form discovery, apparently unless a party could show substantial hardship. The purpose of this modification was to streamline litigation.  The new rule will still allow discovery of communications between counsel and expert on the topics of compensation, assumptions and facts and data provided by the attorney. Now, however, the prior drafts of expert reports appear to be privileged from discovery.

The commentary seems to suggest that discovery along these avenues has not been fruitful, and has just taken up much discovery time. I have had experiences where it has been of limited utility, but usually about once a year, I have a case where an attorney’s modification to an expert’s preliminary report has caused concern or been a hot topic of examination. I was surprised to learn that this modification was supposed by both plaintiff and defense lawyers. 

I believe this modification is "final," so to speak, so watch out for it and plan accordingly in your federal litigation.