In Sharp v. Travelers Personal Security Insurance Co., although no bad faith claim was filed, the court used comparisons to discovery in insurance bad faith cases repeatedly throughout this detailed opinion.
On the issue of reserves, the court cited numerous opinions, pro and con, on the proposition that “insurance reserves are discoverable in bad faith litigation against insurers, where liability for the underlying claim has already been established, since such information may be relevant to the issue of whether the insurer acted in bad faith in failing to settle or pay the original claim.” However, “[n]o Pennsylvania court has permitted discovery of insurance reserves in litigation not involving a bad faith liability claim against an insurer.”
On claims manuals, policy manuals, and training materials, the insurer argued that training and policy manuals have only been deemed discoverable in bad faith actions. The court stated: “It is beyond cavil that an insurer’s claims practice manual setting forth its procedures and guidelines for handling claims is relevant evidence in a bad faith action against an insurer.”
On the issue of claim representative personnel files, in general, there is a heightened standard of review for relevance. Further, “[p]roduction of personnel files has only been deemed appropriate in bad faith litigation where earlier discovery conducted by the parties has established a sufficient nexus between the personnel file and the bad faith claim.” And even in bad faith cases, the requests are often denied. “Those courts have rejected such discovery on the ground that the insureds may obtain the information sought through less invasive and burdensome means by deposing the claims representatives in question and their supervisors.”
On the issue of other litigation or administrative complaints involving medical expense benefit claims, “[s]everal federal district courts have denied discovery requests for ‘similar claims evidence,’ even in bad faith litigation, and have reasoned that evidence of other lawsuits or claims is irrelevant since they presumably involve different facts and circumstances.” “Some of those courts have also concluded that production of information concerning other bad faith suits or complaints would be unduly burdensome and cost prohibitive.” “The only state appellate authority addressing the discoverability of ‘similar claims evidence’ allowed such discovery, provided that it was restricted to the same type of claims at issue in the pending litigation.” “More recent federal rulings have likewise determined that ‘other litigation’ evidence could lead to the discovery of admissible evidence … and may uncover relevant ‘pattern and practice’ proof, so long as the discovery is confined ‘to those practices employed in handling plaintiff’s claim….’” “Such discovery may also unearth earlier depositions or statements by … claims personnel that may be pertinent to the issues in this case.”
Date of Decision: March 7, 2014
Sharp v. Travelers Personal Security Insurance Co., NO. 12 CV 6483, COMMON PLEAS COURT OF LACKAWANNA COUNTY, PENNSYLVANIA, 2014 Pa. Dist. & Cnty. Dec. LEXIS 282 (C.C.P. Lackawanna March 7, 2014) (Nealon, J.)
A copy of Judge Nealon’s exhaustive opinion, including voluminous authority on these discovery issues, can be found at the link of this page of the excellent Tort Talk blog.