Discoverability of the Insurance Company’s Claims File in Third-Party Litigation
By Joseph T. Acquaviva Jr.

The contents of an insurance company’s claims file are thought to include the veritable “keys to the cash,” “the thought processes of the claims department” and “of all who contribute to the contents of the claims file.” Plaintiff attorneys issue discovery requests seeking production of the claims file (or at least portions of it) and such requests are often resisted based upon a claim of “privilege.” Often the insurance company whose claims file is the subject of the subpoena or discovery request is uncertain how to respond. The purpose of this article is to address the issue of discoverability of an insurance company’s claims file in third party litigation and to provide a reasonable approach for responding to such discovery requests which can be as easy as A, B, C.

THE WORK PRODUCT DOCTRINE

The U.S. Supreme Court first recognized the work product doctrine in Hickman v. Taylor.1 In Hickman, five sailors drowned when their tugboat sank. Three days after the accident, the owners of the tugboat hired a law firm to investigate and to defend them in potential claims. During the attorneys’ investigation, they took recorded statements from four of the surviving crew members. 

Approximately one year after the accident, Hickman filed suit against John M. Taylor and George Anderson, individually, and trading as Taylor and Anderson Towing and Lithurage Company.2 The plaintiff’s attorney submitted discovery requests for the identity and production of any:

Oral or written statements, records, reports or other memoranda…concerning any matters relative to the towing operation, the sinking of the tug, the salvage and repair of the tug, and the death of the deceased. 3

The defendants objected to the requests on the basis that the discovery sought privileged information obtained in anticipation of litigation. The trial court ordered the requested documents produced.4 The 3rd Circuit Court of Appeals reversed the trial court holding that the documents were “privileged” and therefore not subject to discovery.5 The U.S. Supreme Court, on certiorari, affirmed the holding of the court of appeals and held that the documents requested were protected from discovery because they were work product. The court reasoned:

Historically, a lawyer is an officer of the Court and is bound to work for the advancement of justice while faithfully protecting the rightful interests of his client. In performing his various duties, however, it is essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusions by opposing parties and their counsel.

Proper presentation of a client’s case demands that he assemble information, fits what he considers to be relevant in facts, prepares his legal theories and plan his strategy without undue and needless interference. That is the historical and the necessary way in which lawyers act within the framework of our system of jurisprudence to promote justice and to protect their clients’ interests. This work is reflected, of course, in interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible ways — aptly though roughly termed by the Circuit Court of Appeals in this case (153 F.2d 212, 223) as the “Work product of the lawyer.” Were such materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten. An attorney’s thoughts, heretofore inviolate would not be his own. Inefficiency, unfairness and sharp practices would inevitably develop in the giving of legal advice and in the preparation of cases for trial. The effect on the legal profession would be demoralizing, and the interest of justice would be poorly served.6

The court recognized that the special protection from discovery given to an attorney’s “work product” is supported on three bases. First, the work product doctrine prevents needless interference with the work of an attorney. Second, protection promotes efficiency and fairness. Third, adopting the work product doctrine would protect the legal professional from demoralization.7 Application of the work product doctrine is often confusing and inconsistent.

THE SCOPE OF DISCOVERY UNDER THE OKLAHOMA DISCOVERY CODE

Parties may obtain discovery of any matter not privileged, which is relevant to the subject matter involved in a pending action, whether it relates to a claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition and the location of any books, documents or other tangible things and the identity and location of persons having knowledge of any discoverable matter.8

In cases where the defendant is insured, it is not uncommon for in-house adjusters, outside adjusters and/or retained counsel to act immediately after an accident is reported to the insurance company. The fruits of the investigation are generally summarized and placed in the claims file. Decisions to pay or not to pay a claim are typically based upon information “discovered” as well as documents gathered, summarized and placed in the claims file. A claims file may contain the names of witnesses, statements from witnesses, photographs, medical bills, records and reports, a statement from the claimant or potential plaintiff, correspondence between the insurance company and the claimant/plaintiff and/or his/her counsel, an accident report and any other information that appears to the claims adjuster/supervisor to be reasonably necessary based upon the fact of the particular claim.  Some of the information is gathered as a matter of course and at other times an investigation is conducted in anticipation of litigation.

In responding to a subpoena or discovery request for documents from the liability insurer’s claims file, how does one determine whether the documents are “privileged” and therefore protected from discovery? Courts recognize that the mere status of an attorney-client relationship does not make every communication between the attorney and client protected or privileged.9

In order to be covered by the attorney-client privilege, communication between a lawyer and client must relate to legal advice or strategies sought by the client.10 To sustain a claim of work product protection, a litigant must demonstrate that the documents at issue were prepared in anticipation of litigation by or for the defendant or by or for the defendant’s representative.11

In analyzing whether a particular document is protected from discovery, one must first determine whether the document includes factual information provided by an independent witness and gathered by the insurer or its legal representative (ordinary work product) or an intellectual analysis of information by the insurer or its legal representative (opinion work product). In Hall, supra, the Oklahoma Supreme Court held that an insurer was required to produce a factual witness statement taken by its attorney during the investigation of a fire loss claim prior to the insurer’s denial of the claim, the statement of the witness essentially being that the insured had hired people to burn his house.12 In doing so, the court determined that the crucial inquiry as to whether a document was protected by a qualified work product privilege was whether the document was secured by the insurer (or its employee) in anticipation of litigation or Z merely in the ordinary or regular course of business.13

Following the court’s reasoning in Hall, it is clear that the court recognizes that “a central part of the business of insurance companies is to investigate claims, review them and decide whether or not to pay” and that “documents prepared in the ordinary course of business by the insurer, its employees and agents in regard to such endeavors cannot automatically be deemed to have been generated in anticipation of litigation merely because litigation may be deemed a contingency. For the anticipation of litigation threshold to be met, the primary motivating purpose behind the creation of a document or investigative report must be in aid of possible future litigation, although litigation need not be imminent at the time of the document’s creation.14 Further, the court recognized that whether an insurance company’s investigatory documents were prepared in anticipation of litigation turns on the facts of each particular case.15

HOW TO RESPOND TO A REQUEST FOR PRODUCTION OF CLAIMS FILE DOCUMENTS

The recent Oklahoma Supreme Court decision of Scott v. Peterson16 provides some guidance concerning the obligations of a party responding to such requests. Scott involved an action by homeowners (Scotts) against their roofer (Perfection) for damages to their home. The Scotts sought discovery of the claims file of the roofer’s liability insurer (NAICO), and filed a motion to compel production of the file. The roofer and the insurer objected to the discovery and sought a protective order.17

The trial court granted the protective order and a writ ensued. The Oklahoma Supreme Court accepted original jurisdiction and explained that the party objecting to discovery did not satisfy its burden to show a privilege or exemption from discovery, and upon that party’s failure to present facts sufficient to adjudicate the privilege and exemption, the trial court was required to order that party to file a privilege log and the documents under seal.18

Without reading any further, it is clear that based upon the court’s ruling in Scott that a request for claims file documents is not in and of itself improper. It is also clear that once the request is made, the burden falls upon the party resisting discovery to demonstrate that the documents are privileged or otherwise exempt from discovery. Specifically, the court stated:

Assuming, but not deciding, that the Perfection-NAICO relationship is an attorney-client relationship for certain purposes, Perfection’s blanket assertion of the privilege for the entire claims file is not supported by either facts or authority showing that the communications in the file are of such a nature that all would qualify pursuant to 12 O.S. Supp. 2002 § 2502.19 Consequently, Perfection must show that particular documents in the claims file are privileged, and this it did not do.20

In order to successfully invoke the work product doctrine, the party asserting the privilege must distinguish between 1) communications and things prepared in anticipation of litigation or for trial by or for another party or by or for a representative of that other party, etc., that may be discoverable and 2) the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation, of which a court shall protect against disclosure.21 Ordinary work product prepared in anticipation of litigation or trial is discoverable if the party seeking the materials makes the required showing, but opinion work product prepared in anticipation of litigation or for trial is not discoverable except in extraordinary circumstances.22

The Scott court also recognized that the party opposing the production on a claim of privilege must make the claim expressly and shall describe the nature of the documents, communications or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection.23

When a party or nonparty responding to a subpoena [discovery request], fails to provide a privilege log and a log is necessary to adjudicate an asserted privilege, the trial court “shall order” the party asserting the privilege to file a privilege log.24

The party asserting the privilege should request an in camera reviewof the documents and request that the court determine whether a privilege or exemption from discovery exists as to particular documents.25

CONCLUSION

Discovery disputes are not favored by the courts. Before asserting boiler plate objections and withholding the entire claims file consider whether it contains medical bills, records and reports of the party making the request. Does it contain communication between the Plaintiff’s lawyer and the claims adjuster? Are there financial documents or other information in the claims file that required an authorization to obtain? Are there documents that are public records (accident reports, weather reports, newspaper articles, etc.)? The decision to assert an objection on the basis of privilege should be well thought out and not a knee-jerk reaction to what may initially seem like an absurd request.

Object wisely, prepare an appropriate privilege log and request an in camera review. It’s as easy as A, B, C.

1. George E. Hickman, as Administrator of the Estate of Norman E. Hickman v. John M. Taylor and George Anderson, individually, and trading as Taylor and Anderson Towing and Lithurage Company, 329 U.S. 495, 67 S.Ct. 385 (1947).
2. 4 F.R.D. 479 (E.D. Pa. 1945).
3. Supra, note 1 at 387-88.
4. Supra, note 3 at 483.
5. 153 F.2d 212 (3rd Cir. 1945).
6. Supra, note 2 at 510-11, 67 S.Ct. 373.
7. Id.
8. 12 O.S. 2004 §3226(b)(1).
9. Scott v. Peterson 2005 OK. 84, at ¶7, 126 P.3d 1232; United States v. Johnston, 146 F.3d 785, 794 (10th Cir. 1998).
10. Supra, note 3 at 794.
11. Hall v. Goodwin, 1989 OK. 1988, at ¶7, 775 P.2d 291, 293. The Hall court recognized that “because Oklahoma adopted its Discovery Code from the Federal Rules of Civil Procedure,” it is appropriate to “examine the Federal cases construing Rule 26.” These cases frequently refer to a “work product privilege.” This court has differentiated between “ordinary work product” consisting of factual information garnered by counsel acting in a professional capacity in anticipation of litigation, and “opinion work product” consisting of a lawyer’s trial strategies, theories and inferences drawn from the research and investigation inference of counsel.
12. Supra, note 13 Hall, 775 P.2d at 291-92.
13. Id. at 295.
14. Id. at 294, Janicker v. George Washington University, 94 F.R.D. 648, 650 (D.D.C. 1982).
15. Hefron v. District Court of Oklahoma County, 2003 OK. 75 at ¶71, 77 P.3d 1069, citing Carver v. Allstate Ins. Co., 94 F.R.D. 131, 134 (S.D.Ga. 1982); see also Chambers v. Allstate Ins. Co., 206 F.R.D. 579 (S.D.W.Va. 2002); Wikel v. Wal-Mart Stores, Inc., 197 F.R.D. 493 (N.D. Okla. 2000).
16. 2005 OK 84, 126 P.3d 1232
17. Id. at ¶0. The liability insurer, National American Insurance Company (NAICO) was not a party to the lawsuit.
18. Id. at ¶1.
19.
A. As used in this section:
1. An “attorney” is a person authorized, or reasonably believed by the client to be authorized, to engage in the practice of law in any state or nation;
2. A “client” is a person, public officer, or corporation, association, or other organization or entity, either public or private, who consults an attorney with a view towards obtaining legal services or is rendered professional legal services by an attorney;
3. A “representative of an attorney” is one employed by the attorney to assist the attorney in the rendition of professional legal services;
4. A “representative of the client” is one having authority to obtain professional legal services, or to act on advice rendered pursuant thereto, on behalf of the client; and
5. A communication is “confidential” if not intended to be disclosed to third persons other than those to whom disclosure is made in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.
B. A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client:
1. Between the client or a representative of the client and the client’s attorney or a representative of the attorney;
2. Between the attorney and a representative of the attorney;
3. By the client or a representative of the client or the client’s attorney or a representative of the attorney to an attorney or a representative of an attorney representing another party in a pending action and concerning a matter of common interest therein;
4. Between representatives of the client or between the client and a representative of the client; or
5. Among attorneys and their representatives representing the same client.
C. The privilege may be claimed by the client, the client’s guardian or conservator, the personal representative of a deceased client, or the successor, trustee, or similar representative of a corporation, association, or other organization, whether or not in existence. The person who was the attorney or the attorney’s representative at the time of the communication is presumed to have authority to claim the privilege but only on behalf of the client.
D. There is no privilege under this rule:
1. If the services of the attorney were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or fraud;
2. As to a communication relevant to an issue between parties who claim through the same deceased client, regardless of whether the claims are by testate or intestate succession or by inter vivos transaction;
3. As to a communication relevant to an issue of breach of duty by the attorney to the client or by the client to the attorney;
4. As to a communication necessary for an attorney to defend in a legal proceeding an accusation that the attorney assisted the client in criminal or fraudulent conduct;
5. As to a communication relevant to an issue concerning an attested document to which the attorney is an attesting witness;
6. As to a communication relevant to a matter of common interest between or among two or more clients if the communication was made by any of them to an attorney retained or consulted in common, when offered in an action between or among any of the clients; or
7. As to a communication between a public officer or agency and its attorney unless the communication concerns a pending investigation, claim or action and the court determines that disclosure will seriously impair the ability of the public officer or agency to process the claim or conduct a pending investigation, litigation or proceeding in the public interest.
20. Supra, note 18 at ¶7
21. 12 O.S. 2001 § 3226 (B)(2).
22. Id. at ¶8, citing, Ellison v. Gray, 1985 OK 35, 702 P.2d 360, 363; 12 O.S. 2001 § 3226 (B)(2).
23. 12 O.S. 2001 § 3226 (B)(4).
24. When a claim of privilege or other protection from discovery is made in response to any request or subpoena for documents, and the court, in its discretion, determines that a privilege log is necessary in order to determine the validity of the claim, the court shall order the party claiming the privilege to prepare and serve a privilege log upon the terms and conditions deemed appropriate by the court. The privilege log shall be served upon all other parties. Unless otherwise ordered by the court, the privilege log shall include, as to each document for which a claim of privilege or other protection from discovery has been made, the following:
a. the author or authors,
b. the recipient or recipients,
c. its origination date,
d. its length,
e. the nature of the document or its intended purpose, and
f. the basis for the objection.
The court may conduct an in camera review of the documents for which the privilege or other protection from discovery is claimed. If the court denies the motion in whole or in part, it may make such protective order as it would have been empowered to make on a motion made pursuant to subsection C of Section 3226 of this title.
25. Supra, note 18 at ¶18.

About The Author

Joseph T. Acquaviva Jr. is a partner in the law firm of Wilson, Cain & Acquaviva. He was admitted to the bar in 1986 after graduating from OCU. He is admitted to all district courts and federal courts of Oklahoma and the U.S. Court of Appeals, 10th Circuit. Guest Lecturer, L.S.U. National Institute of Trial Advocacy Training Program. Currently his practice is primarily limited to products liability and insurance bad faith.

Discoverability of the Insurance Company’s Claims File in Third-Party Litigation
Published 79 OBJ 1779 (August 9, 2008)