JANUARY 2016 BAD FAITH CASES: COURT ORDERS INSURER TO PRODUCE ALL RELEVANT DOCUMENTS PREPARED BEFORE LITIGATION WAS REASONABLY ANTICIPATED, REJECTED THE WORK PRODUCT ARGUMENT (Western District)

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In Smith v. Progressive Specialty Insurance Company, the court wrote at length on the work-product doctrine, as applied to a claim handler’s file in a bad faith case. It ultimately ordered the insurer to produce all relevant documents from its claim file prepared before it could be reasonably anticipated that the claim would be litigated, finding that the work-product doctrine did not apply.  It did, however, protect claims of attorney-client privilege and attorney work product.

An insurer’s claims file can be discoverable in a bad faith case, as information in that file on the insurer’s decision to deny the claim is “relevant or could lead to potentially relevant information.” At the same time, however, the court noted that “institution of a bad faith claim does not automatically waive attorney-client privilege or the work product doctrine.”

The court acknowledged that not everything “prepared by or for the agents of an insurer” is protected by the work product doctrine, and that the doctrine only protects documents prepared in anticipation of litigation. Here, the insurer argued that litigation was anticipated as soon as the insured asserted an underinsured motorist (“UIM”) claim.

The court disagreed, and found that the insurer could not have reasonably anticipated litigation until the insurer’s position and the insured’s position as to the extent of the insured’s damages and lost wages came to “loggerheads.” Accordingly, documents prepared before that time fell outside the scope of the work product doctrine, and the court ordered these documents to be produced.

Date of Decision: December 15, 2015

Smith v. Progressive Specialty Ins. Co., 2:15-cv-528, 2015 U.S. Dist. LEXIS 167618 (W.D. Pa. December 15, 2015) (McVerry, J.)

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