NOVEMBER 2011 BAD FAITH CASES CARRIER’S CLAIMS MANUAL IS DISCOVERABLE AS IT IS PERTINENT TO INSURED’S BAD FAITH CLAIM (Philadelphia Federal)
The court was faced with an insured’s motion to overrule the carrier’s objection to discovery requests. Specifically, the insured sought to discover manuals that the carrier used to process its claims. The carrier objected on grounds that the discovery request was overly broad, burdensome, and irrelevant to the proceedings.
The original suit stemmed from a car accident during which the insured was struck by a car driven by an individual insured by the carrier. The injured party sought damages under Pennsylvania’s Motor Vehicle Financial Responsibility Law, 75 Pa. C.S. § 1701 and Pennsylvania’s Bad Faith Statute, 42 Pa. C.S. § 8371.
With respect to the parties’ discovery issues, the insured claims the “manuals and desk books” pertaining to her claims are discoverable. Her counsel also pledged to keep these materials confidential. However, the carrier objected, arguing that the discovery request contained nothing more than boilerplate language.
The district court examined several pertinent cases as precedent. First, under Garvey v. National Grange Mutual Insurance Company, 167 F.R.D. 391 (E.D. Pa. 1996), the district court previously held that claims manuals were not discoverable to prove that the carrier may have “strayed from its internal procedures” because this alone does not “establish bad faith on the part of the [carrier] in handling the [insured’s] loss.”
However, in other circumstances, the court has specifically acknowledged that claims manuals are pertinent to bad faith claims. In Kaufman v. Nationwide Mutual Insurance Company, 1997 WL 703175 (E.D. Pa. Nov. 12, 1997), the court recognized the rule in Garvey, but held that “there may be circumstances when such discovery would be relevant,” such as situations where “a claims manual…requires an adjustor to take certain investigative steps before adjusting a claim and [the insured] can show that these steps were deliberately omitted.” The court recognized that “this fact alone would not be enough to establish bad faith,” but it would be “probative evidence” for the insured to ultimately prove bad faith.
Since Garvey, the district court has specifically ruled that, “any material which pertains to instructions and procedures for adjusting claims and which was given to the adjusters who worked on plaintiffs’ claim may be relevant to the action and must be produced.”
The court in the instant case held that the insured’s request closely mirrored that in Kaufman and overruled the carrier’s objection to the insured’s discovery requests. Because the insurance claims manual might be relevant to the insured’s bad faith claim, the court permitted discovery, pending absolute confidentiality on behalf of the insured.