A common topic of discussion in my Friday posts is where a policyholder’s attorney should look for information regarding whether an insurance company handled a particular claim in bad faith. One of the considerations that I touched upon in my post titled A Few Unexpected Places Where Valuable Bad Faith Information Might be Located was the possibility that an employee’s personnel information might not all be kept in a single place – not all personnel information on a specific employee is necessarily maintained in what is typically referred to as an employee’s “personnel file.” I also touched upon places where you might find information pertinent to how a claim was handled in places other than what is typically referred to as the “claims file.” This week, I would like to address a few other considerations to keep in mind when seeking information in the insurer’s claims file through discovery in a bad faith lawsuit.

Just like an employee’s personnel information might be kept in a few different places, an insurance company might not keep all of the information that comprises the claims file in a single place. In last week’s post titled How an Organization Chart Can be Useful in Bad Faith Cases, I wrote about how there is a hierarchy of employees within an insurance company. Similarly, many insurance companies have several offices. There are usually a few different physical locations for any single carrier. For example, an insurer could have a home office, regional offices and, possibly, branch offices as well. It is possible that each type of office handles a particular aspect of a claim and that each office has its own file for each claim:

Although the documents in each of these files may be substantially the same, the practitioner [policyholder’s attorney] should never accept the insurer’s representation that they are identical. They are probably not. In each office where there is a separate claim file there are likely to be entries in that office’s files that are unique to that office.

Discovery in Insurance Bad Faith Cases Part I, Charles Miller, Insurance Law Center.

This is particularly true if different offices handle different aspects of a claim. One office might keep part of the claims file regarding reserves. Another office might keep part of the claims file regarding reinsurance. Yet another office might keep part of the claims file regarding the referral of the claim to a “Special Investigations Unit,” so on and so forth.

There may also be separate claim files for separate components of the claim. For example, in a claim arising from an automobile accident there may be a claim file for the damage to the car and a separate claim file for the bodily injury claims. Similarly, in the homeowners’ first party context, there may be separate claim files (and claims handlers) for damage to the dwelling, contents and additional living expenses…

Discovery in Insurance Bad Faith Cases Part I, Charles Miller, Insurance Law Center.

Additionally, the claims adjuster assigned to a particular claim may keep his/her own file which might be referred to as a "field file." The field file may contain documents or information that the insurer’s adjuster believes are of particular importance in handling the claim, as well as the claim handler’s notes that might not be found in the carrier’s hard copy or electronic file. Finally, the claim file for any independent claim representative hired by the insurance company should also be obtained. 

For the reasons stated above, it is important to consider drafting discovery responses to the insurer in a bad faith case that are broad enough to encompass information contained in an insurance company’s claims file, regardless of where the information might be located, how many different files it can be found in, and what the file might actually be called.

Please check in next week for another bad faith discussion.