As I travelled with Chip Merlin to beautiful, but hot, Philadelphia for yesterday’s deposition in a case involving an Arizona fire loss, we discussed many of the documents that had been produced by the insurance company. The insurance company redacted hundreds of pages to conceal reinsurance information. While reinsurance information may not seem relevant to the actual issue of the case – whether the policy provided additional coverage for the loss that occurred – we agreed that this information is well worth obtaining.
Most states, including Florida and Texas, have specific rules of civil procedure that allow for the discovery of certain reinsurance information. In Texas, Rule 192.3(f) states,
Except as otherwise provided by law, a party may obtain discovery of the existence and contents of any indemnity or insurance agreement under which any person may be liable to satisfy part or all of a judgment rendered in the action or to indemnify or reimburse for payments made to satisfy the judgment.
This means reinsurance information is obtainable. The Rule, though, does not limit discoverable information regarding applicable insurance policies. Instead, the plain language of Rule 192.3(f) requires disclosure of that material. There is absolutely no limiting language in the Rule; it is a simple and express authorization to obtain particular information.
In fact, “Rule 192.3(f) does not foreclose discovery of insurance information beyond that identified in the rule….”1 Although 192.3(f) did not require such disclosure, a party may discover information beyond the mere existence and contents of an insurance agreement if the information is otherwise discoverable under the general scope of discovery rule.2 Therefore, a plaintiff must only meet the ordinary scope of discovery requirements in order to obtain information regarding the exhaustion of a defendant’s insurance policies.
Pursuant to Texas Rule of Civil Procedure 192.3(a), the scope of discovery includes “any matter that is not privileged and is relevant to the subject matter of the pending action.” Tex. R. Civ. P. 192.3(a). The ‘relevant to the subject matter’ test is – “liberally construed to allow the litigants to obtain the fullest knowledge of the facts and issues prior to trial.”3
The relevance of discovery requests can be evaluated by balancing the probative value of the requested information and the burden on the requesting party if discovery is denied, against the burden on the opposing party in responding to the request.4 This balancing test is codified in the Texas Rules of Civil Procedure, which provide that when the scope of discovery is challenged, a trial court should balance whether “the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.”5
Further, Texas Rule of Civil Procedure 192.3 does not require that the plaintiffs’ discovery prove any allegation. Instead, Rule 192.3 provides that the information need only appear “reasonably calculated to lead to the discovery of admissible evidence.”6 “In making the determination whether discovery will lead to admissible evidence, we must keep in mind that the ultimate purpose of discovery is to seek the truth so that lawsuits are decided by what the true facts reveal and not what facts are concealed.”7
As you can see, in Texas – and other states with similar rules, reinsurance information is quite easily obtainable, and this information can prove to be incredibly useful. It can give you great insight into an insurance company’s acceptable limits for resolving a case. This not only helps the insured get a fair result, but also assists courts in efficiently resolving civil lawsuits.
2 Id., citing Tex. R. Civ. P. 192.3.
5 Tex. R. Civ. P. 192.4(b).