This blog is an extension of my September 27, 2013, blog. The focus of my earlier blog was a Florida federal court decision, whereas the focus of this blog is a Florida state court decision. The topic is whether or not certain aspects of a carrier’s claim file can be discovered during the contractual dispute. Although the Florida state court viewpoint on this topic is more conservative than the Florida federal court viewpoint, the answer, in my opinion, is still “yes” in federal and state court.
It is important to note that the bulk of Florida state court decisions condemning “claim file” discovery in a contract dispute have emanated from broad requests from policyholders, such as “please produce the claim file.” Bad requests make for bad law, I guess. I suggest that policyholders immersed in a contract dispute consider requesting just the pieces of the claim file that bear on (or are likely to bear on) the disposition of the contract dispute. There will come a time when the entire claim file is fair game – remembering that the tortoise beat the hare, be patient by not overreaching early. Anyway, let’s get back to the decision that is the focus of this post – Zirkelbach Construction, Inc. v. Rajan.1
The Rajan court made clear an insurance company is not sweepingly immune from having to produce its claim file (or, more likely, pieces of its claim file) in a state court contract dispute. The court stated “[a]n insurer’s claim file generally constitutes work product and will be protected from discovery prior to a determination of coverage.” Key word = “generally.” Under what circumstances, then, can a policyholder get at the insurer’s claim file while the coverage issue is still pending?
Well, the Rajan court went on to note that:
[A] party may obtain documents that are otherwise protected by the work product privilege if it can show that it ‘has need of the materials in the preparation of the case and is unable without undue hardship to obtain the substantial equivalent of the materials by other means.’
The court recognized that “[t]his exception applies to an insurer’s claim file,” and had this to say about “need”:
To show ‘need,’ a party must present testimony or evidence demonstrating the material requested is critical to the theory of the requestor’s case, or to some significant aspect of the case. Once the trial court knows the requestor’ theory as to why the items are needed …, the trial court should then conduct an in camera review. During this review, the trial court can evaluate whether the contested materials provide the requisite evidentiary value alleged by the requesting party, and determine whether the requested materials are substantially similar to materials already available.
Mr. Rajan did not end up getting the “claim file” discovery he wanted (so, I guess the Rajan decision is quasi dynamite) because he did not make a strong enough evidentiary showing of need and undue hardship. The court suggested an affidavit as a possible evidentiary tool. I suggest the carrier’s own paperwork as another possible evidentiary tool, for example:
- carrier denies the claim based on purported fraud;
- carrier produces a redacted claim activity log in litigation and contends that the redacted sections constitute immune claim file materials;
- there is no indication of fraud in the unredacted portions of the claim activity log;
- the carrier’s own paperwork suggests that its bases for claiming fraud are contained in the redacted portion of the claim activity log;
- part of the policyholder’s defense involves discrediting the carrier’s bases for claiming fraud, and
- there is no possibility for the policyholder to obtain the substantial equivalent of the unredacted claim activity log (and, thus, the carrier’s bases for fraud) by some other means.
In sum, in Florida state court contract disputes, it is not the absolute “claim file” discovery prohibition that some think it is. As the Rajan court makes clear, there is a bit more to it.