It is not breaking news that many insurance companies monetarily reward their claims department personnel for lowering claim payouts. Thankfully, most courts understand that this is an unacceptable business practice; so, it is not necessarily rare for courts to allow policyholders to discover information pertaining to bonus or incentive plans that insurance companies have in place for their “yes” men and women (adjusters/examiners). That said, however, it is still worthwhile to remind everyone of this golden discovery nugget and to broadcast recent decisions on the subject.
Hot off the California press: In Welle,1 the policyholder requested Provident Life and Accident Insurance Company produce “any and all documents that reflect, refer or relate to bonus awards, including but not limited to the performance rating and percent of bonus awarded.” In granting the policyholder’s motion to compel over myriad carrier objections (privacy, overly broad, unduly burdensome, vague, ambiguous, irrelevant, confidential, proprietary), the Northern District of California federal court held as follows:
To the extent that [the insured’s] theory is that the incentive structure is based on performance, and performance may, in turn, be measured in terms of the resolution of claims, including [the insured’s] own claim, the information [the insured] seeks in these requests speaks to whether [the insured’s] claim was improperly denied and whether Provident encourages bad faith practices. … Provident’s objection that the information sought in these requests is not relevant is therefore overruled.
To read previous posts in my series on dynamite discovery decisions, click here.
1 Welle v. Provident Life and Accident Ins. Co., No.: 3:12-cv-3016, 2013 WL 5663221 (N.D. Cal. Oct. 17, 2013).