In past blogs I’ve talked about rulings and the trend across the country where courts are deeming work product privilege in bad faith litigation for the claims attorney to be incorrect and so their work product is discoverable. Courts are ruling that just because an attorney for the insurance company is on a file and advising on a claim does not always mean that their work product is in anticipation of litigation and therefore is not privileged or confidential under the Attorney Work Product Doctrine.
In bad faith litigation, insurers often argue that at any point in time an insurer’s attorney steps into a claim to advise the insurer and their adjusters, the claim file is privileged. Insurers across the country have utilized this method of calling in an attorney to advise early on to keep a majority of the claims file confidential and exempt from discovery while bad faith litigation is ongoing. By this method many insurers are making a stand as to why their documents cannot be produced. However, courts are seeing through this tactical behavior and are making great efforts to level the playing field and to stop such behavior by the insurer as a method of hiding documents.
The current trend of rulings shows that the Hawaii Court of Appeals agrees with the growing trend around the country that insurers cannot bury discovery by asserting the Work Product Doctrine for the claims file when an attorney is merely advising during a claim. In Anastasi v. Fidelity National Title Insurance Company,1 the Intermediate Court of Appeals found through an analysis of HRCP Rule 26 (b)(4), that although the rule generally prohibits the discovery of documents prepared in anticipation of litigation or for trial, “the difficulty of the this issue is determining at what point work product by an insurer’s in-house counsel in a dual role becomes ‘work prepared in anticipation of litigation.’”2
In Anastasi, the insured purchased title insurance after making a third party loan of $2.4 million for a mortgage on a property purportedly owned by that third party. Although the insurer, Fidelity, insured that the third party had good title, it was discovered that the warranty deed had been forged and Anastasi was sued by the true owners of the property. Fidelity properly issued a defense but kept the matter in ongoing litigation in what Anastasi asserted was a bad faith delay in paying out the policy. During the underlying claim and during the bad faith litigation, Fidelity hired an attorney, McGinnity, to advise on the claim. The court held that Fidelity did not meet its burden of establishing the work product doctrine applied to preclude discovery of McGinnity’s documents because there was “nothing in the record to suggest that that the circuit court considered whether the withheld documents were produced ‘because of’ anticipated litigation and would not have been created in a substantially similar form but for the prospect of litigation.”3
Because HRCP Rule 26(b)(4) dictates that the work product doctrine is applicable when the document was prepared in anticipation of litigation or trial, Hawai’i courts must follow suit and inquire whether the work product doctrine applies in the instance of each document, and if that document is not created in anticipation of litigation or trial, then it must be discoverable. Hawai’i courts are diligently interpreting the rule of whether the work product doctrine really excludes all coverage counsel’s documents and portions of the claims file during bad faith litigation and I anticipate the trend will continue amongst the rest of the states as courts are finding the extremes insurers and their attorneys take to limit the discovery process when producing those claims files.
1 Anastasi v. Fidelity Nat. Title Ins. Co. (Hawaii Ct. App. 2014) 134 Hawai’i 400, 341 P.3d 1200, cert. granted, (Hawaii, May 22, 2015, SCWC-30557) 2015 WL 3384471 and aff’d in part, vacated in part, (Hawaii, Feb. 4, 2016, SCWC-30557) 2016 WL 462380.
2 Anastasi, 134 Hawai’i at 425, 341 P.3d at 1225.
3 Anastasi,134 Hawai’I at 426, 241 P.3d at 1226.