Cooperation does not equal “slavish obedience.” Property claims adjustments overseen by insurance company counsel come in various tones and methods. Some are professional and truly in good faith regardless of the decision. On the other hand, some insurance companies have failed to tell their dogs-on-a-leash counsel to treat their client’s customers the same way the insurance company did before the loss when the customer was not seen as the enemy.  

I considered this while reading an opinion regarding Massachusetts law on examinations under oath.1 Two practical lessons come from the case. First, demands for examinations under oath have to be reasonable. Second, an insurer should not deny the claim before it is time for the examination to take place.

Here is the most relevant part of the decision:       

Philadelphia contends that BAS’s emails on August 4 and August 9, 2021 amount to a ‘contumacious refusal by BAS to produce George Carney for an examination under oath.’ As further evidence that BAS refused to produce Carney for an EUO, Philadelphia avers that BAS presented Rodrigues to sit for an EUO even though ‘she was in fact unable to testify about any of the topics of examination specified by [Philadelphia].’ BAS counters that there is no way to read the August 4 and August 9 emails as refusals, that the timing of Philadelphia’s denial of BAS’s claim precludes a finding of a refusal to submit to an EUO, and that Rodrigues was knowledgeable about the topics of Philadelphia’s investigation.

In the August 4 email, Philadelphia asked to take EUOs of six individuals, including Carney. Philadelphia made this request the day after its EUO of BAS’s designee, Rodrigues. BAS’s email response simply read: ‘I will respond to Philadelphia’s document requests and its request to take examinations under oath of persons who are not insureds in separate correspondence.’ There is no way to read this email as a willful refusal. Rather, it is a promise to respond more fully to the EUO request in a separate email.

The promised response was sent by BAS on August 9. In that email, BAS indeed objected to Philadelphia’s request for the additional examinations because it did not believe the Policy language allowed for them. Nevertheless, BAS stated that it would ‘consider such [EUO] request[s] and respond further’ if Philadelphia would identify ‘why a further examination under oath is ‘reasonably required’ ‘ pursuant to the Policy’s language. Once again, this email cannot be read as a willful and unexcused refusal. Rather than foreclosing all possibility of future EUOs, it instead asks why such EUOs are needed given that BAS had already produced Rodrigues for an EUO. As support for its position, BAS’s email points to Policy language stating that only EUOs that are ‘reasonably required’ may be taken. Thus, BAS took the position that even though it thought it had already satisfied the EUO requirement of the Policy, it would nevertheless consider additional EUOs once more information was provided. This position is not an unexcused and willful refusal to present Carney for an EUO.

…On August 3, Rodrigues appeared for an EUO on behalf of BAS. On August 4, Philadelphia asked for EUOs of Carney and the maintenance workers. On August 4 and August 9, BAS sent emails that, read together, requested further information before submitting to additional EUOs. On August 10, Philadelphia wrote to BAS asking for ‘confirm[ation] that Mr. Carney will appear next Thursday, August 19th, for an EUO as previously requested, or [make] contact … to arrange for a new date, time and place within the next two weeks’ and to ‘confirm that BAS will make the other individuals available for their EUO’s [sic] on Friday, August 20, 2021,’ or on various dates thereafter. This email from Philadelphia provided some explanation as to why the interview of Carney was reasonably required. Thus, Philadelphia appears to accede in part to BAS’s request for further information. The email also appears not to treat BAS’s August 4 and August 9 emails as refusals because it seeks confirmation that the EUOs on August 19 and August 20 will go forward. Moreover, the email does not ask BAS to respond immediately but asks for a response regarding the EUO ‘within the next two weeks.’ Less than 72 hours later, before BAS had responded, and six days before the earliest date Philadelphia had offered for the additional EUOs, Philadelphia denied the claim in part on the theory that BAS had refused to appear for the additional EUOs.

The appellate court held for the policyholder, reversed the summary judgment, and sent the matter back to the trial court:

In short, given the sequence and content of the emails at issue, as well as Rodrigues’s responsive and non-evasive EUO testimony, it is impossible to find on this record that BAS willfully and without excuse refused to present Carney for an EUO. See Lorenzo-Martinez, 790 N.E.2d at 695-96 (holding that an insurer thus may properly disclaim coverage when faced with a ‘wilful [sic], unexcused refusal to submit to an examination under oath ….’). In other words, Carney’s non-appearance at an EUO, especially since his first possible opportunity to appear on August 19 had not yet passed when Philadelphia notified BAS of its decision to deny coverage, in and of itself does not support the district court’s grant of summary judgment as a matter of law in favor of Philadelphia.

The insurance company may still win because the examination under oath is still at issue with a number of other complicated coverage issues.    

For policyholders facing requests for examination under oaths, please read What is The Upside To Refusing To Appear At an Examination Under Oath?, where I warn:

I am writing this because I routinely field questions asking if policyholders can refuse to go to an examination under oath or asking for reasons which can defeat the insurer’s demand. While policyholders may win the legal argument for avoidance, policyholders should not place themselves in that position if they can avoid it.  Unless there are criminal implications by giving the testimony, it is an ‘everything to lose and nothing to be gained’ from refusing to attend an examination under oath.

In this case, it seemed that the policyholder had cooperated and was merely asking why the owner had to appear for an examination. Had the insurance company not jumped the gun and denied the claim so fast, maybe this outcome would have been different.

Thought For The Day  

Different perspectives, experiences, and insights improve decision-making and lead to superior performance.

—Lynne Doughtie

1 Philadelphia Indem. Ins. Co. v. Bas Holding Corp., No. 22-1296, — F.4th — (1st Cir. Aug. 17, 2023)