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Smith v. Life Investors Insurance Company of America

December 3, 2009

FRANCES J. SMITH, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
LIFE INVESTORS INSURANCE COMPANY OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM ORDER

Pending before the Court is PLAINTIFF'S MOTION TO ENFORCE COMPLIANCE WITH COURT ORDER (Document No. 313). Defendant has filed a response in opposition (Document No. 315) and the motion is ripe for disposition.

Procedural History

On July 9, 2009, the Court issued a Memorandum Order (the "July 9 Order") which resolved numerous discovery disputes. Plaintiff now seeks to enforce one of the rulings made by the Court, as it applies to the production of correspondence with state insurance regulators.

In Request No. 19, Plaintiff sought "production of documents received from or provided to third parties, such as state insurance regulators and trade associations, regarding the meaning of 'actual charges.'" July 9 Order at 11 (emphasis added). In opposition to Plaintiff's motion to compel, Defendant argued that correspondence between Life Investors and insurance departments of states other than Pennsylvania was not relevant. The Court rejected this argument, and explained that Defendant's attempt to impose a geographic limitation was not justified. Defendant also argued that the request was grossly overbroad and could "be construed to include any communications with policyholders." See Document No. 180 at 16-17. In Defendant's view, correspondence with policyholders would be impossible to locate and would invade their privacy rights. Id.

The Court granted Plaintiff's motion to compel, and ordered Defendant to produce its correspondence with third parties related to "actual charges" from 2004 and later. However, in response to Defendant's arguments, the Court clarified: "the term 'third parties' should not be construed to include policyholders." July 9, 2009 Order at 12.

As the result of another discovery ruling in this case (which ordered Life Investors to produce all non-privileged documents contained in Connie Whitlock's "green folder"), Plaintiff recently received correspondence between Whitlock and the insurance departments of several states which had not previously been produced.*fn1 Plaintiff contends that these documents were clearly within the scope of the Court's July 9 Order and should have been produced. Defendant contends that it has complied with the Court's July 9 Order.

Legal Analysis

It is undisputed that Defendant did not produce all of its correspondence with third party state insurance regulators upon receipt of the July 9 Order, but instead, withheld certain documents. Defendant has provided two explanations for this conduct. Initially, Life Investors explained that it had produced "general communications with insurance departments," but withheld the documents from the "green folder" because they involved inquiries made about specific policyholders. Defendant argued that such documents were "tantamount to communications with individual insureds" and thus, were not within the scope of the July 9 Order. See Document No. 306 at 1 n.2. In its opposition to the instant motion, Life Investors has embellished its argument by asserting that the documents constitute "correspondence with policyholders through other State's [sic] insurance departments." Response at 3. In Life Investor's view, "[t]he fact the correspondence was directed to policyholders through a third party intermediary, such as another State's Department of Insurance . . . is of no consequence." Id. In sum, Defendant unilaterally withheld documents sent to and from state insurance regulators on the theory that such documents, in actuality, constituted correspondence with its own policyholders.

Defendant's decision to limit its document production in this manner was in clear and blatant disregard of not only the spirit but also the plain text of the July 9 Order. The July 9 Order granted Plaintiff's motion to compel responses to Request No. 19 and required Life Investors to produce all correspondence with state regulators from and after 2004 that related to "actual charges." Life Investors was not given permission to withhold documents that were, in its own judgment, allegedly "tantamount to correspondence with policyholders." Indeed, Defendant never argued for such a limitation in its opposition to the motion to compel. The only limitation in the July 9 Order was the clarification, in direct response to the point raised in Defendant's opposition, that Life Investors need not produce documents sent directly to or from individual policyholders. Defendant's excuse for failing to produce "correspondence directed to policyholders through a third party intermediary" is wholly contrary to the July 9 Order and Defendant's legal position is entirely without merit.*fn2

Defendant's decision to withhold such documents from its production was systematic and intentional, rather than inadvertent. Defendant never notified Plaintiff or the Court that it was withholding certain documents based on its purported interpretation of the July 9 Order. Indeed, Defendant belittles as "absurd" Plaintiff's suggestion that it should have sought clarification prior to implementing its interpretation of the July 9 Order. This reprehensible conduct would likely have never come to light had it not been for the court-ordered production of the entire "green folder." It certainly appears that Defendant engaged in a knowing and calculated decision to withhold these documents, with full knowledge of the potential consequences.

Defendant shall produce all documents received from or provided to third parties, such as state insurance regulators and trade associations, regarding the meaning of "actual charges, created in 2004 and later, regardless of whether a policyholder is referenced therein, on or before December 11, 2009. Further, on or before December 11, 2009, Defendant shall notify Plaintiff of any other "interpretations" or "limitations" by which Defendant withheld any documents that otherwise might reasonably fall within the scope the July 9 Order.

Accordingly, PLAINTIFF'S MOTION TO ENFORCE COMPLIANCE WITH COURT ORDER (Document No. 313) is GRANTED ...


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