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Diana M. Consugar v. Nationwide Insurance Company of America

June 9, 2011


The opinion of the court was delivered by: Judge Munley


Before the court for resolution is a discovery dispute between the parties. Having been briefed, the matter is ripe for disposition.


This case arises out of an April 29, 2009 motor vehicle accident involving the plaintiff, Diana M. Consugar. Plaintiff suffered severe injuries from the accident. Defendant Nationwide Insurance Company of America ("Nationwide") insured plaintiff at the time of the accident. Plaintiff's policy included an underinsured motorist ("UIM") provision which provided for coverage of injuries sustained by plaintiff in an accident where the other driver's insurance policy did not provide sufficient reimbursement. The insurance policy carried by the other driver had a policy limit of $25,000. Plaintiff received this amount from the third-part insurer, and then sought additional coverage under the UIM provisions in her policy.

Plaintiff's policy had a UIM coverage limit of $300,000. Immediately after the accident occurred, Nationwide opened a UIM claim under plaintiff's policy. Plaintiff's attorney provided Nationwide with medical records and other information to help evaluate the claim. Nationwide did not make plaintiff an offer, and defendant's counsel advised plaintiff that the policy did not require Nationwide to arbitrate plaintiff's UIM claim and that she would have to take Nationwide to court to recover the amounts owed under the policy. Plaintiff then filed the instant lawsuit, alleging both that the policy required Nationwide to provide UIM coverage and that defendant's denial of UIM coverage was in bad faith.

After Nationwide removed the case to this court and answered the lawsuit, plaintiff propounded discovery requests. According to plaintiff, Nationwide refused to produce several of the documents she requested, including: the claims file related to her case; the underwriting file pertaining to her case and all documents related to the underwriting of claims from 2009 to the present; policy manuals, policy statements or other documents regarding the processing of insurance claims from 2007 to the present, as well as manuals and other educational materials used to train Nationwide personnel on claims processing; and information relating to loss reserves established in plaintiff's case. Plaintiff's counsel contacted the court about this dispute and, after a telephone conference, the court ordered the parties to brief the issue.

Legal Standard

This matter involves a discovery dispute. Defendant refuses to provide plaintiff with various materials requested in discovery, citing the attorney client privilege, relevance and other doctrines to justify these actions. Federal Rule of Civil Procedure 26(b)(1) governs discovery. Under this rule, "discovery is not limited to information which is admissible at trial but instead is allowed 'if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.'" Josephs v. Harris Corp., 677 F.2d 985, 991 (3d Cir. 1982) (quoting Fed. R. Civ. P. 26(b)(1)). A party refusing to provide discovery on grounds that requests were "'overly broad, burdensome, oppressive and irrelevant' . . . 'must show specifically how . . . each interrogatory is not relevant or how each question is overly broad, burdensome or oppressive.'" Id. (quoting Roesberg v. Johns-Manville Corp., 85 F.R.D. 292, 296-97 (E.D. Pa. 1980)). This is a diversity action arising under Pennsylvania law, and thus the court will apply Pennsylvania law in determining the applicability of the attorney-client privilege to the case. Montgomery County v. MicroVote Corp., 175 F.3d 296, 301 (3d Cir. 1999).


The court will address each of the areas of materials the plaintiff seeks in turn. Those areas are: (a) the claims file related to plaintiff's case; (b) information related to loss reserves, if any, established in connection with plaintiff's case; (c) the underwriting file pertaining to her case and all documents related to the underwriting of claims from 2009 to the present; and (d) policy manuals, policy statements, or other documents regarding the processing of insurance claims for the years 2007 to present and any changes therein, and the specific manuals, educational materials, and written instructions used for the training of Nationwide's agents, adjusters, and other personnel involved in the processing of plaintiff's claim.

A. The Claims File

The parties first dispute whether plaintiff should have access to the entire claims file created by Nationwide for the underlying UIM case. The defendant argues that certain documents within the claims file are subject to the attorney-client privilege and need not be produced. In response to plaintiff's discovery request, Nationwide produced the claims file and the electronic "activity logs" produced by agents in processing the claim. The defendant did not provide the entire file, however, as Nationwide contended that some of the documents contained in the file were protected by the attorney-client privilege. Nationwide instead redacted those documents and produced a privilege log, which described the nature of the documents redacted and the reasons why defendant claimed them to be privileged. Plaintiffs contend that the entire file should be produced and that the attorney-client privilege does not apply to any documents in the claims file.

The defendant's claims file is discoverable in a bad-faith case like this one, as information in that file on defendant's decision to deny the claim is relevant or could lead to potentially relevant information. See, e.g., Robertson v. Allstate Ins. Co., No. CIV. A. 98-4909, 1999 WL 179754 at *3 (E.D. Pa. March 10, 1999.) (finding plaintiff could discover claims file in bad-faith case, but applying the work-product doctrine to limit plaintiff's attempt to discover "the unredated UIM claim file and all documents associated with the file."); Marshall v. Nationwide Mut. Ins. Co., No. 93-cv-6998, 1994 WL 263776, at *1 (E.D. Pa. June 7, 1994) ("the court finds ample authority to support a ruling that the claims file or claims log should be disclosed in a bad faith action against the insurance carrier). Defendant does not appear to dispute that at least some portion of the file may be discovered in an action of this sort. Defendant turned over a portion of the file, but redacted some on the basis of attorney client privilege. Courts that have allowed discovery of claims files have, as the defendant suggests, limited such discovery on the basis of attorney-client privilege. See, e.g. Fidelity and Deposit Co. of Maryland v. McCulloch, 168 F.R.D. 516, 524 (E.D. Pa. 1996) (rejecting the notion that the work-product doctrine does not apply to claims files and concluding that "[i]f Defendants have lingering concerns that information is being wrongfully withheld on attorney-client or work product privilege grounds, they may always file an appropriate motion requesting an in camera review of particular documents."); Dombach v. Allstate Ins. Co., No. Civ. A 98-1652, 1998 WL 633655 at * 1 (E.D. Pa. August 27, 1998) (denying motion to provide entire case file in bad-faith claim because "I cannot find that [plaintiff] has overcome defendant's assertion of privilege" over documents in case file and bad-faith statute does not create an exception to privilege); Provident Life & Acc. Ins. Co. v. Nissenbaum, No. Civ. A. 97-5666, 1998 WL 800323, * 1 (E.D. Pa. November 17, 1998) ("defendants' mere claim of bad faith is not enough to shatter the privilege").

To the extent that plaintiff seeks defendant's entire claims file without any redactions for attorney-client privilege, the court will deny the request. Defendant has in this case asserted privilege over some documents in the case file and provided a privilege log to cover those redactions. While defendant may assert privilege over the case file plaintiff may, of course, challenge those assertions through an appropriate motion with the court. Plaintiff has not done so here, instead focusing on the entire file and arguing that no privilege exists to cover any of the material in the file. The court cannot make a decision on whether particular documents in the file are subject to privilege; such an assessment would require a motion that describes the particular documents at issue and an in ...

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