depositions of insurance claims handlers or representatives in...

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Presenting a live 90-minute webinar with interactive Q&A

Depositions of Insurance Claims Handlers

or Representatives in Coverage and

Bad Faith Litigation Deposition Strategies From Perspectives of Both Insurers and Policyholders

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

THURSDAY, APRIL 20, 2017

Susan Page White, Partner, Manatt Phelps & Phillips, Los Angeles

Christopher Weiss, Esq., Goldberg Segalla, Newark, N.J.

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Coverage and Bad Faith Litigation: Depositions of Insurance Claims Handlers or Representatives Strafford Webinar

Susan Page White

[email protected]

April 20, 2017

6

Policyholder Perspective – Deposition of Claims Handler – Overview

Relevance to Coverage Dispute

– Does case present only issues of law or are issues of fact in dispute?

– Are there allegations of bad faith?

Documents to review prior to deposition

Scope of testimony/knowledge

– Policy documents

– Claims file

– How and when the claim was investigated

– Claims handling manuals and procedures

Strafford 2017 | Manatt, Phelps & Phillips, LLP

7

Policyholder Perspective – Deposition of Claims Handler – Is it Relevant or Necessary

To Depose or Not Depose – That is the QUESTION

– Case alleging breach of contract or declaratory relief re duty to defend

Jurisdiction – what is the standard required to prove duty to defend?

Are there allegations of ambiguity?

– Case alleging breach of contract or declaratory relief re duty to indemnify

– Case alleging breach of covenant of good faith and fair dealing (i.e., bad faith)

Demonstrating that insurer’s withholding of benefits was unreasonable

Claims handling – overall

Investigation – timing, thoroughness, what was considered

Punitive damage evidence – demonstrating conduct also was malicious, oppressive or

fraudulent


8

Policyholder Perspective – Deposition of Claims Handler – Preparation – Documents

Preparation – Documents to Obtain/Review in Advance

– Policy documents (including prior versions of policy)

Relevant to policy interpretation and drafting history issues

– Claims file – relating to insurer’s adjustment of the claim

Details the investigation performed and by whom (don’t forget electronic documents)

Details what decisions were made and by whom

Demonstrates the bases for the coverage decisions made

Provides a chronology of insurer’s handling of claim


9

Policyholder Perspective – Deposition of Claims Handler – Preparation – Documents (cont.)

Underwriting file

– Insurer’s activities in connection with issuing the policy – what insurer knew at time

issued policy

– What was disclosed to insurer in advance of issuance of policy

– Communications with insured and other parties re policy interpretation and

other issues

Insurer’s internal policies, procedures, manuals and guidelines regarding

policy interpretation

– Did handling of this claim comply with insurer’s own guidelines

– Whether conduct toward insured is part of a pattern or practice of similar behavior to

other insureds

Insurer’s marketing/advertising documents

– Assists with themes for coverage litigation of broken promises


10

Policyholder Perspective – Deposition of Claims Handler – Notice of Deposition

Whether want to conduct deposition of the adjuster in his/her individual

capacity and/or person most knowledgeable (i.e., FRCP 30(b)(6))

Advantages of PMK deposition (Corporate Designee)

– Deponent speaks for/binds the insurer

– Preparation required to be the PMK as to the particular categories – testimony is not

limited to adjuster’s personal knowledge

PMK Deposition Notice

– Importance of including all categories to which insured seeks discovery

– Insurer may be required to designate more than one person to specific on the various

categories


11

Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony

Educational and Employment Background

– Prior employment in insurance related field

– Potential prior involvement with insured

– Memberships and degrees

Insurer’s Claims Procedures

– Training at current job/prior insurance-related job at handling

the types of claim at issue

– Claims Files/Manuals

What is used

How often updated

Provided to each adjuster or is it in a central location


12

Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony (cont.)

Claim Handler’s Practice and Procedure followed in adjusting any claim

– Ascertain what claims handler does with any claim from start to finish

– Can compare as to how he/she handled the claim in dispute

– Procedures and policies insurer used during relevant time period concerning the

handling or processing of claims under relevant type of insurance policy

Organizational structure of the claims department responsible for

handling claims under relevant type of insurance policy during relevant

time period

– Identify supervisors and subordinates

– Chain of command in connection with coverage denial


13


Claims File

– Ascertain completeness

– Determine what was done, why, when and by whom

– Confirmation that claims file contains a written record of every significant event

involving the claim, investigation and its adjustment

– Find out who has access to review and input information into claims file

– Identify adjuster’s own supervisors and their involvement with the claim, including

reporting chain and settlement authority

– Electronic files – go through to understand codes, abbreviations, etc.


14


Claims Handling and Investigation

– Identify all communications regarding the claim

With underwriters and their supervisors

Other claims handlers and supervisors (was there any dispute as to coverage position taken)

With broker

– Identify all communications with the insured regarding the claim

Prior to claim

After claim reported

– How investigation was conducted

What information was requested

When and how was information considered

Factual information considered or rejected and why

Rationale for coverage decision


15


Claims Manuals and Procedures

– Standards in place by insurer to ensure prompt and thorough investigation

– Lack of manuals or procedures

– Test claims handler’s familiarity with relevant policies and procedures

– Whether claims handler followed insurer’s own policies and procedures

– Go through manuals – point out sections relevant to claim in dispute

– How often manuals are updated and disseminated

Knowledge of Insurance Codes, Regulations and Standards

– Can claims handler identify relevant ones and explain

– What did claims handler do to figure out the proper law to be applied

– Did claims handler consult with the particular regulations/statutes for claims handling

as to the appropriate jurisdiction


16


Marketing/Advertising Materials

– Information on Website – touting experience and expertise

– Advertisements

“You’re In Good Hands” – Allstate Life Insurance Company

“Like a good neighbor, State Farm is there.” – State Farm Insurance Company

“Peace of mind.” – Chubb

“Let Prudential be your rock.” – Prudential Financial

– Internet information

Westlaw/Lexis

PACER

Prior inconsistent positions in case law


17


Insurance Policy

– Understanding of insurance policy at issue

– Experience handling claims involving that specific policy form

– Other denials of coverage based upon a particular provision or exclusion

– Claims handler’s own interpretation of relevant policy provision(s)

Especially true if ambiguity is an issue

How courts have interpreted provision

Whether alternative interpretation is reasonable

– Insurer’s pleadings and discovery responses

Understanding of factual bases for alleged defenses


18


Claims handler’s own opinion on how claim was investigated/adjusted

– Opinion as to how claim was adjusted

– Agree with decisions

– In reviewing files, see anything insurer did that it shouldn’t have done? Not do

something insurer should have done?

– Whether case exemplifies highest level of claim service in the industry?

– Whether insurer met its obligations to its insured without delay?

– Consider duty of good faith when adjusting claim?

Evaluation of claims handler’s adjustment of claim by supervisor

– Personnel file

– Criticized or critiqued on how handle this claim

– Any bonus or reward for how handled this claim


19


Reserves

– Amount of reserve set by insurer as to claim

– When set

– Whether amount changed at any time. When. Up or down?

Reinsurance

– Whether insurer obtained reinsurance for policy

– Communications with reinsurer as to the claim and coverage issues


20

Policyholder Perspective – Deposition of Claims Handler – Videotape

Videotape Deposition

– Disadvantages

Cost

Speed

If claims handler presents well

– Advantages

See claims handler’s demeanor, facial expressions, hear their tone of voice

Is claims handler hostile or defensive?

Is claims handler evasive?

Can assist in managing an obstructive opposing counsel

If witness would be unavailable at trial – beyond subpoena power or due to physical disability

or illness


21 Bio


Susan Page White

Partner,

Litigation Recovery &

Insurance

– Litigation partner in the firm’s Los Angeles office

– Over 25 years of experience representing client insured

in complex insurance coverage matters, including bad

faith

– Provides advice to senior management and executives

on how to mitigate risks and maximize insurance

protections and recoveries with respect to policy

procurement, negotiations, reviews, and renewals

22 Who Is Manatt?

At-a-Glance

Over 400 attorneys

and consultants

Industry-focused:

– Advertising & Media

– Energy, Environment &

Natural Resources

– Entertainment

– Financial Services

– Government Affairs

– Healthcare

– Hospitality

– Insurance

– Real Estate

– Media and Entertainment

– Not-for-Profit

= Manatt Locations

Sacramento

San Francisco

Palo Alto

Los Angeles Orange County

New York

Washington D.C.

Albany

Key Values

Commitment to public service

Entrepreneurial

Relationship-driven approach


© 2015 Goldberg Segalla LLP

www.GoldbergSegalla.com

NEW YORK | ILLINOIS | MISSOURI | NORTH CAROLINA

PENNSYLVANIA | NEW JERSEY | CONNECTICUT | UNITED KINGDOM

STRAFFORD WEBINAR

DEPOSITIONS OF INSURANCE CLAIMS HANDLERS AND REPRESENTATIVES:

GENERAL PRACTICES AND EVIDENTIARY PROTECTIONS

Christopher R. Weiss

Goldberg Segalla LLP

[email protected]


GENERAL PRACTICES: AGENDA

• How can the deposition of the claims handler or representative impact the case?

• What should insurer’s counsel do in advance of the claims handler or representative’s deposition?

• How can insurer’s counsel properly prepare the claims handler or representative for their deposition?

(c) Pixabay

24


THE RELEVANCY AND SCOPE OF THE DEPOSITION

• Claims At Issue In The Coverage Action

• Duty to Defend/Duty to Indemnify

• Breach of contract for failure to pay benefits

• Extra-contractual claims (e.g., bad faith, punitive damages)

• Whether witness appears in individual capacity or as corporate representative

• The role of the witness testimony in the case

(c) Pixabay

25


BIFURCATION OF THE BAD FAITH CLAIM • Bifurcation – separating underlying claim for

coverage/benefits from the extra-contractual (i.e., bad faith) claim

• Most states allow bifurcation (e.g., AZ, DE, NJ, TX, etc.)

• Staying bad faith discovery or bifurcating only for trial

• Insurers typically prefer bifurcation for discovery and trial

Limits disclosure

Reduces litigation expenses

Protects privileged information

26


INDIVIDUAL CAPACITY OR CORPORATE DESIGNEE

• Individual capacity

• FRCP 30(b)(6) Notice – corporate designee

– Advantage • Allows insurer to select the deponent

– Concerns • Testimony may bind the insurer

• Designated person may not be the “most knowledgeable”

– May need to select multiple corporate designees to address different areas in the notice

27


IMPACT OF TESTIMONY: THE “BUILDING BLOCKS”

• Know and understand before meeting the claims handler to prepare for the deposition:

– The defenses to the underlying and/or extra-contractual claims

– The “building blocks” that are the foundation of those defenses

– What “building blocks” involve the testimony of the claims handler or representative

• Usually some aspect of claim investigation or basis for pre-suit coverage decision

(c) Pixabay

28


IDENTIFYING THE RELEVANT DOCUMENTS

• Determine which documents will likely be addressed during the deposition

– Claim notes

– Coverage position letters

– Policy provisions

– Other pertinent portions of claim file produced in discovery

– Written discovery responses

• Provide documents to claims handler in advance of meeting to prepare for deposition

29


PREPARING THE CLAIMS HANDLER

• Explain their “building blocks”

• Discuss the relevant documents

• Review the timeline of handling the claim – use claim notes as a guide

• Go through their background – licenses, certifications, employment history, prior claims

• Discuss knowledge of and compliance with internal guidelines or insurance codes and regulations (if applicable)

30


PREPARING THE CLAIMS HANDLER

• Advise claims handler of potential “pitfalls” during the deposition:

– Over-explaining and providing more information than asked

– Interpreting provisions of the policy

– Responding to hypothetical claim scenarios

– Conceding “building blocks”

– Providing information that is privileged or protected from disclosure (e.g., reserves or reinsurance)

(c) Pixabay

31


THE VIDEO DEPOSITION

• Ensure opposing counsel gave proper notice

• Presentation of the claims handler

– Be polite and professional – no arguing or crossed arms

– Dress the part

32


EVIDENTIARY PROTECTIONS: AGENDA

• Why do insurers want to protect their claim files from disclosure to insureds and claimants?

• What protections are available to insurers to avoid disclosure of claim file materials?

• What are courts doing to erode those evidentiary protections?

• What can insurer’s counsel do to avoid disclosure by the claims handler of critical, protectable information?

(c) Pixabay

33


IMPORTANCE OF THE CLAIM FILE

34


EVIDENTIARY PROTECTIONS: THE ATTORNEY-CLIENT PRIVILEGE

(c) Pixabay

35


ATTORNEY-CLIENT PRIVILEGE: A REFRESHER

• Applies to communications only about legal advice

• Continuous duration

• State law controls

(c) Commons.wikimedia.org

36


EVIDENTIARY PROTECTIONS: WORK PRODUCT PROTECTION

• Rule 26(b)(3)(A) Federal Rules of Civil Procedure:

“Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative ….”

KEY ISSUE:

In anticipation of litigation


37


POTENTIAL ROLES OF OUTSIDE COUNSEL

Counsel is retained or consulted to: – Assist in the investigation

– Advise as to investigation

– Monitor investigation

– Supervise the investigation

– Perform adjusting functions

– Analyze liability, damages or coverage

– Communicate with insured or claimant

38


A BREACH IN THE WALLS OF THE FORT?


39


CEDELL v. FARMERS INS. CO. OF WASHINGTON, 295 P.3d 239 (Wash. 2013)

• First party bad faith action vs. insured’s HO insurer

• Plaintiff alleged bad faith for insurer’s unreasonable delay in providing its coverage position

• Presumption that the attorney-client privilege does not apply to claim files in first party bad faith actions

--Burden on the insurer to show the communications were privileged

• Work product and attorney-client privileges do not apply to insurer counsel involved in investigating or processing a claim

– Taking sworn statements

– Corresponding with the insured

– Negotiating settlement of the claim

• Privilege applies only to counsel’s advice to potential liability such as whether claim is covered under the law

40


THE CEDELL AFTERMATH • Extended to third-party bad faith claims in Washington and

adopted by federal courts in Idaho and Louisiana

• Prior decisions eroding the attorney-client privilege? Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254 (Del. 1995)

State Farm Mut. Auto. Ins. Co. v. Lee, 13 P.3d 1169 (Ariz. 2000)

Boone v. Vanliner Ins. Co., 744 N.E.2d 154 (Ohio 2001)

• Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. TransCanada Energy USA, Inc., 119 A.D.3d 492 (N.Y. App. Div. 1st Dept. 2014)

• Work Product Erosion Florida: Allstate Indem. Co. v. Ruiz, 899 So. 2d 1121 (Fla. 2005)

Ohio: Unklesbay v. Fenwick, 855 N.E.2d 516 (Ohio Ct. App. 2006)

41


DEPOSITION STRATEGIES TO PROTECT THE CLAIM FILE

42