Source: https://insuranceclaimsbadfaith.typepad.com/insurance_claims_badfaith/discovery/
Timestamp: 2019-04-25 11:55:14+00:00

Document:
P.S. THIS SAME DAY, HERE IS ONE OF THE TRANSCRIPTS!
Here is a copy of the transcript of testimony by GPS Fusion founder Mr. Glenn Simpson behind closed doors to the Senate Judiciary Committee on August 22, 2017. It is apparently redacted and future posts will explore how much.
In the meantime, this transcript was unilaterally released so the American public could read the testimony for themselves, by Senator Dianne Feinstein, the Ranking Member on the Senate Judiciary Committee.
Be prepared if you print it: The transcript runs to 312 pages. You are there!
A CHRISTMAS STORY FROM PENNSYLVANIA.
This is a story that ends with two motions, a motion for reconsideration and an "unopposed emergency motion" to reseal some documents in a Court file. But nothing wonderful can come from this story unless we begin at the beginning.
... that Selective engaged in “bad faith, high risk, [and] brinkmanship negotiation strategy,” (ECF 1-1 at ¶ 41), when Selective continually refused to settle the underlying state court case within the total two-policy limits of $11 million, rejected its initial, well-respected trial attorney's advice, and tried the case to a jury verdict of $32 million.
Golon served a request to produce certain documents. Selective responded to the request by withholding thousands of pages under a claim of "mediation privilege." A close reading of the opinion reveals that at least some of the documents "derived from the pre-trial conciliation before Judge Lutty, the presiding trial judge in the underlying state court matter."
Golon filed a motion to compel.
Selective filed a motion for protective order addressing its claim, again, of mediation privilege.
The District Court granted and denied both of the competing discovery motions, in part. The Court advised the parties and their counsel that the Court had reviewed the "withheld and/or redacted documents" in camera, that the Court holds the mediation privilege in the highest esteem in essence, and still out of the thousand-plus pages the Court held "that the mediation privilege asserted by Selective was not applicable to almost all of the documents it had either withheld or redacted[.]"
The Court accordingly ordered that all of the documents be unsealed but three of them, which were the only three documents among the bunch that were "properly withheld and/or redacted[.]"
Selective's attorneys filed an "unopposed emergency motion" to reseal the documents which the Court had just ordered unsealed. In Selective's emergency motion, its attorneys argued "that Selective's attorney-client privilege and/or work product doctrine are being violated with this Court's ordered production."
The Court had ordered that Selective's production take place no later than Noon on December 11, 2017.
At five minutes after Noon on December 11, 2017, Selective's attorneys filed a motion for reconsideration of the Court's order.
That brings us closer to the climax of our Christmas story. "The Court will now DENY Selective's Motion for Reconsideration finding that there is no basis to grant such a Motion."
Under the federal standard governing motions for reconsideration, this one was simply not well taken in the eyes of the Court.
Repeating that the Court "considers the mediation privilege a very important privilege in jurisprudence," the Court wrote that the Pennsylvania mediation privilege simply does not apply to the documents "such as the reports and emails prepared and exchanged by and among Selective's insurance employees about Golon's (the insured's) underlying mediation[.]" The Court put the same thing another way, observing that "the content of the documents at issue do not fall within the definition of 'mediation communications' which Pennsylvania's mediation privilege protects."
Someone apparently thought that it was a good idea to tell the Judge that they thought that he, the Judge, did not review the documents in question.
The Court notes that it reviewed every document which was provided to the Court for its in camera inspection and found three documents which met the requirements established by Pennsylvania's mediation privilege statute, 42 P.A.C.S.A. § 5949. This Court held that none of the other documents met the criteria set forth in Pennsylvania's mediation privilege statute. Accordingly, just because the Court addressed these documents along with the all the others, and did not single them out as pre-trial conciliation documents as Selective would have preferred, is not a basis for reconsideration; and thus, the Court will deny the Motion for Reconsideration for this reason as well.
The Court was not done. There remained the matter of the unopposed emergency motion to reseal the documents previously ordered unsealed by the Court.
To begin with, the Court found that the emergency motion to reseal was "nothing more than a creatively styled Motion for Reconsideration." A motion for reconsideration by any other name would smell as sweet, apparently, for the emergency motion to reseal was also denied.
"Moreover," of all the documents ordered to be produced, "only seven documents" on Selective's privilege log were written with notations "that attorney-client privilege and/or work product doctrine apply."
So, in the end, for two reasons the emergency motion to reseal that Selective's attorneys filed on its behalf was denied: First, "any argument" as to attorney-client privilege or work product "were, and are, deemed waived."
Second, "based on the information and current record which has been provided to the Court, the Court finds that Selective failed to meet its burden of proving that it is entitled to redact and/or withhold documents" on the basis either of attorney-client privilege or work product.
Still, the Court was not finished with its labors with respect to these discovery issues. The Court's Order denying the motion for reconsideration and denying as moot the emergency motion, was entered during the work day on Thursday, December 14, 2017.
At 10:00 the following morning, or on Friday, December 15, 2017, the Court ordered "Selective to produce the documents" it was ordered to produce to Golon.
Dennis Wall is at work on a forthcoming book about Concealed Evidence and Secret Settlements. The Golon v. Selective decision discussed in this article also addressed arguments that the withheld documents should be resealed because the motion to reseal them was "unopposed." This aspect of the case will be discussed in a separate article on Insurance Claims and Issues tomorrow.
....APPROACH TO PRODUCTION REJECTED IN ILLINOIS.
Ninety thousand index cards were the subject of a defendant's concern in Illinois recently. It produced the index cards for the plaintiffs' attorneys to inspect despite the defendant's concern about trade secrets. Some or all of the 90,000 index cards contained customer information, apparently.
The plaintiffs' attorneys marked 5,077 of the index cards for production, in effect for copying, after they had seen them.
The defendant refused to copy 5,064 of the cards. Instead, the defendant refused on the basis of claimed relevance at that point as to all but 13 of the cards which the defendant had already produced for inspection by the plaintiffs' attorneys.
Salvator v. Air & Liquid Sys's Corp., --- N.E.3d ----, 2017 IL App (4th) 170173, 2017 WL 6015439, at p. *4, ¶¶ 24-25 (Ill. 4th DCA, December 5, 2017).
¶ 64 While it appears Cleaver-Brooks intended to preserve its right to review the tabbed index cards for relevance, the record shows Cleaver-Brooks failed to do so. Prior to production, Cleaver-Brooks did not obtain a ruling from the trial court or enter into an agreement with plaintiffs whereby it could review the index cards tabbed by plaintiffs for relevance. Instead, Cleaver-Brooks voluntarily produced the index cards without any reservation. By doing so, Cleaver-Brooks forfeited its relevance objection. See Gallagher v. Lenart, 226 Ill. 2d 208, 229, 874 N.E.2d 43, 56 (2007) (forfeiture is the failure to make a timely assertion of a known right whereas waiver is the intentional relinquishment of a known right). On this basis alone, the trial court's judgment may be sustained. See Elston v. Oglesby, 2014 IL App (4th) 130732, ¶ 12, 21 N.E.3d 57 (“[T]his court may affirm the trial court's judgment on any basis that is supported by the record.” (Internal quotation marks omitted.)).
For these reasons, the Illinois appellate court in pertinent part affirmed the Illinois trial court's order compelling this discovery in this case. Salvator v. Air & Liquid Sys's Corp., --- N.E.3d ----, 2017 IL App (4th) 170173, 2017 WL 6015439, at p. *10, ¶ 64 (Ill. 4th DCA, December 5, 2017).
The author is currently at work on a book about how concealed evidence and secret settlements change our lives. The Salvator decision is an example of how a so-called "confidentiality order" was not entered or requested, and the information was ordered open to the public.
WHEN PROPORTIONALITY MARRIED GOOD CAUSE.
It is not unusual for a plaintiff in an insurance bad faith case to request production of the adjuster's personnel file. The insurance company then objects. This was the case in Lombardo v. Government Emp's Ins. Co., No.: 3:16cv392/MCR/EMT, 2017 WL 3113410 (N.D. Fla. Feb. 23, 2017) (Timothy, Chief U.S.M.J.; third-party excess judgment case). What happened next is not usual. But it should be.
What happened next is the Magistrate Judge's approach to plaintiff's motion to compel. First, requesting the adjuster's entire personnel file was not proportional to the needs of the case at bar, the Magistrate Judge wrote. But that part of the adjuster's personnel file relative to "settlement and claims handling/adjustment are relevant to Lombardo's claim and proportional to the needs of this case[.}" The Magistrate Judge therefore recommended that that part of the adjuster's personnel file be produced.
Second, the Magistrate Judge did not allow the insurance company simply to cry 'Privileged!' to prevent any of even this limited discovery. "[I]f GEICO has a legitimate claim of privilege as to any document[,] its production should be accompanied by a properly prepared and detailed privilege log."
UMBRELLA PROTECTIVE ORDERS IN INSURANCE BAD FAITH CASES.
Umbrella protective orders are often proposed and entered in insurance bad faith cases. They forestall discovery in advance, and in the usual case they often act as a bar to disclosing information that might be damaging to the insurance company.
Umbrella protective orders are discussed at length by Dennis J. Wall, "Attorneys Decide, Judges Sign Off: Protecting and Sealing Concealed Evidence Including in Insurance Coverage and Bad Faith Cases," ©2017 Matthew Bender & Company, a member of LexisNexis, in New Appleman on Insurance / Critical Issues in Insurance Law, pp. 1-88 (Spring 2017).
Dennis Wall is at work on a book about how concealed evidence and secret settlements change our lives.
CLAIM DENIAL INFORMATION PRODUCED IN FIRST-PARTY BAD FAITH CASE.
Mr. Gowan asks for an order compelling Mid Century to provide documents responsive to requests for production numbers 34 through 37. These requests seek from Mid Century every document or legal opinion that it relied upon to deny Mr. Gowan's request for Mid Century to pay for 100 percent of his total knee replacement surgery, both at the time Mid Century initially denied that request, and now in order to defend Mr. Gowan's bad faith claim.
The court grants Mr. Gowan's motion to compel as to requests for production numbers 34 through 37. If the documents have already been provided, Mid Century shall identify by BATES stamp or other specific identifier which documents it relied upon then and now for the denial of Mr. Gowan's claim. Mid Century shall provide this information to Mr. Gowan within 14 days of the date of this order.
Gowan v. Mid Century Insurance Co., 309 F.R.D. 503, 515 (D.S.D. 2015).
REINSURANCE AS MUST-DISCLOSE INSURANCE. COMMUNICATIONS? NOT SO MUCH.
The lawsuit filed by First Horizon National Corp. against Houston Casualty Co. in the Western District of Tennessee is a case that just keeps on giving. Rulings, that is, by the Chief United States Magistrate Judge.
She was faced with numerous discovery disputes recently. Two of the disputes centered around reinsurance: (1) Are reinsurance agreements discoverable and (2) are communications with reinsurance companies about the case discoverable?
First, following precedent, the Court ruled that in a case against an insurance company which includes a claim for money damages, reinsurance agreements are "insurance agreements" which should be produced in the required initial discovery disclosures. First Horizon Nat'l Corp. v. Houston Cas. Co., No. 2:15-cv-2235-SHL-dkv, 2016 WL 58969580, at *12 (W. D. Tenn. October 5, 2016) (Vescovo, Chief U.S.M.J.).
Next, the Court held that in this case the defendant insurance companies' communications with reinsurance companies are not discoverable, for three stated reasons. The first reason is that in this case, the carriers submitted affidavits that "any responsive documents reflect exclusively 'proprietary or business decisions.'" First Horizon Nat'l Corp. v. Houston Cas. Co., No. 2:15-cv-2235-SHL-dkv, 2016 WL 58969580, at *13 (W. D. Tenn. October 5, 2016) (emphasis by the Court). Although the Court did not say so, this is the language a Court uses when it grants a protective order against discovery.
The second stated reason is very broad: "Reinsurance-related communications are also not relevant to a claim of bad faith."
The final stated reason is much more particular. And therefore potentially much more useful in resolving other discovery disputes.
In this case, the carriers argued "that the reinsurance is treaty insurance, under which the reinsurer agrees to accept an entire block of business from the insured." (Emphasis added.) In the eyes of the Court, this made the carriers' communications related to reinsurance "even less relevant" than usual.
More could be said than this, and undoubtedly more will be said in future disputes. The idea here is that since the reinsurance company agrees to accept a block of business which includes the underlying case, then communications about the underlying case are irrelevant because the purpose of making those communications is at most to update the reinsurer with the status of the business block it has assumed. The purpose of communications under treaty reinsurance is arguably unrelated to the merits of the underlying case, thus the holding in this dispute that the "reinsurance-related communications [were] even less relevant to the claims asserted by the Plaintiffs." First Horizon Nat'l Corp. v. Houston Cas. Co., No. 2:15-cv-2235-SHL-dkv, 2016 WL 58969580, at *13 (W. D. Tenn. October 5, 2016).
In the case of Quillen v. Allstate Insurance Co., No. 1:14cv15, 2015 WL 5474675 (W.D.N.C. September 17, 2015), a U.S. Magistrate Judge laid out some simple steps to require the opposing party to disclose its expert's report.
In Quillen, the plaintiffs timely disclosed their expert but not their expert's report. The defendant filed a motion for sanctions to strike the plaintiffs' amended complaint with prejudice, or alternatively to exclude the expert in question from testifying at trial.
The Magistrate Judge declined the invitation to sanction by dismissal with prejudice of the plaintiffs' amended complaint. He laid out the reasons.
First, the defendant effectively deprived the Court of the opportunity to impose a lesser sanction because the defendant which complained about the undisclosed expert report had not filed a motion to compel production of the report as a first step.
Second, before imposing sanctions, a Court should warn the offending parties in advance of the consequences of their failure to comply with the Pretrial Order before the sanction of dismissal with prejudice should be imposed. This warning was required in the eyes of the Court by letting the offending parties know that their noncompliance amounted to bad faith. Here, there was no such prior warning by the Court. But there was now.
The Magistrate Judge also imposed a prior warning requirement in this particular case on "the lesser sanction of excluding" the expert's testimony.
The Court denied the defendant's now-obviously-premature motion for sanctions but required the plaintiffs to produce a compliant expert report within two weeks from the date of decision. In this order, the plaintiffs received all the warning they could reasonably expect of the consequences of a future failure to comply.
Tide of Judicial Opinion Turning About Incomplete Privilege Logs?
The Rules of Procedure are so deferential to the laudatory purpose of protecting recognized privileges that a party may actually recall inadvertently-produced privileged materials and, in effect, pretend that they had not been produced. See Fed. R. Civ. P. 26(b)(5)(B). If a party may maintain its claim of privilege even after actually producing privileged information to its opponent, I am not going to find waiver simply because I find that the party did not provide quite enough information in a privilege log. That is particularly true where, as here, there is no indication that the party acted in bad faith.
Reprinted with the permission of Thomson Reuters and the author from the manuscript of the author's 2015 Supplement chapters, and in particular Section 8:6, in “Litigation and Prevention of Insurer Bad Faith, 3d” ©2015 by Thomson Reuters.

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