Opinion ID: 1309235
Heading Depth: 1
Heading Rank: 6

Heading: Reasoning Used to Overcome the Work Product Doctrine

Text: 1. The disputed materials were not prepared in anticipation of litigation The first step in any work product analysis is to ask, are the documents or tangible things work product? Work product consists of materials produced in anticipation of litigation. There are numerous approaches used by courts to determine whether documents in insurance claims files are created in anticipation of litigation, generally summarized down to three approaches: never work product, always work product, or case-by-case analysis focused on the primary purpose behind the creation of the documents or tangible things. Thomas Organ v. Jadranska Slobodna Plovidba, 54 F.R.D. 367 (N.D.Ill.1972) represents one extreme, holding that documents produced in the ordinary course of business are discoverable, such as the reports on adjusting claims that insurance companies produce on a daily basis. Hence, unless the documents are created by an attorney or at an attorney's direction, the documents in the insurance company claim file are never protected by work product. See also, Atlanta Coca-Cola Bottling Co. v. Transamerica Ins. Co., 61 F.R.D. 115, 118 (N.D.Ga.1972) (court held that the evaluation of claims of [an insurance company's] policyholders is the regular, ordinary and principal business of defendant insurance company. Most of such claims result in payment by the defendant; it can hardly be said that the evaluation of a routine claim from a policyholder is undertaken in anticipation of litigation....) Thomas Organ has been criticized because Rule 26(b)(3) specifically allows reports generated by representatives to be protected, if prepared in anticipation of litigation. The backlash case is Almaguer v. Chicago, Rock Island & Pacific R.R. Co., 55 F.R.D. 147 (D.Neb.1972), where the court held that statements taken by a claim agent immediately after an accident are taken in anticipation of litigation.... Hence, the court held that everything an insurance company does is protected by the work product doctrine. Most courts use a case-by-case method, looking to when it appeared to the creator of the material that litigation was imminent. While litigation often results from an insurance company's denial of a claim, it cannot be said that any document prepared by an insurance company after such a claim has arisen is prepared in anticipation of litigation.... That is not to suggest that all documents prepared by an insurance company in investigating a claim, are, by definition, compiled in the ordinary course of business and, thus, automatically subject to discovery. APL Corp. v. Aetna Cas. & Surety Co., 91 F.R.D. 10, 17-18 (D.Md.1980). The court in Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655 (S.D.Ind.1991) set out a solid two-part test for determining whether documents are work product: reasonable anticipation, and causation. First, a prudent party anticipates litigation, but there must be more than a remote prospect, inchoate possibility, or likely chance of litigation. There must be a substantial and specific threat of litigation before a party's anticipation of litigation will be considered a reasonable and justifiable motivating force behind creating a document. 138 F.R.D. at 659-60. Second, the disputed document must have been produced because of the prospect of litigation and for no other purpose. In anticipation must not be read broadly; documents that would have been produced in the regular course of business are outside the scope of work product. Id. at 660-61. Also, the work product doctrine does not depend solely on the fact that a document was produced after a certain point in time (such as the date the insurance company learned the plaintiff hired an attorney); routine reports are still not work product. See also, Stout v. Illinois Farmers Ins. Co., 150 F.R.D. 594 (S.D.Ind.1993) (holding that a document is work product only if its primary purpose for creation was for litigation). Insurance companies routinely assert that investigative reports are prepared in anticipation of litigation. The fact that litigation ensues does not make a document in the claims file work product prepared in anticipation of litigation. As one court stated in compelling the production of a claims file over a work product objection, the investigation of potential claims is an integral part of the insurer's business. Investigations are made regularly and in the ordinary course of business. They are necessary if the companies are to make intelligent dispositions of claims. They are necessary also if a carrier is to perform adequately the duties and obligations towards its insureds which are imposed upon it by law. Henry Enterprises, Inc. v. Smith, 225 Kan. 615, 592 P.2d 915, 921 (1979). Incidentally, merely because documents are created by a lawyer does not make the documents protected by the work product doctrine. In Western Nat. Bank of Denver v. Employers Ins. of Wausau, 109 F.R.D. 55 (D.Colo.1985), the insurance company hired a law firm to conduct a factual investigation of misconduct by the insured-bank's employees. The trial court held that the law firm did not generate work product, but rather generated ordinary insurance investigative claim files prepared in the course of business. Hence, the plaintiff-bank was entitled to discover the law firm's files in a bad faith claim against the insurance company. See also, Mission National Ins. Co. v. Lilly, 112 F.R.D. 160 (D.Minn.1986) (insurance company hired law firm as matter of course to direct investigation of any claim with loss exceeding $25,000.00; to the extent the law firm acted as claims adjusters, their work product would be treated as created in the ordinary business of the insurance company, outside the attorney-client and work product privileges). Some variation of this middle approach is followed by most courts, and is more defensible than the other two extremes. 2. Substantial need for the work product and an inability without undue hardship to obtain the substantial equivalent of the materials by other means. As the majority opinion finds, work product is discoverable upon a showing of both a substantial need and an inability to secure the substantial equivalent of the materials by alternate means without undue hardship. A minority of courts hold that the materials in an insurance company claim file are protected by the work product doctrine, and cannot be discovered. See Ex parte Bozeman, 420 So.2d 89 (Ala.1982) (plaintiff did not show substantial need by asserting the claims file documents were needed for impeachment of insurance adjuster); Carver v. Allstate Ins. Co., 94 F.R.D. 131 (S.D.Ga.1982) (plaintiff did not show undue hardship in obtaining the substantial equivalent of the claims file, because the plaintiff could depose insurance company employees about their actions and opinions); Ring v. Commercial Union Ins. Co., 159 F.R.D. 653 (M.D.N.C.1995) (Rule 11 requires a plaintiff to have a basis in fact for making an allegation; therefore, plaintiff should not need claims file to make a bad faith allegation; besides, adjusters could be deposed to learn the facts, so no need or undue burden shown for work product); Dixie Mill Supply Co., Inc. v. Continental Casualty Co., 168 F.R.D. 554 (E.D.La.1996) (follows Ring ). The majority view held by courts generally follows Brown v. Superior Court In and For Maricopa County, 137 Ariz. 327, 670 P.2d 725 (1983), a first party bad faith case arising from the insurance company's refusal to pay business interruption benefits after the plaintiff's business burned. The court held that the question in a bad faith claim is whether the insurance carrier acted reasonably, and ... the substantial equivalent of [the claims file] material cannot be obtained through other means of discovery. The claims file diary is not only likely to lead to evidence, but to be very important evidence on the issue of whether [the insurance company] acted reasonably. The Court held that the strategy, theories, mental impressions and opinions of Continental's agents ... are directly at issue. Therefore, any work product material pertaining to the opinions of the claims agents was discoverable. Similarly, in Reavis v. Metropolitan Property & Liability Ins. Co., 117 F.R.D. 160 (S.D.Cal.1987), the insurance company objected to production of the claims file alleging certain materials were work product. The court stated that the tort of bad faith goes to the reasonableness of Metropolitan's handling of Reavis' claim. It is apparent that the claims files contain a detailed history of how Metropolitan processed and considered Reavis' claim; under these circumstances, the documents are certainly relevant to the issues raised.... 117 F.R.D. at 164. The court did hold that opinion or mental work product is afforded greater protection, but such protection should not be absolute. The adjusters for the insurance company will probably testify at trial concerning the steps they took and the conclusions and opinions they had regarding Reavis' claim. In order to effectively cross-examine these witnesses, Reavis will need to know upon what facts the conclusions were based. The documents reflected in the claims file will give Reavis this information. Id. at 164-65. See also, Hartman v. Banks, 164 F.R.D. 167 (E.D.Pa.1995) (third-party claim; insurance company objected to producing file on grounds of work product; when compelled, in a display of considerable chutzpah company produced documents with entire contents redacted; court ruled unredacted documents should be produced, stating The [claims] file kept by Nationwide may well contain crucial evidence on the central issues in the casethe state of mind and behavior of Nationwide officials.). See also, Thomas E. Workman, Plaintiff's Right to the Claim File, Other Claim Files and Related Information: The Ticket to the Gold Mine, 24 Tort & Ins. L.J. 137 (1988); Note, Work Product Discovery: A Multifactor Approach to the Anticipation of Litigation Requirement in Federal Rule of Civil Procedure 26(b)(3), 66 Iowa L.Rev. 1277 (1981); Woodward, Insurance Companies and Work Product Immunity Under Indiana Trial Rule 26(b)(3): Indiana Adopts a Fact-Sensitive Approach, 19 Ind. L.Rev. 139 (1986); Mary Beth Brookshire Young, The Work Product Doctrine: Functional Considerations and the Question of the Insurer's Claim File, 64 U.Chi.L.Rev. 1425 (1997); Jeff A. Anderson, et al., The Work Product Doctrine, 68 Cornell L.Rev. 760 (1983); Kevin M. LaCroix, The Work Product Doctrine and Claim File Discovery: The Insurer's Perspective, Inside Litigation 24 (March 1992); Randy S. Parlee, Accessing Insurance Company Claim Files, 65 Wisconsin Lawyer 10 (September 1992). On remand, as to any work product contained in the Medical Assurance claim file, the circuit court should consider whether the plaintiff has shown a substantial need for information sought that is allegedly protected by the work-product privilege, and if so whether the plaintiff is unable without undue hardship to obtain the substantial equivalent of the information by other means. The plaintiff is attempting to show that Medical Assurance's decision to deny the plaintiff's request to settle within policy limits was unreasonable, and the record suggests that the documents in the Medical Assurance claim file are the only contemporaneous record of Medical Assurance's decision process. The necessity for the claim file documents therefore appears to be substantial. However, whether these documents could be obtained from another source without undue hardship is not clear from the record, and should be resolved by the circuit court. I otherwise respectfully concur with the majority's decision.