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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
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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
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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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony (cont.)
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.
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony (cont.)
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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony (cont.)
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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony (cont.)
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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony (cont.)
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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony (cont.)
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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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Policyholder Perspective – Deposition of Claims Handler – Scope of Testimony (cont.)
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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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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
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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21 Bio
Strafford 2017 | Manatt, Phelps & Phillips, LLP
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
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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
Strafford 2016 | Manatt, Phelps & Phillips, LLP
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© 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]
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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)
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
IMPORTANCE OF THE CLAIM FILE
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© 2015 Goldberg Segalla LLP
EVIDENTIARY PROTECTIONS: THE ATTORNEY-CLIENT PRIVILEGE
(c) Pixabay
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© 2015 Goldberg Segalla LLP
ATTORNEY-CLIENT PRIVILEGE: A REFRESHER
• Applies to communications only about legal advice
• Continuous duration
• State law controls
(c) Commons.wikimedia.org
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© 2015 Goldberg Segalla LLP
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
(c) Commons.wikimedia.org
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
A BREACH IN THE WALLS OF THE FORT?
(c) Commons.wikimedia.org
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© 2015 Goldberg Segalla LLP
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
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© 2015 Goldberg Segalla LLP
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)
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© 2015 Goldberg Segalla LLP
DEPOSITION STRATEGIES TO PROTECT THE CLAIM FILE
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© 2015 Goldberg Segalla LLP
www.GoldbergSegalla.com
NEW YORK | ILLINOIS | MISSOURI | NORTH CAROLINA
PENNSYLVANIA | NEW JERSEY | CONNECTICUT | UNITED KINGDOM
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