Every time an insurance company is sued for breach of the insurance contract, it receives a Request for Production for its claims file. In Florida, however, the claims file is not discoverable in a first party breach of contract lawsuit. But how can an insured prove a case without the claims file? And how can the insurer defend a lawsuit without producing the claims file?
The answer is that Florida courts have ruled that a claims file is not relevant in such matters. Also, under Florida law, the claims file is protected by the work-product privilege. These principles of Florida law were most recently reaffirmed in the Fifth District Court of Appeals case, State Farm Florida Insurance Co. v. Marascuillo, Case No. 5D13-4218 (July 3, 2014).
It is axiomatic under Florida law that all discovery must be relevant and a party is not “carte blanche” entitled to irrelevant discovery. Allstate Insurance Co. v. Langston, 655 So.2d 91 (Fla. 1995); Brooks v. Owens, 97 So.2d 693 (Fla. 1957).
Rule 90.401 of the Florida Evidence Code defines relevant evidence as “evidence tending to prove or disprove a material fact.” With regard to the claims file in a breach of contract case, the Florida practitioner should ask: “How does the claim investigation prove or disprove whether on the date of the alleged loss there was a covered claim?”
In Langston, although the plaintiff did not allege bad faith or unfair claims handling practices, the plaintiff sought discovery related to the insurer’s internal procedures and handling of the claim. The Supreme Court noted the information requested was irrelevant and quashed the District Court’s Order “to the extent that it permits discovery even when it has been affirmatively established that such discovery is neither relevant nor will lead to the discovery of relevant information.”
In this respect, Florida Courts have consistently held that information relating to an insurer’s handling of a claim is not subject to discovery in an action seeking a determination of insurance policy benefits. The reason is such information is irrelevant to the question of whether the policy obligates the insurance company to provide the requested coverage.
Nationwide v. Demmo
In Nationwide Insurance Co. of Florida v. Demmo, 57 So. 3d 982 (Fla. 2d DCA 2011), the District Court granted Nationwide’s petition for writ of certiorari and quashed the trial court’s discovery order in a case involving damages to property allegedly caused by sinkhole activity. The trial judge ordered the production of claims file materials including claims notes, activity logs, property loss notice information and property loss notice forms. The appellate court stated the “trial court focused on the question of what is and what is not work product with regard to the documents sought.” But that was not the determinative issue. Rather, the issue turns to what type of action Demmo had brought. Here she was not pursuing a bad faith claim, but rather seeking relief for breach of contract. “A trial court departs from the essential requirements of the law in compelling disclosure of the contents of an insurer’s claim file when the issue of coverage is in dispute and has not been resolved.” Seminole Cas. Ins. Co. v. Mastrominas, 6 So.3d 1256,1258(Fla. 2d DCA 2009) (emphasis added). “Further, requiring the disclosure of claim file materials during the litigation of coverage issues would result in irreparable harm that cannot be adequately addressed on appeal.”
In Marascuillo, Florida’s Fifth District Court of Appeal extended the foregoing Florida rule of law to claims files from previous claims. As the court pointed out:
“[M]ost courts addressing the issue have held (either expressly or impliedly) that the work product doctrine protects documents created in anticipation of terminated litigation as well as anticipated litigation that never materializes.” See generally Annotation, Work Product Privilege as Applying to Material Prepared for Terminated Litigation or for Claim Which Did Not Result in Litigation, 27 A.L.R. 4th 568 (2014); Russell J. Davis, Annotation, Attorney’s Work Product Privilege, under Rule 26(b)(3) of the Federal Rules of Civil Procedure, as Applicable to Documents Prepared in Anticipation of Terminated Litigation, 41 A.L.R. Fed. 123 (2014).
This is the rule explicitly adopted in Florida. See Ruhland v. Gibeault, 495 So. 2d 1243, 1244 (Fla. 5th DCA 1986) (holding that the work product privilege does not expire when a case is closed); Alachua Gen. Hosp., Inc. v. Zimmer U.S.A., Inc., 403 So. 2d 1087 (Fla. 1st DCA 1981) (holding that the work product privilege extends beyond the anticipated litigation and noting that “the weight of modern authority clearly provides that work product retains its qualified immunity after the original litigation terminates, regardless of whether or not the subsequent litigation is related”).
We still view this as the correct rule, and also believe this rule to be implicit in the Florida Supreme Court’s holding in Ruiz.
In other words, there would have been no reason for the Supreme Court to carve out an exception calling for the production of a coverage claim file as part of discovery in a bad faith action, but only upon conclusion of the coverage litigation, if the work product privilege expired at the conclusion of the coverage litigation anyway.
Rather, Ruiz can be read as essentially concluding that the good faith exception (to the work product privilege) can always be met in a bad faith action because the coverage claim file “presents virtually the only source of direct evidence with regard to the essential issue of the insurance company’s handling of the insured’s claim” such that its production will always be “necessary to fairly evaluate the allegations of bad faith-information” and “to advance [the bad faith] action. …” Ruiz, 899 So. 2d
While experts may opine as to whether sinkhole activity has caused damage to a structure; wind speeds were strong enough to damage a roof; or if a fire was intentionally set; what the claim adjuster did or when he or she did it is not going to provide answers. Whether it is the vacancy provision in a vandalism claim, or the leakage, seepage exclusion in a water loss claim, the subject insurance policy and fact witnesses will dictate whether the policy provides coverage for a claim and not the adjuster’s interpretation of the policy.
So remember, the next time counsel for the insured serves you with a request for the claims file in a first party breach of contract case, you may confidently say, “Nay, nay!”
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