In Chavez v. Std. Ins. Co., 2020 U.S. Dist. LEXIS 203610 (N.D. Tex. Oct. 30, 2020), Judge David C. Godbey considered a variation on a common scenario that arises in first party cases. Typically, the insured/plaintiff wants an insurer’s claims handling manual to use against the insurer in proving claims under Texas Insurance Code Chapter 541 and the DTPA. However, as Judge Godbey explained, such manuals are not automatically discoverable. Also, insurers can significantly increase the chances that a court will protect such manuals from unrestricted discovery and use in litigation by providing certain affidavit evidence.
The plaintiff in Chavez was receiving long-term disability benefits from Standard Insurance Company (“Standard”). Standard terminated Chavez’s benefits after a medical examination. Litigation ensued. Chavez requested Standard’s claims handling manual in discovery. To avoid a discovery dispute, Standard produced the manual pursuant to an agreed protective order. Chavez subsequently sought to undo Standard’s designation of the manual as confidential trade secret under the protective order.
Read more ›
A recent decision from one of New York’s trial courts of general jurisdiction could have a chilling effect on written communications between an insurer and its retained counsel during a claim investigation. In Otsuka America, Inc. v. Crum & Forster Specialty Insurance Co., 2019 WL 4131024, Judge Andrea Masley of the Supreme Court of the State of New York, New York County, ruled that several communications between Crum & Forster (CF) and its attorney (including the attorney’s coverage opinion letter), were not privileged and must be produced. The Court found that CF retained counsel, in part, to provide an opinion on whether the insured’s claim was covered. Determining whether a claim is covered is part of the regular business of an insurance company, according to the Court. As such, the communications between CF were deemed discoverable.