Auto Insurer Ordered to Produce Its Entire Claim File in SUM Action
Generally, a liability insurer’s investigative claim file is protected from discovery as material prepared for litigation. However, a recent New York State Supreme Court, Appellate Division decision highlights an exception to this general rule. Heimbach v. State Farm Insurance, App.Div. 4th Dep’t, Feb. 7, 2014.
In Heimbach, the Plaintiff commenced an action to recover under an automobile liability insurance policy issued to him by State Farm, pursuant to the supplementary underinsured motorist (SUM) coverage of the policy. In the course of discovery, plaintiff sought to compel the insurer to produce its entire claim file, and for a deposition of its representatives including the claims handler. Defendant opposed the motion and Supreme Court granted the plaintiff’s motion in part.
On appeal, the Appellate Division, Fourth Department, ruled that the entire claim file should be disclosed, and modified the order accordingly. The Court ruled:
Given the scope of the liability and damages issues framed by the pleadings, we conclude that Plaintiff’s request for the entire claim file was not palpably improper, and that the disclosure was ‘material and necessary’ for the prosecution of Plaintiff’s action. ***.
The Court held that it was not established that the parts of the claim file which were precluded from discovery by the lower court, contained material that was privileged or exempt from discovery. The Court also ruled that the claim handler directly responsible for the claim file was subject to deposition by Plaintiff.
This decision illustrates a sharp distinction between discovery in a third-party liability claim and that in a direct action by the insured seeking SUM coverage against the insurer. It also underscores the necessity for properly maintaining the claim file under all circumstances, keeping in mind that it may be subject to disclosure in an action against the insurer.
If you require further information regarding the information presented in this Legal Alert and its impact on your organization, please contact John R. Casey at (518) 429-4277 or email@example.com.