The Western District of Pennsylvania recently granted a motion to compel the production of an insurer’s “best practices” guide, which the insurer had produced in part and without a privilege log. The Court held that the information contained in the insurer’s claims manuals and training manuals was relevant to the bad faith litigation because the manuals contain instructions concerning procedures used by insurance company employees in handling UIM claims like the one asserted by the insureds. See Keeler v. Esurance Insurance Services, Inc., 2020 WL 7239568 (W.D. Pa. Dec. 9, 2020).
In Keeler, the insureds presented a UIM claim to their insurer after the insured sustained injuries when a motorcycle the insured was operating was struck by a vehicle. The insurer denied coverage, claiming that the insureds waived UIM benefits under their insurance policy. The insureds subsequently brought an action against the insurer, claiming that the insurer acted in bad faith in handling their UIM claim. The insureds served a request for production of documents on the insurer that included a request for copies of “all written policies, claims and manuals, company manuals, operational guidelines, and/or any other policies, procedures, guidelines, manuals, and/or instructional/educational material pertaining to the handling of underinsured motorist claims at [insurer]…” Counsel for the insurer responded to this request by producing a partial version of the insurer’s “Best Practices” guide. The insurer removed or redacted portions of the remaining guide regarding liability, subrogation, and first-party medical benefits. The insurer did not provide a privilege log or otherwise specifically identify its redactions.
The insureds moved to compel the production of a complete copy of the guide. In response, the insurer argued that its claims handling procedures were irrelevant to the proceeding because the insureds’ claim was “never handled” since the claim was denied and the only issue in dispute was the propriety of the insurer’s denial of coverage. The insurer further argued that production of the guide would cause the insurer harm based on the nature of the insureds’ counsel’s law firm—a well-advertised firm that represents “injured people.”
The Court granted the insureds’ motion to compel and ordered the insurer to produce the portions of its “best practices” guide that related to the evaluation and handling of an injury and/or UIM claim. The Court held that the claims manuals and training manuals were relevant because they contained instructions concerning procedures used by insurance company employees in handling UIM claims. The Court found that while departures from established standards in handling a UIM claim would not alone establish bad faith, such information “is probative evidence for plaintiff to demonstrate bad faith.” The Court held that the insurer’s failure to process the claim did not necessarily render the guidelines as to how claims are ordinarily processed irrelevant.
Additionally, the Court rejected the insurer’s argument that it would be harmed by the production of the guide because of the nature of insureds’ counsel’s law firm. The Court held that the Federal Rules of Civil Procedure regarding discovery do not limit discovery based on a law firm’s “advertising budget” or the nature of its legal representation of injured persons. The Court found that the insurer could address its concerns regarding potential future use of the materials obtained in discovery through a confidentiality agreement.