• Cooperation Clause: Can An Insured Insist On An Observer's Presence At The Insured's Examination Under Oath Or Medical Examination?
  • December 14, 2009 | Author: Michael A. Gorokhovich
  • Law Firm: Marshall, Dennehey, Warner, Coleman & Goggin - Cherry Hill Office
  • Introduction

    An issue frequently encountered by claims adjusters in the course of investigating insurance claims is whether an insured may insist on an observer's presence at the insured's examination under oath ("EUO") or medical examination. Such an observer may be, for example, the insured's attorney, a public adjuster, a family member, a medical professional, an expert, a court reporter, or even another insured. Although this issue is encountered in many claims, judicial guidance on this subject has been extremely limited.

    Judicial analysis of these scenarios tends to focus on the cooperation clause under a given policy of insurance. A typical cooperation clause states that in the event of a loss, the insured must "cooperate with us in the investigation or settlement of the claim." See, e.g., Employers Mutual Casualty Co. v. Skoutaris, 453 F.3d 915, 918 (7th Cir. 2006). Courts, however, have not yet fashioned a uniform approach to analyzing cooperation clauses that can be reliably applied to every fact pattern involving a controversy over how an examination is to be conducted and who may attend it. This article analyses the current state of the law on this issue, identifies and evaluates the general trends that have emerged in cases interpreting cooperation clauses as they apply to third-parties' attendance of examinations under oath and medical examinations. The article concludes with some limited guidance that can be gleaned from the sparse case law that has developed to date on this issue.

    Discussion and Analysis

    Courts generally agree that examinations under oath and investigative medical examinations are different from depositions and medical examinations conducted in litigation, and their function is to investigate insureds' claims. See, e.g., Sarkisyants v. State Farm Mutual Automobile Ins. Co., 2005 U.S. Dist. LEXIS 30866 (N.D.Ca. 2005) ("The purpose of an examination under oath is to obtain information as part of the insurer's investigation of the insured's claim rather than for litigation. The procedures [in EUOs] are . . . different [from depositions], for an examination under oath is not subject to the rules of procedure or evidence and the insured's counsel has no right to examine the insured.")

    Despite the general agreement that the purpose of investigative examinations is to provide insurance carriers with a means to effectively investigate insurance claims, courts disagree as to whether a carrier may preclude an insured's observers from attending the insured's examinations. Courts also disagree as to how such issues should be analyzed. For example, in Hansen v. State Farm Mutual Automobile Insurance Co., 936 P.2d 584 (Colo. App. 1996), where an insured agreed to submit to a medical examination, but only if her attorney's nurse-paralegal was permitted to observe the examination and take notes, compliance with the cooperation clause was an issue of fact, and reasonableness was held to be the applicable standard. In contrast, in Widener v. Tennessee Farmers Mutual Insurance Co., 1995 Tenn. App. LEXIS 629 (Tenn. Ct. App. 1995), the court found there was no breach of the cooperation clause where an insured refused to submit to an examination under oath unless a public adjuster were permitted to observe the examination. The court reasoned that because the insurance contract was silent as to whether an insured could have an observer at an EUO, the contract had to be construed in favor of the insured, permitting the adjuster's attendance. The court further reasoned that since attorneys were permitted under the Tennessee law to observe EUOs as witnesses without any kind of participation, it did not matter whether a witness were an attorney, an adjuster, or some other person. In Klipper v. Government Employees Insurance Co., 571 So. 2d 26 (Fla. 2d DCA 1990), the court held that the insured was not permitted to insist upon the insured's court reporter's presence at the insured's medical examination, recognizing that investigative examinations are different in nature and purpose from medical examinations conducted in litigation. And in United States Sec. Ins. Co. v. Cimino, 754 So. 2d 697 (Fla. 2000), the Florida Supreme Court overruled Klipper ten years later, holding that independent medical examinations of insureds are inherently adversarial in nature, entitling the insured as a matter of "fairness" to the same safeguards as those afforded to litigants, including presence of an observer.

    Similar trends in the analysis of cooperation clauses have emerged in cases where the observer who sought to be present was a co-insured, and the policy at issue did not expressly provide for separate examinations under oath of co-insureds. Some courts have held in such cases, similarly to the Tennessee court in Widener that where a policy is silent as to whether or not insureds could be sequestered during each other's EUOs, the EUO and cooperation clauses should be construed in favor of the insureds, permitting co-insureds to observe each others' EUOs. See, e.g., Ahmadi v. Allstate Insurance Company, 22 P3d 576 (Colo. Ct App. 2001). Other courts have employed a different analysis which, similarly to Hansen and Klipper focused on the purpose of EUO and cooperation clauses and recognized that the underlying goal of these clauses was to provide a means by which a carrier could effectively investigate claims. See, e.g., State Farm Fire & Casualty Co. v. Tan, 691 F. Supp. 1271, 1273-1274 (S.D. Cal. 1988); Lidawi v. Progressive County Mut. Ins. Co., 112 S.W.3d 725 (Tex. App. 2003). Such courts have held that cooperation clauses contain implied duties that are not stated expressly, and which are subject to the requirement of reasonableness in light of their overarching purpose.


    Although judicial guidance in cases involving controversies over the presence of observers at EUOs and medical examinations is quite limited, the survey of cases above permits drawing several conclusions. First, judicial analysis of such issues in different jurisdictions tends to follow one of two general patterns. The first, and what appears to be the more principled approach, is to analyze each case on its own facts, applying a flexible standard of reasonableness and keeping in mind that the overarching goal sought to be achieved by the cooperation clause is an effective investigation of an insurance claim by the insurance carrier. See, e.g., Tan, supra. The second approach, employed in Widener and Ahmadi, is to interpret a cooperation clause in favor of the insured any time a policy is silent with regard to a particular issue of protocol. This approach ignores the purpose of the cooperation clause, and it is simply not workable when applied to scenarios where an insured pre-conditions his or her examination under oath or medical examination upon compliance with demands that may be unreasonable, oppressive, or detrimental to the carrier's investigation. Textual analysis cannot address, for example, a scenario where an insured is perfectly willing to submit to an examination under oath but only while jogging. It would be absurd to conclude that because the policy does not expressly state that examinations while jogging are prohibited, such an examination must be permitted because a policy must be construed in favor of the insured.

    Second, cases across all jurisdictions appear to be consistent in noting that even where an observer is permitted to attend an insured's examination, and even where the observer is the insured's attorney, passive observation is the only thing that the observer is permitted to do at the examination. Neither an insured's attorney nor any another observer is permitted to participate in the examination or advise the insured during the examination. See, e.g., Widener, supra, Hart v. Mechanics & Traders Insurance Co., 46 F. Supp. 166, 169 (D. La. 1942) (citing other cases); Shelter Insurance Companies v. Spence, 656 S.W.2d 36, 38-39 (Tenn. Ct. App. 1983).

    Finally, because cases involving observers at examinations under oath and medical examinations are jurisdiction-specific and fact-intensive, each situation must be analyzed on its own facts, applying the law of the pertinent jurisdiction. In encountering an issue where an insured insists on the presence of an observer, the handling claims adjuster should evaluate whether and how the presence of any observer demanded by the insured could impede the carrier's claims adjustment process. If there appears to be no risk that the carrier's investigation would be impaired, an observer may be permitted. However, in any instance where the presence of an observer could potentially impair the carrier's investigative efforts, advice of coverage counsel should be obtained as to how to proceed.