• Judge Rambo of the Middle District of Pennsylvania Addresses Scope of Bad Faith Discovery in the Post-Koken World
  • July 7, 2014
  • Law Firm: Thomas Thomas Hafer LLP - Harrisburg Office
  • Judge Rambo of the Middle District of Pennsylvania addresses scope of bad faith discovery in the Post-Koken world.

    One current battle ground in UIM and bad faith litigation is the parameters and timing of discovery in support of bad faith claims. Judge Sylvia H. Rambo addressed the scope of this bad faith discovery in Keefer v. Erie Insurance Exchange (No. 1:13-CV-1938)(M.D. Pa. March 7, 2014) where the UIM and bad faith claims were brought in a single action and litigated simultaneously.

    The insured in Keefer requested reserve information, claims handling manuals, information regarding the adjuster’s impressions, conclusions, and opinions of value and merit, and evaluations of the insured’s demands and insurer’s offers. The insured also sought discovery regarding the adjuster and supervisor’s rationale for the decision not to pay the UIM claim, and general information regarding other (unrelated) bad faith claims against the carrier over the prior five years. Erie objected to these requests.

    With regards to reserve information, Judge Rambo ruled that the reserve amount(s) (if any) assigned to the UIM claim by the carrier should be produced where the insured asserts that the carrier acted in bad faith during the investigation of the insured’s UIM claim. Specifically, Judge Rambo indicated that comparison between the reserve value set and the carrier’s actual actions in processing the claim could prove relevant to the carrier’s statutory liability. Judge Rambo rejected the carrier’s argument that the reserve information was protected by the work product doctrine. The Judge also ruled that the insured would be permitted to inquire into the processes used by the carrier to investigate the UIM claim and discovery of these policies (via the manuals) was reasonably calculated to lead to the discovery of admissible evidence regarding the bad faith claim. Finally, Judge Rambo allowed discovery of the reasoning for non-payment, finding such information may be probative on whether the carrier acted in bad faith in the UIM claims handling process.

    In considering the carrier’s work product objection to the adjuster’s mental impressions, etc., Judge Rambo indicated these impressions and opinions are not protected by the work product doctrine (under the federal discovery rules), unless they were prepared in anticipation of litigation. Judge Rambo ultimately delayed ruling on this objection, as she indicated that the facts as developed did not allow for a determination of when litigation was reasonably anticipated. Judge Rambo upheld the carrier’s objection to the request for information on all other bad faith claims made in the past five years, finding that past claims were irrelevant to the insured’s UIM claim.

    Importantly, Judge Rambo’s decision continues the trend in combined UIM and bad faith cases of an ever increasing allowance of bad faith related discovery typically not permitted with regards to a UIM claim alone.