Medical Protective Company of Fort Wayne Indiana The v. American International Specialty Lines Insurance Company
OPINION AND ORDER GRANTING 24 MOTION to Compel Production of Documents by Defendant American International Specialty Lines Insurance Company and DENYING 29 MOTION to Compel by Plaintiff Medical Protective Company of Fort Wayne Indiana The. Def i s reminded of its ongoing duty under Fed R Civ P 26(e) to supplement its answers and responses to Pla's First Set of Interrogatories and First Requests for Production of Documents. Signed by Magistrate Judge Roger B Cosbey on 10/6/2014. (lhc) Modified on 10/6/2014 to add re 24 (lhc).
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
THE MEDICAL PROTECTIVE COMPANY
OF FORT WAYNE, INDIANA,
AMERICAN INTERNATIONAL SPECIALTY )
LINES INSURANCE COMPANY,
CAUSE NO. 1:13-CV-00357
OPINION AND ORDER
Before the Court in this breach of contract action are two motions to compel: one filed by
Defendant American International Speciality Lines Insurance Company (“AISLIC”) (Docket #
24), and the other by Plaintiff The Medical Protective Company of Fort Wayne, Indiana
(“MedPro”) (Docket # 29). The motions are now fully briefed and ripe for ruling. (Docket 25,
For the following reasons, AISLIC’s motion will be GRANTED, and MedPro’s motion
will be DENIED.
A. Factual and Procedural Background
On December 23, 2013, MedPro, a healthcare and dental malpractice insurance provider,
filed this action against AISLIC, an insurer who issued MedPro a professional liability policy,1
alleging that AISLIC breached the policy when it refused to cover a bad faith claim brought
AISLIC first issued MedPro professional liability coverage effective July 1, 2005, to July 1, 2006, and
then renewed its coverage for the policy period July 1, 2006, to July 1, 2007. (Compl. ¶¶ 11-12.)
against MedPro in Texas.2 (Docket # 1.)
The Court held a preliminary pretrial conference in this matter on March 28, 2014, and
set a discovery deadline of October 31, 2014. (Docket # 21.) This deadline was later extended to
December 31, 2014. (Docket # 27.)
As to the instant discovery dispute, AISLIC asked in its first set of requests for
production of documents that MedPro produce all documents relating to MedPro’s handling of
both the malpractice claim against its insured doctor and the later bad faith claim asserted against
it directly by the Bramletts. (Hafner Decl. Ex. A.) MedPro, however, objects to producing any
documents in its claim file for the malpractice claim generated after June 30, 2005–when the
AISLIC professional liability insurance coverage commenced–claiming they are not relevant to
AISLIC’s coverage defenses and as such, their production would be unduly burdensome. (Id. at
Ex. B; Pl.’s Resp. Br. 5, 9.)
Turning to MedPro’s motion, it asked in its first set of discovery requests that AISLIC
produce its “entire claim file (subject only to claims of privilege) and to produce a corporate
designee to testify about the contents of that file.” (Pl.’s Mem. in Supp. 1.) MedPro explains that
the claim file is “where AISLIC in the ordinary course of business recorded the factual
investigation and decision-making behind its denial of coverage.” (Id.) AISLIC objects to this
The bad faith claim stemmed from MedPro’s handling of a wrongful death suit brought by the family of
Vicky Bramlett in May 2003 against a Texas doctor to whom MedPro had issued a medical malpractice policy.
(Compl. ¶¶ 1, 23, 26, 27.) After MedPro declined to settle the suit on the doctor’s behalf for the $200,000 policy
limits and Texas statutory cap, the suit was tried in October 2005 and resulted in a $12,000,000 judgment against the
insured doctor. (Compl. ¶¶ 29, 30, 42, 43.) After the Texas Supreme Court held in 2009 that MedPro could be liable
for an excess judgment over and above the physician’s liability cap of $200,000, the Bramletts promptly filed suit
against MedPro, asserting that it acted in bad faith when it refused to settle the malpractice suit against its insured
doctor. (Compl. ¶¶ 46, 49.) The Bramletts and MedPro ultimately settled the case in 2013 for a confidential amount
exceeding the $5,000,000 AISLIC policy limit. (Compl. ¶¶ 52, 53.)
discovery request, asserting that because the sole matter in this dispute is whether MedPro is
entitled to coverage under the professional liability insurance policy, AISLIC’s knowledge and
conduct are irrelevant. (AISLIC’s Mem. in Opp’n 1-2.)
B. Standard on a Motion to Compel Discovery
Federal Rule of Civil Procedure 26(b)(1) permits discovery into “any nonprivileged
matter that is relevant to any party’s claim or defense . . . .” For the purpose of discovery,
relevancy will be construed broadly to encompass “any matter that bears on, or that reasonably
could lead to other matter that could bear on, any issue that is or may be in the case.” Chavez v.
DaimlerChrysler, 206 F.R.D. 615, 619 (S.D. Ind. 2002) (quoting Oppenheimer Fund, Inc. v.
Sanders, 437 U.S. 340, 351 (1978)); see Fed. R. Civ. P. 26(b)(1) (“Relevant information need
not be admissible at the trial if the discovery appears reasonably calculated to lead to the
discovery of admissible evidence.”). “When the discovery sought appears relevant, the party
resisting the discovery has the burden to establish the lack of relevance by demonstrating that the
requested discovery is of such marginal relevance that the potential harm occasioned by
discovery would outweigh the ordinary presumption in favor of broad disclosure.” Chavez, 206
F.R.D. at 619.
1. AISLIC’s Motion to Compel
MedPro argues that AISLIC’s request for all documents relating to MedPro’s handling of
both the malpractice claim and the bad faith claim is overly broad. More pointedly, MedPro
points to the affirmative defenses pled by AISLIC, asserting that “the coverage issues in this case
turn on the facts and circumstances existing, and known, to MedPro as of June 30, 2005,”
making documents generated after that date irrelevant. (Pl.’s Resp. Br. 2.)
AISLIC is asserting the following affirmative defenses: (1) the Bramlett malpractice
claim was made against MedPro prior to the July 1, 2006, to July 1, 2007, policy period; (2)
MedPro knew or could have reasonably foreseen before June 30, 2005, that MedPro had
committed a wrongful act (i.e., that it failed to settle the Bramlett malpractice claim within the
policy limits) that would lead to a claim or suit; and (3) the “known loss” doctrine precludes
coverage, as MedPro was “substantially certain” on or before July 1, 2006, that there would be a
claim made against it for its handling of the Bramlett malpractice claim. (AISLIC’s Mem. in
In light of AISLIC’s affirmative defenses, the start date of MedPro’s professional
liability policy, June 30, 2005, does appear significant to this litigation.3 But MedPro’s blanket
assertion–that all documents generated after that date are irrelevant–is untenable. “The relevant
time period for which a party may be required to search for and produce documents depends on
the facts and circumstances of the particular case. The date by which a [party’s] allegedly
wrongful conduct was complete does not necessarily preclude discovery of information or
documents created after that date.” Soffer v. Five Mile Capital Partners, LLC, No. 2:12-cv01407, 2013 WL 4499011, at *3 (D. Nev. Aug. 19, 2013). “Documents that post-date the
transactions may nevertheless relate back to the state of affairs as it existed at the crucial time.”
Assured Guar. Mun. Corp. v. UBS Real Estate Sec., Inc., No. 12 Civ. 1579, 2012 WL 5927379,
at *1 (S.D.N.Y. Nov. 21, 2012).
It is a bit unclear from the briefs whether MedPro’s coverage under the initial AISLIC insurance policy
commenced on June 30, 2005, or the following day, July 1, 2005. This discrepancy, however, is immaterial to this
Here, MedPro’s complaint puts at issue documents generated after June 30, 2005. That
is, MedPro is seeking coverage under the AISLIC renewal policy period of July 1, 2006 to July
1, 2007. And AISLIC’s “known loss” defense places MedPro’s knowledge as of July 1, 2006,
the policy renewal date, at issue. Also, the Bramlett settlement for which MedPro seeks
indemnification was the result of the bad faith claim litigated from 2009 to 2013; documents
relating to that action would presumably speak to MedPro’s conduct and knowledge during its
handling of the malpractice claim in 2003 and 2004. See Kidder, Peabody & Co. v. IAG Int’l
Acceptance Grp., N.V., No. 94 Civ. 4725, 1997 WL 272405, at *5 (S.D.N.Y. May 21, 1997)
(“The relevant question with respect to documents prepared or communications occurring after
August 10, 1994 is not the date thereof, but whether or not that document or communication
contains information that is relevant to the actions [plaintiff] took prior thereto.” (emphasis in
original)). Accordingly, MedPro’s objections based on relevancy are overruled, as documents
generated after June 30, 2005, that are responsive to AISLIC’s discovery requests appear
“reasonably calculated to lead to the discovery of admissible evidence.” Fed. R. Civ. P. 26(b)(1).
MedPro’s objections on grounds of undue burden fare no better. In that regard, MedPro
urges that the burden of producing this “voluminous amount” of documents, which would need
to be reviewed for privilege, outweighs their “neglible relevance. ” (Pl.’s Resp. Br. 9.) But
“[g]eneral and conclusory objections as to . . . burden are insufficient to exclude discovery of
requested information.” Assured Guar. Mun. Corp., 2012 WL 5927379, at *2 (alternation in
original). “[I]f a party is to resist discovery as unduly burdensome, it must adequately
demonstrate the nature and extent of the claimed burden by making a specific showing as to how
disclosure of the requested documents and information would be particularly burdensome.”
Boyer v. Gildea, No. 1:05-cv-129, 2008 WL 4911267, at *4 (N.D. Ind. Nov. 13, 2008) (citations
and internal quotation marks omitted). Here, MedPro fails to make a specific showing of undue
burden, instead advancing merely a conclusory objection.
Nor is MedPro’s argument that many of these documents are already in AISLIC’s (or its
coverage counsel’s) possession effective. “[I]t is not a proper objection to discovery to suggest
that the other party already has the information or that it is available elsewhere.” Jones v. Chase
Manhattan Bank USA, NA, No 1:07-cv-58, 2007 WL 3286854, at *2 (N.D. Ind. Nov. 5, 2007);
see Ragan v. Jeffboat, LLC, 149 F. Supp. 2d 1053, 1061 (S.D. Ind. 2001) (finding the fact that
defendant produced the document to the EEOC and that plaintiff could have gotten the document
from the EEOC irrelevant to plaintiff’s discovery request for the document).
To reiterate, MedPro’s responsive documents dated after June 30, 2005 are reasonably
calculated to lead to the discovery of admissible evidence, and MedPro has failed to show that
the burden of producing them outweighs their relevancy. Consequently, “it is clear that the
truthseeking function will best be served by granting the motion.” Boyer, 2008 WL 4911267, at
*6 (citation omitted). Accordingly, AISLIC’s motion to compel will be GRANTED.
2. MedPro’s Motion to Compel
MedPro asks in its motion that the Court compel AISLIC to produce its entire “‘claim
file,’ where AISLIC in the ordinary course of business recorded the factual investigation and
decision-making behind its denial of coverage,” and also produce a Rule 30(b)(6) representative
to testify about the contents of the file. (Pl.’s Mem. in Supp. 1.) In making this request, MedPro
explains that it seeks to discover “the factual basis for AISLIC’s decision to deny coverage” of
the bad faith claim brought against MedPro by the Bramletts. (Id.)
AISLIC, however, argues that its claim file is not relevant because this dispute solely
involves whether MedPro is entitled to coverage under the policy. AISLIC asserts that its
affirmative defenses place MedPro’s knowledge and conduct at issue, not its own.
Indeed, MedPro does not dispute that the sole claim at issue in this case is whether
AISLIC breached the insurance contract when it denied MedPro coverage of the bad faith claim.
(See Docket # 1, 30, 36.) That is, MedPro is not advancing a separate tort claim that AISLIC
denied coverage in bad faith. See generally Westfield Ins. Co. v. Sheehan Constr. Co., 580 F.
Supp. 2d 701, 717 (S.D. Ind. 2008) (“The tort action recognized in Erie Insurance [v. Hickman
by Smith, 622 N.E.2d 515 (Ind. 1993),] requiring an insurer to act in good faith with an insured is
distinct from the duty to not breach the insurance contract.”).
“Coverage under an insurance policy is generally a question of law that does not require
inquiry into the motivations or the reasoning process of the insurer or its representatives.”4
Winter v. Liberty Mut. Fire Ins. Co., No. 06-C-800, 2006 WL 2711804, at *2 (E.D. Wis. Sept.
21, 2006); see Ramirez v. Am. Family Mut. Ins. Co., 652 N.E.2d 511, 516-17 (Ind. Ct. App.
1995) (“Insurance coverage is a legal question based upon the terms of the underlying insurance
contract.”); see also Medical Assur. Co., 779 F. Supp. 2d at 908 (same). “The motivation and
intent of the insurer, on the other hand, are directly relevant to bad faith claims.” Winter, 2006
WL 2711804, at *2; see 2 Allan D. Windt, Insurance Claims and Disputes § 919 (6th ed.) (“An
“Generally, in Indiana, contracts for insurance are subject to the same rules of interpretation as are other
contracts.” Medical Assur. Co. v. Miller, 779 F. Supp. 2d 902, 908 (N.D. Ind. 2011). “[I]f a contract is clear and
unambiguous, the language therein must be given its plain meaning.” Neighborhood Hous. Servs. of Am. v. Rainbow
Cmty. Org., Inc., No. 1:08-cv-182, 2009 WL 5031336, at *2 (N.D. Ind. Dec. 15, 2009) (quoting Beam v. Wausau
Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002)). “It is only where a contract is ambiguous and its interpretation requires
extrinsic evidence that the fact-finder must determine the facts upon which the contract rests.” Id. (quoting Zurich
Am. Ins. Group v. Wynkoop, 746 N.E.2d 985, 988 (Ind. Ct. App. 2001)).
insurer’s claim file is relevant only to the issue of whether the insurer acted in bad faith.”).
Accordingly, MedPro’s request for AISLIC’s entire claim file is overly broad.5
This does not leave MedPro empty-handed, however. In its Interrogatory Nos. 3 through
10 MedPro asked AISLIC for “each and every” fact, witness, and document that will support its
affirmative defenses, and in Document Request Nos. 7 through 14, MedPro asked AISLIC for all
documents and communications that “support, or in any way relate to” its affirmative defenses.
(Richeimer Decl. Exs. B-E.) Accordingly, AISLIC is reminded of its ongoing duty under
Federal Rule of Civil Procedure 26(e) to supplement its answers to Plaintiff’s First Set of
Interrogatories and First Requests for Production of Documents, not just with responsive
material that “supports” its affirmative defenses, but with all documents and communications
that “in any way relate to” these defenses.
For these reasons, MedPro’s motion to compel will be DENIED without prejudice,
subject to renewal upon the filing of a summary judgment motion by AISLIC. See Neighborhood
Housing, 2009 WL 5031336, at *3. If at the time MedPro believes it cannot respond to
AISLIC’s summary judgment motion without performing additional targeted discovery, it may
file an affidavit pursuant to Federal Rule of Civil Procured 56(f) explaining specifically what
There is one caveat raised by AISLIC’s “known loss” affirmative defense. The “known loss” doctrine “is
inapplicable if the insurer also knew of the circumstances on which it bases the defense.” Gen. Housewares Corp. v.
Nat’l Surety Corp., 741 N.E.2d 408, 414 (Ind. Ct. App. 2000). Therefore, discovery concerning an insurer’s
knowledge could be relevant in certain instances.
Here, however, MedPro does not allege that AISLIC knew of the Bramlett bad faith claim when it extended
the renewal policy to MedPro on July 1, 2006. Quite to the contrary, MedPro asserts that the bad faith claim was
unforeseeable, alleging that “to the best of MedPro’s knowledge, no insurer before MedPro, and none after, has had
to face an extracontractual claim” for the full amount of a malpractice judgment beyond the physician liability cap as
was imposed by the Texas courts in the Bramlett malpractice suit. (Compl. ¶ 48.) Thus, MedPro claims that AISLIC
first learned of the bad faith claim on June 26, 2007–just days before the renewal policy term ended–when MedPro
submitted a “supplemental disclosure” to AISLIC reporting the “potential claim” against MedPro for its handling of
the Bramlett malpractice suit. (Compl. ¶ 23.)
discovery it needs to perform in order to respond to AISLIC’s motion. See id. And, if upon
resolution of AISLIC’s summary judgment motion, the language of any exclusions in the
professional liability policy is determined to be ambiguous and its interpretation requires
extrinsic evidence, MedPro’s motion to compel may be renewed as well. See id.
Defendant’s Motion to Compel Production of Documents (Docket # 24) is GRANTED.
Plaintiff must produce to Defendant on or before October 27, 2014, all documents generated
after June 30, 2005, that are responsive to Defendant’s First Set of Requests for Production of
Plaintiff’s motion to compel (Docket # 29) is DENIED. Defendant is reminded,
however, of its ongoing duty under Federal Rule of Civil Procedure 26(e) to supplement its
answers and responses to Plaintiff’s First Set of Interrogatories and First Requests for Production
Enter for October 6, 2014.
S/Roger B. Cosbey
Roger B. Cosbey,
United States Magistrate Judge
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