Haukaas v. Liberty Mutual Insurance Company

Filing 53

MEMORANDUM OPINION AND ORDER granting in part and denying in part 36 Motion to Compel; granting in part and denying in part 39 Motion for Protective Order; denying 50 Motion to Strike. Signed by US Magistrate Judge Veronica L. Duffy on 11/19/2021. (KK)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
TONYA HAUKAAS,

4:20-CV-04061-KES

Plaintiff,
vs.
LIBERTY MUTUAL INSURANCE
COMPANY,
Defendant.

MEMORANDUM OPINION AND
ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF’S
SECOND MOTION TO COMPEL,
GRANTING IN PART AND DENYING
IN PART DEFENDANT’S MOTION FOR
A PROTECTIVE ORDER & DENYING
PLAINTIFF’S MOTION TO STRIKE
[Docket Nos. 36, 39 & 50]

INTRODUCTION
This matter is pending before the court on plaintiff Tonya Haukaas’
second motion to compel responses to interrogatories and the production of
documents. Docket No. 36. Defendant resists the motion, and plaintiff has
filed a reply. Docket Nos. 39 & 46. In its response to the motion, defendant
made a cross-motion for a protective order and filed a surrreply thereafter.
Docket Nos. 39 and 48. Plaintiff has moved to strike defendant’s surreply.
Docket No. 50. This matter has been referred to this magistrate judge for
determination pursuant to 28 U.S.C. § 636(b)(1)(A) and the October 16, 2014,
standing order of the Honorable Karen E. Schreier, United States District
Judge.

FACTS
The parties’ dispute concerns a worker’s compensation policy issued by
Liberty Mutual Insurance Company to Aspen Grove Assisted Living while
Ms. Haukaas was employed there as a Certified Nursing Assistant. On January
31, 2015, Ms. Haukaas suffered a lower back injury when she and another
employee were assisting a nursing home resident who had fallen. The resident
began to fall backwards, and Ms. Haukaas twisted to prevent the resident from
falling. Ms. Haukaas’ back made a popping sound, and she felt pain in her
lower back. Due to this injury, Ms. Haukaas sought medical treatment and
workers’ compensation benefits from Liberty Mutual.
At first, Liberty Mutual accepted Ms. Haukaas’ claim as compensable
and paid her benefits. Liberty Mutual contracted with Ohara, a managed-care
provider, to oversee Ms. Haukaas’ claim. Docket No. 18-9. Liberty Mutual
asserts it was Ohara, not Liberty Mutual, that was responsible for reviewing
Ms. Haukaas’ condition and treatment. Liberty Mutual asserts Ohara
contacted ExamWorks, an independent medical examination (“IME”) provider,
and learned that Dr. Jeffrey Nipper was available to perform an IME. Ohara
contacted and engaged Dr. Nipper for the IME. Docket No. 18-12. After
reviewing Ms. Haukaas’ medical records and conducting an IME, Dr. Nipper
offered the opinion that Ms. Haukaas’ work-related injuries were not a major
contributing cause of her current condition; instead, Dr. Nipper attributed
Ms. Haukaas’ condition to a chronic degenerative process. Docket No. 18-13.

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Based upon Dr. Nipper’s IME, Liberty Mutual denied benefits for past
and future medical expenses. Docket No. 18-15. These benefits were
eventually reinstated after an administrative law judge determined the injury
was work-related and found the opinions of Ms. Haukaas’ treating physician,
Dr. Brett Lawlor, to be more compelling than those of Dr. Nipper. Docket
No. 18-16. Upon receipt of the determination, Liberty Mutual paid Ms.
Haukaas the award and continued paying for her medical treatments.
Thereafter, the parties reached a global settlement that resolved outstanding
claims except extracontractual claims available under South Dakota law.
The sole count in this cause of action alleges bad faith against Liberty
Mutual. Docket No. 1 at pp. 6-7. Ms. Haukaas claims Liberty Mutual hired
Dr. Nipper as part of a pattern and practice of engaging biased doctors in a
scheme to deny claims. Ms. Haukaas has alleged Dr. Nipper is known to
provide biased IMEs in favor of insurance companies and performs at least five
IMEs per week—and at least 250 per year—for insurers and their attorneys.
Ms. Haukaas has further alleged Dr. Nipper overwhelmingly renders IME
opinions in favor of insurers. Docket No. 1 at p. 7.
Liberty Mutual has hired two experts, Dr. Nipper and David P. McCall,
Ph.D., to rebut Ms. Haukaas’ claim of bias. Dr. McCall is a professor of
economics, education, and public policy at the University of Michigan, Ann
Arbor. Dr. McCall has opined that, to determine whether Dr. Nipper is biased,
Ms. Haukaas first much ascertain “the fraction of times certified medical

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doctors conducting IMEs in similar circumstances would make the same
diagnosis.” Docket No. 38-12 at p. 2.
As a result of Liberty Mutual’s expert disclosure, Ms. Haukaas served her
second set of interrogatories and requests for production of documents on
January 4, 2021. Docket No. 38-1. Liberty Mutual responded late to the
discovery requests on February 22, 2021. Docket No. 38-2. Ms. Haukaas
brought to Liberty Mutual’s attention alleged deficiencies in its discovery
responses in a letter dated March 24, 2021, Docket No. 38-4, and the parties
discussed the discovery dispute in a series of letters. Docket Nos. 38-5
through 38-11 & 42-7.
Ms. Haukaas has consulted Dr. Lawlor to opine about Dr. Nipper’s bias.
In a letter dated March 30, 2021, Dr. Lawlor opined that, at least based on
those patients he has treated who have also had an IME by Dr. Nipper,
Dr. Nipper commonly diagnoses IME patients with a sprain or a strain even
when there is clear medical evidence of a more serious condition. Docket
No. 38-13 at p. 4.
On June 17, 2021, Liberty Mutual served an amended response to
interrogatory number three from the second set of interrogatories. Docket
No. 38-3. On July 13, 2021, counsel for Ms. Haukaas sent Liberty Mutual’s
attorneys a letter describing continued concerns about the insurer’s discovery
responses. Docket No. 38-10. Liberty Mutual responded to Ms. Haukaas’
assertions of deficiency on August 6, 2021. Docket No. 38-11.

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Ms. Haukaas filed this second motion to compel on August 23, 2021.
Docket No. 36. The motion seeks an order compelling Liberty Mutual to fully
respond to interrogatories three, four, five, and six and requests for production
one and eight from the second set of discovery requests. The court considers
each of these discovery disputes in turn.
DISCUSSION
A.

Standards Governing Discovery
Federal Rule of Civil Procedure 26(b)(1) sets forth the scope of discovery

in civil cases pending in federal court:
Scope in General. Unless otherwise limited by court order, the scope of
discovery is as follows: Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case, considering the importance of the
issues at stake in the action, the amount in controversy, the parties’
relative access to relevant information, the parties’ resources, the
importance of the discovery in resolving the issues, and whether the
burden or expense of the proposed discovery outweighs its likely benefit.
Information within the scope of discovery need not be admissible in
evidence to be discoverable.
See Fed. R. Civ. P. 26(b)(1).
If a party fails to respond to a proper request for discovery, or if an
evasive or incomplete response is made, the party requesting the discovery is
entitled to move for a motion compelling disclosure after having made a goodfaith effort to resolve the dispute by conferring first with the other party. See
Fed. R. Civ. P. 37(a).
The scope of discovery under Rule 26(b) is extremely broad. See 8
Charles A. Wright & Arthur R. Miller, Fed. Prac. & Proc. Civ. ' 2007 (3d ed.
Oct. 2020 update). The reason for the broad scope of discovery is that
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“[m]utual knowledge of all the relevant facts gathered by both parties is
essential to proper litigation. To that end, either party may compel the other to
disgorge whatever facts he has in his possession.” Id. (quoting Hickman v.
Taylor, 329 U.S. 495, 507-08 (1947)). The Federal Rules distinguish between
discoverability and admissibility of evidence. FED. R. CIV. P. 26(b)(1), 32, and
33(a)(2) & (c). Therefore, the rules of evidence assume the task of keeping out
incompetent, unreliable, or prejudicial evidence at trial. But these
considerations are not inherent barriers to discovery.
Discoverable information itself need not be admissible at trial; rather, the
defining question is whether it is within the scope of discovery. See FED. R. CIV.
P. 26(b)(1). Additionally, the court may limit the frequency and extent of
discovery. See Fed. R. Civ. P. 26(b)(2); see also Roberts v. Shawnee Mission
Ford, Inc., 352 F.3d 358, 361 (8th Cir. 2003) (“The rule vests the district court
with discretion to limit discovery if it determines, inter alia, the burden or
expense of the proposed discovery outweighs its likely benefit.”); Cont’l Ill. Nat’l
Bank & Trust Co. of Chi. v. Caton, 136 F.R.D. 682, 684-85 (D. Kan. 1991) (“All
discovery requests are a burden on the party who must respond thereto.
Unless the task of producing or answering is unusual, undue or extraordinary,
the general rule requires the entity answering or producing the documents to
bear that burden.”).
Ms. Haukaas was under a duty to meet and confer with Liberty Mutual
before filing this motion to attempt to resolve the parties’ discovery disputes.
D.S.D. Civ. L.R. 37.1. Ms. Haukaas asserts she satisfied that duty, see Docket
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No. 36 at p. 1, and the record demonstrates she has. Accordingly, the motion
is ripe for decision.
B.

Individual Discovery Requests
1.

Interrogatory Number Three and Request for Production One

In interrogatory number 3, Ms. Haukaas asks Liberty Mutual to:
Describe your relationship to any parent company or subsidiary and[,]
for each parent or subsidiary, state the following:
a. Your interest and percentage ownership for the previous five
years in any business, partnership or corporation, the name,
address and telephone number of any persons associated with
you in the ownership of such business and state the principal
assets and liabilities of such business and the current value of
your business interest.
b. Whether you are a wholly owned subsidiary of any other
company.
c. If you are a wholly owned subsidiary of any other company state
how profits and losses are distributed between you and your
parent company.
d. Any salaries, expenses, or losses paid by your parent company
in the past five years.
e. For the previous five years, identify how much revenue,
referrals, and services that your parent companies provide to
any and all subsidiaries.
f. Identify the value of any and all tangible and intangible property
that your parent company has gifted, rented and/or sold to any
and all subsidiaries in the previous five years.
g. Whether your parent company exercise[s] any power to
influence or direct[s] people’s behavior or the course of events
for you. If so, please describe the extent of such power and
provide examples of such.
h. [duplicative of subpart (g)]

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i. Whether our parent company received any income, revenue, or
profits from you. If so, please state the amount of such profits,
revenue, or income received for the previous five years.
j. Identify all employees that hold dual employment and/or dual
leadership positions with you and your parent company.
Docket No. 38-1 at pp. 3-4. Ms. Haukaas indicated she is satisfied with Liberty
Mutual’s responses to subparts (a) and (b). Docket No. 37 at p. 9.
Request for production number 1 seeks “any and all documents
identified in your answers to the above interrogatories or reviewed or relied
upon in answering the above interrogatories.” Docket No. 38-1 at p. 5.
Ms. Haukaas ties these two discovery requests together, arguing Liberty
Mutual’s response to request for production number 1 is inadequate because it
failed to produce documents reviewed or relied upon in completely answering
interrogatory number 3.
Ms. Haukaas argues these categories of information are relevant because
information regarding the extent to which Liberty Mutual is intertwined with its
affiliated entities is relevant to her intent to amend the complaint to add other
entities as defendants. Liberty Mutual’s refusal to provide information beyond
annual statements of Liberty Mutual and First Liberty Insurance Company,
Ms. Haukaas argues, amounts to an improper withholding. Docket No. 37 at
pp. 10-11. Ms. Haukaas insists this information is necessary because Liberty
Mutual has stated that First Liberty (the underwriter of the relevant policy and
the entity that actually provided the insurance benefits in this matter), not
Liberty Mutual, is the proper defendant in this lawsuit. Ms. Haukaas states
more information about corporate structure is necessary for her to ascertain
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whether “Liberty is so intertwined with its affiliated companies that those
parties are properly added to this cause of action.” Docket No. 37 at p. 11.
Liberty Mutual argues in response that this information is irrelevant to
the issues in the case because the complaint does not plead veil piercing, and
Ms. Haukaas has not supported her theory of veil piercing with any evidence.
Liberty Mutual points to its disclosure of First Liberty Insurance Corporation’s
annual financial statements for the years 2010 to 2020 and Liberty Mutual
Insurance Company’s annual statements for the years 2016 to 2020, as well as
its supplemental response to interrogatory number 3 and request for
production number 1, as evidence it has satisfied its duty to respond to these
requests for affiliate information.
In her reply brief, Ms. Haukaas represents that Liberty Mutual “is willing
to limit this Interrogatory to the companies that are superior on the
organizational chart [Docket No. 38-3 at pp. 10-14] to Liberty.” Docket No. 46
at p. 11. Ms. Haukaas, therefore, limits her discovery request to information
about Liberty Mutual Group, Inc., LMCH Massachusetts Holdings, Inc., and
Liberty Mutual Holding Company, Inc. Ms. Haukaas has not identified and the
court cannot discern where or when Liberty Mutual made this concession.
Liberty Mutual, for its part, did not make this concession in its response brief,
instead requesting that its “response to Interrogatory 3 and Request for
Production 1 be deemed sufficient, or alternatively that the Court limit the
scope of the Request to entities involved in the facts giving rise to this lawsuit.”

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Docket No. 39 at p. 28. Accordingly, the court discounts Ms. Haukaas’
representation about Liberty Mutual’s concession.
Assessing the parties’ positions on their merits, it is clear Liberty Mutual
has sufficiently responded to Ms. Haukaas’ discovery requests by providing
annual statements from First Liberty and Liberty Mutual and its answers as
stated in its amended answer to interrogatory 1 and request for production 3
(Docket No. 38-3). Ms. Haukaas has not shown how information related to
affiliate entities, whether parents, sisters, or subsidiaries, is relevant to the bad
faith claim alleged in the complaint. Without some showing of relevance to the
claims or defenses raised in this case, the court will not compel Liberty Mutual
to divulge veil-piercing discovery where Ms. Haukaas has alleged no veilpiercing theory. See Alexander v. 1328 Uptown, Inc., Case No. 18-cv-1544
(ECT/ECW), 2019 WL 4929931, at *7 (D. Minn. Oct. 7, 2019) (granting
protective order precluding plaintiff from engaging in discovery aimed at
piercing the corporate veil of corporate defendants where the complaint alleged
no veil-piercing theory).
Moreover, the sole justification Ms. Haukaas gives for seeking
information about corporate affiliates—that she intends to amend the
complaint to add several affiliated entities as defendants—is not adequately
supported by the record. State law is used to determine whether and how to
pierce the corporate veil. Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 649
(8th Cir. 2003) (citation omitted). Generally, corporations are considered
separate legal entities until there is sufficient reason not to. Mobridge Cmty.
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Indus., Inc. v. Toure, Ltd., 273 N.W.2d 128, 132 (S.D. 1978). “Sufficient
reason,” under South Dakota law, contemplates undercapitalization, failure to
observe corporate formalities, absence of corporate records, unfairness,
injustice, fraud, or other inequitable conduct as a prerequisite. Kansas Gas &
Elec. Co. v. Ross, 521 N.W.2d 107, 112-13 (S.D. 1994). “[T]he mere fact that
one corporation owns all or a majority of the stock of another, or that two
corporations have common officers or directors, will not render a parent
automatically answerable for acts of its subsidiary.” Satellite Cable Servs. v. N.
Elec. Coop., Inc., 581 N.W.2d 478, 482 (S.D. 1998).
The South Dakota Supreme Court announced the instrumentality
exception, which is used to determine when a parent is liable for the actions of
its subsidiary, in Glanzer v. St. Joseph Indian Sch., 438 N.W.2d 204, 207 (S.D.
1989). “A parent corporation is liable for the acts of its subsidiary under the
instrumentality exception when (1) the parent controls the subsidiary to such a
degree as to render the latter the mere instrumentality of the former; and (2)
adherence to the rule of corporate separateness would produce injustices and
inequities.” Id. (citing Larson v. W. Underwriters, 87 N.W.2d 883, 887 (S.D.
1985) & Mobridge Cmty. Indus., 273 N.W.2d at 132).
Here, Ms. Haukaas seeks discovery related to the first inquiry of the
instrumentality exception—control. But neither her complaint nor her papers
filed in support of her motion to compel allege injustice or inequity if she is
unable to pierce the corporate veil. Without such a showing, Liberty Mutual’s
parent companies are not liable for any act of Liberty Mutual or First Liberty.
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Additionally, based upon the financial disclosures concerning Liberty Mutual
and First Liberty provided to Ms. Haukaas, both those entities are adequately
capitalized. It is not as if the omission of corporate parents from this action
would deprive Ms. Haukaas of the proceeds of any judgment she might win.
On this record, it is certainly not enough for a threshold showing of relevance
of financial and employment information concerning parent entities whose sole
relation to the facts of this case is ownership interest of Liberty Mutual.
Accordingly, Ms. Haukaas’ motion to compel further answers to interrogatory
number 3 and request for production number 1 is denied.
2.

Interrogatory Number Four

In this interrogatory, Ms. Haukaas asks Liberty Mutual to “[i]dentify all
other bad faith claims against you for the preceding ten years and state the
result of any litigation related thereto.” Docket No. 38-1 at p. 4. Liberty
Mutual objected to this interrogatory on the basis that it is overbroad because
it is not limited to the relevant jurisdiction, type of claim, or any relevant period
of time. Liberty Mutual also objected to the extent this interrogatory seeks
information that is irrelevant to the issues in this case, to the extent the
request is not proportional to the needs of the case, on the basis that this
interrogatory seeks confidential and proprietary information, and to the extent
it seeks to harass, cause unfair prejudice, confuse the issues, and waste time.
Docket No. 38-2 at p. 7. Liberty Mutual did not offer any answer to this
interrogatory. Id. In its response in opposition to this motion to compel,
Liberty Mutual maintains its objections that the bad-faith information sought
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is not relevant, unduly burdensome, and not proportionate to the needs of the
case.
“[T]his district has . . . routinely compelled discovery of prior lawsuits for
bad faith and extracontractual claims.” Rounds v. The Hartford, No. 4:20-CV04010-KES, 2021 WL 4150838, at *10 (D.S.D. Sept. 13, 2021). In Schultz v.
Sentinel Ins. Co., Ltd., No. 4:15-CV-04160-LLP, 2016 WL 3149686, at *8-9
(D.S.D. June 6, 2016), this court dealt with a similar issue. In an action
alleging bad faith and a claim for punitive damages, the plaintiff-insured
requested the case name, venue, case number, and the substance of the
allegations raised against the defendant-insurer in any bad faith or unfair
claims processing cases in the preceding ten years. Id. at *8. The defendantinsurer objected on relevance and unduly broad/overly burdensome grounds.
Id. The defendant-insurer provided some responsive information, but the
plaintiff-insured brought a motion to compel seeking more complete
information, including the substance of the allegations in each lawsuit. Id.
This court granted the plaintiff-insured’s motion, reasoning as follows:
This issue is not a new one. Evidence of past bad faith claims and
unfair claims processing claims are routinely asked for and
routinely produced, or ordered to be produced, in this district. See
e.g. Lillibridge v. Nautilus Ins. Co., 2013 WL 1896825, at *5-6
(D.S.D. May 3, 2013); Kirschenman v. Auto-Owners Ins., 280
F.R.D. 474, 489 (D.S.D. 2012); Beyer v. Medico, 5:08-cv-05058JLV, Docket No. 61, at pp. 13-114 [sic] (D.S.D. Nov. 13, 2009).
And they are not limited to the exact type of claim presented by the
plaintiff in the case—i.e. property only, first-party only, weatherrelated only. See Lillibridge, 2013 WL 1896825 at *5.
That is because, in order to prove bad faith, the plaintiff must
show that the insurance company unreasonably investigated or
denied a claim knowing that there was coverage, or acted with
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reckless disregard to whether the facts indicated coverage. Id.
(citing Dakota, Minnesota & Eastern RR Corp. v. Acuity, 771
N.W.2d 623, 632 (S.D. 2009)). To prove punitive damages, the
plaintiff must show the insurance company acted with malice,
actual or presumed. Id. (citing Bertelsen v. Allstate Ins. Co., 796
N.W.2d 685, 698-99 (S.D. 2011)). Relevant to the issue of punitive
damages is whether the insurance company engaged in a pattern
or practice of conduct that caused harm to those who are
financially vulnerable. Id. (citing Roth v. Farner-Bocken Co., 667
N.W.2d 651, 666 (S.D. 2003)). Evidence of other claims against
[defendant-insurer] alleging bad faith or unfair claims practices is
relevant to the prima facie claim of bad faith as well as to [plaintiffinsured’s] punitive damages claim.
Id. at *9. Based on this reasoning, this court ordered the defendant-insurer to
provide, for every lawsuit responsive to the plaintiff-insured’s discovery
request, the complaint and answer (including any amended complaints and
amended answers), the docket sheet, and copies of any dispositive motions and
responding briefs, as well as a brief summary of the outcomes of the cases. Id.
Liberty Mutual argues Lillibridge is distinguishable because the plaintiff
in that case presented more evidence of a pattern or practice of improperly or
arbitrarily denying insurance claims before filing a motion to compel the
production of prior litigation against the insurer related to bad-faith claims
handling. Docket No. 39 at pp. 15-16. Liberty Mutual’s argument misses the
mark. There is no requirement that a plaintiff must prove—or substantially
prove—their case before they are entitled to discovery. Rule 26 does not force
plaintiffs to jump through these hoops. Rule 26 only requires that discovery
sought be relevant to a party’s claim or defense, proportional to the needs of
the case, non-privileged, and that its likely benefit outweighs the burden or
expense of complying with the request.
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Assessing Ms. Haukaas’ request according to Rule 26’s framework, the
court disagrees with Liberty Mutual and follows Lillibridge. In that case, the
district court rejected the defendant-insurer’s argument that discovery should
be limited to first-party bad faith, weather-related, property claims from South
Dakota. Lillibridge, 2013 WL 1896825, at *6. The district court rejected this
argument, reasoning that, “[w]hile evidence of first-party bad faith, weatherrelated, property damage claims may be more relevant or factually analogous to
Lillibridge’s claim, it does not lead to the conclusion that other bad faith claims
are not relevant to this case.” Id. “Lillibridge is not necessarily limited to
admitting evidence of identical prior claims involving the loss of a roof due to a
hailstorm in South Dakota to show the nexus between the requested discovery
and his claim. Instead, prior bad faith litigation may be relevant to show
[defendant’s] knowledge and conduct and whether a pattern and practice of
inadequate investigation, offering unreasonably low settlement offers, or other
reprehensible conduct is being repeated among policyholders.” Id. Therefore,
prior bad faith claims against Liberty Mutual need not be related to workers
compensation to be discoverable in this action.
However, “[f]or discovery of out-of-state claims or documents to be
relevant in this case ‘these cases must share some factual or legal vector with
[Ms. Haukaas’] claims.’ ” Id. at *5 (quoting Kischenman, 280 F.R.D. at 489).
See also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 422 (2003)
(“Lawful out-of-state conduct may be probative when it demonstrates the
deliberateness and culpability of the defendant's action in the State where it is
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tortious, but that conduct must have a nexus to the specific harm suffered by
the plaintiff.”).
Brown Bear v. Cuna Mut. Grp., 266 F.R.D. 310 (D.S.D. 2009), is
instructive. There, the plaintiff made a discovery request similar to the one
raised by Ms. Haukaas here—“any documents relating to litigation involving
claims against Cuna for breach of contract or bad faith.” Id. at 325. The court
narrowed this request, finding that claims denied on the same basis as the
plaintiff’s claim share the nexus described by the Supreme Court in Campbell.
Id.
Because Cuna initially denied Brown Bear’s insurance claim based upon
the time filing rule, the court finds that such documents have a nexus to
the harm suffered by plaintiff. . . . [H]owever, the court agrees that
Brown Bear’s request for all documents relating to claims of breach of
contract or bad faith should be narrowed to encompass those claims
bearing a nexus to the specific harm alleged by Brown Bear.”). The court
concluded that, “[w]hen the scope is appropriately narrowed to include
litigation involving the time filing provision specifically, rather than
breach of contract or bad faith generally, this court believes the
requested documents are discoverable.
Id.
So too here. Ms. Haukaas’ request for nationwide discovery of bad-faith
claims should be narrowed to those claims that share a specific nexus with the
harm she alleges. Because Liberty Mutual denied Ms. Haukaas’ claim based
on an IME report, the court finds that prior bad-faith litigation involving a
denial of benefits following an IME is relevant. With the scope of this request
narrowed to litigation files involving denial after an IME—instead of bad-faith
generally—the requested documents are relevant. Because the documents
Ms. Haukaas requests may reveal that Liberty Mutual’s alleged conduct in this
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case occurs more frequently and, as a result, risks harm to many, the
requested documents may be relevant to demonstrate reprehensibility, which is
a proper consideration in a punitive damages determination. See Philip Morris
USA v. Williams, 549 U.S 346, 357 (2007) (finding “conduct that risks harm to
many is likely more reprehensible than conduct that risks harm to only a few.
And a jury consequently may take this fact into account in determining
reprehensibility”).
Ms. Haukaas also asks for regulatory complaints brought against Liberty
Mutual alleging bad faith denial of benefits. Docket No. 46 at p. 11.
[I]nformation about regulatory actions and consumer complaints is not a
new issue in bad faith litigation in this district. Lillibridge, 2013 WL
1896825 at *13; Lyon [v. Bankers Life & Cas. Co., No. CIV. 09-5070-JLV,
2011 WL 124629, at *15 (D.S.D. Jan. 14, 2011)]; McElgunn, Civ. No. 0605061 Docket No. 206 at p. 14 (D.S.D. 2008); Beyer, 266 F.R.D. at 339.
This information is relevant for the same reason the information about
past bad faith claims against Sentinel is relevant: it may tend to show a
pattern or practice of business conduct by Sentinel that shows it denied
claims it knew were covered, or that it acted with reckless disregard in
denying such claims. Lillibridge, 2013 WL 1896825 at *13; Beyer, 266
F.R.D. at 339.
Schultz, 2016 WL 3149686, at *13. The court concludes such information is
relevant to Ms. Haukaas’ assertion of bad faith because it may show a pattern
or practice of business conduct by Liberty Mutual that shows it denied claims
it knew were covered, or that it acted with reckless disregard in denying those
claims.
Thus, Ms. Haukaas has made a threshold showing of relevance for badfaith litigation and regulatory complaints against Liberty Mutual involving
denial after an IME for the past 10 years. The burden now shifts to Liberty
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Mutual to show that this interrogatory is unduly burdensome or not
proportionate to the needs of the case.
a.

Undue Burden

“All discovery requests are a burden on the party who must respond
thereto. Unless the task of producing or answering is unusual, undue or
extraordinary, the general rule requires the entity answering or producing the
documents to bear that burden.” Lillibridge, 2013 WL 1896825, at *6 (quoting
Cont’l Ill. Nat’ Bank & Trust Co. of Chi. v. Caton, 136 F.R.D. 682, 684-85
(D. Kan. 1991)). Liberty Mutual asserts it would be unduly burdened by an
order compelling its response to this interrogatory because it, unlike the
defendant-insurers in Lillibridge and Lyon, is one of the country’s largest
insurers, providing virtually every type of insurance available. The sheer
volume of responsive cases, according to Liberty Mutual, is itself overly
burdensome. Docket No. 39 at p. 17 n.12. This is because Liberty Mutual
does not internally track which lawsuits brought against it include bad-faith
claims and cannot easily identify and track specific disputes with bad-faith
claims to determine how they resolved. This, Liberty Mutual asserts, makes
the process arduous, costly, and time consuming.
Liberty Mutual specifically states it would need to retrieve and review
approximately 26,000 claim files that were submitted to its legal department
for litigation oversight. This number does not include any state regulatory
complaints. Docket No. 40 at p. 3. Liberty Mutual notes that, if reviewing each
of the 26,000 files takes 30 minutes, it would take 13,000 workhours to
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manually review these files to identify which of them involved bad-faith claims.
This, Liberty Mutual argues, makes the burden of complying with this
interrogatory undue and extreme. But Liberty Mutual’s correspondence
regarding discovery makes clear the problem is not the number of files it would
need to review; the problem is the time it would take to manually review each
file. See Docket No. 38-7 at p. 2 (“[T]he number of such claims is not the issue.
The issue is that Liberty would need to reopen every file in which bad faith was
alleged over the course of the last ten years—regardless of any tie to workers
compensation claims handling—to evaluate the claim and how the matter
resolved.”).
Thus, Liberty Mutual indicates its agents would need to thumb through
each claim file to ascertain whether it involved an allegation of bad faith.
Liberty Mutual has presented evidence that its records are not text-searchable
such that they could be electronically searched for specific words or key
phrases—e.g., “bad faith” or “independent medical examination.” Docket No.
40 at p. 2, ¶ 6. “The use of specific words or key phrases in electronic searches
of computerized claim files has been approved historically in this district.”
Lyon, 2011 WL 124629, at *11 (citing McElgunn, CIV. 06-5061, Docket No. 84
at pp. 2-3 (D.S.D. 2007) & Brown Bear, 266 F.R.D. at 323. However, due to
the way Liberty Mutual retains its claims files in the system of record, searches
using optical character recognition data are impossible.
Liberty Mutual has presented evidence that it would also need to
manually review each regulatory complaint to determine whether it involves a
19

bad-faith claim. Docket No. 40 at p. 3, ¶ 10. These records can be sorted
according to state of origin, line of coverage, and underwriting company, but
not the substance of the claim. Id. It appears these databases also cannot be
searched according to optical character recognition data.
This burden, Ms. Haukaas argues, is of Liberty Mutual’s own making
and should not limit her ability to discover information about prior bad-faith
litigation and regulatory complaints. Docket No. 38-10 at p. 3. Ms. Haukaas
further asserts a limitation based on type of claim would not alleviate the
burden on Liberty Mutual; a search limited to bad-faith claims related to a
worker’s compensation policy would still require Liberty Mutual to search all
files sent to its home legal office. Docket No. 38-10 at p. 3. Therefore,
limitations based on type of claim (or, following the court’s finding on the issue
of relevance, whether a denial followed an IME) would not decrease Liberty
Mutual’s burden in responding to this interrogatory. Therefore, it appears the
only effective limitations would be geographical and temporal. See Docket No.
38-11 at p. 3 (“Liberty Mutual does have the capability to determine the
jurisdiction and date of a file without manually reviewing it, so any limitation
on the scope of the discovery request or its timeframe would indeed limit the
burden you are imposing on Liberty Mutual.”).
Several courts have determined that, when discovery requests are
relevant, the fact that answering them will be burdensome and expensive is not
itself a reason to deny a motion to compel. See In re Folding Carton Antitrust
Litig., 83 F.R.D. 260, 265 (N.D. Ill. 1979) (stating “[b]ecause the interrogatories
20

themselves are relevant, the fact that answers to them will be burdensome and
expensive is not in itself a reason for refusing to order discovery which is
otherwise appropriate” (quotation omitted)); Alexander v. Parsons, 75 F.R.D.
536, 539 (W.D. Mich. 1977) (stating that “the mere fact discovery is
burdensome . . . is not a sufficient objection to such discovery, providing the
information sought is relevant or may lead to the discovery of admissible
evidence”); and Burns v. Imagine Films Entm’t, Inc., 164 F.R.D. 589, 593
(W.D.N.Y. 1996) (the fact that answering interrogatories will require the
objecting party to expend considerable time, effort, and expense consulting,
reviewing, and analyzing huge volumes of documents and information is an
insufficient basis for an objection). Moreover, if discovery requests are
relevant, the fact that they involve work, which may be time consuming, is not
sufficient to render them objectionable. See United States v. Nysco Labs., Inc.,
26 F.R.D. 159, 161-62 (E.D.N.Y. 1960) (citation omitted) & Rogers v. Tri-State
Materials Corp., 51 F.R.D. 234, 245 (N.D. W. Va. 1970) (citation omitted)
(stating “[i]nterrogatories, otherwise relevant, are not objectionable and
oppressive simply on grounds [that] they may cause the answering party work,
research and expense”). See Brown Bear, 266 F.R.D. at 320-21.
The court is mindful that Liberty Mutual is not a small business
unfamiliar with the intricacies and requirements of litigation, and it agrees with
the conclusion of other district courts that permitting “a defendant whose
business generates massive records to frustrate discovery by creating an
inadequate filing system, and then claiming undue burden, would defeat the
21

purposes of the discovery rules.” Kozlowski v. Sears, Roebuck & Co., 73 F.R.D.
73, 76 (D. Mass. 1976); accord Beseke v. Equifax Info. Servs., LLC, No. 17-cv4971-DWF-KMM, 2018 WL 6040016, at *4 (D. Minn. Oct. 18, 2018); Zubulake
v. UBS Warburg LLC, 217 F.R.D. 309, 321-22 n.68 (S.D.N.Y. 2003). Although
Liberty Mutual has shown that information responsive to this request is not in
a readily accessible format, the court is reticent to find undue burden where
the most burdensome aspect of complying with this interrogatory—manually
reviewing each file sent to the home legal office to determine whether that
action or regulatory complaint involved a bad-faith claim—would largely be
obviated if Liberty Mutual tracked litigation against it or retained its claims
files in a format compatible with optical character recognition.
As such, the fact that Liberty Mutual will have to review voluminous
claims and regulatory action files to search for litigation and regulatory
complaints involving bad faith is not itself a sufficient reason to find that
interrogatory four is unduly burdensome.
b.

Proportionality

Federal Rule of Civil Procedure 26(b)(1) limits discovery to information
that is “proportional to the needs of the case, considering the importance of the
issues at stake in the action, the amount in controversy, the parties’ relative
access to relevant information, the parties’ resources, the importance of the
discovery in resolving the issues, and whether the burden or expense of the
proposed discovery outweighs its likely benefit.” FED. R. CIV. P. 26(b)(1).

22

Here, Liberty Mutual has shown that manually reviewing litigation files
and regulatory complaints would take countless hours and would cost an
exorbitant amount. The court concludes the expense of complying with this
interrogatory—even as narrowed by the court—outweighs its likely benefit.
Therefore, requiring Liberty Mutual to produce a narrower set of materials is
appropriate in this case.
Considering the massive volume of records Liberty Mutual must work
through, the expense of identifying and producing information about bad-faith
claims raised from 2018 to the present does not outweigh its likely benefit.
Liberty Mutual denied benefits to Ms. Haukaas in November 2015, and the
South Dakota Department of Labor rejected Dr. Nipper’s medical opinion and
reinstated benefits in May 2017. While bad-faith claims raised in 2018, 2019,
2020, and 2021 might be relevant to the issues in this case, the expense of
producing them outweighs their likely benefit; bad-faith conduct alleged in
those claims would likely be remote for purposes of establishing a pattern and
practice. The same is true for bad-faith claims and regulatory complaints
raised in 2010 and 2011. Therefore, the court limits the scope of this
interrogatory to claims and regulatory complaints alleging bad faith from 2012
through 2017.
Liberty Mutual presents as an untenable hypothetical a scenario where a
Liberty Mutual affiliate in New Jersey would need to produce information
pertaining to a bad-faith claim arising out of the handling of a commercial hail
claim in New Jersey, where different laws govern and different company
23

guidelines apply to the claim. The court doubts this parade of horribles would
come to pass. First, the court has narrowed this interrogatory to claims and
regulatory complaints arising from a denial after an IME—that limitation
excludes hail damage files. Second, this interrogatory is directed at Liberty
Mutual or anyone acting at its direction, not the breadth of Liberty Mutualaffiliated companies around the country or globe. See Docket No. 38-1 at
pp. 1, 4. So, it follows that only claims raised against Liberty Mutual, not its
various affiliated entities, are responsive to this request.
Liberty Mutual also objects, for the first time in its response to the
motion to compel, on the basis that it should not be forced to re-litigate the
issue of whether any bad-faith claim, regardless of the type of claim or
underwriting company, is relevant to punitive damages. Docket No. 39 at p. 17
n.11. This is because, Liberty Mutual argues, it should not be subject to what
is effectively a civil version of double jeopardy. Id. (citing in re “Agent Orange”
Prod. Liab. Litig., 100 F.R.D. 718, 728 (E.D.N.Y. 1983) (“There must . . . be
some limit, either as a matter of policy or as a matter of due process, to the
amount of times defendants may be punished for a single transaction.”)), aff’d,
818 F.2d 145 (2d Cir. 1987), cert. denied, 484 U.S. 1004 (1988); In re “Dalkon
Shield” Prod. Liab. Litig., 526 F. Supp. 887, 899 (N.D. Cal. 1981) (“A defendant
has a due process right to be protected against unlimited multiple punishment
for the same act.”), vacated on other grounds, 693 F.2d 847, 852 (9th Cir.
1982), cert. denied, 459 U.S. 1171 (1983)).

24

This argument fails on several grounds. First, and most foundationally,
Liberty Mutual has not shown that it has previously defended any lawsuits
arising from the facts alleged by Ms. Haukaas herein. Without any such prior
legal action, there is no likelihood whatsoever that Liberty Mutual will be
subject to multifarious liability for the same act. Second, Liberty Mutual has
not identified any other cases where it has already litigated the issue of
whether prior bad-faith claims are relevant to present bad-faith claims,
regardless of type of claim or underwriting company. Without any showing of
which prior lawsuits arguably preclude the litigation of this issue, the court
cannot begin to assess Liberty Mutual’s argument.
Lastly, Liberty Mutual suggests this interrogatory is improper because it
would require it to disclose information subject to confidentiality agreements
between parties to the prior litigation. This concern can be ameliorated
through the entry of a protective order, and confidentiality clauses in
settlement agreements typically include an exception if disclosure is ordered by
a court. The court will grant a protective order that ensures the continued
confidentiality of the information in its use in this litigation. In summary,
Liberty Mutual is ordered to identify and state the outcome of the litigation of
bad faith claims and regulatory complaint lodged against it in the years 2012
through 2017 where the denial of benefits followed an IME.

25

3.

Interrogatory Five, Interrogatory Six & Request for Production
Eight

Interrogatory five asks Liberty Mutual to:
Identify each person hired to conduct an IME or Records Review from
November 3, 2010 to the present of any insured of The First Liberty
Insurance Corporation, Liberty Mutual Insurance Company, Liberty
Mutual Group, Inc., LMHC Massachusetts Holdings, Inc., Liberty Mutual
Holding Company, Inc., or any parent or subsidiary of those entities.
This interrogatory is not limited to persons hired by those entities but
also includes persons hired by any affiliate or agent of those listed
entities.
Docket No. 38-1 at p. 4.
Interrogatory six asks Liberty Mutual to state, for each person identified
in interrogatory five,
a.

How many times the person was hired to conduct and [sic] IME or
Records Review.

b.

How many claims were denied based wholly or in part upon the
IME or Records Review results.

c.

The steps taken by you to determine any biases each person
identified in Interrogatory Number 141 had.

Docket No. 38-1 at p. 4.
Request for production eight asks Liberty Mutual to “[p]roduce a copy of
each IME report or Medical Records review from November 3, 2010 to the
present, as referenced in Interrogatory Numbers 5 and 6. For purposes of this
request, you may redact any personal identifying information of the claimant.
This request is not limited in geographical scope.” Docket No. 38-1 at p. 5.
Liberty Mutual has already produced IME reports authored by Dr. Nipper.

This appears to be a drafting error, and the court interprets this subpart to
reference interrogatory five.
1

26

Since making these discovery requests, Ms. Haukaas has agreed to limit
the timeframe to 2012 to the present. Docket No. 37 at pp. 37-38. The court
first considers whether Ms. Haukaas has met her initial burden to show the
relevance of information related to the individuals Liberty Mutual has hired to
perform IMEs and documents related to the IMEs themselves.
Ms. Haukaas asserts information about all IMEs performed at Liberty
Mutual’s request is relevant because Dr. McCall, Liberty Mutual’s expert, has
offered the opinion that, among other things, “[t]o determine whether
Dr. Nipper’s conclusions from conducting an IME exhibit any bias[,] his
conclusions need to be compared to the conclusions from a random sample of
IME reports conducted by other physicians on individuals with similar types of
conditions to those examined by Dr. Nipper where the IME was conducted after
a similar amount of time has elapsed between the date of reported occurrence
of the injury and the date of the IME.” Docket No. 38-12 at p. 2. “What needs
to be determined first is the fraction of times certified medical doctors
conducting IMEs in similar circumstances would make the same diagnosis.
Once this is accomplished, the fraction of times the particular doctor under
scrutiny makes this diagnosis can be compared to this population fraction to
determine whether any statistical evidence exists as to whether this doctor
makes this type of diagnosis more (or less) frequently than usual.” Id.
Dr. McCall concluded that Ms. Haukaas “provides no evidence about the
fraction of time certified medical doctors that examine patients in similar
circumstances to those examined by Dr. Nipper, when conducting an IME[,]
27

would make the same diagnosis. Therefore, any conclusion of bias is
unwarranted and is not based on any type of statistically reliable evidence.” Id.
at p. 3.
Thus, Ms. Haukaas argues, to address the defense outlined in
Dr. McCall’s report, she would need to study a sample of all IME reports from
similarly situated doctors evaluating similar injuries after a similar amount of
time from all other insurance companies in the country to ascertain a baseline
statistical probability that an IME report is favorable to an insurance company.
However, obtaining every IME report—or even simply logging the outcome of
every IME—is not a viable option for Ms. Haukaas. But IME reports in Liberty
Mutual’s possession are a different story; in this litigation, Ms. Haukaas is
empowered by Federal Rules of Civil Procedure 26 and 34 to request
information and documents from Liberty Mutual. And, Ms. Haukaas argues,
Liberty Mutual should not be entitled to offer Dr. McCall’s opinion—which says
Ms. Haukaas’ claim of bias must fail if she cannot determine a baseline
probability of whether an IME report favors the insurer—then shield itself from
discovery by arguing that producing information related to all IMEs—from
which such a statistical probability could be calculated—is irrelevant or unduly
burdensome.
Ms. Haukaas’ argument is compelling. Liberty Mutual put the outcomes
of all IMEs—including those performed for Liberty Mutual—at issue by
presenting the opinion of Dr. McCall. As such, information regarding the

28

outcomes of IMEs performed for Liberty Mutual from 2012 to the present is
relevant to the issues presented in this case.
Liberty Mutual resists this conclusion, arguing the rate at which
physicians it hires to perform IMEs cannot be relevant because Ms. Haukaas
has claimed Liberty Mutual engages in a pattern of hiring biased physicians.
Therefore, Liberty Mutual argues, any population statistic calculated from
IMEs performed for Liberty Mutual would not, one way or the other, tend to
show whether Dr. Nipper’s statistical likelihood of rendering an IME opinion in
favor of Liberty Mutual is so high as to suggest bias. Instead, Liberty Mutual
suggests the random sample of other doctors diagnosing similar injuries after a
similar amount of time must come from outside Liberty Mutual to be relevant
to Ms. Haukaas’ bad-faith claim. Docket No. 39 at p. 21.
There is sense in Liberty Mutual’s argument. It would be preferable for
the population statistic, against which Dr. McCall says Dr. Nipper’s statistic
should be compared, to be a truly representative sample of the whole insurance
industry. But, as Ms. Haukaas notes in her reply brief, these industry-wide
data are not readily available.
Regardless, relevance under Rule 26 is not so narrow that Ms. Haukaas’
mere allegation that Liberty Mutual has a pattern of hiring biased doctors can
operate to preclude her from discovering any data useful for calculating a
population statistic. “Relevancy . . . encompass[es] ‘any matter that could bear
on, or that reasonably could lead to other matter that could bear on, any issue
that is or may be in the case.’ ” E.E.O.C. v. Woodmen of the World Life Ins.
29

Soc’y, No. 8:03CV165, 2007 WL 1217919, at *1 (D. Neb. Mar. 15, 2007)
(quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)).
Indeed, such data could also be relevant to show that Liberty Mutual’s
population statistic is biased in favor of the insurer when compared to an
industry-wide population statistic; such a finding would be highly relevant to
Ms. Haukaas’ allegation of a pattern and practice of bad faith. Therefore, the
court overrules Liberty Mutual’s relevance objection.
Ms. Haukaas also asserts the reports themselves are—separate from
Dr. McCall’s opinion—relevant to the issue of Liberty Mutual’s knowledge that
it was hiring biased doctors to provide IMEs by issuing reports stating the
claimant’s physical ailments resolved within weeks of their injury and were the
result of a sprain or strain instead of a more significant injury. Ms. Haukaas’
expert, Dr. Lawlor, has reviewed Dr. Nipper’s IME opinions in several other
cases and concluded that Dr. Nipper commonly diagnoses sprains and strains
even when there is clear medical evidence indicating otherwise. Docket
No. 38-13 at p. 4. Ms. Haukaas argues that this, together with an IME opinion
from Dr. Mark Thomas, D.O., which also diagnosed the claimant with
sprain/strain injuries (Docket No. 38-14), suggests that Liberty Mutual has a
pattern and practice of hiring biased doctors, beyond Dr. Nipper, whose reports
are relevant to Ms. Haukaas’ bad-faith argument and her request for punitive
damages.
However, whether any given IME was rendered by a biased physician
cannot be determined by examining the IME report itself. That is, in the case
30

of the IME report of Dr. Thomas, there is no telling whether Dr. Thomas was
correct in diagnosing the claimant with sprain/strain injuries or if he
minimized the injuries out of bias in favor of the insurer.
Yet, as Ms. Haukaas notes in her reply brief, the IME reports might show
that physicians who issued IMEs favorable to the claimant were re-hired
significantly fewer times than physicians who issued IMEs favorable to the
insurer. Such a disparity would be highly relevant to Ms. Haukaas’ claim of
bad faith. The actual identities of physicians who are not at issue in this case
is, however, irrelevant. Even with a protective order or confidentiality
agreement, the possible benefit of disclosing the actual names of every
physician who performed an IME for Liberty Mutual from 2012 to the present
does not justify such an expansive disclosure of personal information.
Therefore, the motion to compel as to interrogatories five and six is denied.
Having concluded the outcomes of IME reports are relevant to
Ms. Haukaas’ bad-faith claim, the court turns next to Liberty Mutual’s
assertion that the burden and expense of producing this information is
disproportionate to the needs of the case. Again, Federal Rule of Civil
Procedure 26(b)(1) limits discovery to information that is “proportional to the
needs of the case, considering the importance of the issues at stake in the
action, the amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, the importance of the discovery in resolving
the issues, and whether the burden or expense of the proposed discovery
outweighs its likely benefit.” FED. R. CIV. P. 26(b)(1).
31

Liberty Mutual has asserted it would be virtually impossible for it to
comply with Ms. Haukaas’ request for information. In the context of
confidentiality and non-disclosure obligations that bind Liberty Mutual to
various claimants whose medical records would be caught up in the broad
disclosure of IME reports, Liberty Mutual argues the requests as drafted would
likely violate multiple states’ data privacy laws. The court believes the
application of redactions to the names of claimants, together with the
protective order already in place (docket nos. 19 & 26) and the protective order
contemplated in this opinion, should ameliorate these concerns.
Although Liberty Mutual makes much of the fact that it would need to
utilize its IME vendors to obtain copies of IME reports, those reports are still
within Liberty Mutual’s “control” under Federal Rule of Civil Procedure 34.
Rule 34 governs requests for the production of documents and provides that a
party may ask another party to permit copying of documents “in the
responding party’s possession, custody, or control.” See FED. R. CIV. P. 34(a)(1).
The concept of documents in a party’s “possession” or “custody” is clear
enough, but the concept of documents in a party’s “control” is not obvious
upon a reading of the rule.
The rule that has developed is that if a party “has the legal right to obtain
the document,” then the document is within that party’s “control” and, thus,
subject to production under Rule 34. See 8A Charles A. Wright, Arthur R.
Miller, & Richard L. Marcus, Fed. Practice & Procedure, '2210, at 397 (2d ed.
1994). “Because a client has the right, and the ready ability, to obtain copies
32

of documents gathered or created by its attorneys pursuant to their
representation of that client, such documents are clearly within the client=s
control.” American Soc. for the Prevention of Cruelty to Animals v. Ringling
Bros. & Barnum & Bailey Circus, 233 F.R.D. 209, 212 (D.D.C. 2006) (citing
Poole ex rel. Elliott v. Textron, Inc., 192 F.R.D. 494, 501 (D. Md. 2000); and
Poppino v. Jones Store Co., 1 F.R.D. 215, 219 (W.D. Mo. 1940)).
Thus, although the IME reports may be in the possession of Liberty
Mutual’s vendors, they are still discoverable in this litigation because Liberty
Mutual has a legal right to obtain them. The reports are within the control of
Liberty Mutual regardless of where they are stored and which entity actually
possesses them. Accordingly, the court considers Liberty Mutual’s assertion of
difficulty retrieving the reports only in terms of undue burden and
proportionality.
As far as logistical impracticability, Liberty Mutual has asserted
Ms. Haukaas’ request is virtually impossible to respond to. According to
Liberty Mutual, there is no database of IME reports and no internal mechanism
Liberty Mutual could use to identify for which claimants IMEs were performed.
The storage structure for claims within Liberty Mutual’s system of record does
not allow for text searches across multiple claims, and many of the individual
documents within claims files are not compatible with optical character
recognition. In order to retrieve an IME report to ascertain information about
its date, provider, and outcome, Liberty Mutual would first need to identify the
claim and then manually locate the report within the file. Liberty Mutual
33

estimates this process would need to be repeated hundreds of thousands of
times to log all IMEs performed on its behalf from 2012 to the present.
But, before it can retrieve IME reports from those hundreds of thousands
of files, Liberty Mutual first needs to identify the claims files that contain IME
reports. Liberty Mutual indicates it does not track the files in which an IME
has been performed, and it has no way of doing a controlled search of its files
to identify those claims quickly and accurately. Indeed, Liberty Mutual
suggests the most efficient way to identify most of the files where an IME has
been performed is working through payments made to its approved vendors
and manually reviewing each claim file to determine if the work performed by
the vendor was an IME. This process, according to Liberty Mutual, would still
not identify IMEs not performed through an approved vendor system due to
location or area of specialty.
Liberty Mutual offers 60,000 hours as a rough estimate to accomplish
this work. This burden and cost, Liberty Mutual argues, far outweighs any
benefit which Ms. Haukaas could reasonably expect to receive from this
information. The court is skeptical of this estimate. Although Liberty Mutual
itself may not track files in which IMEs are obtained, its agent Ohara almost
certainly does track such information. Liberty Mutual never explains why it
cannot simply ask Ohara (and any other third-party intermediaries that may
exist) to compile a list of Liberty Mutual cases in which Ohara procured IME
opinions for Liberty Mutual and, thus, narrow its search in that manner.
Ms. Haukaas argues the IME data sought are proportional to the needs of this
34

case when public policy and business-practices concerns are considered.
Ms. Haukaas argues the proportionality considerations in this case should be
weighed on the same terms as in Schultz, 2016 WL 3149686, at *7. There, the
court noted that
Rule 26 requires the court to consider, in regard to proportionality, not
only the amount of damages at stake, but also the importance of the
interests in the case, the parties’ access to relevant information, the
parties’ resources, how important the discovery is to the issues, and
whether the burden of producing the discovery outweighs its likely
benefit. See FED. R. CIV. P. 26(b)(1). The Advisory Committee notes
stress that public policy concerns, philosophic, social, or institutional
matters are to be considered and may dwarf the consideration indicated
by the “relatively small amounts of money or no money at all” that may
be at stake in the litigation. See FED. R. CIV. P. 26(b)(1), 2015 Advisory
Committee notes.
Ms. Schultz, as discussed above, has asserted a bad faith claim and a
claim for punitive damages. See Docket No. 1. Her theory of her bad
faith claim is that Sentinel’s denial of her claim was part of a larger,
company-wide culture of knowingly denying valid claims in order to
profit therefrom. It remains to be seen whether Ms. Schultz will prevail
on this claim, but if she does, her claim is about many victims of an
unscrupulous claims-handling practice. As a practical matter, most
insureds who are unfairly treated by Sentinel will not have the fortitude,
motivation, or luck to be able to bring suit. If punitive damages are
awarded, Ms. Schultz has the potential to affect Sentinel’s alleged
business practices and to remedy the situation for many insureds, not
just herself. It is this “value” of the case the court considers when
evaluating the proportionality of the discovery Ms. Schultz seeks, in
addition to the other factors set forth in Rule 26.
Id.
Ms. Haukaas argues these same public policy considerations should tip
the scales in favor of production in this case. “If the Plaintiff prevails here,” she
argues, “the outcome of this litigation could help change Liberty’s biased IME
practices that would benefit Liberty’s insureds. The potential public benefit of
this litigation is significant, and therefore, the discovery sought is not out of
35

proportion to the needs of this case and is also relevant to punitive damages in
this case.” Docket No. 46 at p. 9.
While the allegations in Ms. Haukaas’ complaint, similar to the
allegations in Schultz, assert the denial of her claim was part of a larger,
company-wide culture of knowingly denying valid claims and the “value” of this
case involves the potential to affect Liberty Mutual’s alleged business practices
and remedy unfavorable situations for many other insureds, that value still
does not outweigh the expense of an estimated 60,000 hours of work.
However, were the request limited in temporal and geographic scopes,
the balance of proportionality tips in favor of Ms. Haukaas. The court
concludes the time frame of 2012 through 2017 is appropriate to this request
for the same reasons stated regarding interrogatory four. Additionally, the
court will limit the geographical scope of request for production eight to the
states that make up the Eighth Circuit Court of Appeals—North Dakota, South
Dakota, Nebraska, Minnesota, Iowa, Missouri, and Arkansas. With the scope
of request for production eight limited in this manner, the court grants
Ms. Haukaas’ motion to compel.
Ms. Haukaas also suggests a solution whereby she would not seek IME
reports and data if Liberty Mutual gives up the opportunity to present
Dr. McCall’s opinion as a defense. This request to exclude evidence is outside
the scope of this discovery motion. Furthermore, admissibility of expert
opinions is a matter for the district court to determine, not this magistrate
judge.
36

Accordingly, Ms. Haukaas’ motion to compel a response to interrogatory
five (the identities of all physicians who performed IMEs for Liberty Mutual and
various affiliated entities) and interrogatory six (other information regarding the
physicians identified in response to interrogatory five) is denied on relevance
and proportionality grounds. As for request for production eight, the court
grants the motion to compel as narrowed. Liberty Mutual is directed to redact
all personal identifying information of claimants. Liberty Mutual is further
directed to redact all personal identifying information of the physicians who
performed the IMEs except for the physicians’ first, middle (where applicable),
and last initials and the state where they practice. The partial redaction of
physicians’ identifiers is calculated to protect their identities while enabling
Ms. Haukaas to track how many times physicians were rehired after rendering
opinions in favor of claimants. The production of these IME reports is subject
to the protective order already in place. Docket Nos. 19 & 26.
C.

Liberty Mutual’s Motion for a Protective Order
In its response to Ms. Haukaas’ motion to compel, Liberty Mutual makes

an affirmative motion for a protective order to prevent Ms. Haukaas from
serving it with additional unduly expensive and time-consuming discovery
requests. Docket No. 39. The court has the authority to issue a protective
order, upon a showing of good cause, to “protect a party or person from
annoyance, embarrassment, oppression, or undue burden or expense.” FED. R.
CIV. P. 26(c)(1). Such a protective order may, among other things, forbid the
requested disclosure or discovery, forbid inquiry into certain matters, or limit
37

the scope of disclosure or discovery to certain matters. FED. R. CIV. P.
26(c)(1)(A) through (D). The district court has broad discretion in deciding
whether the grant or deny a protective order. Miscellaneous Docket Matter No.
1 v. Miscellaneous Docket Matter No. 2, 197 F.3d 922, 925 (8th Cir. 1999)
(quoting Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984)).
Before the court considers the merits of the motion for a protective order,
it must consider a procedural challenge Ms. Haukaas has raised. After
Ms. Haukaas filed her reply in the normal course of briefing the motion to
compel, Liberty Mutual filed a reply in support of its motion for a protective
order. Docket No. 48. Ms. Haukaas has moved to strike this reply on the basis
that it is an improper surreply to the motion to compel in violation of Civil
Local Rule 7.1. Docket No. 50.
Civil Local Rule 7.1 sets forth the principles for briefing schedules in this
district. It provides for an initial brief filed with a motion, a response brief filed
by the non-moving party, and a reply brief filed by the moving party. However,
under Federal Rule of Civil Procedure 1, procedural rules “should be
construed, administered, and employed by the court and the parties to secure
the just, speedy, and inexpensive determination of every action and
proceeding.” FED. R. CIV. P. 1.
The court has reviewed the parties’ submissions and concludes the facts
and arguments presented by Liberty Mutual in its reply are not substantially
new. In the interest of facilitating a just, speedy, and inexpensive
determination of this action, the court denies Ms. Haukaas’ motion to strike
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and will not order or grant leave to file further briefing on this discovery
dispute, including on the issue of a protective order.
As for the motion for a protective order itself, the relief sought by Liberty
Mutual has been substantially addressed by this court’s determination of
Ms. Haukaas’ motion to compel. The court has denied Ms. Haukaas’ motion to
compel as to interrogatory three, which sought veil-piercing discovery. On the
subject of interrogatory four, Liberty Mutual asked for a protective order
limiting its scope geographically and in a manner consistent with the
allegations in Ms. Haukaas’ complaint. The court has already granted
Ms. Haukaas’ motion to compel as to interrogatory four in part, narrowed the
subject matter based on relevance, and narrowed the window of time for which
Liberty Mutual must respond. Accordingly, the court denies Liberty Mutual’s
motion for a protective order further limiting the scope of interrogatory four.
And the court has denied Ms. Haukaas’ motion to compel as to interrogatories
five and six. Therefore, the court concludes there is not good cause to support
the entry of a protective order further forbidding discovery into these areas.
However, a protective order covering disclosures of information from past
bad-faith litigation and IME reports is in order. The court grants in part
Liberty Mutual’s motion for a protective order.
D.

Attorneys’ Fees
Ms. Haukaas also asks the court for an award of costs and attorneys’

fees for bringing this motion to compel under Federal Rule of Civil Procedure
37(a)(5)(A). That rule states:
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(5) Payment of Expenses; Protective Orders.
(A) If the Motion Is Granted (or Disclosure or Discovery Is
Provided After Filing). If the motion is granted—or if the
disclosure or requested discovery is provided after the
motion was filed—the court must, after giving an opportunity
to be heard, require the party or deponent whose conduct
necessitated the motion, the party or attorney advising the
conduct, or both to pay the movant’s reasonable expenses
incurred in making the motion, including attorney’s fees.
But the court must not order this payment if:
(i) the movant filed the motion before attempting in good
faith to obtain the disclosure or discovery without court
action;
(ii) the opposing party’s nondisclosure, response, or objection
was substantially justified; or
(iii) other circumstances make an award of expenses unjust.
FED. R. CIV. P. 37(a)(5)(A). To satisfy this hearing requirement, the court “can
consider such questions on written submissions as well as on oral hearings.”
FED. R. CIV. P. 37(a)(4) advisory comm. note to 1993 amendment (regarding
Rule 37(a)(4), which has since been renumbered as Rule 37(a)(5)).
Rule 37(a)(5)(C) provides that, if a Rule 37 discovery motion “is granted in
part and denied in part, the court . . . may, after giving an opportunity to be
heard, apportion the reasonable expenses for the motion.” FED. R. CIV. P.
37(a)(5)(C). The district court has wide latitude in discovery and the appellate
court reviews “discovery matters only ‘for gross abuse of discretion resulting in
fundamental unfairness in the trial of the case.’ ” United States ex rel. O’Keefe
v. McDonnel Douglas Corp., 132 F.3d 1252, 1258 (8th Cir. 1998) (quoting Prow
v. Medtronic, Inc., 770 F.2d 117, 122 (8th Cir. 1985)). Similarly, the appellate
court only reverses a Rule 37 monetary award if the district court abused its
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discretion. Sentis Grp., Inc. v. Shell Oil Co., 559 F.3d 888, 889 (8th Cir. 2009)
(citing Int’l Bhd. of Elec. Workers, Local Union No. 545 v. Hope Elec., 380 F.3d
1084, 1105 (8th Cir. 2004)).
Here, the court has granted Ms. Haukaas’ motion to compel responses to
specific discovery requests. Therefore, Ms. Haukaas meets the first criterion of
Rule 37(a)(5)(A), and the court may consider apportioning reasonable expenses
for the motion. And Ms. Haukaas first raised the issue of costs and attorneys’
fees in her second motion to compel. See Docket No. 36 at p. 1. Therefore,
Liberty Mutual had an opportunity to be heard when it responded in writing to
Ms. Haukaas’ motion.
With these requirements satisfied, the court examines whether any of the
exceptions outlined in Rule 37(a)(5)(A)(i)-(iii) apply. If none of the exceptions
apply, the court must award reasonable costs. FED. R. CIV. P. 37(a)(5)(A).
First, Ms. Haukaas must not have filed the motion before attempting in
good faith to obtain the disclosure or discovery without court action.
Ms. Haukaas submitted to the court certification showing her attorneys’
attempts to resolve the discovery disputes without involving the court, and
defendants have not alleged any contrary facts or information. Therefore, the
court finds that Ms. Haukaas did not file this motion to compel before
attempting in good faith to resolve its discovery disputes with Liberty Mutual.
Liberty Mutual has not identified reasons why its objections were
substantially justified or any other circumstances that make the award of
expenses on this second motion to compel unjust, and reasonable expenses are
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required by Rule 37. Ms. Haukaas is directed to submit an affidavit of her
costs and attorneys’ fees associated with this motion as to the portions of the
motion on which she prevailed within 28 days of this order along with an
accounting of attorney hours and description of what those hours represent in
terms of attorney work. Liberty Mutual shall have 21 days thereafter to file
objections to the hours or amount of fees requested. Ms. Haukaas will then
have 14 days to file a reply if she wishes to do so.
CONCLUSION
Based on the foregoing facts, law, and analysis, it is hereby
ORDERED that the motion to compel [Docket No. 36] filed by plaintiff
Tonya Haukaas is granted as to interrogatory four (as narrowed) and request
for production eight (as narrowed). Defendant shall provide, within 15 days of
the date of this order, a plan for providing information responsive to this
request. Plaintiff’s motion to compel is denied as to interrogatories one, five,
and six and request for production one.
ORDERED that the motion for a protective order is granted in part. The
court will enter a protective order that ensures the continued confidentiality of
information and documents produced in response to interrogatory four and
request for production eight.
ORDERED that Ms. Haukaas shall be entitled to reasonable costs and
attorneys’ fees for bringing this motion to compel. Ms. Haukaas shall file an
affidavit with proof of service setting forth the time reasonably spent on this
motion attributable to the matters on which she prevailed, the hourly rate
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requested for attorneys’ fees and costs, and any factual matters pertinent to
the motion for attorneys’ fees within 28 days of this order. Defendant shall file
any and all objections to the allowance of fees within 21 days after receipt of
service of Ms. Haukaas’ motion and affidavit. Defendant may, by counter
affidavit, controvert any of the factual matters contained in Ms. Haukaas’
motion and may assert any factual matters bearing on the award of attorneys’
fees. D.S.D. LR 54.1(C). Ms. Haukaas shall have 14 days after service of
defendants’ response in opposition to file a reply.
NOTICE OF RIGHT TO APPEAL
Pursuant to 28 U.S.C. § 636(b)(1)(A), any party may seek reconsideration
of this order before the district court upon a showing that the order is clearly
erroneous or contrary to law. The parties have fourteen (14) days after service
of this order to file written objections pursuant to 28 U.S.C. § 636(b)(1)(A),
unless an extension of time for good cause is obtained. See FED. R. CIV. P.
72(a); 28 U.S.C. § 636(b)(1)(A). Failure to file timely objections will result in the
waiver of the right to appeal questions of fact. Id. Objections must be timely
and specific in order to require review by the district court. Thompson v. Nix,
897 F.2d 356 (8th Cir. 1990); Nash v. Black, 781 F.2d 665 (8th Cir. 1986).
DATED this 19th day of November, 2021.
BY THE COURT:

VERONICA L. DUFFY
United States Magistrate Judge
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