Ro v. Everest Indemnity Insurance Company et al

Filing 56

ORDER granting in part plaintiff's 41 Motion to Compel, by Judge Robert S. Lasnik. (KERR)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
_______________________________________
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DAEIL RO,
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Plaintiff,
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v.
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EVEREST INDEMNITY INSURANCE
)
COMPANY, et al,
)
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Defendants.
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_______________________________________)

Civil Case No. C16-0664RSL
ORDER GRANTING IN PART
PLAINTIFF’S MOTION TO COMPEL

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This matter comes before the Court on “Plaintiff’s Motion to Compel Discovery.” Dkt.

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# 41. Plaintiff alleges that Everest Indemnity Insurance Company, the insurer on a professional

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liability policy purchased by plaintiff’s employer, acted in bad faith when it denied his claim for

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coverage against third-party claims. Plaintiff seeks production of Everest’s unredacted claim file,

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all claims-handling manuals and guidelines, underwriting materials for the policy at issue, and

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reserve information. Having reviewed the memoranda, declarations, and exhibits submitted by

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the parties, the Court finds as follows:

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(1) Privilege Claims

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Everest has clearly and plainly stated that the seven progress notes that were redacted

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from the claim file reflect communications with counsel after the insurer was on notice that

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plaintiff intended to file an Insurance Fair Conduct Act (“IFCA”) claim. Plaintiff takes issue

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ORDER GRANTING IN PART
PLAINTIFF’S MOTION TO COMPEL - 1

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with the fact that the insurer has not disclosed the names of the attorneys involved in these

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communications or proven that the communications involved legal advice or were in anticipation

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of litigation. While the surrounding circumstances do not justify plaintiff’s unwillingness to

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credit Everest’s statements, the redactions are very limited and this issue can be resolved through

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an in camera review.1

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(2) Claims-Handling Manuals

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Request for Production No. 5 requests “all manuals, books, pamphlets, memoranda, best

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practice manuals, guidelines, and any and all other documents[] you use or rely upon and that in

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any way describe, detail, explain or address the manner or procedures that your agents or

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employees are to follow when receiving, investigating and/or adjusting claims for insurance

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benefits under any insurance policy you issued.” Dkt. # 42 at 13. See also Dkt. # 42 at 20.

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Lancer Claims Services, the agent that handled plaintiff’s claim on Everest’s behalf, has

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produced its claim-handling guidelines related to the type of insurance policy and claim at issue

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in this case. Everest has refused to produce its own manuals and guidelines regarding the

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handling of professional liability claims, however. Regardless of whether Lancer reviewed or

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was required to comply with Everest’s guidelines, Everest’s advice regarding how these claims

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should be handled is relevant to a determination of whether Everest and its agent behaved

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reasonably and/or in bad faith. While an insurer’s internal guidelines do not set the standard of

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reasonable care, they may inform the analysis (a) by showing an industry participant’s custom or

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practice and/or (b) by providing a benchmark by which to compare Lancer’s conduct and

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policies. Everest shall therefore provide any manuals or guidelines that apply generally to claims

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handling activities and any such documents regarding the handling of the type of professional

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Cedell v. Farmers Ins. Co. of Wash., 176 Wn.2d 686 (2013), is inapplicable. The Cedell
presumption that the attorney-client privilege does not apply as between an insurer and its insured
reflects the quasi-fiduciary duties owed in the first-party insurance context. No quasi-fiduciary duty
arises in the third-party context presented here, and the presumption that does not apply.

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ORDER GRANTING IN PART
PLAINTIFF’S MOTION TO COMPEL - 2

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liability claims at issue here.
Plaintiff has made no attempt to explain how documents related to other types of policies

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or claims are relevant to the issues in this case. Instructions to claims managers on how to

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investigate and adjust workers compensation, uninsured motorist, or first-person property claims

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have little, if any, relevance to the evaluation of plaintiff’s claim. Discovery of every document

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that addresses the manner in which Everest’s employees handle claims under every type of

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insurance it offers is neither relevant nor proportional to the needs of this case. Fed. R. Civ. P.

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26(b)(1).

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(3) Underwriting Materials
Plaintiff seeks production of all documents that “refer or relate in any way to the

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underwriting, application for, or issuance of, the Policy” purchased by his employer. Dkt. # 42 at

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12. Everest objects on relevance grounds, but evidence regarding the insured’s request for

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coverage and the negotiations that led to the selection of the form policy and endorsements may

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reflect the risks Everest expected to cover and/or the scope of coverage provided to employees

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like plaintiff. Silgan Containers v. Nat’l Union Fire Ins., 2011 WL 1058861, at *1 (N.D. Cal.

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Mar. 23, 2011); Bayley Const. v. Wausau Bus. Ins. Co., 2012 WL 6553790, at *2 (W.D. Wash.

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Dec. 14, 2012).

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(4) Reserve Information

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Everest redacted eleven entries in the claim file because they reflect “[c]onfidential and

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irrelevant reserve information.” Dkt. # 42 at 35-36. The establishment of a reserve amount is

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required by Washington law and is not, therefore, an admission of coverage or liability under the

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policy. Although it may provide insight into the way the claims adjusters who investigated and

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evaluated plaintiff’s claim valued the claim, the issue in this case is whether or not coverage

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exists, not whether the insurer low-balled a settlement offer or undervalued the claim. Plaintiff

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has not shown that the reserve information is relevant in this case.

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ORDER GRANTING IN PART
PLAINTIFF’S MOTION TO COMPEL - 3

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For all of the foregoing reasons, plaintiff’s motion to compel is GRANTED in part.

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Within fourteen days of this Order, Everest shall deliver to chambers unredacted copies of Dkt.

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# 42-1 at 2-3 for in camera review and shall produce to plaintiff (1) all manuals and guidelines of

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general applicability regarding claims handling procedures, (2) all manuals and guidelines

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regarding the handling of the type of professional liability claims at issue here, and (3) the

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underwriting materials related to this policy.

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Dated this 25th day of January, 2017.

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A

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Robert S. Lasnik
United States District Judge

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ORDER GRANTING IN PART
PLAINTIFF’S MOTION TO COMPEL - 4