How to obtain the insurer’s internal records and overcome privilege objections
Missouri Injury & Insurance Law | missouriinjuryandinsurancelaw.com
Introduction
Discovery in insurance coverage and bad faith litigation presents unique challenges. The insurer’s claim file contains some of the most relevant evidence in a bad faith case—adjuster notes, reserve histories, internal communications, and coverage analyses—but insurers routinely assert work product and attorney-client privilege over large portions of these materials. This post examines Missouri’s discovery rules as applied to insurance claim files, the scope and limits of applicable privilege protections, and the strategies practitioners can use to obtain the documents they need.
The Claim File as Evidence
The insurer’s claim file is the central repository of evidence in a bad faith case. It contains the adjuster’s contemporaneous notes reflecting what the insurer knew and when it knew it, reserve histories that reveal the insurer’s internal assessment of its exposure, coverage analyses prepared by staff or outside counsel, and all communications between the insurer and the insured. Obtaining a complete, unredacted claim file is typically the first and most important discovery objective in any bad faith case.
Under Mo. R. Civ. P. 56.01, a party may obtain discovery of any non-privileged matter relevant to the subject matter of the pending action. The relevance standard in Missouri is broad—materials need only be reasonably calculated to lead to the discovery of admissible evidence. The claim file clearly meets this standard in coverage and bad faith litigation, and blanket objections to claim file production should be challenged vigorously.
Work Product Doctrine in Insurance Litigation
Insurers frequently assert work product protection over claim file materials prepared in anticipation of litigation. Mo. R. Civ. P. 56.01(c)(3) codifies the work product doctrine, protecting documents and tangible things prepared in anticipation of litigation or for trial by a party or its representative. However, in the insurance context, the doctrine has important limitations.
Missouri courts have recognized the ‘ordinary course of business’ exception to work product protection in insurance cases. Materials prepared in the ordinary course of the insurer’s claims adjustment process—i.e., materials the insurer would have prepared regardless of whether litigation was anticipated—are not protected as work product. This distinction is critical because most claim file materials are prepared as part of routine claims handling, not in anticipation of litigation. Practitioners should argue strenuously that materials prepared before the insurer retained litigation counsel, or before suit was filed, fall outside work product protection.
Attorney-Client Privilege and the Common Interest Doctrine
Insurers may also assert attorney-client privilege over communications between claims personnel and in-house or outside coverage counsel. In the context of bad faith litigation, Missouri courts have recognized that the attorney-client privilege may be overcome by the crime-fraud exception or where the plaintiff can demonstrate that the advice of counsel was used to facilitate the bad faith conduct.
The common interest doctrine may also be relevant in cases where the insurer and insured share a common defense interest in underlying litigation. However, where a reservation of rights has created a conflict of interest between the insurer and insured, the common interest doctrine may not protect communications between the insurer’s defense counsel and the insurer’s coverage counsel from discovery by the insured.
Deposing the Claims Adjuster
The claims adjuster’s deposition is typically the most important deposition in a bad faith case. Practitioners should prepare thoroughly to examine the adjuster on: the timeline of the investigation; what information was available at the time of the settlement demand; how the adjuster valued the claim and apportioned fault; what reserve amounts were set and when; what communications occurred with supervisors or coverage counsel; and the basis for any decision to reject a settlement demand.
Adjuster deposition preparation should include a careful review of all produced claim file materials, the insurer’s claims handling guidelines, and the UCSPA standards under Mo. Rev. Stat. § 375.1000 (2023). Line-by-line cross-examination of the adjuster against the UCSPA’s specific requirements can be devastatingly effective when the insurer’s conduct deviated from those standards.
Conclusion
Discovery in insurance coverage litigation requires a sophisticated understanding of Missouri’s discovery rules, the applicable privilege doctrines, and the specific evidence needed to support a bad faith claim. Practitioners who approach coverage discovery with the same rigor they apply to liability discovery will be best positioned to develop the complete factual record necessary for success at trial or in settlement negotiations.
