Who to depose, what to demand, and how to build the record that proves bad faith from the inside out
Missouri Injury & Insurance Law | missouriinjuryandinsurancelaw.com
Missouri Injury & Insurance Law | missouriinjuryandinsurancelaw.com
Introduction
A bad faith claim against a Missouri liability insurer is won or lost on the insurer’s own internal records. As the Western District made clear in Rinehart v. Shelter General Insurance Co., 261 S.W.3d 583 (Mo. App. W.D. 2008), the evidence proving a bad faith claim comes from evidence of how the company handled the claim, and that evidence is relevant to demonstrate the insurer’s state of mind. The fiduciary duty framework established in Craig v. Iowa Kemper Mutual Insurance Co., 565 S.W.2d 716 (Mo. App. W.D. 1978), Young v. United States Fidelity and Guaranty Co., 588 S.W.2d 46 (Mo. App. S.D. 1979), and Scottsdale Insurance Co. v. Addison Insurance Co., 448 S.W.3d 818 (Mo. 2014) defines what the insurer was obligated to do. Discovery defines what the insurer actually did. The gap between the two is your case.
This practice guide sets out an introduction to the discovery framework for Missouri bad faith and breach of fiduciary duty cases. It identifies the categories of documents and information to demand, the witnesses most likely to have relevant knowledge, and general deposition topics that will develop the record needed to establish both liability and the full measure of damages available under Scottsdale—including damages beyond any excess judgment and punitive damages under the Rinehart standard.
The Discovery Objective: Proving State of Mind
Before turning to the specific discovery items, it is worth pausing on the overarching objective. Unlike most tort litigation, where the defendant’s subjective state of mind is relevant only to punitive damages, bad faith insurance litigation treats state of mind as central to liability itself. The core question under Scottsdale is whether the insurer was ‘guilty of fraud or bad faith’ in refusing to settle—an inquiry that is inherently subjective. What did the insurer know? When did it know it? What did it do with that knowledge? Did it give weight to the insured’s financial interests, or did it subordinate those interests to its own?
Discovery requests and deposition questions in a bad faith case should be calibrated to answer these questions. The insurer’s internal documents—claim notes, reserve analyses, supervisor approvals, coverage opinions, and communications with defense counsel—are the primary evidence of state of mind. The depositions of claims personnel, supervisors, and coverage counsel are the mechanism for authenticating those documents, filling gaps, and pressing witnesses on the reasoning behind key decisions. The two categories of discovery work together and should be developed in parallel.
Practice Tip: File a pre-suit demand for the claims file and after suit file your written discovery requests as early as possible. The claim file is time-sensitive: adjusters leave, notes get supplemented, and despite regulatory requirements to preserve the claims file experience has taught that electronic records may not be preserved unless litigation holds are in place. A pre-suit demand for the claim file is appropriate as the claims file belongs to the insured. An early demand creates an early record if the claims file is provided as required by law or if documents go missing.
Part I: Document Discovery — What to Demand and Why
A. The Complete Claim File
The claim file is the single most important document production in a bad faith case. It should be demanded in its entirety, without redaction, from the date of first notice through the present. The demand should be specific about what the claim file includes to prevent selective production.
1. Complete claim file, all volumes. Including all adjuster notes, diary entries, activity logs, status reports, coverage analyses, and internal memoranda from first notice of claim through the present. Demand both paper and electronically stored versions. The electronic claim file often contains metadata—timestamps, edit histories, deleted entries—not present in printed versions.
2. All reserve worksheets and reserve change documentation. Reserves reflect the insurer’s contemporaneous assessment of its exposure. Reserve increases, particularly those made close in time to a settlement demand, are among the most powerful evidence of bad faith. An insurer that raised its reserve to policy limits or beyond while simultaneously refusing a within-limits demand has documented its own awareness of the claim’s value.
3. All communications with the insured regarding the claim. Including all letters, emails, texts, and recorded statements. These establish what the insurer told the insured about the status of the claim, whether the insured was informed of settlement demands, and whether the insurer fulfilled its obligation under Craig to act as a fiduciary toward the insured.
4. All communications with claimant’s counsel or claimant. Including all settlement correspondence, demands, offers, counteroffers, and rejection letters. The timing and content of settlement communications is central to establishing whether the insurer made a good faith effort to resolve the claim within policy limits.
5. All communications with defense counsel assigned to the underlying case. Including litigation reports, status updates, trial evaluations, and settlement recommendations. Defense counsel’s assessment of the claim’s value and the risk of an excess verdict is critical evidence. An insurer that ignored its own defense counsel’s recommendation to settle acted in conscious disregard of the risk to its insured.
6. All communications with coverage counsel. Including coverage opinions, reservation of rights analyses, and declaratory judgment strategy. These documents reveal the insurer’s awareness of coverage issues and the timing of its coverage decisions relative to settlement opportunities.
Practice Tip: Expect the insurer to assert work product or attorney client protection over some or all of these documents. Be prepared to argue these objections and insist on a privilege log. Generally speaking, all documents in the claims file fall under the ordinary course of business exception for pre-suit materials. There is a possibility of a document being included that probably should not be in the claims file that may be subject to privilege. Seek in camera review for disputed pre-suit documents.
B. Investigation Records
The thoroughness—or lack thereof—of the insurer’s investigation is central to the fiduciary duty analysis. Under Standard Artificial Limb, Inc. v. Allianz Insurance Co., 895 S.W.2d 205 (Mo. App. E.D. 1995), an insurer cannot ignore facts known to it or ascertainable through reasonable investigation. Discovery into the investigation record exposes whether the insurer fulfilled this obligation.
7. All investigation reports, field reports, and surveillance records. Including reports from independent investigators, surveillance footage, accident reconstruction reports, and scene photographs. An investigation that focused on undermining the claimant’s damages while ignoring clear liability evidence suggests the insurer was building a file to justify a low offer rather than genuinely evaluating its exposure.
8. All recorded and written statements taken from witnesses. Including the insured, the claimant, eyewitnesses, and expert witnesses. The content and timing of statements taken reveals what the insurer knew about liability and damages at key decision points.
9. All medical records and medical bill summaries obtained by the insurer. Including records obtained by the insurer’s independent medical examiners or nurse case managers. The insurer’s own medical records establish what it knew about the severity of the claimant’s injuries when evaluating settlement demands.
10. All independent medical examination reports. Including the retaining letter, curriculum vitae, fee arrangements, and prior reports by the same examiner for the same insurer. A pattern of favorable opinions from a frequently retained IME physician is relevant to the reasonableness of the insurer’s reliance on those opinions.
11. All expert reports and consultant communications. Including accident reconstruction, vocational rehabilitation, life care planning, and economic loss analyses. These documents establish the insurer’s awareness of the full scope of the claimant’s damages.
C. Claims Handling Policies and Guidelines
The insurer’s internal policies and guidelines establish the standard of conduct the insurer set for itself and provide the benchmark against which its actual conduct is measured. Deviation from internal guidelines is powerful evidence of unreasonable claims handling.
12. Claims handling manuals, guidelines, and best practices in effect at the time of the claim. These establish the procedures the insurer required its adjusters to follow. Cross-examination of adjusters against their own company’s guidelines—demonstrating that they failed to follow procedures they were required to observe—is among the most effective techniques in bad faith litigation.
13. Settlement authority matrices and approval procedures. These documents identify the monetary thresholds at which supervisor approval is required for settlement and reveal the organizational chain of command for settlement decisions. They allow the practitioner to identify every individual who had authority over the settlement decision and to trace the approval process—or its failure.
14. Training materials for claims adjusters on fiduciary duty, good faith, and bad faith. Insurers routinely train adjusters on the legal standards governing their conduct. Training materials that accurately describe the fiduciary duty—combined with evidence that the adjuster failed to meet that standard in practice—are devastating in cross-examination.
15. Performance evaluation criteria and incentive compensation structures for adjusters. These documents reveal whether adjusters were financially incentivized to minimize payouts. An insurer that evaluated and compensated adjusters based on claim savings has created a structural conflict between the adjuster’s financial interests and the insured’s interests—precisely the conflict the fiduciary duty is designed to prevent.
D. Regulatory and Prior Claim Records
16. All Missouri Department of Insurance market conduct examination reports. Market conduct examinations by the Department of Insurance may reveal a pattern of claims handling deficiencies. Prior regulatory findings against the insurer for similar conduct are relevant to punitive damages under the Rinehart standard and to establishing that the conduct was a general business practice rather than an isolated occurrence.
17. All prior bad faith claims, lawsuits, or judgments against the insurer in Missouri within the past ten years involving similar claims handling conduct. Prior bad faith findings or settlements involving the same type of conduct are relevant to punitive damages and to demonstrating that the insurer’s conduct was not inadvertent. Expect vigorous objection to this request; be prepared to brief the relevance argument and to accept reasonable temporal and geographic limitations. You need not limit your inquiry to Missouri, depending on the insurance company, its claims history, regulatory history, litigation history, and size may justify seeking multistate or nationwide prior bad conduct.
18. All complaints filed with the Missouri Department of Insurance against the insurer regarding claims handling practices. Consumer complaint records maintained by the Department of Insurance may reveal a pattern of the same type of conduct at issue in the case. These records are publicly available through the Department and should be obtained directly in addition to being demanded in discovery.
E. Damages-Related Discovery
19. All documents reflecting the insured’s financial condition, including any bankruptcy filings, credit reports, or financial statements obtained by the insurer. These documents are relevant to the Scottsdale damages analysis, which encompasses the financial effects of the judgment, fear of financial ruin, and bankruptcy. The insurer’s own awareness of the insured’s financial vulnerability at the time of its refusal to settle bears directly on the recklessness of that refusal.
20. All communications regarding the insured’s demand that the insurer settle the claim or protect the insured from an excess judgment. Any direct communication from the insured to the insurer about the risk of an excess verdict is critical evidence. An insured who pleaded with the insurer to protect it from financial ruin—and whose plea was ignored—has made the insurer’s disregard of the fiduciary duty concrete and personal.
Practice Tip: Do not overlook the insured as a source of documentary evidence. The insured may have copies of correspondence with the insurer, notes from telephone conversations, and records of promises made by the adjuster that are not in the insurer’s claim file. Obtain and preserve these records early.
F. Miscellaneous
21. All advertising for the type of coverage/policy purchased by the insured. Insurance company advertising often includes representations and promises relevant to claims handling and service or protection provided by the policy. These statements may be in TV commercials, radio ads, on websites, or in written materials associated with the promotion and sale of policies.
22. All litigation management guidelines, and case type guidelines for defense counsel. Insurance companies develop litigation guidelines for the lawyers they retain that sets out the standards for defense counsel including information about communication, litigation reports, expert witness, case evaluation, and settlement. Some insurers also provide case guidelines for example a manual on how to defend brain injury cases. These documents provide valuable information about the insurance companies practices, standards and goals.
23. Relevant Claims Adjacent Polices. There is often information, guidelines, standards or work rules that may be relevant to the claims handler’s work that are not part of the normal claims handling standards. Experience has taught me to seek out these rules to have a full understanding of the claim environment at any particular company. An example would be a policy issued by the company on when an adjuster can use internal resources or external resources such as a medical review by a nurse or doctor. The existence or nonexistence of such a policy, or the deviation from such a policy can help prove standards, breach, and state of mind.
Part II: Key Deponents — Who to Depose and What to Cover
A. The Primary Claims Adjuster
The primary claims adjuster is almost always the most important deponent in a Missouri bad faith case. The adjuster is the person who handled the claim on a day-to-day basis, made or recommended the key settlement decisions, and—under the Craig fiduciary framework—was acting as the insurer’s agent in discharging the insurer’s obligations to the insured. The adjuster’s deposition should be thorough and methodical.
1. Primary claims adjuster. Cover: training and qualifications; full claims handling timeline from first notice through resolution; what investigation was conducted and when; what the adjuster knew about liability and damages at each key decision point; how the adjuster valued the claim; reserve history and the reasoning behind reserve changes; what settlement authority the adjuster held; how the settlement demand was evaluated; what consideration was given to the insured’s excess exposure; whether the adjuster consulted with supervisors or coverage counsel; and the basis for the decision to reject the settlement demand. Examine the adjuster line by line against the company’s claims handling guidelines and the UCSPA standards under Mo. Rev. Stat. § 375.1000 (2023).
B. The Supervisory Chain
Settlement decisions on significant claims typically require supervisor approval at one or more levels above the primary adjuster. Every supervisor who reviewed, approved, or rejected a settlement decision is a potential deponent. These depositions establish that the insurer’s bad faith conduct was not the result of one rogue adjuster’s mistake—it was sanctioned at multiple levels of the organization.
2. Claims supervisor or unit manager. Cover: supervisory review process; what information was presented for approval; what additional investigation, if any, was directed; the supervisor’s own assessment of the claim’s value and the insured’s excess exposure; the basis for approving or directing the rejection of the settlement demand; and whether the supervisor considered the fiduciary obligation to the insured. The supervisor’s deposition should be coordinated with the adjuster’s deposition to identify inconsistencies.
3. Regional or national claims manager. Cover: company-wide claims handling policies; oversight of the adjuster and supervisor; awareness of the claim and its significance; any involvement in the settlement decision; and the insurer’s general approach to claims of this type and value. In cases involving a pattern of bad faith conduct, the claims manager’s deposition should explore what the insurer knew about prior similar conduct and what corrective action, if any, was taken.
C. Coverage Counsel
When the insurer retained coverage counsel to analyze the coverage question, that attorney is a potential deponent on non-privileged matters. The scope of permissible inquiry will be contested, but the timing of the coverage analysis, the information provided to coverage counsel, and the general nature of the coverage opinion are relevant and discoverable to the extent they are not protected by attorney-client privilege. Practitioners should be prepared to litigate the privilege question.
4. Coverage counsel retained by the insurer. Cover: when retained; what information was provided; the timeline of the coverage analysis; whether coverage counsel advised on the interaction between the coverage dispute and the settlement obligation; and whether coverage counsel was aware of the fiduciary duty the insurer owed to the insured notwithstanding the coverage dispute. Note that under Hyatt Corp. v. Occidental Fire & Casualty, 801 S.W.2d 382 (Mo. App. 1990), the fiduciary obligation persists through coverage disputes—coverage counsel’s awareness of this principle is directly relevant.
D. Defense Counsel in the Underlying Case
Defense counsel assigned by the insurer to defend the insured in the underlying litigation is a critical witness. Defense counsel’s trial evaluation—the counsel’s assessment of the risk of an excess verdict and the reasonableness of the settlement demand—is among the most compelling evidence of bad faith when the insurer ignored it.
5. Insurer-appointed defense counsel in the underlying litigation. Cover: litigation reports submitted to the insurer; trial evaluations and risk assessments; any recommendation to settle; the insurer’s response to those recommendations; communications with the insured about the risks of trial; whether defense counsel advised the insured of the risk of an excess verdict; and whether defense counsel was aware of any conflict of interest created by the reservation of rights. An insurer that rejected its own defense counsel’s settlement recommendation has powerful evidence working against it.
E. The Insured
The insured is not merely a nominal party in an assigned bad faith claim—the insured is a critical witness to the human and financial impact of the insurer’s breach of fiduciary duty. Under Scottsdale, damages include the fear of financial ruin, bankruptcy, and other intangibles. Only the insured can give that testimony.
6. The insured. Cover: the insured’s understanding of the defense and settlement process; any communications with the insurer about the risk of an excess verdict; whether the insurer informed the insured of settlement demands; the judgment against the insured, the emotional and personal impact of facing a judgment that the insurer could have prevented; and the insured’s relationship within the insurer—the insured was obligated to relinquish control of the defense and settlement, and/or the insurer denied coverage and abandoned its insured. The jury should hear what the insurer’s conduct meant to the insured in human terms.
F. Expert Witnesses
Bad faith cases in Missouri may require expert testimony on insurance industry standards and claims handling practices. The expert provides the jury with a framework for evaluating whether the insurer’s conduct conformed to or deviated from the standards that reasonable insurers observe. The insurer’s expert is a critical deponent as well.
7. Plaintiff’s insurance industry expert. Depose to authenticate the expert’s methodology, the standards relied upon, and the application of those standards to the facts of the case. The expert should address the UCSPA standards under Mo. Rev. Stat. § 375.1000 (2023), the fiduciary duty framework of Craig and Zumwalt, and the specific ways in which the insurer’s conduct deviated from industry norms. Prepare the expert to address the adjuster’s deposition testimony specifically.
8. Defendant insurer’s insurance industry expert. Depose to identify the specific bases for the opinion that the insurer’s conduct was reasonable; what facts the expert relied upon; whether the expert reviewed the complete claim file; and whether the expert is familiar with the Craig, Young, Truck Insurance Exchange, and Scottsdale framework. An insurer’s expert who has not accounted for the full fiduciary duty standard or who relied on an incomplete factual record is vulnerable on cross-examination.
G. Independent Medical Examiners and Retained Consultants
9. Independent medical examiner retained by the insurer. Cover: the scope of the examination; the records reviewed; the conclusions reached; the frequency with which the examiner is retained by this insurer; the examiner’s fee arrangements; and any prior opinions in similar cases. A pattern of insurer-favorable opinions from a frequently retained examiner undermines the reliability of the opinion and supports the inference that the insurer was building a pretextual record to justify a low valuation.
10. Any other retained consultant whose analysis influenced the settlement decision. Including accident reconstructionists, vocational experts, economists, or liability specialists. Cover the same areas as the IME deposition: scope of engagement, records reviewed, conclusions, and pattern of retention by the insurer. The consistency between consultant conclusions and the insurer’s preferred narrative is itself worth exploring.
H. Rule 30(b)(6) Corporate Representative
A notice of deposition under Mo. R. Civ. P. 57.03(b)(4)—the Missouri equivalent of Federal Rule 30(b)(6)—requiring the insurer to designate a corporate representative to testify on specified topics is an essential tool in bad faith litigation. The corporate representative’s testimony binds the insurer and fills gaps that individual deponents may try to avoid.
11. Corporate representative (Mo. R. Civ. P. 57.03(b)(4)) on specified topics. Specify topics including: the insurer’s claims handling policies and procedures; the insurer’s training program on fiduciary duty and good faith; the settlement authority matrix and approval procedures; the insurer’s reserve practices; the basis for the decision to reject the settlement demand; the insurer’s knowledge of the insured’s excess exposure; the insurer’s financial condition relevant to punitive damages; and any prior bad faith claims or regulatory actions. The corporate representative deposition often produces admissions that no individual witness would make on his or her own.
Part III: Organizing the Discovery Record for Trial
The discovery record in a bad faith case should be organized around the Scottsdale elements and the Zumwalt fiduciary standard from the outset. As documents are produced and depositions are taken, the practitioner should be building the narrative that answers the jury’s central question: did this insurer meet its duty to act in the insured’s best interest or did it sacrifice the insured to protect its own bottom line?
The most effective trial presentations in Missouri bad faith cases organize the insurer’s conduct chronologically—from first notice through the refusal to settle—and use the insurer’s own documents and witness testimony to tell the story. The reserve history shows when the insurer knew it had significant exposure. The adjuster’s notes show what investigation was—and was not—conducted. The settlement correspondence shows what the insurer said and when. The defense counsel’s trial evaluation shows what the insurer’s own lawyer thought the case was worth. And the insured’s testimony shows what all of this cost the real person whose interests the insurer was obligated to protect.
When those pieces are assembled from the insurer’s own records and witnesses, the breach of fiduciary duty does not need to be argued—it is demonstrated. That is the goal of every discovery request and every deposition in a Missouri bad faith case.
Practice Tip: Consider filing a motion to compel early and aggressively. Insurers routinely produce claim files with significant redactions and withhold key communications behind blanket privilege assertions. An early motion to compel—with a request for in camera review where appropriate—signals that you will not accept incomplete production and often produces supplemental materials that are among the most valuable documents in the case.
Conclusion
Missouri’s bad faith framework—anchored in the fiduciary duty of Craig and Zumwalt, refined through Scottsdale’s four-element test, and expanded by Rinehart’s punitive damages standard—provides a powerful basis for holding insurers accountable for breaches of their obligations to their insureds. But the framework is only as strong as the factual record built through discovery. The discovery checklist and deponent list set out in this guide provide a starting point for developing that record. The practitioner who demands every relevant document, deposes every relevant witness, and organizes the resulting record around the Scottsdale elements and the Craig fiduciary standard will be best positioned to present a compelling bad faith case.
