Thought Leadership

Ms. Long made a claim for Underinsured Motorist benefits under a policy of auto insurance that the insurer had issued to her. Her lawyer sent a demand letter to the insurer, demanding UIM policy limits to avoid litigation. Three days later, the insurer completed its evaluation of her UIM claim. During the course of the subsequent litigation—where Long asserted causes of action for breach of contract and statutory insurance bad faith—the insurer produced its claim notes from its evaluation of Long’s UIM claim. Certain portions of its overall valuation and analysis of specific elements of Long’s claim were redacted based upon the work product doctrine. Long filed a discovery motion seeking to have those portions unredacted, and Judge Wolson reviewed the redacted material in camera.

Judge Wolson ultimately determined the insurer failed to carry its burden in showing that the redacted material was created in anticipation of litigation. The court noted the insurer had an obligation to investigate, evaluate and decide the claim presented by Long independent of the threat of litigation. The court further pointed to the fact that the demand letter “did not demand more than the insurer had offered, it did not demand more than the policy limits or threaten a bad faith claim, and the insurer had not yet hired outside counsel.”

The court distinguished this case from other cases cited by the insurer where the work product doctrine was determined to apply to the claim notes. In the other cases, the insurers had evaluated the claims and communicated their positions to the insureds before the demand letters were sent. In those situations, the insurers had already fulfilled their duties as insurers. Further, “revisitation of the claim analysis” following receipt of the demand letter “ties more to the litigation demand than a business need.”

The court further dismissed the insurer’s argument that, since it created the documents after the demand letter threatening litigation was received, the documents were necessarily created in anticipation of litigation. The court dismissed this per se argument, stating: “[a] demand letter, even one with a high settlement demand, does not absolve an insurance company of the duty to evaluate a claim.”

Insurers are, therefore, warned that the work product doctrine will not apply merely because claims notes and materials were generated after receipt of a demand threatening litigation without further evidence that such notes and materials were generated in anticipation of litigation. 

_{Case Law Alerts, 1st Quarter, January 2025 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2024 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.}