An interesting privilege issue arose in the State of Washingtonâwhether a plaintiffâinsured may obtain her uninsured motorist carrierâs (UIM) post-litigation file in a bad-faith case.
Distinguishing between a general insurerâs claims fileâwhich is discoverableâand a UIM file, the Washington Court of Appeals ruled that the attorneyâclient privilege and work-product doctrine protect a UIM carrierâs post-litigation file. Richardson v. Govât Employees Ins. Co., 2017 WL 4367701 (Wash. Ct. App. Oct. 3, 2017). You may read the decision here.
Access to Attorneyâs Post-Litigation File?
GEICO provided Christine Richardson with personal injury protection (PIP) coverage and UIM coverage. After suffering injuries in a car accident, Richardson received a coverage-limits payment from the at-fault driver and money from GEICOâs PIP coverage, but that was not enough. So, she filed a UIM claim and later a bad-faith lawsuit after GEICO denied UIM coverage.
The trial court granted Richardsonâs motion to compel GEICOâs âlitigation file,â which included documents and communications generated by GEICOâs attorney after Richardson filed the bad-faith UIM lawsuit. The basis, you (rightfully) ask?
The trial court ruled that GEICO has an âongoing duty of good faith and fair dealing to its policy holders, even after a lawsuit has been commenced.â And it analogized the attorneyâs litigation file in bad-faith UIM lawsuits to an insurerâs âclaims fileâ in traditional bad-faith litigation.
Privilege âTensionâ in Bad-Faith Claims
The appellate court noted â[t]he principles of discovery and attorneyâclient privilege are in tension in insurance bad faith claims.â The court noted that, under Cedell v. Farmers Ins. Co. of Wash., 295 P.3d 339 (Wash. 2013) (available here) insurers in first-party bad-faith claims cannot invoke the attorneyâclient privilege to protect the claims file from discovery. There is a rebuttable presumption that the privilege does not apply and insureds may see the claims file.
But UIM claims are different from the privilege perspectiveâthere is no similar presumption that the insurer waives the privilege when sued for bad-faith handling of a UIM claim. Courts treat UIM claims differently because UIM carriers âstand in the shoesâ of the uninsured tortfeasor. The UIM carrier and insured are effectively adverse and, therefore, courts apply a higher standard for overcoming the privilege.
The Ruling
These standards, however, apply to pre-litigation claims files, and, in Richardson, the plaintiff sought GEICOâs post-litigation file. The court held the privilege-waiver issues that apply to pre-litigation claims files, whether in traditional bad-faith claims or UIM bad-faith claims, do not apply to an insurerâs post-litigation files.
The court flatly rejected the trial courtâs ruling that the privilege provides no protection for post-litigation files in UIM bad-faith litigation. Allowing Richardson to access GEICOâs litigation file would ârun afoulâ of the purposes underlying the privilege and the work-product doctrine. And rejecting the privilege would violate public policy and âhave a chilling effect on an insurerâs ability to defend itself against claim disputes.â