United States: Protecting Insurer-Obtained Statements From Discovery

It is common in trucking cases for insurers or their adjusters to obtain statements from the insured driver or other important witnesses after the accident is reported to the carrier. It also is common for plaintiffs' attorneys to ask for any statements about the accident in discovery, causing the defense to disclose at the very least the existence of the insurer-obtained statements. These statements are particularly desirable from the claimant's point of view because they provide valuable information − a contemporaneous description of the accident. As a result, plaintiffs' attorneys will often fight to obtain these statements, resulting in contentious discovery battles during litigation.

It is important to know the general rules regarding the protection afforded to insurer-obtained statements in federal court, and below you will find some practical suggestions to help insurers and adjusters protect this information at the time it is prepared and thereafter.

THE WORK PRODUCT PRIVILEGE

In federal courts, statements insurers obtain are protected from discovery under Federal Rule of Civil Procedure 26(b)(3)(A), which states:

Documents and Tangible Things. Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent). But, subject to Rule 26(b)(4), those materials may be discovered if:

  1. they are otherwise discoverable under Rule 26(b)(1); and
  2. the party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means.

This provision is universally known as "the attorney work product doctrine." Plaintiffs' attorneys typically seem to believe that the attorney work product doctrine extends only to attorney work product, arguing that where the statement is taken prior to the hiring of defense counsel, the privilege does not apply. However, the quoted rule clearly states that the privilege extends to documents prepared not only by a party's attorney but also by its other representatives, which expressly includes a party's insurer or agent.

Perhaps the most litigated issue in the work product privilege is whether the statement was "prepared in anticipation of litigation." The rule makes this a condition to its application to any "work product" that might be protected. Certainly, witness statements obtained at or near the time of the incident will have been given before lawsuit is filed. To prove the statement is protected, the burden is on the defendant to establish that the insurer or adjuster obtained the statement because there was the potential for a lawsuit, and that the anticipation of potential litigation was reasonable.

In the case of United States v. Roxworthy, 457 F.3d 590, 594 (6th Cir. 2006), the Sixth Circuit Court of Appeals identified a two-part test to analyze whether a document is protected under F.R.C.P. 26(b)(3)(A):

(1) whether a document was created because of a party's subjective anticipation of litigation, as contrasted with an ordinary business purpose, and (2) whether that subjective anticipation of litigation was objectively reasonable.

These conditions should be at the forefront of the insurer's representative's thought process when taking a statement from a driver or witness.

ANTICIPATION OF LITIGATION

On one hand, if there was an accident that was serious enough for the trucking company to report it to the insurance carrier and for the insurance carrier to make the effort to obtain the driver's statement, the defense will have a strong argument that the insurer acquired the statement not for any standard business reason, but because there was the prospect of litigation on the horizon. On the other hand, insurers often run into an argument that because the taking of witness statements is standard practice, and not all claims go into litigation, the statement was taken for an ordinary business purpose and not specifically because the insurer anticipated litigation about this particular case. Indeed, it will be pointed out that an insurer may need the statement simply to adjust the claim made by the injured party, without necessarily any real anticipation of litigation.

Whether the subjective anticipation of litigation is objectively reasonable will be a legal determination by the court. We will generally argue that the facts and circumstances of the accident, which likely involve some claim that an individual was injured in the accident, should make the insurer's subjective anticipation of litigation actions objectively reasonable.

There is, of course, no one method that will satisfy every court to prove that this legal test for the privilege can be met, but below are a few thoughts on what insurers can do to demonstrate for a future court that a driver or witness statement was taken because of the anticipation of litigation. It should be noted that these suggestions come with no guarantees, and their effectiveness ultimately will be determined by the discretion of the court or jurisdiction that hears a discovery dispute about these statements.

STRATEGIES FOR A DISCOVERY DISPUTE

One suggestion is to include as a preface to the statement some comment by the insurer or the person taking the statement explaining why the statement is being taken and noting or acknowledging the potential for litigation. For example, the statement could say the driver was involved in an accident, some third person allegedly suffered injuries from the accident and the statement is being taken to investigate the accident in preparation for potential future litigation. How this is written will need to be tailored to the situation, but the use of this introductory note to explain why the insurer or adjuster believes there may be a lawsuit or claim in the future and the purpose for taking the statement can help satisfy the burden of protecting the statement from future discovery. Of course, the reasons incorporated should not include any admissions of liability or damages, which could undermine the insurer or policyholder's position later in the litigation.

Another suggestion is that the claims handler or adjuster who is either taking the statement or authorizing that the statement be taken, include a note in the claims file explaining the purpose of the statement. That note, made contemporaneously with the creation of the statement, could then, if needed, be produced to the court with a brief opposing the production of an insurer-obtained statement to show that the insurer at the time the statement was taken believed and reasonably anticipated that there could be litigation.

A third suggestion is to use outside counsel to secure statements, particularly in severe accidents. Counsel will generally have experience creating such statements and will know how to do so strategically to help in future litigation. The hiring of outside counsel presents a strong argument that this is not a "typical" investigation and that the insurer reasonably anticipates future litigation.

Once these issues are addressed and the defendant's burden to apply the privilege is satisfied, then the bulk of most disputes regarding the discovery of insurer-taken statements turns on the last part of the rule: whether, notwithstanding the protections afforded by the attorney work product doctrine, the plaintiff can show substantial need and undue hardship if the statement is not produced in discovery. This is the exception to the general rule of privilege and protection of these statements.

This exception allows the party seeking the statement to prove it should be produced because the party "has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means" even though the statement would otherwise be privileged from discovery. In other words, while there is a qualified privilege that attaches to insurer-obtained statements through F.R.C.P. 26(b)(3)(A), even if the privilege is established, it can be overcome; although the burden to overcome the privilege rests on the party seeking to invoke this exception to the general rule. Because the privilege can be overcome by the demonstration of a substantial need or undue hardship, the person creating this statement should always consider the fact that the statement might be turned over to the plaintiff, even if it is absolutely clear that litigation is imminent and anticipated.

THE SUBSTANTIAL NEED OR UNDUE HARDSHIP ARGUMENT

In litigating these issues, plaintiffs often repeat the same types of arguments to explain why the substantial need or undue hardship test can be met in their case. For instance, they may argue the statement could be useful for impeachment purposes or may include admissions by the driver. They also claim − a claim that sometimes has merit − that the memory of the person giving the statement was better at the time of the statement than when the case is being litigated, often years later, so the statement should be produced as a better representation of the driver's or witness's memory. However, there are several ways to attack these arguments.

Courts have held that plaintiffs must prove a particularized need for the statement in this case. Thus, a plaintiff's general argument that the statement is needed for impeachment or that the driver's memory was better at the time he or she gave the statement should be rejected because the fact that contemporaneous recordings of a person's memory is better than a later recollection is an argument that could be made in any case. As such, this argument does not provide a persuasive reason why the statement is needed for the particular litigation.

Plaintiffs also will face the uphill battle of explaining why they need the statement when they can depose the driver or other witness. The primary defense to a plaintiff's argument about substantial need and undue hardship is that the plaintiff does not need the statement because he or she has an alternative avenue to obtain the same information − through a deposition. Because the burden falls on plaintiffs to prove undue hardship or a substantial need, courts have required a plaintiff to prove that he or she cannot obtain the substantial equivalent of the insurer-taken statement by other means. Accordingly, so long as the driver or other witness is available to be deposed and has a memory of the collision, plaintiffs should be hard-pressed to establish that taking a deposition is not the substantial equivalent of obtaining the witness's written statement, even when the statement was taken years earlier and closer in time to the incident that is the subject of the litigation. This fact underscores the importance of keeping track of important witnesses following a significant casualty, which could result in future litigation.

While this article addresses how the federal courts can protect insurer-obtained statements, each state will have its own rules on whether or to what extent these statements are privileged. At the end of the day, the court where the dispute will be heard will determine whether the insurer-obtained statement will be protected from discovery. As a result, it is important that claims handlers and adjusters share statements obtained from witnesses with their liability defense counsel at the earliest stages of the litigation, since action regarding a choice of forum (such as removal to federal court, challenges to jurisdiction or transfer of venue) must usually be determined at the outset of a case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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