Underwriting manuals and files and claims professionals’ personnel files are guarded business records for any insurance company. These proprietary and confidential documents were the subject of discovery demands in a declaratory judgment action involving denial of defense and indemnity to a law firm in a professional liability action. In Westport Insurance Corp. v. Hippo Fleming & Pertile Law Offices, the federal court sitting in the Western District of Pennsylvania grappled with whether to compel production these sensitive documents.
The law firm contended that Westport’s coverage denial was made in bad faith and in breach of contract. To establish its claims, it sought Westport’s underwriting manual and file. The firm specifically sought information shared between claims and underwriting professionals in connection with an increase in premium tied to the underlying litigation. In opposition, Westport argued that the underwriting materials were irrelevant because there were no claims related to the underwriting of Hippo’s policy.
The court, however, found that although Hippo did not make any specific claims regarding the underwriting of its policy, the bad faith and breach of contract claims supported the discovery sought. The firm pointed to premium increases imposed by the insurer that were related to the underlying litigation. Given this allegation, the Court ruled that the underwriting files may be relevant and compelled production.
On the other hand, the Court was not inclined to order the insurer to produce personnel files of three claims adjusters who worked on Hippo’s underlying claim. Hippo argued the personnel files would help Hippo establish Westport’s corporate policy, standards, training, procedures and relationship with its employees. The court, however, did not believe Hippo’s reasoning for the request was sufficient to overcome the general privacy concerns when production of personnel files is at issue. Rather, the court noted that Hippo could obtain the information it needed through other, less invasive means, e.g. depositions of the employees.
In making both of these discovery rulings, the court noted that the case law in both areas (production of underwriting files and personnel files) is murky at best. Thus, the court reiterated that production of such information will depend on the specific facts and circumstances a on a case by case basis.
Thanks to Erin Connolly for her contribution.