What is discoverable and what is not discoverable in a professional negligence setting influences the viability of the claims. Attorney-Client privilege, work-product privilege and burdensomeness are all considerations in whether the material is discoverable. Judge Shulman gives a cogent explanation of the competing arguments in American Med. Alert Corp. v Evanston Ins. Co.
2018 NY Slip Op 30479(U) March 23, 2018 Supreme Court, New York County Docket Number: 655974/2016 .
“The question of whether insurance reserve information is discoverable is not easily answered. Preliminarily, Evanston never claimed that when it established a reserve (after AMAC notified insurer of the Lynch Action to which it was not a party in November 2015), insurer did so after consulting with coverage counsel which, in turn, would subject this information to attorney-client privilege. Rather, Evanston deems reserve information presumably referenced in the redacted claim notes not relevant to resolve the issue of coverage and not discoverable, because “the establishment of a reserve may merely reflect a prudent insurer’s recognition of the risks of inherent litigation rather than an admission of coverage or liability … ” National Union Fire Ins. Co. of Pittsburgh, Pa: v H&R Block, Inc., 2014 WL 4377845 at *3 (SONY, 2015).
As stated earlier, Evanston urges the court to simply presume the fact that every one of its adjusters’ claim note entries indisputably made on and after February 16, 2016 (retention of coverage counsel) and on and after April 27, 2016 (formal declination of defense coverage) is either protected as work product or by attorney-client privilege and/or prepared in anticipation of coverage litigation. Generally, there is case. law supporting this position and this court finds Bovis Lend Lease LMB, Inc. v Seasons Contracting Corp., 2002 WL 31729693 at *4 (SONY 2002) particularly instructive
(Exhibit B to Cohen Sur-Reply):
Insurance claim files may present difficult issues regarding where the line
should be drawn between documents prepared in the ordinary course of
the insurer’s business which, by its very nature, involves claim
investigation and analysis and documents prepared in anticipation of
litigation. As many courts have noted, it is often difficult to determine
whether documents prepared by an insurance company or its
representatives are entitled to work-product protection because the
insurers are in the business of investigating and adjusting claims. Where,
however, documents are generated after the insurer has declined
coverage of claim or after the insurer has referred the matter to counsel, it
can generally be said that insurer is fairly anticipating litigation and thus
product immunity will typically attach. Certainly, documents created after
litigation has already commenced, when the claims handlers’ work has
plainly shifted from investigating the initial claim to assisting in the defense
of the pending litigation and evaluating litigation exposure, are likely to be
covered by the work product doctrine (quotations, parentheses and
However, Evanston’s adjusters’ unredacted claim notes for the period November 2015 through February 12, 2016, seemingly tell a different story prior to the formal declination of coverage under the Policy in April 2016. ”
“Evanston bears the burden of establishing that its claim note entries after these significant dates are subject to attorney-client privilege and/or protected as work product. Despite insurer choosing not to file any specific fact-based affidavit by its representative with personal knowledge of the relevant facts, this court can fairly conclude that claim note entries made after April 27, 2016 (when Evanston issued a formal letter to plaintiff declining coverage under the Policy) were made in anticipation of AMAC initiating coverage litigation for declaratory and related relief, are work product or privilege protected and not discoverable.
Despite retaining coverage counsel on February 16, 2016, the same cannot be said with presumptive certainty about Evanston’s adjusters’ claim note entries made between that date and April 27, 2016. Relying on insurer’s claim notes·entries made prior to February 16, 2016, AMAC has established a factual predicate for the court’s discretionary in camera review of Evanston’s adjusters’ claim notes made during this particular period to determine whether they are work product or protected by attorney client privilege. Spearin v Linmar, 129 AD3d 528 (1’1 Dept 2015); see generally, Forman
v Henkin, 134 AD3d 529, 533 (1’1 Dept 2015), Accordingly, this court grants the branch of AMAC’s order to show cause to deliver a copy of unredacted claim notes for this particular period to the courthouse at 60 Centre Street, Room 325, New York, New York 10007 within two business days after the issuance of this order. This court will then issue an order apprising the parties of its findings. “