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Insurance Law

Court Refuses to Recognize the Claim File Privilege as Providing a Basis for Refusing to Produce Documents in an Insured’s Claim File during Discovery

In Oahu Air, [subscribers can access an enhanced version of this opinion: | Lexis Advance], the Eastern District of California refused to recognize the claim file privilege, finding that federal privilege law did not recognize that privilege as a proper ground for withholding documents during discovery.

Oahu Air was a lawsuit filed by the insurer against third party defendants to obtain reimbursement of monies paid by the insurer to settle claims against its insured in a lawsuit for the mishandling of hazardous waste.  During discovery, the defendant requested documents from the carrier’s claim file.  The carrier objected to that request based on the “claim file privilege,” which the carrier argued protected from production to a third party the entire contents of its claim file for an underlying matter.  The defendant challenged that position in a motion to compel, which the court granted in part and denied in part.

The court held that federal privilege law does not recognize the claim file privilege and that the carrier’s assertion of that privilege was therefore improper. Notably, however, the court also held that the work product privilege was applicable to some of the documents sought by the defendant.  To the extent that the documents sought by the defendant were created in the anticipation of litigation, the court held that the work product privilege applied and that the documents need not be produced.

Carolina Cas. Ins. Co. v. Oahu Air Conditioning Serv., 2015 U.S. Dist. LEXIS 40786 (E.D. Cal. Mar. 27, 2015)

Originally published in California Insurance Law Quarterly - Spring 2015 Newsletter 06.03.15

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