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The attorney-client and work product privileges do not apply to communications in an insurer’s claims file before the insurer’s decision to deny coverage, the Ohio Supreme Court ruled April 4 in a 4-3 decision ( Richard Boone v. Vanliner Insurance Co., No. 00-104, Ohio Sup.). Richard Boone sued his automobile insurer, Vanliner Insurance Co., for bad faith after it refused to pay uninsured/underinsured motorist benefits. Boone sought discovery of the insurer’s claims file which contained 1,741 documents. Vanliner submitted its claim file to the court for in camera review and the court found only 175 of the documents were protected from discovery, relying on the Ohio Supreme Court’s 1994 ruling in Moskovitz v. Mt. Sinai Med. Ctr. (69 Ohio St.3d 638, 635 N.E.2d 331). Vanliner appealed, arguing the trial court erred by applying Moskovitz, and by ordering production of 30 documents in the claims file that are protected by attorney-client and work product privilege. The appeals court agreed with Vanliner’s argument and found that of the 30 contested documents, only one was discoverable. Boone appealed to the Ohio Supreme Court. DOCUMENTS NOT PROTECTED The Ohio Supreme Court said its decision in Moskovitz held that in a prejudgment interest case (R.C. 1343.03C) in a medical malpractice action, the attorney-client and work product privilege do not bar discovery of the contents of an insurer’s claim file. The supreme court in Moskovitz said that “documents and other things showing the lack of a good faith effort to settle by a party or the attorneys acting on his or her behalf are wholly unworthy of the protections afforded by any claimed privilege.” The Ohio Supreme Court said the rationale behind its decision in Moskovitz is applicable to actions for bad faith denial of coverage. “That is, claims file materials that show an insurer’s lack of good faith in denying coverage are unworthy of protection,” the court said. “It appears, however, that in determining which documents were protected in this case, the trial court applied the specific holding in Moskovitz, i.e., only those documents containing attorney-client communications and work product that go directly to the theory of defenses of the underlying claim are protected. “We find this holding inapplicable in the present case because, while the lack of a good faith effort to settle involves conduct that may continue throughout the entire claims process, a lack of good faith in determining coverage involves conduct that occurs when assessment of coverage is being considered. Therefore, the only attorney-client and work-product documents that would contain information related to the bad faith claim, and, thus, be unworthy of protection, would have been created prior to the denial of coverage.” In a bad faith insurance action, the supreme court said, the insured is entitled to discover claims file materials that contain attorney-client communications related to the issue of coverage that were generated before the denial of coverage. “At that stage of the claims handling, the claims file materials will not contain work product, i.e., things prepared in anticipation of litigation, because at that point it has not yet been determined whether coverage exists. Of course, if the trial court finds that the release of this information will inhibit the insurer’s ability to defend on the underlying claim, it may issue a stay of the bad faith claim and related production of discovery pending the outcome of the underlying claim,” the supreme court held. PRODUCTION ORDERED The supreme court ordered production of several of the 29 documents that were created prior to American Family’s denial of coverage. Justice Andrew Douglas wrote the majority opinion, joined by Justices Alice Robie Resnick, Francis E. Sweeney and Paul E. Pfeifer. Justice Deborah L. Cook wrote a dissent, joined by Chief Justice Thomas J. Moyer and Justice Evelyn Lundberg Stratton. The dissent said the majority’s opinion diminishes the attorney-client privilege without a reasonable basis. “I cannot join the majority’s unsound decision to declare a whole species of communications undeserving of protection by the attorney-client privilege. I would treat bad-faith cases no differently from any other case and regard attorney-client communications as privileged when those communications satisfy all elements of the privilege,” Justice Cook said. Boone is represented by Richard H.H. Troxell of Blue, Wilson & Blue in Columbus, Ohio. Vanliner is represented by Mark S. Maddox of Frost & Maddox in Columbus, Ohio. � Copyright 2001 Mealey Publications, Inc.

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