Ohio Supreme Court reverses decision requiring Farmers Insurance to hand over attorney communication
The Ohio Supreme Court has reversed an appeals court decision in an alleged bad faith lawsuit that would have required Farmers Insurance to hand over a claims file, including communications involving the company and its attorneys.
Plaintiffs, Melissa and Alexis Eddy, were involved in a 2020 collision, which court documents state was not their fault. As a result, documents state they received $100,000 from the at-fault driver’s policy, but believed it didn’t cover the extent of their injuries. They sought additional recovery under their underinsured motorist (UIM) policy with Farmers.
The Eddys sought an additional $150,000 from Farmers, which countered with $33,312, according to court documents.
Allegedly, the Eddys sued Farmers for breach of contract in 2021 after negotiations failed.
Farmers agreed to pay $150,000 in 2022 after it said it was presented with new medical information showing the extent of Melissa’s injuries. The 2021 suit was dropped.
A couple of months later, the Eddys filed a new lawsuit alleging bad faith misconduct in the handling of their claim. The Eddys allege that Farmers delayed the resolution of their claim, causing them to face long-term uncertainty as to their financial future and emotional and mental pain and distress.
The Supreme Court decision states that during discovery, the Eddys sought Farmers’ entire claims file regarding their UIM claim. Farmers produced most of the claim file but refused to produce documents created from the date the Eddys filed their coverage lawsuit through the issuing of its check resolving the claim.
Farmers argued that producing the contested documents would involve turning over the company’s communication with counsel after litigation was initiated and its work product in defending the lawsuit filed by Plaintiffs.
A trial court issued an order granting the motion to compel, noting it typically requires a judge’s on-camera review of the claims file materials. However, the court did not order an on-camera inspection.
Farmers appealed to the First District, arguing that the trial court erred by ordering production of the entire claim for dates after the Eddys filed their coverage lawsuit.
The appeals court sided with the trial court, using a 2001 Ohio Supreme Court decision, Boone v. Vanliner Ins. Co., which created an attorney-client privilege exception in insurer bad faith cases.
Farmers presents two objections, saying that the case is different from Boone because the documents were created while the company was engaged in litigation with its insured. In Boone, the documents dealt with were created before litigation began.
The insurance company also argued that the Boone decision was superseded by statutory enactment, R.C. 2317.02(A)(2), which requires a trial court to determine that the insured has made a prima facie showing of bad faith and conduct during an on-camera review to determine if the requested materials are related to bad faith misconduct.
In the Eddys’ case, the Ohio Supreme Court sent the matter back to the trial court to determine whether the Eddys have made a prima facie showing of bad faith, fraud, or criminal misconduct. It also required an on-camera review of the claim file to determine if the documents would ordinally be protected before making a decision to release the documents.
Image
Photo courtesy of Suspended Image/iStock