It has reached a level of absurdity that Florida home and business owners would find appalling, yet there appears to be no end in sight for the abuse by insurance companies of the state’s untenable work product privilege laws shielding their entire “claim file” from discovery in litigation.
A series of misinterpreted and sometimes contradictory court rulings during the last decade have created a situation in which the state courts and federal courts in Florida disagree on whether insurance carriers’ claim files are subject to discovery by plaintiffs in first-party property litigation. As a result, insurers are now afforded greater work product protection than any others in Florida’s state courts by being allowed to shield important reports, estimates, communications and photographs that would be subject to discovery in the state’s federal courts as well as in many of the other courts in the country.
The work product doctrine, which is incorporated into both the Federal and Florida Rules of Civil Procedure, is intended to shield from discovery documents and communications that are created in anticipation of litigation. It has been extended by Florida’s state courts to include all insurance company reports, communications, correspondence and routine claims investigation documents simply because the companies deem these materials to be part of their claim file, regardless of the fact that these documents were not generated in anticipation of litigation but rather during the routine course of claim investigation.
This has created a de facto new “insurer claim file” privilege that exists solely to enable insurers to exempt relevant documents from discovery, and it has quickly become the most confusing and arbitrarily enforced privilege in the state’s legal system. Insurers routinely invoke this privilege to avoid divulging everything except for copies of the actual policy and any written communications they had previously sent to the policyholder.
It seems preposterous to identify all pre-loss reports, photographs and emails starting from the moment when an insurer first issued a policy to have been generated in preparation for litigation. Yet somehow the state courts in Florida have (mis)interpreted several rulings and created an all-encompassing work product immunity for everything that insurers deem to be a part of their sacred claim file, regardless of whether litigation was actually being contemplated.
Oftentimes the best evidence to dispute an insurance company’s denial or underpayment of a claim is found in the contents of the company’s file. For example, insurers regularly deny claims resulting from water pipe bursts by stating that the loss is excluded from coverage because it was the result of repeated seepage and the damage was pre-existing. Policyholders typically respond by requesting all photographs and reports from all inspections performed by the insurance company prior to the loss in order to establish that the insurer has no basis to claim that the damage was progressive and pre-existing, rather than a sudden occurrence. However, the insurance company claims that those materials, generated before the loss, claim or litigation, are a part of their claim file and therefore not subject to discovery.
Similarly, documents created by insurance companies during their routine investigations after a loss, but well before a claim is denied or litigation is contemplated, are also shielded from discovery. This includes adjusters’ estimates, correspondence, investigative reports and photos. Some insurers even claim that reports issued by third-party independent adjusters and loss mediation specialists that have even been retained by the policyholders, not the insurers, are also part of their claim file and protected pursuant to the work product doctrine.
The end result is that in our state courts, policyholders are being denied access to insurers’ reports and communications that they would be entitled to receive in Florida’s federal courts and in many other courts. This built-in advantage for the insurance carriers makes it imperative in many cases for the policyholder to conduct their own investigations using public adjusters, engineers and remediation contractors in order to prove that a claim is valid, should be covered and adjusted for the appropriate amount. Add to that legal and expert witness fees and the cost to ensure that a claim is adjusted appropriately can become stifling.
Ironically, Citizens Property Insurance, the state-run company that is commonly referred to as the insurer of last resort, is an exception, as Florida law provides that it must make the contents of its complete underwriting and claim files available to its policyholders upon the submission of a simple form.
The Florida legislature should amend the Florida Insurance Code in order to extend this provision beyond Citizens and apply it to all insurance carriers which issue property insurance policies in Florida. Otherwise, the insurance companies will continue to be able to only disclose that which they wish, playing fast and loose with their claims documents, communications and ultimately their decisions, by simply deeming everything to be a part of their claim file.
B. Michael Clark, Jr. is a partner with the South Florida law firm Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A. He is a Florida Bar Board Certified Construction Law Specialist who focuses on construction law as well as residential and commercial property insurance matters. Susan C. Odess is an attorney with the firm who focuses on insurance law and represents residential and commercial property owners in insurance matters. Both are based in the firm’s Coral Gables office. 305-442-3334, www.srhl-law.com.
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