The issue of the scope of attorney-client privilege in claim materials continues to be an issue for courts.  Both insureds and plaintiffs in underlying cases seek production of documents within a claim file.  As to litigation with an insured, the focus of legal decisions is on whether attorney-client privilege can be asserted as to portions of the file involving coverage or in-house counsel whereas with respect to underlying plaintiffs the issue is whether most if not all of the claim file is protected from production.

The Cedell v. Farmers Insurance Company of Washington, 176 Wn.2d 686, 295 P.3d 239 (2013), decision in Washington set out a process for determining whether an attorney’s work in the claims handling aspects of a claim serve to avoid the attorney-client privilege in litigation where insurer bad faith is asserted.  Since that decision there have been several decisions interpreting the scope of Cedell.  In Sousie v. Allstate Ins. Co, 2018 U.S. Dist. LEXIS 67771 (W.D. Wash. April 16, 2018), the court found that Cedell applied to allow the deposition of Allstate’s counsel.  The court noted that counsel assisted in processing the claim, conducted the examination under oath (which the court classified as part of investigating the claim), and wrote the letter denying the claim.  Therefore, even though the attorney’s participation as a witness may disqualify him as Allstate’s counsel in the coverage litigation, because Allstate was on notice of this issue, the deposition could go forward.  The framework in Cedell does not apply in all circumstances, and the presumption of production can be overcome.  For example, it does not apply in UIM claims because the insurer in essence steps in to the shoes of the tortfeasor.  See, Leahy v .State Farm Auto. Ins. Co., 3 Wn. App. 2d 613, 418 P.3d 175 (2018); Cedell supra.

As to efforts by an underlying plaintiff to obtain discovery from a claim file, courts have sided with the insured-underlying defendant in resisting production of the insured’s own statements.  In Figueroa v. Mariscal, 3 Wn. App. 139, 414 P.3d 590 (2018), the court found that information provided by an insured to the insurer was protected by the related work product doctrine because there was a reasonable expectation on the part of the insured that its statements would be confidential.   Courts may also be reluctant to place blanket protections, either on the basis of work product or attorney-client privilege on the entirety of a first- or third-party claim file. See, Amy’s Kitchen, Inc. v. Stukel Mt. Orgnaics, LLC, 2016 U.S. Dist. LEXIS 192170 (D. Or. Sept. 28, 2016).  Some states have adopted an insurer-insured privilege, but even there it may only extend to communications between an insured and its defending insurer.  Pietro v. Marriott Senior Living Servs., 348 Ill. App. 3d 541, 551, 810 N.E.2d 217, 226 (2004).  The common interest doctrine may also apply to protect communications.  United Servs. Auto. Ass’n v. Law Offices of Herssein & Herssein, P.A., 233 So. 3d 1224, 1230 (Fla. Dist. Ct. App. 2017).  There is the potential, however, that the underlying plaintiff may be entitled to other portions of the claim file, and the insurer and insured would need to argue that materials beyond just the communications are still protected as related to the protected communications.