By realizing that
anything on your computer may become part of a trial, you should be
motivated to pay particular attention to the documents you create.
In Arizona, the general rule is that an insurance
claim's file is discoverable in a bad faith action. Brown v.
Superior Court In and For Maricopa County, 137 Ariz. 327, 670
P.2d 725 (1983). Therefore, when investigating a potential claim,
proper maintenance of the claim's file is of paramount importance.
Additionally, evidence of claims handling practices as to other
insureds (not necessarily the one making the claim) is relevant to a
jury's findings assessing punitive damages when considering whether
the carrier's action are "reprehensible" enough to warrant punitive
damages. Merrick v. Paul Revere Life Ins. Co., 2007 WL
2458503 (9th Cir., Aug. 31, 2007).
Therefore, proper preservation and maintenance of
the claim's file is of utmost importance. The rules of litigation
have changed in order to accommodate the fact that many business
entities are moving toward, or utilizing, electronic (or
"paperless") files. Federal Rule of Civil Procedure 34 was amended
last year to allow discovery of a company's computer hardware and
software. Every e-mail may become the subject to discovery and,
perhaps, admissible evidence. The discovery may also entail
metadata, thus allowing an adverse party to view every change made
to every document.
This presents claims handlers and investigators with
a unique challenge and a unique opportunity. First, we should
appreciate the role that e-mail and electronic communication plays
in the workplace. Conversations that used to be held in the
hallways, over the phone or around the water cooler are now often
reduced to intra-office email. Oftentimes, however, the email
communication mirrors the "water cooler talk." The rule in your
office should therefore become, "If you don't want it read in front
of a jury, don't email it."
While this may seem a daunting warning, it also
provides a claims handler or investigator a clear standard of
practice. By realizing that anything on your computer may become
part of a trial, you should be motivated to pay particular attention
to the documents you create. This can, if approached properly, raise
the level of service provided to insureds and the insurance company.
This article was published in the Fall 2007 NSPII Newsletter.