Written By Attorneys Robert T. Horst and Justin K. Fortescue
Note: this article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
The United States District Court for the Eastern District of Pennsylvania recently discussed the standard for the production of documents in an insurance bad faith case. In Santer v. Teachers Ins. and Annuity Ass'n, Civ. Act. No. 06-CV-1863, 2008 WL 755774 (E.D. Pa. March 19, 2008) the court required the Plaintiff to demonstrate a sufficient nexus between the bad faith practices alleged in the handling of Plaintiff's claim and the discovery being sought before ordering production of documents.
Santer worked for the University of Alabama ("UAB") and developed an injury which prevented her from working. UAB's disability provider, Teachers Insurance and Annuity Association ("TIAA"), initially approved payment of disability benefits. After TIAA sold the rights to administer its disability claims to Standard Benefit Administrators ("Standard"), Standard conducted surveillance on Santer and also arranged for her to undergo an independent medical examination and a functional capacity evaluation. Based upon the results from its investigation, Standard terminated Santer's disability benefits. Santer then initiated a lawsuit against both TIAA and Standard that included a cause of action for statutory bad faith pursuant to 42 Pa. Cons. Stat. Ann. § 8371.
During the discovery phase of this disability insurance matter, Standard and TIAA objected to various document requests made by Santer. Specifically, Santer demanded production of documents relating to: (1) TIAA and Standard's transaction evaluations of the disability claims business that TIAA sold to Standard; (2) Standard's performance evaluations of the units and individuals handling Santer's claim; and (3) claims denial letters from the third party vendors who performed Santer's independent medical examination and functional capacity evaluation. The Court reiterated the principle that discovery is not meant to be used to conduct a "'fishing expedition.'" Santer, 2008 WL 755774 at *2 (quoting Zuk v. E. Pa. Psychiatric Inst., 103 F.3d 294, 299 (3d Cir. 1996)). In furtherance of that principle, the court required the Plaintiff to show that the requested information was (1) sufficiently relevant to outweigh the burden of its production and (2) that the bad faith practices the information would support were actually applied in the handling of Plaintiff's claim. Because Santer failed to produce any hint that TIAA or Standard improperly reviewed her claim, and because she was unable to connect any of the practices the performance evaluations allegedly implied to the handling of her claim, the court found Santer was not entitled to the discovery sought in the first and second document requests.
The court did find that Santer was entitled to the production of claims denial letters and functional capacity evaluations. The court determined that Santer had connected some of the bad faith practices alleged to the particular document requests at issue, and noted that Standard was informed by one of its third party vendors that its functional capacity methodology had not been validated for patients suffering from the same condition suffered by Santer. In addition, Santer alleged that the independent medical examinations were conducted by an individual without a great deal of experience in evaluating the condition suffered by her. As a result, the court ordered the production of these documents, subject to the redaction of information concerning other insurance claimants.
Although many courts adopt a liberal view of the types of information a party must produce in discovery, the Santer court required the demonstration of a sufficient connection between the alleged bad faith practices and the discovery being requested before ordering compliance. In reaching such a conclusion, the Santer decision will be useful in litigating the reasonableness of discovery requests in bad faith cases. Please contact Robert T. Horst (rhorst@nldhlaw.com (215) 358-5180) or Justin K. Fortescue (jfortescue@nldhlaw.com (215) 358-5161) with any inquiries.
