Discovery in a bad faith case, particularly in cases based on breach of a duty to settle or defend, is involved, intense and requires a great deal of planning at the onset of the litigation. Bad faith cases involve a number of potential witnesses on the insurance industry side who made decisions concerning the claim which form the basis of the allegations of bad faith made by claimant’s counsel. These individuals include the initial claims adjuster, litigation adjusters, claims and litigation supervisors and other senior personnel responsible for making decisions about coverage, settlement or the evaluation of the claim. In addition, numerous documents including, claims files, written and electronic communications, claims manuals, claims evaluation software and training materials are the subject of discovery and require early identification, careful management and precise legal objections when appropriate. Thus, it is incumbent upon counsel representing the insurance carrier to identify all the important players and documents that will be the subject of discovery.
This paper will focus on developing an initial discovery plan in bad faith cases, objections to production based upon attorney-client and work product privileges, preparing and defending depositions of insurance carriers’ representatives and, using targeted discovery to obtain admissions, exact specifications of bad faith and claimed damages and important documents from the policyholder. Although this paper is based upon my experiences defending bad faith cases based upon a breach of a duty to settle or defend and coverage disputes, these principles can apply when defending insurance carriers in both first and third party bad faith lawsuits.