This article was originally published in the Subrogator, a publication by the National Association of Subrogation Professionals, Spring/Summer, 2012. © Copyright 2012 by NASP. All rights reserved. Republished by Butler Pappas with permission from NASP. A question sometimes arises as to whether expert reports are protected under the work product doctrine when experts are retained by claims adjusters, as opposed to attorneys. For instance, when expert reports are issued to adjusters or another subrogation professional, the report can be deemed not protected, because the report is written during the normal course of an adjustment or investigative stage of a claim. On the other hand, when expert reports are directed to an attorney, the expert report usually has a better chance of being protected from subsequent disclosure, per the work product doctrine.
In Selective Ins. Co. v. Swarey, 2011 WL 240750 (W.D.N.Y. Jan. 24, 2011), one New York Court held that an expert report was not protected by the work product privilege when it was prepared and sent to the insurer while the matter was still in the investigation stage, and the insurer had not yet determined that a subrogation claim would be pursued. This case is significant, because it provides a detailed account of the timing for when an expert report is received into an active claim file, and whether the expert report can later be shielded from discovery in litigation per the work product privilege.
In Swarey, the defendant requested production of the subrogating insurer's underwriting file and claim file. The claim file included an origin and cause expert report, which was mailed to the claims adjuster during the claims investigation and for consideration of subrogation possibilities. In response, the insurer did not produce the expert report in litigation, filed a privilege log, and claimed that the expert report was protected under the work product doctrine, because it was created solely for the purpose of anticipated subrogation litigation.
The Court in Swarey held an in-camera inspection of the expert report, and determined that the expert report was not different from any other claim file investigation documents, and thus, the report was not protected by the work product doctrine. The Court noted that federal courts take a fact-specific approach in determining whether a document created by, or for an insurance company is protected by the work-product doctrine. The fact-specific approach is used, because the business of insurance companies is to investigate and evaluate claims that may end up in litigation. The Court noted that if not prevented by some limiting principles, insurance companies could essentially assert that an entire claim file is always protected under the work product doctrine.
The Court in Swarey relied on American Ins. Co. v. Elgot Sales Corp.,1998 WL 647206 (S.D.N.Y. Sept. 21, 1998), which held that "in the context of insurance company cases, it has been recognized that at a certain point, an insurance company's activity shifts from the ordinary course of business to anticipation of litigation." Id. at * 1. In Elgot, documents that were created, after a law firm was retained to investigate subrogation, but before the decision was made that a subrogation claim would be pursued, were deemed discoverable and not protected under the work product doctrine, because the Court found that the documents were not created in anticipation of litigation. Until that point, the Elgot Court found that an investigation into subrogation is part of an insurer's practice of investigating all issues arising from a loss involving insureds. As noted by the Court in Elgot, documents and reports created as part of the investigation process would have been created regardless of the insurer's decision to litigate. Id. at 2. Also see Weber v. Paduano, 2003 WL 161340 at * 9 (S.D.N.Y. Jan. 22, 2003) (finding no work product protection to subrogation related materials in claim file when no evidence was proffered of when insurer's normal investigation turned its attention to potential litigation).
Courts in other jurisdictions have followed the approach outlined in Swarey and Elgot. The Court in American Home Assurance Co. v. United States, 2009 WL 3245445 (D.N.J. Oct. 7, 2009), also found that an expert report was not protected under the work product privilege. The American Home Court held that the expert report was discoverable, because the report was not prepared for the purpose of litigation, and the insurer failed to establish that the report was prepared because of the prospect of litigation. Also see Thomas Organ Co. v. Jadranska Slobodna Plovidba, 54 F.R.D. 367, 373 (N.D. Ill. March 17, 1972) (holding that the mere fact that [the insurer] may have anticipated the possibility of pursuing a subrogation claim against defendants . . . is a far cry from anticipating litigation). But see Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655, 670 (S.D.Ind. 1991) (determining that the work product doctrine protected the expert report when all documents emanating from the investigation were in anticipation of litigation).
In sum, the Court in Swarey determined that an expert report was not protected under the work product doctrine, because the expert report was prepared in the ordinary course of the claim investigation process, and was not prepared in anticipation of litigation. Insurers, therefore, may not have the protection of the work product privilege when expert reports are prepared and received into the claim file unless a clear decision is made that a subrogation claim will be pursued at that time. For this reason, subrogating insurers in New York, as well as all other jurisdictions, should probably consider having their expert's activities directed by, and reported directly to subrogation counsel. That way, the expert's reports would have an increased likelihood for protection from premature discovery in litigation. This is because the involvement of subrogation counsel in directing the expert's activities helps demonstrate that the expert's activities are directly related to the pursuit of, or an anticipation of a subrogation claim.