United States District Court, Eastern District of Michigan; Case #14-12813
Hon. Linda V. Parker
Official Michigan Reporter Citation: Not Applicable; Opinion Not Available
Discovery in Auto Liability Cases
In this Federal written Opinion involving plaintiff’s right to obtain discovery of internal documents relating to an insurer’s alleged practices of denying claims without proper investigation, Judge Linda V. Parker held that plaintiff was not entitled to discovery of the documents because they were irrelevant to plaintiff’s claims, which were submitted 15 years after the date of the documents being sought. However, in reaching this holding, Judge Parker did acknowledge that the controverted discovery may become relevant and discoverable later in the action, should plaintiff prevail on her underlying claim and seek penalty attorney fees under MCL 500.3148.
Plaintiff was in an auto accident and sought benefits from defendant State Farm, her no-fault insurer. State Farm did not provide coverage and plaintiff filed an action seeking benefits, claiming State Farm unreasonably delayed or refused to pay. Plaintiff alleged State Farm handled her claim in an unreasonable manner and this was consistent with its practice of denying claims without regard to a claim’s actual validity. During discovery, plaintiff sought to obtain documentation in State Farm’s Advancing Claims Excellence (ACE) review and in its Auto Claims Manual. State Farm objected to the production of these documents, arguing they had no relation to plaintiff’s claim for benefits. Plaintiff, relying on Morales v State Farm Mut Ins Co, 279 Mich App 720 (2008), maintained the documents were relevant to her argument that State Farm handled her claim in an unreasonable fashion.
Judge Parker held that the documents sought by plaintiff were irrelevant to her claim. The judge said:
“The only issues relevant to Plaintiff’s claim for benefits are whether a contract exists and whether the expenses sought are compensable under the contract and Michigan’s No-Fault Act. To be compensable, three requirements must be satisfied: (1) the expense must have been incurred by the insured, (2) the expense must have been for a product, service, or accommodation reasonably necessary for the injured person’s care, recovery, or rehabilitation, and (3) the amount of the expense must have been reasonable.”
According to Judge Parker, the ACE documents were irrelevant because they related to claims files from November 1995 through 1997, and plaintiff’s claims were submitted more than 15 years after those ACE reviews. The judge stated:
“Evidence of how Defendant handled claims fifteen years earlier is not relevant to how it handled Plaintiff’s claim. While the ACE program may have led Defendant to adopt a certain philosophy or approach for handling future claims such as Plaintiff’s, the Court believes other, more direct, evidence is available from which to glean that information which would be less burdensome to produce.”
However, Judge Parker further held that evidence of State Farm’s alleged bad faith in handling no-fault claims might be relevant if plaintiff prevailed in the underlying action and sought attorney fees pursuant to §3148. The judge said:
“[W]hether Plaintiff is entitled to attorney fees would be decided by the Court in post-judgment proceedings if a jury has decided that benefits are owing and overdue. … Plaintiff can seek the requested discovery at that time, if it still believes the information is needed.”
In conclusion, Judge Parker sustained defendant’s objections to the discovery request.