In Pennsylvania, a Party May be Required to Disclose Materials in the Claim File of its Third-Party Claims Administrator

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In Brown v. Greyhound Lines, Inc., 142 A.3d 1 (Pa. Super. May 24, 2016), the Superior Court of Pennsylvania addressed attorney-client privilege and work product claims associated with the ordered production of materials from a third-party administrator’s claim file. The court also discussed whether the video recording of a mock deposition of a defendant’s employee was discoverable as a recorded statement. With respect to the first issue, the court rejected the defendants’ wholesale claim of privilege related to any and all original investigation statements in the third-party administrator’s file. With respect to the ordered production of the mock deposition video, the court found that the video was discoverable pursuant to Pa. R.C.P. 4003.4. The Brown case serves as a reminder that a third-party claims administrator’s file materials may be discoverable and recorded statements by party witnesses, even if conducted by counsel in the form of an interview, may be discoverable if they are recorded by a third-party such as a court reporter or videographer.

In Brown, the plaintiffs sued Greyhound Lines, Inc. (Greyhound), FirstGroup America (FirstGroup), who purportedly owns, operates and/or controls Greyhound, and various other parties seeking to recover for personal injuries sustained in a motor vehicle accident. The plaintiffs sent Greyhound and FirstGroup discovery requests seeking the production of claims files, correspondence and emails regarding the accident that were exchanged between Greyhound and Gallagher Bassett (Gallagher), a third-party adjustment company that contractually handled claims and investigations for Greyhound and FirstGroup. The plaintiffs also requested the video of a “mock deposition” of a Greyhound employee conducted by counsel retained by Gallagher.

The defendants objected to these requests on the grounds that the materials were confidential under the attorney-client privilege and work-product privilege. The defendants argued that Gallagher’s claim file included “verbatim recitations and/or summaries of confidential communications” from defense counsel to Gallagher. In addition, the defendants argued that these communications were privileged because Gallagher was handling the investigation for the defendants, retained defense counsel on behalf of the defendants, and essentially served as a “direct arm of Greyhound.” The trial court reviewed, in camera, the documents identified in the defendants’ privilege log, which included the entire Gallagher claim file. The trial court found that only the portions of Gallagher’s file containing mental impressions, opinions and analysis of the attorney and defendants’ representatives were protected under the work-product privilege and ordered the defendants to produce the remainder of Gallagher’s claim file.

With respect to the video of the mock deposition, defense counsel argued that the recording was made while preparing the client’s bus driver for a deposition, and thus was protected by attorney-client privilege. However, the trial court ordered the disclosure of the video, finding that the video was a previously recorded statement of a party pursuant to Pa. R.C.P. 4003.4 and that there was no reasonable expectation of confidentiality. Greyhound and FirstGroup appealed the trial court’s discovery rulings. The Superior Court granted interlocutory review of the trial court’s orders under the collateral order doctrine, finding that the issues were separable from and collateral to the main cause of action, and were too important to be denied review.

Under Pennsylvania law, the attorney-client privilege is invoked when an attorney and a client or prospective client engages in communication relating to a fact of which the attorney was informed by the client, without the presence of strangers, for the purpose of securing either an opinion of law or legal services, and the client has not waived the privilege. The work product privilege protects the disclosure of mental impressions, conclusions, opinions, memoranda, notes, summaries, legal research or legal theories of the attorney, as well as the mental impressions, conclusions, and opinions of a party’s representative with respect to the merit of claims, defenses, strategies or tactics. The party asserting either privilege has the burden of proving that it properly invoked the privilege.

On appeal, the Superior Court found that the defendants failed to carry their burden of proving that Gallagher’s entire claim file—which was comprised of thousands of documents—was privileged. A significant portion of the claim file consisted of emails between representatives of Gallagher and employees of Greyhound (including general counsel), statements from vehicle passengers, summaries of procedural history, public sector reports, copies of checks and other documents related to the investigation of the accident. The court found that these documents were recitations of Gallagher’s investigation as a risk manager/claims handler, which were not privileged communications. The court, noting that the defendants failed to cite any supporting case law, rejected the defendants’ argument that Gallagher was defense counsel’s “client-representative” and that information relayed between Gallagher and its retained defense counsel was subject to the same protections as information provided directly to defendants.

With respect to the defendant’s work-product privilege claim, the Superior Court held that the trial court meticulously reviewed the submitted documents and appropriately excluded from discovery all portions of the claim file containing the mental impressions, conclusions, opinions, memoranda, notes, summaries, legal research and legal theories of the attorney, as well as the mental impressions, conclusions, and opinions of the defendants’ representatives with respect to the merit of claims, defenses, strategies or tactics. In support of its holding, the Superior Court took issue with the defendants’ position that the entire claim file was protected, finding that the defendants “failed to make any specific argument beyond citing general precepts governing the attorney-client and work-product privileges.” The Superior Court also found that the defendants failed to challenge a myriad of documents reviewed by the trial court with sufficient detail to allow the court to find that the documents were privileged. In other words, the Superior Court found that the defendants failed to specify which of the thousands of documents reviewed by the trial court were erroneously deemed discoverable.

Discussing the video of the mock deposition of Greyhound’s employee, the Superior Court found that the video recording was not protected under the attorney-client privilege. The court ruled that the defendants failed to establish that the defendants had a reasonable expectation that the videotaped statement, made before a court reporter and videographer, would remain confidential. Furthermore, the court explained that Rule 4003.4 of the Pennsylvania Rules of Civil Procedure allows for the disclosure of recorded statements previously made by a party concerning the action or its subject matter.

Although the Brown decision discusses a plaintiff’s personal injury case, its lessons extend to the subrogation arena. Brown serves as a reminder that documents created by third-party administrators as part of their routine investigation of a claim are generally discoverable in Pennsylvania and that an attempt to preclude the production of a third-party administrator’s entire claim file will likely be rejected. Thus, when responding to discovery requests, subrogating insurers should, consistent with Pa.R.C.P. 4003.3, carefully review documents and withhold or redact only those documents containing: a) the mental impressions, notes, summaries, opinions, conclusions, legal research or theories of the insurer’s attorney; or b) a claims representative’s or investigator’s mental impressions, conclusions or opinions  respecting the value or merits of a claim or defense or respecting strategy or tactics.

Brown also serves as a reminder that Pennsylvania’s disclosure rule related to statements, Pa. C.R.P. 4003.4, requires the production of statements by a party or witness and, if a third-party such as a stenographer or videographer is present when the statement is made, a court may find that the party giving the statement did not have a reasonable expectation that the statement was confidential. In that circumstance, a court may find that the statement is not privileged.

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