Washington Court Rules on Discoverability of Insurer’s Claim File by Third Parties

In 2013 the Washington Supreme Court found that an insurance company’s claim file was presumptively not privileged in disputes between insurance companies and their insureds unless the insurance company could demonstrate that the attorney-client aspects of the file involved the attorney providing counsel as to the insurance company’s potential liability. See, Cedell v. Farmers Insurance Co. of Washington, 295 P.3d 239 (2013).

More recently, the Washington Court of Appeals extended the Washington Supreme Court’s ruling in Cedell by finding that third parties suing insurance companies as assignees of the insureds were entitled to discovery the insurer’s claim file unless the insurance company could demonstrate that any attorney-client privileged materials involved the attorney providing counsel to the insurer regarding potential liability.

In Cedell the Washington Supreme Court established that insureds needed access to the insurer’s claim file in order to discovery facts to support alleged bad faith claims. Because of this need, the Cedell court identified several principles governing a discovery request for an insurance claim file. First, the court noted there was a presumption that there was no attorney-client privilege existing between the insured and the insurance company regarding the claim adjustment process and that attorney-client work product privileges were generally not relevant in that context. This presumption of discoverability could be overcome by the insurance company’s showing that its attorney was not engaged in any quasi-fiduciary tasks of investigating and evaluating or processing the claim and that the attorney was providing the insurance company with counsel as to its own potential liability.

The Washington Court of Appeals in State Farm Fire and Casualty Co. v. Justus, 2017 WL 2774191 (Wash. App. Div. II, filed June 27, 2017) found that the trial court had authority to compel production of an insurance company claim file in cases involving third party assignees in accordance with the Cedell factors.