Northern District of Iowa: Litigation “Reasonably Foreseeable” After Insured Accuses Insurer of Acting in Bad Faith

by Saul Ewing Arnstein & Lehr LLP

Meighan v. TransGuard Ins. Co. of Am., Inc., No. C13-3024-MWB, 2014 WL 1199596 (N.D. Iowa Mar. 24, 2014).

The Northern District of Iowa finds that claim reserves and settlement information created after litigation was reasonably foreseeable is protected by the work product doctrine, but that documentation of an insurer’s factual investigation and surveillance of the insured must be produced.

TransGuard Insurance Company of America, Inc. began making benefits payments to Michael Meighan in November 2011, after Meighan sustained injuries covered by his occupational injury policy.  TransGuard ceased making payments in early 2012 because of Meighan’s failure to provide TransGuard with updated medical records.  TransGuard resumed making payments after discussions with Meighan’s attorney, including a discussion in which the attorney accused TransGuard of acting in bad faith.  TransGuard’s payments continued for a little more than a month, again stopping payment after a doctor reported that Meighan’s disability resulted from a pre-existing condition, not his on-the-job injury.  After TransGuard denied his claim, Meighan filed suit in the Northern District of Iowa alleging breach of contract and bad faith.  

During discovery, TransGuard produced its complete claims file for the period from October 28, 2011 through March 9, 2012, the day that Meighan’s attorney first contacted TransGuard to inquire why TransGuard had ceased making disability payments.  TransGuard produced the remainder of its claims file in heavily redacted form.  The redacted portions of the file consisted of three categories of documents: 1) claim reserves information; 2) communications related to settlement or mediation; and 3) communications regarding investigation and coverage.  TransGuard claimed that the documents it redacted and withheld were protected work product or were subject to attorney-client privilege.  Meighan filed a motion to compel and argued that the privilege did not apply because TransGuard’s outside counsel’s work consisted of investigating and adjusting the claim rather than giving legal advice.

In considering Meighan’s motion to compel, the Court was first required to determine the date on which: (1) TransGuard and its counsel established an attorney-client relationship; and (2) litigation between the parties became “reasonably foreseeable.”  First, the Court concluded that TransGuard and its outside counsel established an attorney-client relationship when counsel accepted TransGuard’s request for “legal assistance” in “handling the file” on March 12, 2012.  Next, the Court found that litigation was “reasonably foreseeable” on March 13, 2012, when Meighan accused TransGuard of acting in bad faith. 

With respect to TransGuard’s claims of work product protection, the Court found that claim reserves information that was noted in the file after March 13, 2012 was protected work product.  In so doing, the Court explained that the Eighth Circuit draws a distinction between individual case reserves, which are typically prepared in anticipation of litigation and thus protected from discovery, and aggregate reserve information used for business-planning purposes.  The Court held that because the withheld reserves information was related to Meighan’s particular claim and was documented after litigation was reasonably foreseeable, it was protected regardless of the fact that a non-attorney claims adjuster documented the information. 

The Court also held that all documents, including file notes regarding settlement authority, created prior to the date that litigation became reasonably foreseeable had to be produced.  Any documents concerning settlement and mediation created after that date, however, were prepared in anticipation of litigation and protected as work product.  The third category of documents for which TransGuard claimed work product protection were related to surveillance of Meighan and to TransGuard’s investigation of the extent and nature of Meighan’s injuries.  The Court found that while these documents were created after the date that litigation became reasonably foreseeable, they consisted of “pure factual investigation of the claim” and were therefore not prepared in anticipation of litigation. 

Meighan also moved to compel certain communications between TransGuard employees and outside counsel that TransGuard claimed were protected from disclosure by the attorney-client privilege.  Meighan argued that TransGuard hired the outside attorney to step into the shoes of the claims adjuster to perform a non-legal investigation and adjustment of the claim.  The Court rejected Meighan’s argument and held that the correspondence at issue was protected by attorney-client privilege.  Central to the Court’s reasoning was the adversarial relationship between the parties and the fact that TransGuard conducted the initial investigation on its own and only retained outside counsel after Meighan’s attorney became involved.  The Court noted that if attorney-client privilege did not apply in this situation, this would have a chilling effect on an insurer’s decision to seek legal advice regarding close coverage questions.    

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Saul Ewing Arnstein & Lehr LLP | Attorney Advertising

Written by:

Saul Ewing Arnstein & Lehr LLP

Saul Ewing Arnstein & Lehr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.