Withholding Claims Notes Results in Severe Sanctions

Payne & Fears
Contact

In Garcia v. Awerbach, 136 Nev. Adv. Op. 27 (May 21, 2020), the Supreme Court of Nevada reinstated a severe discovery sanction against a defendant who withheld a critical insurance claims note. In doing so, the Supreme Court sends a clear message that (a) an insurance company’s internal claims documents are discoverable and (b) refusing to disclose such documents exposes parties to severe sanctions.

In Garcia, the Plaintiff sued the Defendant for negligent entrustment and punitive damages after a collision in which the Defendant’s son was driving her car. Plaintiff sought production of Defendant’s insurance claims file regarding the collision, but Defendant redacted a claims note pertinent to a critical element in the case – whether or not she allowed her son to use her car. When the redacted portion of the claims note came to light, the Court issued a discovery sanction against Defendant establishing permissive use as a matter of law. The Court reasoned that the sanction was appropriate because  “the claims note was concealed improperly, was relevant and was willfully withheld by [Defendant].”

The district court judge subsequently recused herself from the case due to a conflict with new counsel. The new district court judge attempted to modify the discovery sanction such that the finding of permissive use as a matter of law was reduced to merely a rebuttable presumption. The district court reasoned that the sanction was too severe because it essentially established an element of Plaintiff’s claim against Defendant for punitive damages. The Nevada Supreme Court reversed the district court’s modification of the discovery sanction. The Supreme Court held that the finding of permissive use as a matter of law was appropriate and did not prevent Defendant from defending herself as it established only one element of Plaintiff’s punitive damage claim.  Because Plaintiff was still required to prove her case and the discovery sanction alone did not prevent Defendant from mounting a defense, the sanction establishing an element of the claim as a matter of law was reinstated.

Garcia serves as a warning. Withholding relevant portions of an insurance claims file – including claims notes – can expose parties to severe sanctions precipitating the loss of the case. Parties and policyholders may aggressively employ the tools Garcia provides to leverage the disclosure of insurance company documents and/or seek critical sanctions that can change the complexion of their case.

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.

© Payne & Fears | Attorney Advertising

Written by:

Payne & Fears
Contact
more
less

Payne & Fears on:

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:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.