The Examination Under Oath - a Connecticut Overview

• Publication year: 2021
• Pages: 289

Connecticut Bar Journal Volume 83.

83 CBJ 289. THE EXAMINATION UNDER OATH - A CONNECTICUT OVERVIEW

Connecticut Bar Journal
Volume 83, No. 4, Pg. 289
DECEMBER 2009

THE EXAMINATION UNDER OATH - A CONNECTICUT OVERVIEW

By Jon D. Biller And Susan W. Schillaci(fn*)

I. Introduction

For over 140 years, contracts of insurance have included the requirement that an insured submit to at least one examination under oath as a condition precedent to collection of insurance proceeds.(fn1) Today, insurance policies often amplify this condition, requiring an insured to submit to an examination under oath "while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to [the] insurance or the claim, including an insured's books and records. In the event of an examination, an insured's statement must be signed."(fn2) A breach of this condition, in the absence of a reasonable excuse, "generally results in the forfeiture of coverage, thereby relieving the insurer of its liability to pay, and provides the insurer an absolute defense to an action on the policy."(fn3 )Further, an insured is typically not permitted to bring legal action against an insurer until he has complied with the policy's conditions, including submission to the examination.(fn4 )As a result, the examination under oath has evolved from a mechanism to detect fraudulent claims into a formidable tool often viewed by the insured as intrusive and intimidating.

II. What is the Examination Under Oath

The function of the examination under oath has not changed for over a century.

The object of the provisions in the policies of insurance, requiring the assured to submit himself to an examination under oath, to be reduced to writing, [is] to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts, material to their rights, to enable them to decide upon their obligations, and to protect them against false claims. And every interrogatory that [is] relevant and pertinent in such an examination [is] material, in the sense that a true answer to it [is] of the substance of the obligation of the assured. A false answer as to any matter of fact material to the inquiry, knowingly and wilfully made, with intent to deceive the insurer, would be fraudulent.(fn5)

In short, the examination under oath is a tool to identify false claims. It is often required in connection with an insurance policy's "cooperation clause," which obligates the insured to "[c]ooperate with [the insurer] in the investigation or settlement of the claim."(fn6)

The examination under oath requirement also implicates public policy issues because the procedure may ultimately affect the cost of insurance premiums, at least indirectly.

The right to examination [under oath] ... is material because it is part of a bargained-for discovery process that may lead to the discovery of information barring recovery under a policy because a claim is based on fraud and criminal activity. Thus, from the perspective of setting a fair and adequate premium, which is essential to insurers if risk is to be allocated in a predictable way - predictable to profit margins necessary to sustain their business given possible claims ... . (fn7)

A. The Examination Under Oath is Contractual

The examination under oath is, typically, a requirement created within the confines of an insurance policy.(fn8) Such provisions are "valid and enforceable"(fn9) and "Connecticut courts have upheld insurance policy requirements that insureds submit to an 'examination under oath.'" (fn10)

The examination requirement in a standard insurance policy is usually located in the "Conditions" section as a component of the "Your Duties After loss" clause. This clause typically requires that the insured: promptly notify the insurance agent of the loss; notify the police if a theft is involved; protect the property from further damage; keep an accurate record of repair expenditures; prepare a detailed and documented inventory of the damaged property; and provide the insurer with a sworn proof of loss statement within a specified period.(fn11) The examination under oath is often listed as a separate duty and, at first glance, appears innocuous.

Your Duties After Loss. In case of a loss to covered property, you must see that the following are done:

...

f. As often as we reasonably require:

(1) Show the damaged property;

(2) Provide us with records and documents we request and permit us to make copies; and

(3) Submit to examination under oath, while not in the presence of any other "insured," and sign the same[.](fn12)

"You" and "your" are usually defined as the "named insured" and his "spouse if a resident of the same house-hold."(fn13) "Insured" may be defined as "you and residents of your household who are: a. [y]our relatives; or b. [o]ther[s]" under 21 in their care.(fn14)

These conditions can become onerous for the insured. Additionally, some have argued that the examination requirements favor the insurer.(fn15)

A breach of the examination under oath provision usually results in an insurer denying a claim. There are limited scenarios when refusing to submit to the examination will not preclude denial; e.g., if "'good cause'" or a "reasonable explanation for the failure" exists.(fn16) But "the burden is [still] on the insured to submit to a later examination and to offer to do so."(fn17) (fn18)

In the opinion of the authors, a "reasonable justification" to postpone an examination under oath occurs when the insured needs additional time to produce records or documents that were requested in connection with the examination. In this situation, the insured must, however, acknowledge that he will attend the examination once he has secured the requested information. And, to show his willingness to comply with the examination, the insured should indicate the date by which he reasonably believes he will obtain the requested material, and indicate future dates on which he is available to submit to the examination.

B. The Scarcity of Information Regarding the Examination Under Oath

There is little authority discussing the parameters of the examination under oath. As a result, its application varies among insurers and the individuals conducting the examinations.

1. The Examination Under Oath is Contractual and Invoked Outside of Court Procedure

The examination under oath is not a legal proceeding. It is, instead, a provision of an insurance policy and "[a]n insurance policy is to be interpreted by the same general rules that govern the construction of any written contract ... ."(fn19)

If the insurance coverage is defined in terms that are ambiguous, such ambiguity is, in accordance with standard rules of construction, resolved against the insurance company. Where the terms of the policy are of doubtful meaning, the construction most favorable to the insured will be adopted. If however, the words in the policy are plain and unambiguous the established rules for the construction of contracts apply, the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning ... .(fn20)

2. What Constitutes an Examination Under Oath?

While no formal rules exist, most examinations are "conducted by an attorney and the claimant gives sworn testimony which is generally taken down verbatim by a stenogra-pher."(fn21) The insured may be required to sign the transcript.(fn22 )A judge is not involved in the procedure.

"An examination under oath is not the equivalent of a mere conversation between the insurance company representative and the claimant."(fn23) A recorded examination by an insurance investigator has, however, been sufficient for purposes of "substantial compliance."(fn24) In Kitzman v. Pacific Indemnity Co., the insured "claim[ed] that her recorded examination by the defendant's investigator resulting in a sixty-eight page transcript was substantial compliance."(fn25 )The insured's attorney, who attended that examination, submitted an affidavit that he and his client were told by the investigator the examination and statement "'was being taken in accordance with the terms of her [the plaintiff] insurance policy.'"(fn26) The insurer's motion for summary judgment on this issue was denied(fn27) and the case proceeded to trial. There, the court wrote "[t]he plaintiff was misled by the investigator ... in believing she was in fact complying with the terms of the policy as to the [examination under oath]" and ultimately held that she "did not in this case breach her contract for coverage" because the evidence did not show that she "did not substantially meet her compliance" with the examination clause; her claim was thus paid.(fn28)

In the view of the authors, if an insured is led to believe a "statement" is an examination under oath, or if a statement is taken "under oath" or is "sworn to," the insured should be considered in "substantial compliance" with the examination provisions.

3. Limited Judicial Assistance is Available

Judicial intervention occurred in Southern New England Television Service, Inc. v. Hartford Ins. Group when the plaintiffs applied for a protective order pursuant to the Connecticut Practice Book to "prevent the dissemination" of information in an examination under oath to fire and law officials, alleging it would "violate plaintiffs' right of privacy along with other constitutional rights."(fn29) Prior to the examination, the insurer "advised" the insured it planned to send the fire marshal, per his request, a copy of the examination transcript and related exhibits.(fn30)

The court wrote it "ha[d] authority to grant protective orders in discovery matters" and the defendant had not "challenged what seems to be an...