South Carolina BAR Journal
SC Lawyer, March 2011, #3.
Discovery of Insurance Claims Files: An Analysis of Attorney-Client and Work Product Privilege Defenses
South Carolina LawyerMarch 2011Discovery of Insurance Claims Files: An Analysis of Attorney-Client and Work Product Privilege DefensesBy Jeffrey J. Wiseman and Joseph W. Rohe In most litigated cases where an insurance policy may be in play, counsel for the plaintiff will very often seek through discovery a copy of the insurance company's claims files. Not surprisingly, counsel for the defendants and the insurers will fight to prevent disclosure to the plaintiff. Despite an issue so significant in modern litigation, there is very little specific guidance in South Carolina concerning the parameters of discovery of this information.
Pursuant to Rule 26 of the S.C. Rules of Civil Procedure, the General Provisions Regarding Discovery, a party "may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action ..." Moreover, it is widely accepted that "[i]n South Carolina, the scope of discovery is very broad ..." Samples v. Mitchell, 329 S.C. 105, 110, 495 S.E.2d 213, 215 (Ct. App. 1997). In fact, the material sought need not be admissible at trial, so long as it "appears reasonably calculated to lead to the discovery of admissible evidence." Rule 26(b)(1), SCRCP. Accordingly, defending the disclosure of the claims file requires a showing of privilege-either under the attorney-client privilege or the work product doctrine. To that end, advocates for insurance companies often argue that as soon as a claim is made against the insured, statements given by that insured in the course of the investigation, along with any other notes or documentation generated during the investigation, are protected under one or both of these doctrines. It is worth noting that when a party asserts a claim of privilege, the burden of proving the particular document or communication is in fact privileged rests upon the party asserting such privilege. See State v. Love, 275 S.C. 55, 271 S.E.2d 110 (1980).
Defenses under the attorney-client privilege
Plainly stated, the attorney-client privilege protects against disclosure of confidential communications by a client to his attorney. See Tobaccoville USA, Inc. v. McMaster, 387 S.C. 287, 293, 692 S.E.2d 526, 529 (2010). This privilege is based upon a policy that considers that the interests of society are best promoted by inviting the utmost confidence on the part of the client in disclosing his secrets to a professional advisor. Id. (citing State v. Owens, 309 S.C. 402, 407, 424 S.E.2d 473, 476 (1992)). Obviously, this definition raises questions of applicability when applied to communications between an insured and his insurer.
The Supreme Court has on more than one occasion explained the attorney-client privilege as follows: (1) where legal advice of any kind is sought (2) from a professional legal advisor in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal advisor, (8) except where the protection is waived. See Tobaccoville USA, 387 S.C. at 293, 692 S.E.2d at 529 (citing State v. Doster, 276 S.C. 647, 651, 284 S.E.2d 218, 219-20 (1981)). Similarly, the American Law Institute's Restatement explains that the attorney-client privilege applies only to "(1) a communication, (2) made between privileged persons, (3) in confidence, (4) for the purpose of obtaining or providing legal assistance for the client." Restatement (Third) of the Law Governing Lawyers § 68 (2000). However, in Tobaccoville USA, the court found that retention of counsel was not a component necessary to trigger the privilege. 387 S.C. at 292-93, 692 S.E.2d at 529 (finding solicitation of counsel for legal advice and consultation may give rise to a privilege).
South Carolina courts have not addressed the attorney-client privilege in the context of insurance claims adjusting. The issue is whether the statement, given by the insured to his insurance company-before defense counsel is ever hired-is protected as attorney client privilege communication. South Carolina state courts have not ruled, and other state jurisdictions are split, on whether these statements fall within the...