Production of Claims File Required Regardless of Privilege

By Barry Zalma on March 3, 2026

Allegations of Bad Faith Avoids Lawyer Client Privilege

Post number 5296

See the video at https://rumble.com/v76dd9o-production-of-claims-file-required-regardless-of-privilege.html and at https://youtu.be/izQ3Ivztqt0

Claims File Created During the Pendency of a Lawsuit is Discoverable Regardless of Privilege

In Melissa Eddy, and Alexis Eddy v. Farmers Property Casualty Insurance Company, f.k.a. Metropolitan Property and Casualty Insurance Company, APPEAL NO. C-230298, Court of Appeals of Ohio, First District, Hamilton County, 239 N.E.3d 1003, 239 N.E.3d 1000, 2024-Ohio-1047 (March 22, 2024) ruled on discovery issues with regards to the privileges asserted by Farmers.

Facts

In February 2020, Melissa Eddy was injured in a car accident while her husband, Alexis Eddy, was driving. The accident was caused by another driver, Pamela Shooner. Melissa sustained neck injuries that required surgery. At the time, the Eddys held an underinsured motorist (UIM) policy with Farmers Property Casualty Insurance Company (“Farmers”), providing coverage beyond the tortfeasor’s policy limits. Shooner’s insurer offered the $100,000 policy maximum, and the Eddys then demanded $150,000 from Farmers under their UIM coverage, submitting supporting medical documentation and forms.

Farmers offered the Eddys a $150,000 settlement, conditioned on their waiver of any bad-faith claims. In April 2022, Farmers offered the Eddys an unconditional $150,000 settlement to resolve their UIM benefits claims. The Eddys accepted the April 2022 offer and dismissed the coverage action the following month.

LAW

The key legal issue was whether an insurer’s claims file created during the pendency of a lawsuit is discoverable when the insured subsequently alleges that the insurer acted in bad faith by delaying the handling, processing, and payment of a benefits claim.

Farmers argued that the claims file was protected by attorney-client privilege and the work-product doctrine, and that the bad-faith exception to these protections does not apply after the insured files suit for coverage. The Eddys contended that alleged bad-faith delay in processing and payment makes the claims file discoverable until payment occurs.

DISCUSSION

The court examined the scope of discovery in bad-faith insurance claims, particularly regarding privilege and the work-product doctrine. It considered whether the bad-faith exception to privilege applies when the insured alleges delayed payment, not just denial. The court also addressed the burden on the insurer to assert privilege under Ohio Civil Rule 26(B)(8) and whether the trial court must conduct an in camera review if the insurer’s privilege claims are conclusory.

ANALYSIS

The attorney-client privilege is one of the oldest recognized privileges for confidential communications. The privilege protects confidences shared in the attorney-client relationship to encourage legal consultation and aid in the administration of justice. Communications are privileged if:

legal advice of any kind is sought
from a professional legal adviser in his capacity as such,
the communications relating to that purpose,
made in confidence by the client, are at his instance permanently protected
from disclosure by himself or by the legal adviser, unless the protection is waived.

But the privilege is not absolute—it applies only where necessary to achieve its purpose and protects only those communications necessary to obtain legal advice.

CONCLUSION

The appellate court agreed with the Eddys, holding that when insureds allege bad-faith delay in claim handling, the insurer’s claims file is discoverable up to the date of payment. The court further held that the trial court is not required to review the claims file in camera unless the insurer’s assertions of privilege are specific and sufficient; conclusory assertions do not meet the insurer’s burden. Thus, the court clarified the discoverability of claims files in bad-faith delay cases and reinforced the standards for asserting privilege.

It follows that the claims file could include evidence related to the Eddys’ allegations of bad faith up to the payment date. When insureds like the Eddys allege that their insurer unreasonably delayed its handling, processing, and payment of a benefits claim in bad faith, the insureds are entitled to portions of the claims file showing a lack of good faith up to the benefit-payment date.

In sum, the court held that the trial court appropriately ordered the production of Farmers’s claims file up to the benefits-payment date. Furthermore, Farmers failed to satisfy its burden under Civ.R. 26(B)(8) when it withheld information under a claim of privilege.

ZALMA OPINION

The tort of bad faith has created often strange appellate decisions that have changed the common law almost as much as the tort of bad faith changed contract law. Here, the attorney client privilege has been modified so that the privilege is ignored when bad faith is alleged against an insurer it must turn over its files, including usually privileged communications. Insurance Litigation in Ohio can, by merely alleging the tort of bad faith, force insurers to produce usually privileged documents to make it easier for the insured to prove the tort and will have insurers keeping legal advice from its claims file.

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