I.      Introduction

Insurance bad faith cases are usually hard fought and can be bitter.

Generally speaking, when we take on a carrier for acting contrary to its insured's interests and allege those actions are malicious justifying punitive damages, the folks on the defense side tend to take it personally.

So, the first rule of discovery in the bad faith case is, assume you are in for a tough fight.  Which, in turn, leads to the second and third rules: know your adversary and be prepared.

The bad news that the general practitioner faces in prosecuting a bad faith case is that the defense team will usually be much better schooled in the fine points of insurance than an attorney who does not work with insurance matters on a daily basis.

The good news that the general practitioner can take heart from is B the purpose of bad faith law is to act as an equalizer between the powerful carriers who adjust claims for a living and the ordinary insured who probably never wanted to have a claim and, with luck, will never have another.  Insurance regulations require that insurance companies keep a record of all material claims decisions.  So, where there is wrongdoing, there is almost always a record of the bad acts waiting to be uncovered.

The key discovery strategy in defending bad faith cases is to deny the plaintiff information.  However, if you know where and how to dig, it's not that difficult to get the evidence you need to put on your successful case.

II.    Know your adversary.

People spend their lives learning about the insurance business, which itself represents a huge, multifaceted, globally diverse industry devoted to making money by spreading risk.  Generally, you do not have a lifetime to learn each and every nuance of the insurance world.  So, don't try.  But do make sure you know everything you can about the facts and circumstances of the insurance business as it applies to your case.

Understand that the defendant or defendants in your prospective case may not be obvious from the face of the insurance materials your clients hand you.  For example, it is not unusual to have a client provide letters on letterhead from the "Farmers Insurance Group of Companies."  Some practitioners will put this name in their complaint.  Only, there is no such creature that can be sued.  "Farmers Insurance Group of Companies" is simply the trade name for a collective of entities organized as inter-insurance exchanges.  Usually, the proper defendants in a Farmers claims case are Farmers Group, Inc. (the management company), Farmers Insurance Exchange (the claims handling entity) and the insuring exchange (ie., Fire Insurance Exchange, Truck Insurance Exchange, etc.).  See, Tran v. Farmers Group, Inc. (2002) 104 Cal.App.4th 1202 (rev. den. Mar. 26, 2003).

So, when laying out your case, always make sure you closely review the original insurance policy and declarations pages prior to determining who to name in your complaint.  When in doubt, consult with experienced practitioners about who the proper parties are and why.  Getting the defendants right at the beginning can save tremendous amounts of time during the case.

Also, make sure you understand who has standing to sue under the insurance policy.  A business owner may not be able to sue for bad faith if the named insured is a corporation or limited liability company.  On the other hand, the owner may have standing as an additional insured.  The question is important where there is a potential for emotional distress and other general damage to the owner.  Again, look to the policy and declarations pages for the answer.

III.    Getting to the Heart of Your Case in 60 days or less.

Once you have the parties clear in your mind and have filed suit, you can prepare your initial round of discovery for service once the defendants answer or, as is more typical, demur.

I seldom use interrogatories during my initial bad faith discovery.  I find it is much more productive to immediately demand the claim file(s) and, if warranted, the underwriting file(s), since these are the basic documents necessary for preparing any bad faith case for trial.