West Virginia Supreme Court Decision Protects Personal Information of Non-Party Insureds
Is a plaintiff asserting extra-contractual and UTPA (“bad faith”) claims against an insurer entitled to discover the names, addresses, and phone numbers of all other similar first-party insureds/claimants in West Virginia for the past 10 years? No, according to the Supreme Court of Appeals of West Virginia in State Farm v. Cramer, No.15-1101, issued March 8, 2016, because that personal information must be redacted to protect the non-party insureds’ privacy interests. Unfortunately, the Court did not fault the circuit court’s decision to allow production of redacted documents for the designated 10 year time period.
State Farm was sued in West Virginia for bad faith arising out of an uninsured motorist (UM) claim and allegations that it did not make the statutorily required UM limits offer to the Plaintiff-insured when the policy was purchased. During the accident litigation, the insured filed a UM claim but argued that the UM limits should have been greater and that State Farm was required to increase the limits because State Farm’s UM form did not comply with state requirements. State Farm ultimately agreed to increase the limits and Plaintiff then sought the names, addresses, and phone numbers of other non-party State Farm UM policyholders in order to prove State Farm’s general business practice and violations of law, which is an element of the bad faith claim. Plaintiff’s counsel intended to contact these non-party insureds to inquire into their treatment by State Farm. The request was for the period 2005 to the present for West Virginia insureds, and would have involved over 400 non-party insureds. State Farm objected and the trial court ordered the production.
The Supreme Court of Appeals of West Virginia overruled the trial court due to the privacy interests of the non-party insureds. The Supreme Court ordered that the documents sought have the names, addresses, phone numbers, and any information of a personal nature, redacted and then produced. The Court concluded that information related to State Farm’s general business practices could be provided by disclosing (1) the form State Farm used for offering optional (additional) coverages, (2) data concerning when and how often State Farm paid additional coverage in connection with the use of that form, and (3) information related to first-party lawsuits which contained allegations of bad faith. Unfortunately, the Supreme Court did not criticize the breadth of the request, allowing discovery of such information for all such insureds located in West Virginia for the past 10 years.
Although this case arose out of a UM coverage dispute, the holding is not likely limited solely to UM claims. Instead, insurers should rely upon it to justify the redaction of personal information about non-party insureds whenever information about non-party insureds is sought in discovery. The Supreme Court did acknowledge the privacy interests of non-party insureds and also that those non-party insureds had not consented to the release of their information, but the Court did not further comment on this latter point.