United States District Court, D. Arizona
Douglas L. Rayes, United States District Judge.
insurance bad faith case, the insurance carrier Defendants
have asked the Court on the day before trial to allow
untimely disclosed medical records to be added to the claims
file for use as a trial exhibit. For two years, Plaintiff has
been arguing that Defendants should have obtained these
records when they processed his disability benefits claim.
Plaintiff objects to the admission of the newly discovered
records pursuant to Rules 26 and 37 of the Federal Rules of
Civil Procedure. The parties have briefed the issues and the
Court heard oral argument on August 23, 2017. For the
following reasons, the Court will exclude the untimely
disclosed medical records from evidence at trial.
purchased a disability insurance policy from Defendants in
1995. Plaintiff submitted a claim for disability benefits
after sustaining a disabling head injury, which Defendants
initially approved. In April 2014, however, Defendants
terminated benefits after concluding that Plaintiff's
records no longer supported disability. Plaintiff brought
this action against Defendants in December 2015, alleging
that they breached the insurance contract and administered
his claim in bad faith. Plaintiff contends, inter
alia, that Defendants failed to obtain relevant medical
records when evaluating his claim.
parties have completed extensive discovery, including
depositions of Plaintiff, the claim adjusters, adjuster
supervisors, medical providers, and experts. The deadline for
expert depositions was March 1, 2017. Summary judgment
motions filed by all parties were denied, and the case is set
for a jury trial to commence on August 24, 2017. In
preparation for trial, the parties lodged a Joint Proposed
Final Pretrial Order on August 9, 2017, and an amended
pretrial order and “Notice of Errata” on August
15, 2017. The Joint Proposed Pretrial Order and Notice of
Errata contain a list of exhibits, including Plaintiff's
Exhibit No. 1, “Claim File (COUNTRY MCCLURE 001-381),
” to which Defendants did not object.
August 16, 2017, however, counsel for Defendants, Thomas
Burke, sent an email to Plaintiff's counsel, Steven
Dawson, informing him that he discovered during trial
preparation that, due to a copying error, “some of Dr.
Turner's and Dr. Foltz's records in the claim file
were not included in the produced copy, ” and attaching
a copy of the missing records. Dr. Turner is Plaintiff's
primary care physician and Dr. Foltz is his neurologist. Of
importance, Dr. Turner's records include portions of
Plaintiff's hospitalization records regarding a
psychiatric hospitalization. These records do not appear
anywhere else in the claims file that Defendants initially
disclosed to Plaintiff. Accordingly, Plaintiff alleged and
his experts opined that Defendants made coverage
determinations without obtaining or considering the records
of his psychiatric hospitalization. Mr. Burke nonetheless
requested that Mr. Dawson agree to add the records attached
to his email as a trial exhibit. Mr. Dawson declined Mr.
Burke's request in an email sent the next day.
August 21, 2017, Plaintiff filed a “Request for
Emergency Telephonic Hearing” raising the issue with
the Court. Plaintiff argues that the newly discovered records
should be excluded from trial because they were not timely
disclosed, and the untimely disclosure was neither
substantially justified nor harmless.
Rule of Civil Procedure 26(a) requires parties to disclose
certain information pertinent to the case. A party is
obligated to supplement a Rule 26(a) disclosure “in a
timely manner if the party learns that in some material
respect the disclosure or response is incomplete[.]”
Fed.R.Civ.P. 26 (e)(1)(A). “If a party fails to provide
information . . . as required by Rule 26(a) or (e), the party
is not allowed to use that information . . . to supply
evidence . . . at trial, unless the failure was substantially
justified or is harmless.” Fed.R.Civ.P. 37(c)(1). Where
appropriate, the Court has discretion to impose alternative
insurance bad faith case, the insurance claims file
“constitutes the only source of information relevant to
whether the insurer has a good faith basis for its
decision.” Steven Plitt et al., 17A Couch
on Insurance, § 251:27 (3d ed. 2017). Indeed,
Defendants produced the claims file with the understanding
and intent that Plaintiff would rely on the contents of that
file when investigating and litigating his bad faith claim,
and Plaintiff's bad faith claim and Defendants'
defenses are substantially based on the claims file produced
by Defendants. The Court therefore finds that the claims file
is a “Required Disclosure” under Rule 26(a)(1).
Accordingly, to allow Defendants to use this newly discovered
claims file information at trial, the Court must find either
that Mr. Burke's August 16, 2017 email was a timely filed
supplement under Rule 26(e)(1), or that Defendants'
failure to disclose was substantially justified or harmless
under Rule 37(c)(1).
The August 16, 2017 email was not a timely
disclosed a mere eight days before trial that the claims file
was incomplete and approximately sixty pages of relevant
medical records had inadvertently been omitted. This is not a
timely supplement under Rule 26(e)(1). Plaintiff relied on
the disclosed claims file during pretrial discovery.
Plaintiff disclosed expert opinions and pursued a bad faith
claim based, in part, on Defendants' failure to obtain or
consider these missing records. During the course of
discovery, defense witnesses did not volunteer that they had
these records in the claims file when asked about them. When
Plaintiff's expert was deposed in February 2017, she
offered opinions based on Defendants' failure to obtain
these records. Discovery is complete, and theories and expert
opinions are locked in by reports and depositions. Disclosure
approximate a week before trial is untimely.
The untimely disclosure is not ...