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McColl v. American Naturopathic Council

United States District Court, D. Montana, Helena Division

October 23, 2018

TINA MCCOLL, Plaintiff,
v.
AMERICAN NATUROPATHIC COUNCIL and ALLIED PROFESSIONALS INSURANCE COMPANY, Defendants.

          ORDER DENYING PLAINTIFF'S SECOND MOTION TO COMPEL DISCOVERY

          TIMOTHY J. CAVAN, UNITED STATES MAGISTRATE JUDGE.

         Plaintiff Tina McColl (“McColl”) brings this action against Defendant Allied Professional Insurance Company (“Allied”) for bad faith insurance practices under Montana's Unfair Trade Practices Act. (Doc. 6.)

         United States District Judge Sam E. Haddon has referred the case to the undersigned under 28 U.S.C. § 636(b)(1)(B). (Doc. 76, 82.) Presently before the Court is McColl's Second Motion to Compel Discovery. (Doc. 122.) Having considered the parties' submissions, the Court finds McColl's motion should be denied.

         I. FACTUAL BACKGROUND

         Allied insured Dr. Michael Lang, a Bozeman naturopathic physician, under a professional liability policy. McColl presented a claim for damages against Dr. Lang for professional negligence, alleging that he applied “black salve” to her nose, which burned a third-degree, 4 mm deep hole in her nose. The claim was not resolved, and ultimately the matter proceeded to trial. A jury rendered a verdict against Dr. Lang in the amount of $138, 853.00. (Doc. 36.)

         This lawsuit arises out of Allied's handling of McColl's claim against Dr. Lang. (Doc. 6.) McColl alleges Allied failed to timely and adequately investigate, negotiate and pay McColl's damages, despite the fact liability was reasonably clear.

         Allied Professionals Insurance Services (“APIS”) is a management services company which provides administrative, management and claims handling functions for Allied. The services are provided under a Corporate Services Agreement between Allied and APIS. Pursuant to that agreement, an employee of APIS, Sara Schroeder, participated in the handling of McColl's underlying claim against Dr. Lang. Id. Her father, Michael J. Schroeder, also participated in the handling of McColl's underlying claim. Mr. Schroeder is Vice President and legal counsel for APIS, and is also a stockholder in APIS. Although it was involved in the adjustment of McColl's claim, APIS is not a party to this action.

         In her present motion, McColl seeks to compel (1) the production of the Corporate Services Agreement between Allied and APIS; (2) a response to “interrogatories about Michael Schroeder's remuneration for his claims handling activities;” and (3) “Michael Schroeder to answer questions about his ownership interest in APIS.” (Doc. 123 at 1.)

         II. DISCUSSION

         The threshold requirement for discoverability under the Federal Rules of Civil Procedure is whether the information sought is “relevant to any party's claim or defense and proportional to the needs of the case.” Fed R. Civ. P. 26(b)(1). Factors to consider include “the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. “Information within this scope of discovery need not be admissible in evidence to be discoverable.” Id.

         The relevance standard is commonly recognized as one that is necessarily broad in scope. See Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978) (citing Hickman v. Taylor, 329 U.S. 495, 501 (1947)). However broadly defined, relevancy is not without “ultimate and necessary boundaries.” Hickman, 329 U.S. at 507. Accordingly, district courts have broad discretion to determine relevancy for discovery purposes. The party seeking to compel discovery has the burden of establishing that its request satisfies the relevancy requirements of Rule 26(b). Soto v. City of Concord, 162 F.R.D. 603, 610 (N.D. Cal. 1995).

         McColl maintains that an adjuster's financial motivation to deny claims or adjust claims in a particular manner is relevant and discoverable. McColl argues the information sought to be compelled by her motion is necessary to determine whether Michael Schroeder or APIS had a financial motive to refuse to timely investigate and pay her claim against Dr. Lang.

         McColl is correct that courts have found that adjuster compensation may be relevant to bad faith claims in certain circumstances. In Anspach v. United of Omaha Life Ins. Co., 2011 WL 3862267 at *9 (D.S.D. Aug. 31, 2011), for example, the federal district court compelled the production of adjuster personnel files, finding they “may reveal whether a particular employee was rewarded financially for denying a certain number or percentage of claims or achieving a particular outcome with regard to claim's handling.” Here, however, there is no indication that is the case. In fact, Allied has responded to discovery on this issue, and has stated that neither Sara nor Michael Schroeder receive any financial benefit from the manner in which either may handle or adjust individual claims, including McColl's claim. Nevertheless, the Court will discuss below each of the specific matters McColl seeks to compel.

         A. Corporate ...


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