Pharmavite LLC filed a statement of loss under a policy issued by Crum & Forster Specialty Insurance Co. Crum & Forster disclaimed coverage, and Pharmavite commenced an action for breach of contract and declaratory judgment. After the parties disputed whether certain documents in Crum & Forster’s privilege log were discoverable, the court conducted an in camera review and ordered Crum & Forster to disclose all documents. Crum & Forster moved to reargue whether the documents were protected by attorney-client privilege or as attorney work product.

With respect to attorney-client privilege, the court held that “an attorney’s communication is not privileged when the attorney is hired for business or personal advice, or to do the work of a nonlawyer.” The court found that in the context of insurance “the payment or rejection of claims is a part of the regular business of an insurance company.” In its decision, the court explained that documents prepared in the ordinary course of an insurance company’s business in evaluating coverage are not privileged and do not become privileged if the investigation was conducted by a lawyer. Therefore, the court held that when an attorney acts as a claims investigator, the communications are not privileged. Further, the court found that reports prepared by insurance investigators, adjusters, or attorneys prior to the decision on coverage are not privileged even when those reports are multipurpose reports and motivated in part by potential litigation.

The court found that attorney work product only applies to “documents prepared by counsel acting as such, and to materials uniquely the product of a lawyer’s learning and professional skills, such as those reflecting an attorney’s legal research, analysis, conclusions, legal theory or strategy.” The court held that a memorandum created by a claims handler allegedly summarizing counsels’ opinion on its investigation of coverage was not protected. The court reasoned that the memorandum was created by a nonlawyer, and even though it summarized an attorney’s opinion, the attorney was acting as a claims investigator, which is in the ordinary course of an insurance company’s claim evaluation.

Various communications between Crum & Forster and its counsel were held to be discoverable. The court reasoned that these communications contained no legal advice or attorney thought processes and were dated prior to the disclaimer of coverage. Additionally, the court explained that the email indicated that the attorney was hired to act as claims investigator and to issue a coverage opinion.

A memorandum marked “privileged and confidential attorney client work product” was also held to be non-privileged and discoverable. The court explained that a party’s own labels are not determinative, and a review of the document indicated that it was a coverage opinion. The court found that despite the fact that the memorandum had multiple purposes, insofar as it was composed in anticipation of litigation, the attorney was nevertheless engaged in claims handling and, therefore, the document was discoverable.

Otsuka Am., Inc. v. Crum & Forster Specialty Ins. Co., No. 650463/2018 (N.Y. Sup. Ct. Aug. 30, 2019).