The DRI Bad Faith Conference continued late Friday morning with a discussion of the impact of social media on bad faith litigation, led by Paul Berne of Lancer Insurance. Mr. Berne discussed the pros and cons of performing a social media search of claimants or policyholders. Although a fulsome investigation of a claim may very well involve a review of publicly available social media, there is a risk that the sheer amount of data may induce claims professionals to spend too much time in the investigation, at the expense of timely responding to the claim. Moreover, there is a risk that claims professionals will overestimate the evidentiary value of information discovered on social medial. Mr. Berne referenced several issues in the investigation process that may be impacted by social media, such as improper “friending” of a claimant or insured on social media, or the improper access of private information. Information gathered via social media also involve evidentiary issues, such as how to properly admit the results of a social media investigation into evidence. Defense counsel should be prepared to advise clients on the acquisition, authentication, and preservation of information learned through the use of social media for use at trial. Defense counsel may also wish to keep clients up to date on the latest case law about the use and admissibility of such information in litigation.
The discussion continued with a presentation by Asim Desai of Carlson, Calladine & Peterson LLP, on how to handle actual or perceived “mistakes” in the claims file. Insurers should recognize that many claims files contain some sort of a “mistake,” and that often these “mistakes” are not fatal to a case. “Mistakes” do not necessarily rise to the heightened standard necessary for a finding of bad faith. It may, however, appear that Policyholder counsels’ goal is to convert individual “mistakes” into indicia of institutional bad faith.
“Mistakes” may include interpretation of policy provisions, communications that do not conform to statutory requirements, insufficient investigation or evaluation, or timing issues. Counsel is advised to identify the “mistakes” alleged by policyholder counsel, as compared to any actual “mistakes.” It is also important to identify who made the “mistakes,” when they were made, whether any corrective action that was taken, and the nature of the harm, if any, caused. When faced with an actual or potential “mistake,” it is important to evaluate whether it was intentional, whether it was acknowledged, and whether proper corrective action was taken. Counsel is advised to evaluate claim files and notes early, and to identify the claims professionals that were involved with or may be aware of how the file was handled. Adequate preparation for depositions of the claims professionals is useful to frame the context in which “mistakes” were made during adjustment of the claim. Moreover, acknowledgment of any genuine mistakes during discovery may help diffuse them at trial. Focus groups and mock trials can also identify how a jury may evaluate “mistakes.” Mr. Desai also discussed how to handle and minimize “mistakes” during trial, from the jury selection phase through closing arguments.