In a case of first impression, the Southern District of New York determined Montana Code § 33-28-108(3) did not mandate the Montana Commissioner of Insurance’s report on a captive insurer was privileged. The Code provision stated:

[A]ll examination reports, preliminary examination reports or results, working papers, recorded information, documents, and their copies produced by, obtained by, or disclosed to the commissioner or any other person in the course of an examination made under this section are confidential, are not subject to subpoena, and may not be made public by the commissioner or an employee or agent of the commissioner without the written consent of the company or upon court order.

The Court required the subject documents be produced for three reasons. First, statutory interpretation did not support the privilege, as interpreting the statute so broadly would sweep in almost any company record – such as discoverable business records – that played a part in the Commissioner’s examination. Instead, the statute should be found to protect documents in the possession of the Commissioner, not the examined company. Furthermore, the statute noted the documents are “confidential,” and did not expressly create an evidentiary privilege.

Second, the Court looked at the interpretation of similarly worded statutes from other jurisdictions, as this was a case of first impression under Montana law. Statutes surveyed included Indiana, Rhode Island, New Hampshire, West Virginia and New Jersey – all of which prohibited the state insurance agency from disclosing company records but not information in the company’s control. Notably, California Insurance Code § 735.5, which was also analogous to the Montana statute yet interpreted very broadly to support the withholding of such documents, was not considered by the Court because of the “odd” result such a statutory interpretation would yield.

Finally, the Court looked at the Commissioner’s conduct: it declined to submit any formal administrative interpretation of the statute; it appeared at a deposition to discuss the company; and, it freely discussed the allegedly privileged documents over objections. The documents were thus subject to the case’s confidentiality order, but were not privileged.

Amtrust North America, Inc., et al. v. Safebuilt Insurance Services, Inc., et al., Nos. 16-MC-169 and 16-MC-170 (USDC S.D.N.Y. May 16, 2016)