Insurers doing business in Florida will be relieved to learn that the Florida Supreme Court has finally put to rest a long-unsettled question: whether communications between an insurer and its attorneys regarding a policyholder’s claim are discoverable during first-party bad faith litigation brought by the policyholder.

The Court’s decision in Genovese v. Provident Life and Accident Ins. Co.,1 which held that the attorney-client privilege protects such communications from discovery, settles a long-running dispute between attorneys for policyholders on one side, and attorneys for insurers on the other, over the proper scope of the Florida Supreme Court’s 2005 decision in Allstate v. Ruiz2.

The Significance of the Genovese Decision

For any insurer with experience in defending against claims of insurer bad faith, the importance of the Genovese decision is obvious. An insurer communicating with its counsel about an insurance claim expects to have a private and uncensored discussion of issues. Under that veil of privacy, the insurer and counsel may consider the legal aspects of an insurance claim from a variety of angles. When such communications are disclosed to a policyholder’s counsel during litigation, the policyholder’s counsel may then sift through them to try to find language with which to raise an inference of bad faith. In situations where there were factors militating both in favor of and against coverage, and the insurer, considering the totality of the circumstances, ultimately decided that a claim was not covered, this practice by policyholder’s counsel may be especially problematic for the insurer.

Notably, the Genovese decision does not apply to materials that fall under the work product doctrine – i.e., materials prepared in anticipation of litigation. As described below, under the 2005 Ruiz decision, such materials are discoverable by policyholders in a Florida first-party bad faith lawsuit.

Ruiz and the History of the Dispute Over Attorney-Client Communications in Discovery3

Florida law recognizes causes of action for both third-party insurance bad faith and first-party insurance bad faith.4 Third-party bad faith involves allegations that the insurer acted in bad faith in handling the defense of its insured against claims brought by a third party. In contrast, first-party bad faith involves allegations that the insurer acted in bad faith when it denied, delayed or underpaid a claim for the insured’s injuries or losses. Historically, Florida courts have applied different treatment to the two types of bad faith claims when examining the attorney-client privilege and work product doctrine.

In the third-party bad faith context, Florida courts have reasoned that the policyholder (as well as the injured third party, who can bring the third-party bad faith claim and who “stands in the shoes” of the policyholder for that purpose) is entitled to review all records related to his or her representation. Thus, a plaintiff in a third-party bad faith case, seeking to review underlying claims and litigation files, usually can trump the insurer’s assertion of the work product doctrine and attorney-client privilege, even if the injured third party brings the action directly against the insurer. There is an exception to this general rule: an insurer may successfully assert the attorney-client privilege with respect to communications between the insurer and separate counsel retained solely to represent the insurer’s interest.5

In contrast, for years Florida courts protected both work product materials and attorney-client communications from disclosure in first-party bad faith lawsuits. In 1989, the Florida Supreme Court distinguished between the discovery available to plaintiffs in first- versus third-party bad faith claims in Kujawa v. Manhattan Life Ins. Co. Reasoning that the relationship between policyholder and insurer in a first-party dispute is purely adversarial, the Court in Kujawa held that an insurer could invoke the work product doctrine and attorney-client privilege in first-party bad faith litigation.

However, in 2005, the Florida Supreme Court revisited the issue and overturned Kujawa – at least partially. In its decision in Allstate v. Ruiz, the Court, when considering whether the work product doctrine shielded the insurer’s documents from discovery in a first-party bad faith lawsuit, held that any distinction between first-party and third-party bad faith lawsuits is “unjustified” and “without support.”7

Because the documents typically found in claims files are virtually the only direct evidence of how the insurer handled the insured’s claim, the Court held that “all” materials created before or on the date when the underlying dispute was resolved should be produced in a first-party bad faith action, just as they are in a third-party action. Material pertaining in any way to coverage, benefits, liability, or damages is currently discoverable in a Florida bad faith action – even if the insurer argues that such materials were “prepared in anticipation of litigation.” Thus, at least with respect to the work product privilege, Ruiz removed the distinction between the discovery that insurers must provide in first- and third-party bad faith actions.

Although the Court in Ruiz was only considering the issue of work product doctrine, attorneys for policyholders have been arguing ever since – sometimes successfully – that its holding applies to attorney-client communications as well. Appellate court and federal district courts in Florida have disagreed as to the reach of Ruiz, with some deciding that Ruiz applies only to the work product doctrine,8 with others siding with policyholders’ counsel in holding that attorney-client communications are likewise subject to disclosure.9

For insurers, the result of the debate over Ruiz has been anxiety over whether their confidential communications with attorneys will be disclosed during the discovery phase of first-party bad faith litigation – not to mention the expense of engaging in motion practice and appeals regarding an unsettled area of law.

Genovese Limits the Reach of Ruiz

With the Florida Supreme Court’s decision in Genovese, the anxiety is finally over. With limited exceptions an insurer’s communications with its attorneys will remain shielded from disclosure in Florida first-party insurance bad faith actions.

In Genovese, the plaintiff, holder of a disability income policy, sued his insurer for statutory first-party bad faith after the insurer terminated the policyholder’s monthly payments. The parties engaged in a dispute as to whether attorney-client communications of the insurer would be produced in discovery. The trial court, like many such courts in the six years following the Ruiz decision, settled the dispute by issuing an order compelling the insurer to produce the documents.

On appeal, however, Florida’s Fourth District Court of Appeals quashed the trial court’s order. The appellate court also certified the following question to the Florida Supreme Court:

Does the Florida Supreme Court’s holding in Allstate Indemnity Co. v. Ruiz, 899 SO. 2D 1121 (FLA. 2005), relating to discovery of work product in first-party bad faith actions brought pursuant to Section 624.155, Florida statutes, also apply to attorney-client privileged communications in the same circumstances?10

The Florida Supreme Court answered the certified question in the negative. First, the Court revisited its decision in Ruiz, and explained that the issue under review had been limited to the work product doctrine. The Court next explained the fundamental differences between the work product doctrine and the attorney-client privilege, and why those differences led the Court to allow disclosure of work product materials while protecting attorney-client communications from disclosure.

The work product doctrine, explained the Court, is outlined in Florida Rules of Civil Procedure 1.280(b)(3), which states that a party may obtain discovery of materials prepared by another party in anticipation of litigation (i.e., work product), “upon a showing that the party seeking discovery has need of the materials in preparation of the case and is unable without undue hardship to obtain the substantial equivalent of the materials by other means.”11 In the context of a first-party bad faith claim, the Court held that the underlying claim files are “necessary” to evaluating allegations of bad faith, and they therefore fall under Rule 1.280(b) (3) and are discoverable.

In contrast, the attorney-client privilege “is not concerned with the litigation needs of the opposing party.12 Instead, explained the Court, the purpose of the privilege is “to encourage full and frank communication between the attorney and the client.”13 The Court explained that this “significant goal” of the privilege would be “severely hampered if an insurer were aware that its communications with its attorney, which were not intended to be disclosed, could be revealed upon request by the insured.”14 The Court also noted that unlike the work product doctrine, which is modified by Rule 1.280(b)(3), there is no statutory exception to the attorney-client privilege. “Consequently,” concluded the Court, “when an insured party brings a bad faith claim against its insurer, the insured may not discover those privileged communications that occurred between the insurer and its counsel during the underlying action.”15

Exceptions to the Attorney-Client Privilege

Although the Genovese decision preserves the attorney-client privilege for insurers defending against first-party bad faith lawsuits, insurers should take note that there are exceptions to the privilege. As explained by the Court, in situations where an insurer has hired an attorney both to investigate the underlying claim and provide legal advice, the materials produced by that attorney may implicate both the work product doctrine and the attorney-client privilege. In those situations, advised the Court, trial courts should conduct an in camera inspection of the requested materials to determine whether they are truly protected by the attorney-client privilege.16

The Court also noted that its opinion is not intended to undermine any statutory or judicially created waiver of the privilege. For example, the decision leaves in place the “at issue” doctrine, where the insurer raises the advice of counsel as a defense and disclosure of the communications is necessary to establish the defense.17


The decision in Genovese should relieve some of the anxiety regarding discovery in Florida first-party bad faith actions. The traditional protections from disclosure enjoyed by attorney-client communications have been preserved for insurers in such lawsuits. However, given the exceptions to the attorney-client privilege as noted by the Florida Supreme Court, insurers should still take precautions, particularly where insurers retain attorneys both to investigate claims and render legal advice.