Traditionally, courts automatically stopped (“stayed” in legal jargon) people who sued their insurance companies from obtaining copies of claims files, procedural guidelines and other such documents until they first prevailed on their basic, “contract” claim. In cases bearing the earmarks of true “bad faith” this could ultimately require the parties and the courts to hold 2 trials, usually with different juries at greater time and expense to all involved.

Federal courts are not bound to follow the procedure established by state courts and in one of our present cases we noted that a growing trend among federal courts is now changing the time-honored state procedure and, on a case-by-case basis (depending on the facts) simultaneous discovery of “bad faith” issues is being allowed. We brought these cases and the trend that they seem to be establishing to the attention of a United States District Court Judge (William Smith) in Rhode Island and he, in a thoughtful decision, has agreed with the newer federal approach and held that stopping or “staying” discovery of bad faith issues should no longer occur automatically. Rather, he points out several criteria to be considered and held that this issue should be determined on and in view of the facts and type of each individual case.

John Reilly & Associates is pleased to have received this ruling on behalf of one of our valued clients and the full text of the order appears below. Visit us on the web for more interesting news and cases.

Full text of order respecting stay of “bad faith” discovery in PDF format. Adobe Acrobat Reader required (free download).