The plaintiff insured sought compensatory and punitive damages for alleged common law bad faith and alleged violations of Kentucky’s Unfair Claims Settlement Practices Act (UCSPA), including failure to make any offer of settlement. During the litigation, the insured sought discovery of documents and information concerning the defendant insurer’s conduct during the litigation.
The insurer objected and moved to limit discovery to its pre-litigation claims handling process. In support of its motion, the insurer argued that, because Rule 11 of the Federal Rules of Civil Procedure necessarily requires that a bad-faith complaint contain allegations of pre-litigation wrongdoing that had occurred as of the filing date of the complaint, the insurer’s conduct after the filing of the complaint was irrelevant and non-discoverable.
The court disagreed and ordered broad discovery concerning both the insurer’s post-filing conduct and its handling of other bad faith litigation in the state of Kentucky. In reaching its decision, the court noted that the Kentucky Supreme Court has previously found that an insurer’s duty to settle under the UCSPA is continuous and extends through the course of litigation.
