Discoverability of Insurance Policy Limits

In Tennessee, the Supreme Court has an advisory commission that recommends changes in the rules of civil procedure, evidence and appellate procedure.  Proposed changes are circulated for public comment and then the court sends them to the legislature for approval.  The legislature can only vote the rule changes up or down, it cannot modify them.

However, the legislature has persuaded the court to withdraw proposed changes to the rules on several occasions.  The most frequent subject of objection has been a proposed change to Rule 26 of the Tennessee Rules of Civil Procedure which would permit the discovery of the existence and amount of liability insurance coverage.  Insurance companies, primarily Tennessee Farmers Mutual Insurance Company, opposes disclosures of insurance information.

Now the Tennessee Supreme Court is going to get the opportunity to determine whether to permit the discovery of insurance information by way of case law.  In Thomas v. Oldfield, No. M2006-02767-COA-R9-CV, (Tenn. Ct. App. Nov. 7, 2007) the intermediate court rejected a plaintiff’s effort to discover insurance information.   The court held as follows:

"Informed by the plain meaning of “subject matter of the pending action” and the spirit and purpose of the rule as originally enacted, we do not view the liability insurance coverage in this case as coming within its scope because the information bears no relation to the issues before  the trial court. When the party seeking discovery has failed to state a connection between the  liability insurance information and the preparation of its case for trial, and when none is  otherwise apparent, that information falls outside the scope of discovery. "

There is no reason, absent historical precedent, that the courts permit the legislature to have any say whatsoever on what rules of procedure are adopted for use in our courts. 

This case will put the court on the hot seat.  Will it follow the majority rule and permit discovery of this information?  Or will it yield to the legislature?  Time will tell.

Read the decision here.

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