The Ohio Supreme Court issued a ruling on February 26, 2026 reversing lower court rulings that allowed the production of the insurer’s claim file in a bad faith lawsuit. Eddy v. Farmers Prop. Cas. Ins. Co., 2026 Ohio 626, 2026 WL 530293 (Ohio Feb. 26, 2026). The bad faith lawsuit stemmed from an underlying automobile accident in which a vehicle collided with a car being driven by a husband (driver) and wife (passenger). The negligent driver’s insurer paid out the limits of his liability policy. After receipt of the settlement, the husband and wife (the “Eddys”) made a $150,000 demand under the underinsured motorist (UIM) coverage of their personal auto policy issued by Farmers Property Casualty Insurance (“Farmers”). However, Farmers only offered $33,000 in response. The Eddys sued Farmers seeking coverage (the “UIM lawsuit”). Farmers offered $150,000 to settle the UIM lawsuit, which the Eddys accepted and dismissed the lawsuit. The Eddys later sued Farmers for bad faith negotiation of their UIM claim alleging that Farmers “delayed in making any reasonable attempt to resolve” and that it “failed to promptly, adequately, and reasonably investigate the facts and circumstances of the subject collision.”
During the discovery phase of the bad faith lawsuit, the Eddys requested Farmers’ complete claim file. Farmers produced portions of its claim file but refused to produce the portions from when the original coverage lawsuit was filed seeking UIM benefits. The Eddys argued that the entire claims file should be discoverable up until Farmers made payment in the UIM lawsuit. The trial court agreed with the Eddys, ordering Farmers to produce “the entire unredacted claim file up to the benefit-payment date of 04/11/22, which was the date of the check for underinsured motorist benefits to [the Eddys].” Farmers appealed the ruling. On appeal, the Ohio Court of Appeals ruled that the claims file was discoverable up to the date of the UIM payment made in the original UIM coverage suit. The Ohio Supreme Court reversed, holding that bad faith allegations do not create a blanket pass to obtain attorney-client communications in bad faith cases. Specifically, attorney-client privileged material is discoverable “only upon a prima facie showing of bad faith, and only to the extent that the court, upon an in camera inspection, determines that the communications ‘are related to the attorney’s aiding or furthering an ongoing or future commission of bad faith by the client.’” The court also addressed the application of the work-product doctrine to the insurer’s claims-file materials. The court ruled that the “work-product doctrine applies to the claims-file information in this case in the same manner as it applies to other materials: such materials may be disclosed only upon a showing of good cause therefor.” The court also rejected the policyholder’s invitation to create a special exception to this rule for bad faith lawsuits.
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