Pre-suit considerations.

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* whether the insurer objectively evaluated the claim;

You need to evaluate who will preside over your case and what type
of jury you will have when it comes time to tell your client's
story. What will be the emotional responses? Will there be legal
barriers that the judge is likely to accept? What is the current
"temperature" of the community toward insurance companies and
big business in general? Does your client have an employment or personal
history (for example, a successful businessperson, a police officer, or
a member of a minority group) that may affect jurors?

Accordingly, these employees may be asked to give their own

opinions about whether the defendant complied with the obligations
imposed by the covenant of good faith and fair dealing, as well as with
statutory obligations adopted by the jurisdiction whose laws apply to
the substantive issues of the case.

* Are the defendant's employees credible witnesses? Some of

the insurance company's witnesses may be subject to impeachment.
Others may have dealt with the insured in an adversarial manner
inconsistent with the principles of good faith claims handling.

* What amount of compensatory damages is likely to be awarded for

economic loss, emotional distress, and attorney fees? (Fees may be

recoverable in obtaining improperly withheld policy benefits.) The

greater the amount of compensatory damages, the greater the potential
for punitive damages. This is particularly true in a "cap"
state, such as Indiana, where three times the compensatory award may
pose a much greater exposure to punitives than the monetary cap of only
$50,000. That is, if the compensatory damages are several hundred
thousand dollars, three times that sum in punitives greatly exceeds the
monetary cap.

* Where do you find experts?

You should assess the need for experts early in the case and
secure an early commitment from the best experts in the field. Recognize
that these cases can become, to some degree, a battle of experts.

(4.) See, e.g., Mann v. Cracchiolo, 694 P.2d 1134, 1144-45 (Cal.
1985).

* Their goal is to make money, often at the expense of insureds.

* What is the personal plight of the insured/claimant plaintiff?

How sad is the story? In the minds of the jurors, will it justify
punishing the defendant?

* Is an insurer's bad faith or alleged wrongdoing a proper

subject for expert testimony?(3)

* whether the insurer processed and handled the claim consistently

with acceptable claims practices; and

Pattern and practice cases

Insurance and claims expert witnesses have become fixtures in
insurance extracontractual actions. These experts can be both useful
tools and damaging obstacles. Attorneys, judges, and independent
qualified claims personnel are often consulted as experts in insurance
litigation.

There may also be privilege issues. The insurer may assert that a
privilege applies to a large part of the claim file. Moreover, an
insurer may assert as an affirmative defense that it acted reasonably
and in good faith in taking the advice of counsel. This defense can pose
problems, including the likely waiver of the attorney-client privilege.
Also, it is unclear whether "advice of counsel" is an
affirmative defense that must be pleaded or simply an issue to be
considered in determining whether the insurer acted reasonably.

* whether the insurer conducted a thorough investigation of the

facts;(7)

* Insurance policies are designed to give insurers opportunities to

deny claims.

For example, a plaintiff's expert may establish a basis for

punitive damages. On the other hand, a persuasive expert for the defense
may totally defuse the plaintiff's case for punitive damages even
though the trier of fact decides that the claim decisions were wrong.

Your client's integrity will likely be challenged. Honest

insureds and claimants will be rewarded; those who are dishonest and
overreaching will not. Insurers will fight until it is clear that
relying on a jury's good judgment will lead to a serious monetary
loss. Your client must have the commitment to take the case through the
appellate process, if necessary.
(7.) Egan v. Mutual of Omaha Ins. Co., 620 P.2d 141,144-46 (Cal.
1979); see also CAL. INS. CODE [sections] 790.03(h)(3) (1997).

Need for experts

(3.) The issue may be raised first in a motion in limine to exclude

the expert's opinion testimony.

Potential for punitive damages

* whether the insurer made reasonable attempts to resolve or settle

the claim;

* How long has the plaintiff been a policyholder? A jury will

expect the insurer to "give slack" to an insured who has been

a policyholder for a substantial period of time. An insurer's

reluctance to do so may make the jury more likely to award punitive
damages.

Notes

* When is the expert necessary to the case?

(2.) FED. R. EVID. 702; CAL. EVID. CODE [sections] 720(a) (1997).

* What is the amount of the contract claim? Is it sufficient to

justify a substantial compensatory award? Is the fact that

the plaintiff
has been deprived of this sum justification for a significant
emotional
distress award?

Usually these experts are retained solely for the purpose of

giving opinions on issues in the case, as opposed to insurer employees,
who, because of their involvement in a claim file, can testify on the
facts. Insurer employees, too, can be considered "experts"
because of their special "knowledge, skill, experience, training,
or education," which may entitle them to testify in the form of an
opinion.(2)

Is the plaintiff's story one that a jury would find

sympathetic? Do you have the resources--financial and otherwise--to take

on a major corporation? Will you need to hire expert witnesses? The
answers to these and other questions will help you decide whether taking
the case would be prudent.

* whether the insurer has given as much consideration to the

interests of its insureds as to its own interests;(6)

The issues for expert testimony may be as follows:

When approached by a potential client seeking redress against an

insurance company for wrongful claims handling, you should consider a
number of factors before filing a lawsuit and committing your firm to
the case.
If there are coverage issues, is the court likely to bifurcate the
trial, limiting the first phase to breach of contract issues? If so,
then the court may not hear evidence relating to improper claims
handling until that issue is resolved. This may affect the coverage
decision.

Do not forget, however, that the insurer's large treasury

means the company has the resources to take the case "all the
way." While large companies are a bigger monetary target, they are
also formidable opponents with unlimited potential for
"stonewalling" and "hardball" discovery tactics.
These tactics include making it difficult for plaintiffs to locate

company employees with information about key issues in the case,

"coaching" company witnesses and objecting at depositions,
forcing motions to compel to get information, and raising objections to
written discovery on virtually every request.

* whether the insurer followed its own internal procedures, and, if

so, if these procedures constitute a "fair" and "good
faith" process for handling the claim.

* Are the proffered "experts" sufficiently qualified?(4)

The expert on claims issues may have an impact on the punitive

damages claim. A court is not likely to permit such an expert to testify
about the insurer's "state of mind" in handling the
claim. In other words, the expert may not speculate about whether the
claims handling was "fraudulent," "malicious," or
"vexatious." These issues are for the trier of fact.(5)
However, an expert's testimony on claims issues may influence the
jury's view of the case and ultimately affect the punitive damages
issue.

There are a number of fundamental questions concerning the

testimony of claims and insurance practices "experts":

(1.) See Downey Sav. & Loan Ass'n v. Ohio Cas. Ins. Co., 234
Cal. Rptr. 835, 850 (Ct. App. 1987); Moore v. American United Life Ins.

Co., 197 Cal. Rptr. 878, 895-97 (Ct. App. 1984).

Second, they offer the potential for admission of other claims

stories that can enhance the potential for punitive damages. The
continued practice of misdeeds represents corporate policy and makes the
defendant a ripe candidate for punitive damages.(1)

Before filing suit, you must evaluate your chances of getting

juror commitment to these emotional themes. The greater the commitment,
the more likely the fact finder will accept your evidence and arguments
that your client's insurance matters have been mishandled and
damages must be awarded to right the wrong and potentially prevent
future occurrences.

* What is the length of time from claim to compensation? The longer

the period from the time of the initial injury to trial--or payment of
what was rightly owed--the greater the potential for punitive damages. A
lengthy period of denial bolsters the perception that insurance company
claims personnel retain the insurer's money for as long as possible
to maximize profits.

These have great potential for showcasing insurance company

misdeeds. First, class action claims may be appropriate in these cases.
This can increase the seriousness of the case in the eyes of the court,
the jury, and the defendant itself.

Guy O. Kornblum is a partner in the firm of Bailey & Kornblum in

San Francisco. He can be reached at his e-mail address:
gkornbluml@aol.com.

(6.) See Crisci v. Security Ins. Co., 426 P.2d 173, 176 (Cal. 1967).

The environment for seeking redress for insurance company wrongs

is not always "plaintiff friendly." While juries may be
sympathetic, you must evaluate the barriers posed by evidentiary rules,
punitive "caps," and judicial views regarding class actions or
large punitive "windfalls" before committing your law firm to
these suits. They require careful planning and consideration before
filing.

* What is the overall perception of the insurance company? Promises

of "good hands," "good neighbors," and "pieces
of the rock" give the jury the impression that the insurer can be
trusted. On the other hand, these advertising slogans may be perceived

as marketing tools for attracting customers. Also, if the insurer is

perceived as "big" and "rich," this may influence
the jury's decision to award punitives.

Although it is difficult to evaluate the evidentiary issues at the

outset of a case, counsel can anticipate some potential evidentiary
problems. For example, is the plaintiff willing to allow the defense to

explore his or her emotional background before a jury? The court may
allow this line of questioning if the plaintiff has claimed emotional
distress.

* The claims process has built-in impediments to allow delay in

payment so that companies can retain their money as long as possible.

They testify about (1) the reasonableness of settlement offers,

(2) the standard or customary practice of insurance companies and their
employees and agents, and (3) the ultimate issue of whether the
insurer-defendant acted in bad faith or in violation of implied or
statutory obligations.

Anyone handling insurance cases from a plaintiff's

perspective knows the importance of representing the appropriate
plaintiff. I often refer to these as the "have to" plaintiffs:
They have to sue--they have no choice. The insurer's conduct has
been devastating or so one-sided in favor of the company that it clearly
deserves close scrutiny for an appropriate remedy. The plaintiff must
present a truly sympathetic story. For example, has the insurer's
bad conduct caused financial ruin, serious physical and emotional
problems, or family devastation?

In evaluating the potential for punitive damages in an insurance

tort case, consider the following:

(5.) See FED. R. EVID. 704.

Evidentiary issues

* How can experts be used effectively by both parties in an

extracontractual action?

An improvidently taken case can result in considerable expense.

Thus, you must first determine what it will cost to litigate your
client's claim. Travel expenses and depositions can cost thousands
of dollars. In addition, cases requiring experts can be enormously
expensive. The end result may not justify the necessary financial
commitment. While these are factors to consider before taking any case,

they are extremely important in litigation

challenging major
corporations with extensive resources.

Insurance lawsuits have a "David v. Goliath"

theme. Your
case should support this theme and other
prevalent notions about large
insurance companies:

* Insurance company employees are often less than candid.