Federal Rule 26(b)(3) is about the discovery of materials prepared in the ordinary course of business, including the insurance business. The Rule does not protect everything the business happens to prepare, and policy-holders generally should be aware of what is and what is not protected. The Rule applies only to business records prepared "in anticipation of litigation or for trial," to use the legal phrase.
The Rule was discussed in the context of a motion to compel a document prepared by an insurance company in a recent unpublished case in which the policy-holder argued the document was not proteced by what is called work-product immunity.
To sustain a defense of work product immunity and keep the document out of the hands of the policy-holder and her lawyer, the insurance company "must demonstrate that the documents at issue were prepared in anticipation or litigation by or for [the insurance company] or by or for [the insurance company's] representative." As another court noted, however:
[M]embers of society tend to document transactions and occurrences to avoid the foibles of memory and to perpetuate evidence for the resolution of future disputes. And because litigation is an ever-present possibility in American life, it is more often the case than not that events are documented with the general possibility of litigation in mind. Yet, the mere fact that litigation does eventually ensue does not, by itself, cloak materials with work product immunity.
In addition, assume that the insurance company document was pursuant to an investigation of a claim made by a policy-holder, such an investigation "would normally be undertaken," and thus would be "an investigative report developed in the ordinary course of business." Such reports are not protected as work product.
As the magistrate stated: "A substantial part of an insurance company's business is investigating claims and handling appeals of claims determinations. Consequently, those activities are a part of the normal business activity of [the insurance company], and reports prepared or used in connection with those ordinary business activities are not protected from disclosure under the work product doctrine."
The court found that the document in question was not protected under work product immunity, but beware, the court found the same document to be protected under another doctrine, called attorney-client privilege!