You know that awful sinking feeling when your insurance company denies your claim or offers you way too little? You’ve been paying your premiums faithfully for years, and now, when you actually need them, they’re giving you the runaround. If you’re going through this frustration in Colorado, you’re definitely not alone – and there might be more you can do about it than you think.
When insurance companies act unfairly or in “bad faith,” there’s a powerful tool called the “discovery process.” Think of it like getting a backstage pass to see how the insurance company really operates, what they knew about your claim, and whether they actually treated you fairly. But here’s the cool part – discovery in insurance bad faith cases isn’t just about collecting a bunch of papers. It’s about getting to the bottom of things and finding the truth hidden within their corporate walls.
So, What Exactly Is Insurance Bad Faith?
Before we get into the nitty-gritty of how you find out what happened, let’s chat about what “bad faith” actually means. In Colorado, insurance companies have a legal duty to deal with you honestly and fairly. They can’t just deny claims for no good reason or drag their feet hoping you’ll just give up.
Bad faith can show up in lots of different ways. Maybe they denied your claim without properly looking into it. Perhaps they’re taking forever to respond to your calls and paperwork. Or maybe they’re offering you a settlement that’s laughably low compared to what your actual damages are. Sometimes, they’ll approve part of your claim but conveniently “forget” about other expenses that should be covered.
The tricky part is proving it. Insurance companies are pretty good at covering their tracks, which is exactly where discovery comes in handy.
Why Discovery is Such a Big Deal in Bad Faith Cases
Imagine being a detective with some serious legal superpowers. That’s kind of what discovery is like. You get to demand documents, ask pointed questions under oath, and dig into the insurance company’s internal workings. It’s your chance to level the playing field.
In most regular lawsuits, discovery helps you understand what happened. But in bad faith cases, discovery helps you figure out what the insurance company was thinking when they made their decisions. Did they have all the facts? Did they follow their own rules? Were there internal emails showing they knew they should pay your claim but decided not to anyway?
This is where things get really interesting. Insurance companies often have to hand over their claim files, internal chats, training materials, and even details about how they handled similar claims. Sometimes, what you find in discovery is even more valuable than your original claim itself.
The Legal Side: Colorado’s Rules
Colorado takes insurance bad faith pretty seriously. The state follows something called the “reasonable expectations” doctrine. Basically, this means insurance companies need to honor what a reasonable person would expect from their policy coverage.
Colorado Revised Statute § 10-3-1115 and § 10-3-1116 lay out the rules. These laws say insurance companies can’t unreasonably delay or deny benefits, and they have to do reasonable investigations. If they mess up, you might be able to get your original benefits plus penalties, attorney fees, and sometimes even extra damages (called punitive damages).
Colorado courts have also developed what’s known as the “Goodson” standard (from a 1991 case called Goodson v. American Standard Insurance Company). This standard requires insurance companies to look into claims quickly and thoroughly, talk clearly with policyholders, and make decisions based on reasonable interpretations of the policy.
Getting Started: The First Steps
When you file a bad faith lawsuit in Colorado, the discovery process doesn’t kick off immediately. First, you’ll file your complaint, the insurance company will respond, and then the court usually sets up a schedule with deadlines for different discovery steps.
Here’s something most people don’t realize: the discovery process in bad faith cases often starts before you even file the lawsuit. Colorado law requires you to give the insurance company written notice of your bad faith claim and wait 30 days before suing. During this time, smart attorneys are already thinking about what documents and info they’ll need.
Once the lawsuit is filed, Colorado generally follows the Federal Rules of Civil Procedure in federal court, or the Colorado Rules of Civil Procedure in state court. Both sets of rules are pretty open about what you can discover, as long as it’s relevant to your case and not legally “privileged” (meaning it’s protected, like attorney-client conversations).
The Claim File: Your Go-To Spot
The insurance company’s claim file is like the ultimate treasure trove for bad faith discovery. This file should contain everything related to your claim: your application, policy papers, letters, internal notes, investigation reports, medical records, repair estimates, photos, and recorded statements.
But here’s where it gets a little tricky. Insurance companies sometimes have multiple files, and they don’t always offer up all of them. You might have the adjuster’s file, the supervisor’s file, the legal department’s file, and the corporate file. Each one could have different important details.
When you ask for the claim file, you want to be super specific. Don’t just say “the claim file.” Ask for all files, folders, databases, electronic records, and any other places where information related to your claim might be stored. Make sure to include backup files, deleted files, and old archived stuff.
You’ll also want to ask for the file in its original format. If they keep electronic records, you want them electronically, not printed out. This way, you can see things like metadata (data about data), timestamps, and other hidden info that could be really important.
Internal Communications: Where the Real Story Lives
This is truly where discovery gets exciting. Internal emails, memos, and chats between adjusters, supervisors, and executives can really show what the insurance company was thinking and how they made their decisions.
You’re looking for communications that show:
- Whether the company actually looked into your claim properly.
- If they had doubts about their decision to deny your claim.
- Whether they were trying to pay out less to boost profits.
- If there were disagreements inside the company about how to handle your claim.
- Whether they followed their own rules and guidelines.
Sometimes, you’ll find “smoking gun” emails where an adjuster recommends paying your claim, but a supervisor overrides that decision for questionable reasons. Other times, you might find that the company was rushing through claim reviews to meet quotas or save money.
Personnel Files and Training Materials
Don’t forget about the folks who handled your claim. Personnel files can show whether the adjuster or supervisor had the right training, experience, or qualifications. If someone with no medical background was making decisions about your injury claim, that’s definitely worth noting.
Training materials are also gold mines. They show what the insurance company taught its employees about handling claims like yours. If the training materials say one thing, but the adjuster did something totally different, well, you’ve got evidence of improper handling.
You might also want to look at performance reviews, disciplinary records, and how bonuses were structured. If adjusters get bonuses for denying claims or keeping payouts low, that’s a pretty strong sign of bad faith practices.
Similar Claims and Company Practices
One really strong discovery tool is looking at how the insurance company handled claims similar to yours. If they routinely deny claims like yours without a proper investigation, that points to a pattern of bad faith.
You can ask for information about:
- Other claims involving similar injuries, damages, or situations.
- How often they deny different types of claims.
- Average settlement amounts for comparable claims.
- How long it took them to process similar claims.
- Company policies and procedures for handling your kind of claim.
This info helps figure out if your treatment was just a one-off issue or part of a bigger pattern of misconduct.
Expert Witnesses and Industry Standards
Discovery isn’t just about documents. You’ll likely need expert witnesses to explain industry standards and whether the insurance company met them. During discovery, you can question the insurance company’s experts and employees to understand their arguments and find weak spots.
Common expert witnesses in bad faith cases include:
- Former insurance company executives who can explain how claims should be handled.
- Medical experts who can review the company’s medical assessments.
- Economic experts who can figure out proper settlement values.
- Industry consultants who can explain standard practices.
Electronic Discovery: The Digital Footprint
Most insurance companies today handle claims electronically, which means there’s a digital trail of everything they did (or didn’t do) on your claim. Electronic discovery (or “e-discovery”) can dig up information that might not exist in paper files.
This includes:
- Email conversations and instant messages.
- Database entries and changes.
- System logs showing who accessed your file and when.
- Backup tapes and old archived data.
- Metadata showing when documents were created or changed.
E-discovery can be a bit pricey and complicated, but it’s often totally worth it in bad faith cases. Sometimes, the insurance company’s own computer systems reveal that they broke their own rules or made decisions without a proper review.
Depositions: Getting Answers Under Oath
Depositions are formal question-and-answer sessions where witnesses testify under oath before the trial. In bad faith cases, you’ll typically want to question:
- The adjuster who handled your claim.
- Supervisors who reviewed claim decisions.
- Medical reviewers or other experts the company talked to.
- Company representatives who can speak about company policies.
- IT folks who can explain electronic records.
Depositions are your chance to get the insurance company’s story pinned down and look for any inconsistencies. You can ask about their decision-making process, what documents they looked at, and whether they followed proper procedures.
Here’s a pro tip: insurance company employees often give more honest answers in depositions than in their written reports. They’re under oath and can’t hide behind a bunch of corporate jargon.
Corporate Depositions: The “Rule 30(b)(6)” in Federal Court
If your case is in federal court, “Rule 30(b)(6)” depositions are super powerful. This rule lets you question the insurance company as a whole entity, not just individual employees. You can ask them to name someone to testify about specific topics like:
- Company policies for handling claims like yours.
- Training given to adjusters and supervisors.
- How they make decisions about claim denials.
- Quality control and oversight procedures.
- Financial incentives and how employees are measured.
The company has to name someone knowledgeable about these topics and make sure they’re ready to testify. If they can’t find anyone who knows about their own procedures, that’s pretty telling, right?
Dealing with Discovery Roadblocks
Insurance companies don’t exactly make discovery easy. They’ll often claim “privilege,” argue that information isn’t relevant, or try to limit what you can discover. Here are some common hurdles and how attorneys typically handle them:
Attorney-Client Privilege
Insurance companies love to claim attorney-client privilege, but it doesn’t cover everything. Chats with their in-house lawyers about handling the claim itself (as opposed to advice about the lawsuit) usually aren’t privileged. The trick is showing that the lawyer was acting like a claims professional, not giving legal advice.
Work Product Protection
“Work product protection” covers materials prepared specifically for a lawsuit, but it has limits too. If the insurance company was investigating your claim for coverage reasons (not because they knew they’d be sued), their investigation materials usually aren’t protected.
Privacy and Confidentiality
Insurance companies sometimes argue that other customers’ information is private. While this can limit things a bit, it doesn’t stop discovery completely. Courts can order the info to be shared, but with names and identifying details blacked out.
Proportionality
Colorado courts want discovery to be reasonable for the case. Insurance companies might argue that lots of discovery is too expensive or burdensome. However, in bad faith cases with significant damages, courts are usually okay with broad discovery.
The Role of McCormick & Murphy P.C.
When you’re dealing with a complex discovery process, having experienced legal help makes all the difference. McCormick & Murphy P.C. has been handling insurance bad faith cases in Colorado since 1995, and they know exactly what to look for during discovery.
Kirk McCormick and Jay Murphy have over 60 years of combined experience in personal injury and insurance bad faith lawsuits. They know which documents matter most, how to ask deposition questions to get useful answers, and how to get past the roadblocks insurance companies put up.
Their office is located at 929 W Colorado Ave, Colorado Springs, CO 80905, and they handle most bad faith cases on a contingent fee basis. That means you don’t pay attorney fees unless you win.
Timing and Deadlines
Discovery in Colorado state court typically lasts about 8 months from when the defendant files their answer, but courts can extend this if there’s a good reason. Federal court discovery deadlines vary depending on the judge’s schedule.
Here’s a rough idea of the typical timeline:
- Months 1-2: Sending out initial document requests and written questions.
- Months 3-4: Getting documents and answers back.
- Months 5-6: Depositions (questioning people under oath).
- Months 7-8: Getting info from expert witnesses and corporate depositions.
- Month 9+: Dealing with court motions and getting ready for trial.
The key is starting early and being organized. You don’t want to wait until the last minute to ask for important documents or schedule depositions.
Cost and Who Pays
Discovery can get expensive, especially in complex bad faith cases that involve e-discovery and lots of expert witnesses. However, Colorado law has a rule for attorney fee shifting in successful bad faith cases. This means the insurance company might have to pay your legal costs if you win.
This fee-shifting rule helps level the playing field and makes it financially possible to pursue bad faith claims even when the original insurance benefits aren’t huge. Insurance companies know this, which is why they often take discovery seriously and sometimes settle cases rather than risk having to pay the other side’s attorney fees.
Common Discovery Fights and How Courts Handle Them
Colorado courts see certain discovery arguments pop up repeatedly in bad faith cases. Knowing how courts usually rule can help you plan your discovery strategy:
How Much “Similar Claims” Data Can You Get?
Courts usually allow you to look at similar claims data but might limit it to a certain time period (often 3-5 years) and similar types of claims. The trick is showing how it’s relevant to your specific case.
Getting to High-Level Executives
It can be tough to get depositions of high-level corporate executives, but courts will order them if you can show the executives have unique knowledge that’s important to your case.
Financial Information
You can usually discover the insurance company’s financial condition if you’re seeking punitive damages, but courts might limit it to prevent “fishing expeditions” (just looking for anything).
Third-Party Information
Information about other policyholders can be discovered if it’s relevant, but courts will usually require blacking out identifying info to protect privacy.
Technology and Modern Discovery Challenges
Today’s discovery process looks very different from even ten years ago. Insurance companies use fancy software to manage claims, and much of their decision-making happens electronically. This creates both opportunities and challenges for discovery.
Artificial Intelligence and Automated Decisions
Some insurance companies now use AI to help evaluate claims. If AI was involved in your claim decision, you might be able to discover the algorithms, training data, and decision-making rules they used. This is pretty cutting-edge stuff, and courts are still figuring out how to handle it.
Social Media and Digital Communications
Insurance companies are increasingly checking social media and using digital investigation tools. You might be able to find out what digital surveillance they did on you and whether it affected their claim decision.
Cloud Storage and Data Retention
Many insurance companies store data in the cloud or use outside companies for data management. This can make discovery more complicated because the data might be stored in multiple places or formats.
Practical Tips for Getting the Most Out of Discovery
Based on years of handling bad faith cases, here are some practical tips for making the most of discovery:
Start Broad, Then Get Specific
Begin with wide-ranging document requests to get the full picture, then follow up with targeted requests based on what you find.
Pay Attention to What’s Missing
Sometimes what isn’t in the file is as important as what is. If you’d expect certain documents to exist but they’re not produced, ask specifically about them.
Look for Patterns
Don’t just focus on your individual claim. Look for patterns in how the company handles similar claims, trains employees, and makes decisions.
Use All Your Tools
Don’t rely just on asking for documents. Use written questions to get specific answers, depositions to nail down testimony, and requests for admission to establish key facts.
Follow the Money Trail
Look at financial incentives, performance measures, and bonus structures that might have influenced how your claim was handled.
Special Considerations for Different Types of Claims
The discovery process can vary a bit depending on what type of insurance claim you’re dealing with:
Auto Insurance Claims
Look for accident reconstruction reports, witness statements, and chats with repair shops. Pay attention to whether the company properly investigated who was at fault and how much damage there was.
Homeowner’s Insurance Claims
Focus on inspection reports, expert evaluations, and communications with contractors. Look for signs that the company failed to properly assess damage or coverage.
Disability Insurance Claims
Medical file reviews, surveillance reports, and job assessments are key. Look for signs that the company ignored good medical evidence or used biased reviewers.
Health Insurance Claims
Medical necessity decisions, peer reviews, and communications with healthcare providers are important. Look for signs that the company used flawed review processes or ignored medical evidence.
How Discovery Helps with Settlement
Discovery doesn’t just help you get ready for trial – it often drives settlement talks. As you find damaging information about the insurance company’s behavior, they become more interested in settling.
Some discoveries that often lead to settlement discussions include:
- Internal emails showing they acted unfairly on purpose.
- Evidence of widespread problems with how they handle claims.
- Proof that the company broke its own rules.
- Documents showing financial incentives to deny claims.
Insurance companies know that bad discovery can lead to big punitive damage awards and negative publicity, so they often prefer to settle once problematic information comes to light.
Working with Your Legal Team
Discovery is a team effort between you and your attorneys. Here’s how you can help:
Get Your Records Organized
Gather all documents related to your claim, including letters, medical records, receipts, and photos. Put them in order by date and make copies.
Keep Detailed Notes
Write down everything you remember about talking to the insurance company, including dates, times, and the names of people you spoke with.
Be Quick to Respond
When your attorneys need information or documents from you, provide them quickly. Delays on your end can slow down the whole discovery process.
Stay Involved
While your attorneys handle the technical stuff, stay informed about what’s being discovered and how it affects your case.
What Happens After Discovery
Once discovery is done, you’ll have a much clearer picture of your case. Your attorneys will look at all the info gathered and figure out the best way forward.
Sometimes, the discovery process uncovers such strong evidence of bad faith that the insurance company agrees to settle for a significant amount. Other times, you might need to go to trial to get full compensation.
If your case goes to trial, all the information gathered during discovery becomes the foundation for your presentation to the jury. The documents, depositions, and expert testimony you developed during discovery will tell the story of how the insurance company treated you unfairly.
Recent Changes in Colorado Bad Faith Law
Colorado’s bad faith law keeps evolving. Recent court decisions have made several important things clearer:
The “Reasonableness” Standard
Colorado courts have stressed that insurance companies must act reasonably when investigating and evaluating claims. What’s “reasonable” depends on the specific situation of each case.
Statutory vs. Common Law Claims
Colorado recognizes both bad faith claims under the insurance code (statutory) and general bad faith claims (common law). The discovery process might be slightly different depending on which type of claim you’re pursuing.
Punitive Damages
Colorado courts have become more willing to award punitive damages in clear cases of bad faith, which makes thorough discovery even more important.
Should You Go to Federal or State Court?
If you’re dealing with an insurance company based outside Colorado, you might have the option of filing your lawsuit in federal or state court. This decision can affect your discovery strategy:
Federal Court Perks
- Often has more resources for complex discovery.
- Usually has stricter deadlines, which can prevent delays.
- Often has better procedures for electronic discovery.
- Judges might have more experience with complex cases.
State Court Perks
- More familiar local rules.
- Potentially more sympathetic juries.
- Lower costs for some types of discovery.
- Judges are very familiar with Colorado insurance law.
The Human Side of Discovery
While we’ve focused on the technical stuff, don’t forget that this process can be emotionally tough. You’re reliving the frustrating experience of dealing with your insurance company, and you’re learning details about how they really saw your claim.
It’s totally normal to feel angry, frustrated, or overwhelmed during discovery. Remember that this process is designed to find the truth and hold the insurance company accountable for what they did.
Your legal team understands these emotional challenges and can help you work through them while staying focused on the goal of getting fair compensation for your claim and the unfair treatment you received.
Questions You Should Ask Your Attorney
If you’re thinking about a bad faith lawsuit, here are some questions to ask your attorney about the discovery process:
- What specific documents will we try to get?
- How long do you expect discovery to take?
- What are the likely costs, and who usually pays them?
- What are the biggest challenges we might face?
- How will discovery affect the value of my case?
- What will my role be in the discovery process?
Red Flags That Hint at Bad Faith
During discovery, certain warning signs often pop up that suggest bad faith conduct:
- The insurance company destroyed or “lost” key documents.
- There are missing pieces in the claim file that can’t be explained.
- Internal communications contradict what the company publicly said.
- The company failed to follow its own procedures.
- Financial incentives pushed employees to deny claims.
- The company ignored evidence that was good for you.
- Supervisors overruled adjusters without good reasons.
Moving Forward: Your Next Steps
If you believe your insurance company has acted unfairly, don’t wait to do something. Colorado has time limits (statutes of limitations) that can stop your claim if you wait too long.
The discovery process might seem daunting, but remember that it’s your opportunity to even the score and hold the insurance company accountable. With experienced legal help, you can get through this process successfully and get the compensation you deserve.
If you’re dealing with insurance bad faith in Colorado, consider reaching out to McCormick & Murphy P.C. at (719) 800-9407. They offer free consultations and handle most cases on a contingent fee basis, so you don’t pay attorney fees unless you win your case.
You can also learn more about challenging insurance company decisions in bad faith cases or get information about filing a complaint against your insurance company.
The Bottom Line
The discovery process in Colorado insurance bad faith litigation is your chance to really find out what happened with your claim. It’s complex, sometimes expensive, and often takes time, but it’s also your best shot at proving bad faith and getting fair compensation.
With the right legal team and an organized approach to discovery, you can hold insurance companies accountable for their actions and send a clear message that unfair conduct won’t be tolerated. Remember, insurance companies often count on people giving up or accepting unfair treatment. The discovery process helps make sure that doesn’t happen.
Don’t let your insurance company get away with treating you unfairly. If you suspect bad faith, talk to an experienced attorney about your options and what the discovery process might reveal about your case. You might be surprised by what’s hiding in those corporate files!
