Maryland’s Court of Special Appeals handed down a new insurance case: Dolan v. Kemper Independence Insurance Company, No. 0084, September Term, 2017.
Dolan reaffirmed that policyholders must participate in Examinations Under Oath (“EUOs”) in UM / UIM claims if their insurer asks for one. (An EUO is a recorded interview much like a deposition, but with even less rules.) This isn’t particularly novel. Phillips v. Allstate, 156 Md. App. 729 (2004) already said that about Collision Coverage. I can’t see why Phillips wouldn’t control every first party claim. I’d let it pass without comment because the result isn’t noteworthy. But the process that led the policyholder to this claim denial is.
In a simplified form, the policyholder got its claim denial by saying no to an EUO on the grounds that the policyholder filed suit after the insurer requested an EUO. The insurer asked for an EUO during claim handling. The policyholder waffled but eventually filed suit instead. The insurer said (paraphrasing) “Hey! What about my EUO?” The policyholder replied (again paraphrasing) “just depose me.” The insurer denied coverage in response. Slip at *3-5.
This decision fascinates me because I advise clients (both policyholder and insurer) looking at EUOs all the time. Since this isn’t my case, I can’t say what drove the policyholder to do this. As I said above, Phillips v. Allstate says refusing an EUO (or even a relevant question) is grounds for a complete claim denial on a first party claim. Not an injunction ordering an EUO. A claim denial. (By contrast, arguing about the necessity of a deposition by litigating a motion to compel seems less likely to draw so severe a sanction without a chance to comply.) Unfortunately, the opinion doesn’t say why the policyholder chose to fight the EUO. I suspect they had a really good reason to risk losing the whole case.
The policyholder argument centered around why refusing an EUO at that stage wasn’t grounds for being denied coverage. Those arguments are technical, boring, and unpersuasive (at least as restated by the court.) The result seems obvious in light of Phillips. The only interesting holding is that the Court thought submitting to a deposition didn’t satisfy the requirement for an EUO. Slip at *17-18. That holding is supported by a lot of out of state precedent, but non-intuitive because EUOs and depositions are pretty similar.
I think insurers defending first party claims will use EUOs more aggressively. This case says an insurer can ask for an EUO in addition to a deposition and during litigation. That means insurers (if they want to spend the money) can get two depositions. Three if you consider that they often get recorded statements as well. I could see insurers including EUO requests as part of initial discovery, demanding interviews before doing paper discovery. (I’m not sure the Court would have viewed a post-suit EUO demand the same way though. But I’m also not sure any policyholder’s willing to find out.)