Insurer's statements at mediation of claim against insured may be discoverable in later bad faith coverage suit
Most parties generally assume that whatever they say at mediation is confidential and cannot later be used against them in court. But the protections provided by Evidence Rule 408 and state mediation statutes like the Uniform Mediation Act are not absolute. In some circumstances, statements made during mediation can be admissible or at least discoverable.
One instance in which mediation communications may not be confidential, inadmissible or exempt from discovery is in bad faith coverage claims against an insurer. A recent decision by the United States District Court for the Eastern District of Washington in Mutual of Enumclaw v. Cornhusker Casualty Insurance illustrates how an insurer’s statements at mediation can be used to support a later bad faith claim. Cornhusker and Enumclaw both insured the same defendant in a motor vehicle personal injury case and both participated in a mediation of that claim. Cornhusker, however, asserted at the mediation that it had coverage defenses such that it would only contribute a limited amount to settle the claim. In response, Enumclaw funded a settlement without Cornhusker’s participation, took an assignment of the insured’s claims against Cornhusker and filed claim against Cornhusker.
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