Rule 26 of the Federal Rules of Civil Procedure, commonly referred to as the “expert rule,” has been a thorn in the side of subrogation claims handlers and attorneys for many years. Thankfully, last year the rules committee made several changes to the rule that limits discovery of expert material, greatly impacting the industry.
As it is critical that Rule 26 and expert information be handled carefully at the onset of a claim, here is a crash course on the new amendments and how they apply to a subrogation case from inception.
Goodbye Expert File
The previous rendition of Rule 26 required that testifying experts disclose all “information considered.” This was consistently interpreted by the courts to mean that the entire file of the expert was discoverable, including all communication with counsel, mental impressions of counsel, and all communications between the subrogation handler/insurer and the expert. In sum, every document and thought of the expert—relevant or not—was discoverable.
The 2011 amendments to Rule 26 replaced the standard of “information considered” with “facts or data considered” by the expert. In explanation of the new standard, the rules committee stated that “the refocus of disclosure on ‘facts or data’ is meant to limit disclosure to material of a factual nature by excluding theories or mental impressions of counsel.”
Simply put, attorneys are no longer required to produce their expert’s entire file, but rather only those facts and data considered. Although the reported decisions are few to date, the intent of the rules committee appears clear: Steer expert discovery toward the real issues and basis of the expert opinion and away from the obnoxious, never-ending squabbling over ancillary matters.
Goodbye Discovery of Attorney-Expert Communications
Under the old rule, all communications between attorneys and their experts were discoverable, which forced attorneys, claims handlers, and experts to walk on eggshells in fear of every communication being discoverable.
Now, under Rule 26(b)(4)(c), such communications are protected, with few exceptions (see sidebar, “Exception to the Rule,” bottom of page). For example, if the attorney emails his expert and writes, “I’m concerned that the jury will not understand your testing; it doesn’t make sense,” this is now protected as work product under the revised rule and is not discoverable.
Likewise, if a subrogation claims handler emails the expert early in the case and asks for clarification on the results of the expert’s testing or the details of the expert’s theory as to the cause of the fire, this too is now protected from discovery under the revised rule.
Goodbye Draft Reports
We have long traveled across the country speaking on the critical nature of expert reports and their impact on subrogation litigation. Specifically, we have made the case against using expert reports, detailing how they are unnecessary until required by the court and should only be prepared at that time, when material information has been disclosed and discovered.
The new Rule 26 now protects against premature reports by experts that are prepared prior to written discovery and sometimes before the target defendant is identified. While draft reports are protected under the new Rule 26, we recommend assuming all matters will be litigated in state courts and to direct an expert to refrain from drafting a report until required by a court with jurisdiction, unless it is clear from the onset of the loss that the case will be in federal court.
With that said, the new Rule 26 explicitly “protects drafts of any report or disclosures required under Rule 26(a)(2), regardless of the form in which the draft is recorded.” This amendment, in particular, greatly affects expert discovery.
Under this revised rule, attorneys and consulting experts now can assist in the editing process of a report without the fear of discovery of the draft report. Moreover, the expert who prepares a report early after a loss can freely revise the report based on new information without the fear of discovery and cross examination of the draft at deposition.
Although the issue has not been fully litigated, new case law has ruled on the side of protecting all draft reports, even when the report is prepared prior to the filing of a lawsuit. Specifically, a recent court held that a report prepared for the purposes of coverage was still protected as a draft report under the revised rule and was therefore protected from discovery by opposing counsel.
Goodbye Extra Expense and “Second Expert”
With the fear of broad expert discovery under the previous version of Rule 26, it became common in high-dollar cases to retain at least two separate experts. The first expert would serve as the testifying expert who prepared a Rule 26 report and is made known in the Rule 26 disclosures.
Because counsel could not freely communicate with the testifying expert for fear of discovery, they would often retain a non-testifying expert to perform testing and provide consultation on the relevant subject matter. This “second expert” would not testify at trial and would not be divulged in the Rule 26 disclosures. Thus, all of the communications were privileged.
Now, with the new Rule 26, the “second expert” and additional expenses are no longer necessary. The advisory committee addressed this point while stating that “counsel are also free to question expert witnesses about alternative analyses, testing methods, or approaches to the issues on which they are testifying, whether or not the expert considered them in forming the opinions to be expressed.”
This revision will streamline the communication process between counsel and the expert, making life easier on counsel and reducing the expenses incurred by the insurer.
In conclusion, attorneys and claims handlers have more freedom in communicating with the expert, and the expert should have less fear of discovery of irrelevant, collateral matters. Furthermore, under the new Rule 26, counsel is free to participate and edit draft reports without fear of being accused of coaching during cross examination. Of course, this applies to federal court cases only, and few decisions have been published to date to provide guidance on how courts will interpret the new amendments to Rule 26.
Exception to the Rule
Three exceptions exist to the rule that allows discovery of communication between an expert and counsel of the communication. To be discoverable, it must:
- Relate to compensation for the expert’s study or testimony;
- Identify facts or data that the party’s attorney provided and that the expert considered in forming the opinions to be expressed; and
- Identify assumptions that the party’s attorney provided and that the expert relied on in forming the opinions to be expressed.
Richard Gerber, principal, (left) and Matt Leffler, associate, are attorneys at the law firm of Brown & James, P.C., where they both focus their practice on subrogation. They may be reached at (314) 421-3400.