An Examination of
Examinations Under Oath - Part 2
Let's continue with our survey of the EUO and the Public Adjuster's opportunities to help the insured through the process.
Should you attend?
The Public Adjuster's attendance at an EUO will depend in each instance on several factors. If your insured has retained counsel, you will want to discuss your role with both counsel and the insured. If the insured has not retained counsel, then you should discuss your ability to assist in the EUO process with the insured.
A Public Adjuster can attend an EUO only with the permission of the insurer, or as we say legally "at the sufferance of the insurer." This means that the Public Adjuster can be removed from the proceeding if the insurer deems the Public Adjuster to be interfering with, obstructing or hindering the process, such as by furnishing answers to the insured or arguing with the examiner. Insurers rarely prohibit attendance by a Public Adjuster, except if there is a real concern that the Public Adjuster will ferry information from one witness to the next, thereby frustrating the conduct of separate examinations.
You should be aware that New Jersey Court Rules (Rule 4:14-3(f)) prohibit communication between a sworn deponent and counsel during the course of a deposition, except with regard to a claim of privilege, a right to confidentiality or a limitation pursuant to a previously entered court order. While this Rule does not apply to an EUO, be prepared for the insurer to attempt to invoke it, and certainly to inquire as to your conversation with the insured during any break, recess or adjournment of the EUO.
Right to counsel
Every insured has the right to retain an attorney, at the insured's own expense, and to have the attorney present during the EUO. Exercise of this right will cost money, but failure to exercise it may be even more expensive. As the EUO occurs in a civil matter, no law, rule or regulation requires the insured to be furnished with a free lawyer. Remember, however, that an insured has the right to halt the EUO at any time by requesting the opportunity to consult with a lawyer. Indeed, if you attend an EUO and encounter an examiner who is overbearing, harassing, browbeating, who shouts at the witness or otherwise seeks to take advantage of an unrepresented insured, you should advise your insured to stop the proceeding in order to retain an attorney.
When two or more witnesses are to be questioned at EUO, the insurer will routinely demand that they testify out of the presence of each other. This is different from the situation in a deposition where every party to the lawsuit is entitled to attend (NJ Rule 4:14-2(a)). A 1983 Tennessee decision, Shelter Insurance Company v. Spence, upheld the insurer's right to conduct separate examinations, citing the insureds' obligation of cooperation and the greater likelihood of obtaining more accurate factual statements if multiple parties are questioned separately. The Court relied in part on the New York decision in Dyno-Bite Inc. v. Travelers (1981), which found the right to examine under the policy to be broader than the right to discovery in litigation.The federal court in Southern California followed Spence in State Farm Fire & Casualty v. Tan, in 1986. More recently, insurers have amended the conditions section to their policies to provide specifically that the insured must submit to examination outside the presence of other insureds. Indeed, the language is extended in some policies to require the insured to produce witnesses over whom the insured may exercise control (such as children, resident or visiting relatives, etc.).
The reasoning behind the rule is to prevent collusion and is premised on the proposition that persons with nothing to hide have no need to fear sequestration. Properly prepared insureds will not suffer from separate examinations. The rule does have some easily ascertained benefits: no witness can look to another and ask for the answer; interruption or coaching is eliminated; some embarrassment is avoided (Q. "What is the date of your marriage? A. Duh, ask my wife.") and generally the proceeding goes more quickly and smoothly.
Separate examinations have proved to be very helpful in fraudulent auto accident cases in which the alleged passengers always seem to have different stories as to where they were coming from, going to, where everyone was sitting, or how many people were actually in the vehicle. Conversely, in more than 25 years of taking EUOs, I never encountered a property insurance case in which separate EUOs led to the denial of a claim.
Some insurance policies also require the insured to "subscribe" the EUO. What this means is that the insurer will send the transcript of the EUO to the insured for the insured to read and to sign a statement at the end of the transcript stating that the transcript is a true and accurate report of the proceeding. Several consequences flow from the demand for subscription.
Initially, the delay in responding to the claim will be protracted. The shorthand reporter will have to prepare the transcript, then the transcript will have to be mailed or otherwise delivered to the insured, then the insured will have to read it, sign it before a notary public and then return it to the insurer or its attorney. Then the adjustment/investigation process starts again.
The insured's ability to review the written record gives the insured the very useful opportunity to verify that the testimony is accurate, make any corrections necessary, point out any omissions or otherwise challenge the accuracy of the transcript. You should advise your insured to approach this opportunity seriously. Once it is signed, the insured is married to the testimony as recorded in the transcript and cannot easily claim confusion. Review may also afford an opportunity to revise "mistaken" testimony, but that is the subject of another Newsletter.
The shorthand reporter
Typically, EUOs are recorded stenographically. The stenographer may or may not be certified and may or may not be competent. In their drive to reduce costs, most insurers have extracted greatly reduced rates for transcripts from shorthand reporting firms. In turn, the quality of the reporters has decreased markedly. If you find yourself at an EUO with an inexperienced reporter, or indeed with any reporter, it is always a good idea, early on in the questioning or after a heated exchange, to request the reporter to read back some testimony. If the reporter is unable to do so, or cannot make sense of the notes, a quick conference with the examiner is in order. Depending on the case, you may suggest a brief adjournment so the reporter can be replaced, or you may insist upon going forward but only with the proviso that the insured will be given the opportunity to review the transcript for accuracy. Whatever you do, be sure the agreement is placed on the record and confirmed with a letter.
If you have questions or encounter difficult situations at an Examination Under Oath, please feel free to contact me at 973-538-4100 or firstname.lastname@example.org. We are here to help!