Earlier this month, a federal court in Texas dismissed proposed insurance expert witness testimony for focusing too strongly on legal issues rather than factual disputes. During a claim dispute, the insurer submitted an attorney familiar with insurance issues as an expert witness to explain the process of reviewing claims and interpreting policy documents, however the judge refused the expert because he was acting as an advocate rather than a source of knowledge.
Insurance Company Offers Attorney as Expert Witness
The dispute arose in 2012 when Atrium Medical Center was sued by a former patient claiming that he now faces a terminal illness because his primary physician allowed his condition to worsen by failing to advise him of the results of a CT scan performed in the hospital. After being served with the lawsuit, Atrium notified its insurer Homeland Insurance Company (HIC) and filed a claim to have the insurance company provide a defense pursuant to Atrium’s policy. Upon reviewing the claim, HIC denied coverage because the claim was not made against Atrium during the HIC policy period and was excluded by the Policy’ prior knowledge provision against claims that the insured knew about before the policy was in effect.
In response, Atrium filed a lawsuit against HIC alleging the insurer violated its duty of good faith and fair dealing by rejecting the hospital’s claim. According to Atrium, HIC rejected the claim in bad faith by not conducting a reasonable review of the situation before issuing a denial of coverage. HIC responded that it conducted and adequate and reasonable analysis of the claim as to meet industry standards of coverage on claims requesting legal defense. In an effort to support its position, HIC called an attorney as an insurance coverage expert witness to tell the court that the insurer met its duty of good faith and fair dealing by conducting a sufficient investigation into Atrium’s claim.
Report from Insurance Attorney Expert Witness Contested
HIC submitted Michael Huddleston, an attorney with more than 30 years experience in insurance law, as an expert witness. According to Huddleston’s report, HIC had a reasonable explanation for denying coverage under the “controlling legal concepts applicable under Texas law.” Huddleston supported this claim by reviewing the relevant legal standard of bad faith claim denial under Texas law, and explaining that HIC did not take any steps that are outside of accepted common practice among insurance carriers which deny coverage based on the prior knowledge exception. Huddleston’s expert witness report was written to help jurors understand the standard of “reasonableness” under Texas insurance law, and support the defendant’s position that it did not act in bad faith when denying Atrium’s claim.
Atrium argued that Huddleston’s expert report violated the Federal Rules of Evidence because it offered impermissible conclusions of law. Under evidentiary law, an expert witness is not permitted to usurp the responsibility of judges by explaining the relevant law to jurors. These rules are in place to avoid situations where jurors rely on the conclusions of a legal expert rather than properly analyze all the facts and come to their own conclusions. Arguing that Huddleston’s expert witness report violated the Federal Rules by giving jurors legal conclusions, Atrium requested the court prevent him from taking the stand during trial.
Federal Court Rejects Expert Witness on Legal Interpretation
Although the court acknowledged that attorneys are not barred from acting as expert witnesses, and may, in fact, testify to some matters that blend issues of fact and law, the judge found that HIC’s expert went too far in his analysis of the legal issues key to the case. The court pointed out that Huddleston frequently cited legal cases throughout his report, and approached the issue from a purely legal background and way of thinking. Huddleston, who has no experience working in the insurance industry, wrote the report from the perspective of an attorney and, naturally, his expert opinion focused on how Texas law applies to the dispute. When Huddleston mentioned the factual issues, he did so only to frame them in light of the legal standard establishing when it is reasonable to reject an insurance claim.
Finding that his expert witness report read more like a legal brief than an analysis of the facts, the federal court in Texas dismissed Huddleston as an expert witness in the case because he improperly offered legal conclusions. The case reminds attorneys that expert witnesses are not permitted to provide legal conclusions during their testimony, and provides an example of when legal conclusions by an expert go beyond what is permissible under the Federal Rules of Evidence.