The E.U.O. Experience
Examinations under oath have been widely validated by courts, but insurers have responsibilities toward claimants that can make or break the value of the EUO.
Examinations under oath (EUOs) are examinations of claimants (not necessarily insureds) that are conducted pre-suit, during the claim-investigation stage. While each state handles EUOs differently, here we cite Massachusetts state law, which is relevant in principle to other jurisdictions.
"[T]he purpose of the inclusion of an examination under oath provision in the policy [is] as an aid to the insurer's investigation of a claim…" according to Morales v. Pilgrim Ins. Co. The Mello v. Hingham Mut. Fire Ins. Co. case says, "It is the law in most jurisdictions that the submission to an examination, if the request is reasonable, is strictly construed as a condition precedent to the insurer's liability."
It should be noted that a "recorded statement differs from a statement or examination under oath. A recorded statement is an oral statement given by an insured to the insurer's representative, who records it on a tape recorder. A statement or examination under oath is an examination conducted by the insurer of the insured who is placed under oath and whose answers are transcribed by a stenographer," as stated in Lorenzo-Martinez v. Safety Ins. Co.
As to the legal aspects of conducting EUOs, there are several things to keep in mind:
- The claimant's submission to an EUO is a condition precedent to coverage under the standard Massachusetts Automobile Insurance Policy. Morales v. Pilgrim Ins. Co. states, "The submission to an examination under oath is a condition precedent to coverage under a Massachusetts motor vehicle insurance policy. A willful, unexcused failure to submit to an examination under oath constitutes a material breach of the insurance contract without proof of actual prejudice to the insurer's interests, discharging the insurer's liability under the contract." For further reference, see Ellis v. Safety Ins. Co., and Lorenzo-Martinez v. Safety Ins. Co.
- The locus of the examination under oath must be reasonable with respect to the burden placed on examinee. In Labonte v. Commercial Union Ins. Co., an insurer violated the consumer protection statute when, among other things, it requested that an insured travel a considerable distance in order to submit to examination under oath and then refused to pay the insured's claim based upon her failure to submit to examination under oath.
- An examinee may assert his right against self-incrimination, under the Fifth Amendment or Art. XII, but this response may be deemed as non-cooperative. In Metlife Auto & Home v. Cunningham, an insured "manifestly and persistently failed" to provide requested information. The court held that "[h]is assertion of rights under the Fifth Amendment to the United States Constitution and under Art. 12 of the Declaration of Rights of the Massachusetts Constitution afforded him no sanctuary from his obligation to cooperate, for it is not by the Commonwealth or by [the insurer] that [the insured] is compelled to…furnish evidence against himself, but by his own contractual undertaking."
- The insurer owes a reciprocal duty of good faith and diligence in seeking cooperation of the insured. In Lorenzo-Martinez v. Safety Ins. Co., the Massachusetts court held that insurers must be "mindful that an insurer has a reciprocal duty to exercise good faith and diligence in seeking cooperation from its insured…"
- An EUO must be scheduled within a reasonable time after the insurer receives notice of the claim. "Determining what is a reasonable time involves examining ‘the nature of the contract, the probable intention of the parties, and the attendant circumstances,'" Lorenzo-Martinez v. Safety Ins. Co. states, quoting Plymouth Port, Inc. v. Smith. Compare Lorenzo-Martinez v. Safety Ins. Co., wherein nine months after receiving notice of claim, claimants' refusal to submit to examination under oath was unjustified since the insurer had made seven attempts to obtain statements, with Lorenzo-Martinez, wherein the claimants' refusal to submit to examination under oath 13 months after notice of claim was justified because the insured failed to attempt to make any contact. See also Knight v. CNA Ins. Co. in which a four-and-a-half-month delay in requesting examination under oath was deemed unreasonable when the insurer failed to offer a reasonable justification for its delay.
- The Massachusetts personal injury protection (PIP) statute states, "Non-cooperation of an injured party shall be a defense to an insurer in any suit for benefits authorized by this section…" In Action Physical Therapy and Rehabilitation v. Amica Mut. Ins. Co., the court held that non-cooperation in the context of PIP cases usually arises from a claimant's failure to attend scheduled…examinations under oath.
In conducting EUOs, an attorney often considers the following:
- Prior to conducting the EUO, determine what documents you would like from the claimant and make that request in the original notice of examination under oath. According to the decision in Rymsha v. Trust Ins. Co., Massachusetts courts "see no basis for a distinction between an obligation to submit to a reasonably requested examination under oath and the duty to produce documents pertinent to the claimed loss."
- Input from the claims adjuster and/or SIU investigator, including the complete file, is vital. The wealth of knowledge and experience that often comes from claims adjusters and seasoned investigators is invaluable to the attorney who conducts the EUO. The complete file, which would include (in pertinent cases) the special investigative unit's file and the claims file, can assist the lawyers in preparation and examination.
- It is helpful to have the insured's application for insurance. An insured may make a "material misrepresentation," and this possibility should be examined.
- A properly conducted EUO is a deterrent to fraud. "The purpose of the examination under oath provision ‘ostensibly [is] to weed out fraud by providing [the] insurer with a mechanism for obtaining formal corroboration of a claim. This mechanism is particularly important in situations like [a] hit-and-run accident…where information about the claim is primarily or exclusively within the possession of the insured,'" the Morales v. Pilgrim Ins. Co. court found, quoting Lorenzo-Martinez v. Safety Ins. Co.
- Discuss with the claims professional, prior to the EUO, what the scope of examination will entail. Should an insurer decide to examine under oath its own insured, that transcript is most likely discoverable in the event of subsequent litigation. As such, if it is later determined that the insurer will defend the insured, it may have elicited damaging information at the EUO relative to the insured's defense, which then becomes available to the opposing party.
In the appropriate cases, an EUO is an invaluable weapon in the arsenal against fraud. To accomplish your overall goals, it is important to have communication and teamwork between the attorney and adjuster/investigator. Above all else, the decisions ultimately made regarding the claim should be reasonable and supported by the facts.
Timothy J. Smyth is an attorney at Burns & Farrey in Boston and a former assistant district attorney. He represents corporate and individual clients in state and federal courts.