The insurance industry gets hit with grand jury investigations: how to respond if you receive a subpoena
October, 2004
By
Jerret E. Sale
Some state Attorneys General are conducting grand jury investigations of the insurance industry. The investigations, occurring at least in New York and California, have required a number of companies to produce documents and information regarding contingent agreements, placement service, or market agreements. We know of at least a dozen such subpoenas that have been issued.
The possible negative outcome of an investigation makes the importance of an early and aggressive response to an investigation manifest. Surviving such an investigation will result from the preservation of legal and constitutional privileges. If you receive a grand jury subpoena or learn that you are a subject or target of the investigation, here are a few things you should know:
- A document custodian should be identified as early as possible. The document custodian must be a person within the organization who can certify under oath that: (1) he or she is familiar with the company's record keeping procedures; (2) he or she has knowledge of the search conducted by the company to collect the responsive documents, including any in electronic form that are required to be produced under the terms of the subpoena; and (3) all responsive documents in the company's possession, custody or control have been produced. It is important that the person designated as the document custodian not be intimately involved in the matters under investigation.
- Organizations, unlike individuals, have no Fifth Amendment privilege against self-incrimination. They must produce the documents sought by subpoena unless protected by a statutory or common law privilege such as the attorney-client privilege.
- Extensions of time for production of documents responsive to a subpoena can often be negotiated by counsel, particularly if responding by the stated date would be unreasonable or burdensome.
- The scope of the grand jury subpoena can also frequently be negotiated if the subpoena is unduly burdensome. Otherwise, court intervention is available to quash elements of a subpoena that pose an unreasonable compliance burden.
- No documents relating to the subject matter of the investigation, whether specifically the subject of the current subpoena or not, should be destroyed or altered even if they are due for destruction under the company's routine document destruction policy.
There is no question that the organizations devoting the time and energy in the early stages of a corporate investigation are the ones that are most able to successfully avoid negative repercussions. It is essential for any corporation and its board of directors to put a plan of action in place for a thorough, well-organized, and effective response in case of government investigation.
Bullivant Houser Bailey PC's insurance coverage practice has over 40 lawyers who practice in the field of insurance coverage on a full-time basis. Our coverage lawyers are physically located in four western states, but many are licensed in other states, and are generally able to assist with coverage matters across the country.