Pre-Litigation Incident Investigation Strategies

Drew C. Timmons


December 2, 2019

FF Pre-Litigation

Every insurance policy contains a condition requiring the policyholder to give “prompt notice” (or similar language) to the carrier regarding any potential covered loss. Therefore, when even the smallest incident occurs at a business or involves employees or vehicles, it should be common practice for risk managers to report it to their liability or workers compensation carrier. Even if there is only slight damage to the vehicles, the injury is not reported at the scene or seems relatively minor, or the injured party says they are fine and do not need medical treatment, the risk of a denial of coverage is too great not to provide notice to the insurance carrier. In some circumstances, it might be sufficient to merely notify the carrier and move on. But businesses can take several other small steps that can pay dividends if a possible claim evolves into an extended lawsuit.

Instead of simply passing along notice to your insurance carrier, the better practice is to recognize that an incident could become a lawsuit filed years later, when much of the evidence is gone. That evidence could have alerted you to the nature of the risk, altered your defense strategy, proven the claim was frivolous from the start or saved you from a spoliation sanction. In the current litigious and plaintiff-friendly climate, businesses can gain a much-needed advantage by making a conscious effort to investigate the facts early, preserve all available evidence and evaluate exposure at the onset.
Investigating the Incident

Following an incident that results in bodily injury or that could lead to litigation, both small and large companies tend to complete a fairly simple incident report that lists basic information like the parties involved and the nature of the incident. As a general rule, and when done correctly, preparing an incident report is recommended for several reasons. First, it provides a reference point of general information regarding the incident and forces the company to take affirmative action to complete it. The report should not only identify the parties involved, but also any witnesses who may be able to provide additional information. Second, an internal incident report should contain a description of the event while it is still fresh in the minds of all parties and before it can be influenced by zealous attorneys. Finally, creating an incident report is evidence of the company’s effort to document and/or investigate the incident and take corrective action, if appropriate.

Yet some companies still resist creating these internal reports for fear that it will be discoverable. Indeed, the broad scope of civil discovery in most states is likely to require disclosure of the incident report, especially if it is company practice to prepare a report in response to every incident. But while discoverability should not be a deterrent from preparing the report, it should be considered when determining what information to include. To that end, do not include sections in an incident report relating to “fault” or “cause.” Instead, focus on the facts surrounding the incident. Internal decisions regarding fault or discipline should be made separately and not as a result of a cursory review of the first available facts. Additionally, avoid including instructions in an incident report such as: “don’t admit liability,” “don’t apologize” or “don’t offer to pay any money.” These instructions will certainly be used against the company in any future lawsuit.

Early investigation benefits the defense as much as, if not more than, a claimant. For one, the more information a company has before the formal discovery process, the better positioned it will be to effectively evaluate the claim before the company is knee-deep in document requests from the claimant’s attorney. Completing an incident report is just a small piece of the investigation. It is strongly encouraged that company employees take photographs following an incident as a picture revealing lighting, facial expressions, skid marks and/or scene placement is invaluable. Moreover, although often handled by an insurance carrier, it is advisable to contact any witnesses to obtain written or recorded statements in the hours or days following the incident, not years later when the suit is filed. A witness is much more likely to appreciate your inquiry, rather than be frustrated by it, if the contact occurs closer in time to the incident when memories are fresh. Even unsworn witness statements can be used effectively in civil litigation to establish facts that may later be forgotten.

Do not assume the facts have been established simply because law enforcement investigated the incident and reached its own conclusions. In auto/truck accident cases, investigating officers do not always fully investigate the scene and consider all potential causes, and the statements they receive are usually conflicting. Similarly, in work-related incidents, a purported Occupational Safety and Health Administration (OSHA) violation may not even relate to the actual incident. Retaining experts early in the process can be extremely helpful to establish a true root cause.

Another valuable component of early investigation is assessing your own employees involved in the claim. Companies too often take at face value the version of events provided by employees, while carefully analyzing recorded statements from the claimant for inconsistencies. Instead, take a recorded statement from your employee and compare it to other evidence. Better yet, perform a complete evaluation of your employee as a potential witness—not based solely on how you view him or her, but from the perspective of a juror in a future courtroom. If a suit is filed, this person will be the claimant’s counsel’s first target and will be seen as your company’s representative. Will this person be effective and credible?

It is possible all these investigative efforts will still result in the discovery of unfavorable evidence that must be turned over to the claimant if they file a suit. However, by developing such evidence early, your company may be in a position to resolve the claim without such disclosure and before a lawsuit is ever filed, versus years of expensive discovery, an eventual determination of liability for the company and the claimant refusing to accept a reasonable settlement.
Preserving Evidence

Along with your internal fact-finding and investigation of an incident, preserving evidence should be a primary focus. Trial courts can govern the behavior of litigants even before a suit is filed by imposing sanctions for pre-suit failure to preserve relevant evidence (spoliation). To be clear, spoliation sanctions are not only appropriate when a party has intentionally destroyed relevant evidence, but also when such evidence is merely lost, re-used or unavailable. Businesses must make a conscious effort to collect and keep all manner of evidence for future litigation to protect against spoliation sanctions.

Preparing an incident report and creating a specific file relating to a claim, including photographs and statements, is a starting point for preserving evidence, but is not sufficient on its own. In addition, consider preserving other useful evidence: vehicle electronic control modules, email accounts, phone records (including texts), maintenance records, construction designs/plans, hours-of-service logbooks, lock-out/tag-out logbooks, video surveillance, training sign-in sheets and disciplinary records. In the normal course of business, many materials are erased, reused or thrown away without a second thought. These may not have even contained facts harmful or helpful to either side, but a claimant’s seasoned litigator can take advantage of the absence of any arguably relevant evidence, and the consequences can include an adverse inference to the jury regarding the content, the exclusion of testimony and/or the striking of defenses or pleadings.

During your pre-suit investigation, in cooperation with your attorney and insurer, attempt to identify and preserve all papers, tangible evidence and electronic data possibly containing information pertinent to your subject incident, the claimant and any involved employees or company property. Moreover, if you receive pre-suit correspondence from an attorney or claimant identifying specific evidence to preserve, you must take affirmative action to keep whatever is identified and remains available.
Drew C. Timmons is a partner at Swift, Currie, McGhee & Hiers, LLP.