Texas Court’s Opinion On Protecting A Claims Handling Manual As A Trade Secret

In Chavez v. Std. Ins. Co., 2020 U.S. Dist. LEXIS 203610 (N.D. Tex. Oct. 30, 2020), Judge David C. Godbey considered a variation on a common scenario that arises in first party cases.

Typically, the insured/plaintiff wants an insurer’s claims handling manual to use against the insurer in proving claims under Texas Insurance Code Chapter 541 and the DTPA. However, as Judge Godbey explained, such manuals are not automatically discoverable.

Also, insurers can significantly increase the chances that a court will protect such manuals from unrestricted discovery and use in litigation by providing certain affidavit evidence.

The plaintiff in Chavez was receiving long-term disability benefits from Standard Insurance Company (“Standard”). Standard terminated Chavez’s benefits after a medical examination. Litigation ensued. Chavez requested Standard’s claims handling manual in discovery.

To avoid a discovery dispute, Standard produced the manual pursuant to an agreed protective order. Chavez subsequently sought to undo Standard’s designation of the manual as confidential trade secret under the protective order.