SDV Insights

SDV Opposes Rules Change that Would Negatively Affect Policyholders

The ancient document exception to the Federal Rules of Evidence hearsay rule is an important tool for policyholders to put the content of a lost policy into evidence. Long tail claims in occurrence based policies (such as asbestos claims) can be brought many years after the policy was procured. If the policy is subsequently lost, the ancient documents rule is often the only way that a policyholder can establish the content of their policy and receive coverage.

On February 12, 2016, SDV partner Tracy Alan Saxe gave testimony to the Judicial Conference Advisory Committee on Evidence Rules opposing the proposed changes to the Ancient Document hearsay exception.*  Tracy’s testimony highlighted the importance of this exception to the hearsay rule for policyholders. He advocated on behalf of policyholders, recommending that this exception to the hearsay rule not be abrogated.

The Evidence Rules Committee is tasked with updating and revising the Federal Rules of Evidence. Procedural rules have an important impact on lawsuits, including in coverage disputes between policyholders and insurers. One of the most important rules is the hearsay rule, which prevents out of court statements from being entered into evidence if they are offered for the truth of the matter asserted. The hearsay rule has a number of exceptions. Exception 16 is for statements in ancient documents. The exception removes from hearsay and allows into evidence “[a] statement in a document that is at least 20 years old and whose authenticity is established.”

The Evidence Rules Committee recently proposed the abrogation of the ancient document exception to the hearsay rule, citing worries about electronically stored documents reaching the 20-year mark that would qualify them for ancient document status. Ever mindful of the needs of policyholders, Saxe Doernberger & Vita opposed the rule change in a written testimony and through Tracy’s testimony.

Tracy testified to the importance of the rule for policyholders. In nearly all jurisdictions, insurance companies have no obligation to retain copies of policies that they have issued. The burden of establishing the existence of a policy rests on the policyholders. Policies often cover risk for periods of time well over twenty years. Old policies can be lost or misplaced, and policyholders must rely on alternative sources such as accounting records, company ledger entries, and invoices to establish the contents and even the existence, of the lost policy. When the policies are this old, there is often no one left who is capable of providing the foundation for the business records exception for these alternative documents. Therefore, the contents of those pieces of evidence would only be admissible under the ancient documents rule.

Tracy’s testimony highlighted how, without the ancient documents rule, policyholders would be unable to use old documents to establish the existence of lost policies, depriving them of the benefit of the insurance policy they paid for. As Tracy asked, “Is this rule change designed to help relieve insurers of their contractual obligations?”

Although the Rules Committee answered in the negative, policyholders will have to wait to see if the proposed change is made and results in just that happening. Either way, Saxe Doernberger & Vita will be there advocating on behalf of policyholders in court, before the Rules Committee, and wherever the rights of policyholders are threatened.

*USCS Fed Rules Evid R 803(16)


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