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Claims Practices

Pleading the Fifth Can Forfeit Insurance Coverage

Barry Zalma | January 1, 2011

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The Fifth Amendment to the US Constitution protects an individual from being forced to testify in a manner that might incriminate him or her and subject the witness to prosecution. It is a defense, however, not a weapon that can be used against a defendant in a civil suit. Since civil litigation is entered into voluntarily testimony in a civil suit brought by a plaintiff is not a compulsion to self-incrimination because the plaintiff can protect his or her privilege by dismissing the suit.

In Fremont Indem. Co. v. Superior Ct. of Orange Cty., 137 Cal. App. 3d 554, 187 Cal. Rptr. 137 (Cal. App. Dist. 4 11/19/1982), the California Court of Appeal found that the plaintiff, who owned a restaurant insured by Fremont, the defendant, which insured the plaintiff against loss of the restaurant by fire. Implicit in the record is the circumstance that the policy included an exclusion under which the insurer would be relieved of liability on the policy if it were shown that the insured's arson caused the loss.

Facts of the Case

After the fire, a criminal investigation into the origin of the fire was undertaken, and plaintiff came under suspicion. As a consequence, the defendant declined to pay plaintiff's claim. Because of this, plaintiff filed suit against his insurer.

Before his scheduled deposition counsel for plaintiff notified counsel for defendant that plaintiff would not appear for his deposition because he had been indicted for arson and therefore was asserting his constitutional privilege against self-incrimination.

Since the plaintiff claimed the privilege as to his own behavior, which was vitally relevant to a coverage exclusion contained in the very fire insurance policy upon which he seeks recovery, the California Court of Appeal issued a peremptory writ of mandate compelling the testimony of the plaintiff. If he continued to refuse to appear for deposition as ordered, or refused to provide the documentary evidence as already ordered, the Court of Appeal instructed the trial court to dismiss the plaintiff's action. He continued to refuse, and his case against his insurer was dismissed.

The Analysis

The Fremont court analyzed the issue by reviewing discovery disputes where the commencement of litigation necessarily waived the privilege asserted. (See, e.g., Newson v. City of Oakland (1974) 37 Cal. App. 3d 1050 [112 Cal. Rptr. 890] [plaintiff asserting claim for lost wages compelled to disclose his failure to file income tax returns]; City & County of S. F. v. Superior Court (1951) 37 Cal. 2d 227 [231 P.2d 26, 25 A.L.R.2d 1418] [the physician-patient privilege was waived when the plaintiff placed his physical condition in issue by filing an action for personal injuries]; Wilson v. Superior Court (1976) 63 Cal. App. 3d 825 [134 Cal. Rptr. 130] [by initiating an action against her accountant for malpractice with respect to tax advice she received, the plaintiff tendered issues involving the existence and content of her income tax returns and was precluded from asserting the privileged status of a taxpayer's copies of income tax returns].)

In Guadagni v. New York City Transit Auth., No. 08–CV–3163 (E.D.N.Y. 01/27/2009), a plaintiff was not allowed to assert his Fifth Amendment privilege against self-incrimination to circumvent a jurisdictional prerequisite to the commencement of an action in tort against the Transit Authority. As the Southern District stated in Independent Productions Corp v. Loew's, Inc.:

Plaintiffs in this civil action have initiated the action and forced defendants into court. If plaintiffs had not brought the action, they would not have been called on to testify. Even now, plaintiffs need not testify if they discontinue the action. They have freedom and reasonable choice of action. They cannot use this asserted privilege as both a sword and a shield. Defendants ought not be denied a possible defense because plaintiffs seek to invoke an alleged privilege. [See also In re Grand Jury Proceedings, 219 F.3d at 182 (internal citations omitted). See also In re Sims, 534 F.3d at132; 21 C. Wright & K. Graham, Federal Practice and Procedure § 5039 at 828 (2005); United Automobile Insurance Co. v. Veluchamy, No. 09 C 5487 (N.D.Ill. 10/29/2010); United States v. Hills, 618 F.3d 619 (7th Cir. 08/18/2010).

Another Example

Most recently, in Medical Protective Co. v. Bubenik, No. 09–2324 (8th Cir. 02/18/2010), the Eighth Circuit Court of Appeal was faced with the question and resolved it against the person asserting the privilege and in favor of his insurer, who claimed that Bubenik failed to cooperate in his defense by asserting the privilege.

Medical Protective Company (MPC) brought a declaratory judgment action against its insured, Dr. James Bubenik, and Joseph and Mary Johnston, who had obtained a state court judgment against the doctor for malpractice, contending that it had no duty to pay because Dr. Bubenik had materially breached the terms of his insurance policy. The district court entered a declaratory judgment in favor of MPC and the Johnstons appealed.

Dr. Bubenik was a dentist specializing in conscious sedation dentistry and MPC provided his medical malpractice insurance. A patient named Marlon Jaudon died in July 2004 during a procedure at Dr. Bubenik's office. Six months later, Dr. Bubenik performed the same type of procedure on Henry Johnston. Johnston did not regain consciousness and died 4 days later.

Malpractice actions were filed against Dr. Bubenik by the Jaudon family and subsequently by the Johnstons. During the course of the Jaudon litigation, Dr. Bubenik invoked his Fifth Amendment privilege against self incrimination and refused to offer any testimony. In March 2006, MPC told Dr. Bubenik that his refusal to testify might jeopardize his insurance coverage. MPC's counsel sent Dr. Bubenik a letter on April 3, 2006, stating that his continued refusal to testify might be a material breach of the cooperation clause in his policy. That clause provided that "[t]he Insured shall at all times fully cooperate with the Company in any claim hereunder and shall attend and assist in the preparation and trial of any such claim."

On the morning of the Jaudon trial, the presiding judge disqualified Dr. Bubenik's expert witness for that case because her opinion was based on information which had been given her by the doctor but was not in the record. MPC settled the Jaudon case the same day, but it was unable to contest coverage at that point because it had not sent Dr. Bubenik a reservation of rights letter.

During the course of the Johnston litigation, Dr. Bubenik again asserted his Fifth Amendment privilege. He refused to answer interrogatories, submit to a deposition, or testify at trial. When asked about the merits of his defense, Dr. Bubenik told MPC that the Johnston case was defensible, but that he was unwilling to discuss how it could be defended. He also refused to release to MPC a state dental board report completed 6 days after Johnston's death. That report related what had occurred on Johnston's visit and contained Dr. Bubenik's opinion as to the cause of his death, information that was not contained in the dental records released to MPC.

MPC sent Dr. Bubenik's personal attorney a letter in August 2006 which stated:

Pursuant to the policy terms, including the provisions pertaining to his duty to cooperate, Dr. Bubenik is required to "fully cooperate" and "assist in the preparation and trial" of claims against him. Specifically, this duty to cooperate requires Dr. Bubenik to answer interrogatory requests, provide testimony in his defense at deposition and at trial, and assist MPC in the defense of this matter, all of which he has refused to do.

The letter from the insurer further advised that "Dr. Bubenik's failure to cooperate or testify creates a complete obstacle to the ability of MPC to defend the claims" against him and that "[a]bsent his full cooperation . . . MPC will be forced to choose between electing to deny coverage or providing a continued defense only under a full reservation of rights."   Neither Dr. Bubenik nor his counsel responded to the August letter. A similar letter was sent in October 2006. Again, MPC received no response. Finally at an October mediation in the Johnston case, MPC hand delivered to Dr. Bubenik a letter stating that he had breached the cooperation clause and that MPC was reserving its rights under the policy.

By early November 2006, Dr. Bubenik knew that MPC planned to seek a declaratory judgment that it was not liable to pay any judgment in the Johnston case due to his breach of the cooperation clause. He entered into a settlement with the Johnstons in which they agreed to pursue execution of any judgment only against MPC. Shortly thereafter, MPC filed this declaratory judgment action in federal district court, joining the Johnstons as defendants. The state court action went to trial in December resulting in a $2.4 million judgment in favor of the Johnstons against Dr. Bubenik. The federal district court subsequently concluded that MPC was not liable for that judgment because Dr. Bubenik had breached the cooperation clause in his policy by failing to testify and assist with his defense. The court also concluded that MPC neither waived nor should be estopped from asserting its affirmative defense.

The Johnstons appealed, asserting that MPC failed to make the showing required by Missouri law to deny coverage for breach of a policy cooperation clause. They also claim that MPC waived this defense and should be estopped from denying coverage.

Cooperation clauses such as the one at issue in the case are valid and enforceable under Missouri law. The district court concluded that Dr. Bubenik had materially breached that clause by failing to answer interrogatories, participate in discussions, share documents, submit to a deposition, or testify at trial.

The district court concluded that much of the information in Dr. Bubenik's sole possession would have been relevant to the coverage issue. The state court which decided the Johnston case found that Dr. Bubenik had committed four separate acts of malpractice. One of its findings was that Dr. Bubenik had not performed cardiopulmonary resuscitation (CPR) on Johnston. This finding was directly contradicted by the state dental board document completed by Dr. Bubenik 6 days after Johnston's procedure, a document which he refused to release to MPC. The state court also found instances of medical malpractice based on the amount of medication administered to Johnston and Dr. Bubenik's decision to perform the dental procedure at his office rather than at a hospital.

The limited medical records available to MPC did not contain explanations for those decisions. Only Dr. Bubenik could have provided that information. Dr. Bubenik's decision not to assist in the preparation of interrogatories, submit to a deposition, or to testify, all impacted the ability of others to testify in his defense.

The record disclosed that before issuing the reservation of rights letter, MPC had advised Dr. Bubenik on multiple occasions about his duty to cooperate under the policy and the jeopardy to his coverage caused by his non-cooperation. MPC informed Dr. Bubenik that "[a]bsent his full cooperation . . . MPC will be forced to choose between election to deny coverage or providing a continued defense only under a full reservation of rights." Although MPC continued to defend Dr. Bubenik despite his persistent noncooperation, it did not take inconsistent positions on the matter. Rather, its continued defense of Dr. Bubenik was in accord with its duty to defend and to attempt to secure his cooperation. The Eighth Circuit, therefore, concluded that district court did not err by ruling that MPC was not estopped from denying coverage.


The issue and solution are simple. The Fifth Amendment to the US Constitution is a protection (a shield), not a weapon (a sword). If a person does not wish to testify in a manner that might incriminate him or her criminally, it would be prudent to avoid litigation and not file a lawsuit. If suit is filed by the plaintiff, he or she will usually be required to testify in a manner that might incriminate him or her criminally.

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