Insurance Industry Expert Did Not Need To Satisfy All Of The Daubert Reliability Factors

Eleventh Circuit rejects argument that “[e]xperience alone . . . can never form the basis for expert testimony” and flexibility in applying reliability factors to nonscientific expert testimony, in American General Life Ins. Co. v. Schoenthal Family, LLC, 555 F.3d 1331 (11th Cir. Jan. 30, 2009) (No. 08-10749)

A recent Eleventh Circuit decision in an insurance case demonstrates the application of the Daubert expert reliability factors. In the landmark Daubert case, the Supreme Court set forth some non-exclusive factors to evaluate the reliability of expert testimony, including:

  • Whether the theory can or has been tested;
  • The known or potential rate of error;
  • Whether the methods have been subjected to peer review and publication; and
  • The general acceptance of the method within the relevant community.
See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 593-94 (1993). The case highlights that the Daubert factors are illustrative and need not apply uniformly to all expert testimony.

In the case, an insurance company sought to rescind the life insurance policy of Schoenthal for misrepresenting “in his application for a policy of $7,000,000 that his net worth was $10,700,000 and his annual income was over $150,000; Schoenthal’s net worth, in fact, was $160,000 and his annual income was $7,200.” Schoenthal Family, LLC, 555 F.3d at 1335. The district court considered the insurance expert’s testimony concerning “general insurance industry financial underwriting standards and risk management issues.” The district court dismissed the beneficiary claims that the expert was unqualified and his testimony was unreliable and contradictory. The district court found the misrepresentations were material and rescinded the life insurance policy.

The Eleventh Circuit affirmed. The insurance expert had extensive experience. The beneficiaries contended that the insurance expert’s testimony was unreliable as “[e]xperience alone . . . can never form the basis for expert testimony.” Schoenthal Family, LLC, 555 F.3d at 1338. The circuit noted the flexibility afforded the district court on nonscientific expert testimony:

“Standards of scientific reliability, such as testability and peer review, do not apply to all forms of expert testimony. For nonscientific expert testimony, ‘the trial judge must have considerable leeway in deciding in a particular case how to go about determining whether particular expert testimony is reliable.’ A district court may decide that nonscientific expert testimony is reliable based “upon personal knowledge or experience.” Id. at 150.” Schoenthal Family, LLC, 555 F.3d at 1338 (quoting and citing Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150-52 (1999)).

As the Schoenthal case shows, while the Daubert factors are applied in many cases they are illustrative and may be tailored to the particular expert testimony.

Federal Rules of Evidence