How insurance companies settle claims
THE 10 SECRETS INSURANCE COMPANIES DON'T WANT JURORS TO KNOW
At Huggins & Maxwell, we have learned that people often ask the same questions when trying to figure out the process. These are the same questions that insurance companies don't want answered.
1. Is the defendant going to have to pay a settlement or jury verdict out of his own pocket?
Our law firm has consistently been impressed by the citizenship and hard work of juries. Often juries are torn between concern for injured people and a corresponding concern for how a large verdict will affect the defendant and his or her family.
The rules of evidence that govern a trial often exclude the introduction of the fact that the defendant had liability insurance. Liability insurance is the insurance we all must carry in order to have a driver's license. All drivers must carry a policy that provides between $25,000 and $50,000 in coverage, although many drivers have insurance policies that provide between $100,000 and $300,000 in coverage. Despite this fact, the rules of evidence have been interpreted very broadly so as to preclude any testimony or evidence that in any way may tell the jury about the existence of liability coverage.
Unfortunately, this exclusion often allows skillful insurance defense lawyers to imply that the defendant will have to pay any judgment returned in the case out of their own pocket.
Often our clients try to resolve their cases on their own before becoming frustrated with delays and "low ball" offers from the insurance company. Unfortunately, the rules of evidence also prevent us from presenting any evidence as to why our client had to hire us. This allows skillful insurance defense lawyers to imply that our clients are "greedy, sue-happy" people because they hired us. In reality, our clients just want to be treated fairly.
2. OK, so if there was insurance, why is it that the defendant was sued and not his insurance company?
Again, another good question. The defendant was the person who actually committed the action made on the basis of the Complaint and therefore he or she has to be the named party to the lawsuit. In most cases, the only person who can be sued is the actual driver who caused the accident.
This creates an extremely strange situation. In most cases, the insurance company controls virtually every aspect of the litigation. They decide when and how much is going to be paid to settle. They choose the lawyer who will defend the case and they pay for that lawyer's bills. Often then, the person who is the "defendant" in the case has very little involvement beyond having their deposition taken and going to trial.
Under this system, the person who paid for the insurance policy has little or no say in whether a case settles or has to go to trial. It has been our experience that most individuals, victims and defendants, do not want to go through the rigors of taking a case to trial. A wise attorney once said, "a lawsuit is like surgery. it should be a last resort." Our office has a policy of making a good faith effort to settle a matter with the at-fault party's insurance carrier before taking a case to trial. Yet because many large insurance companies have a nationwide policy of making "low ball" offers, we too often find ourselves having to try a case against a defendant who probably would have preferred that the case settle for a fair amount.
3. We all know that many people have health insurance nowadays. Isn't it unfair that the plaintiff should recover for the medical bills that were paid by health insurance?
Again, a very good question. It is true that the plaintiff's medical bills (and future medical bills) are an important part of most personal injury cases. However, in the vast majority of cases, the plaintiff will have to pay back the health insurance carrier from the money awarded for damages in any jury verdict. There is no double recovery.
If you look closely at your health insurance contract under the clause "subrogation rights," you will see the language that requires personal injury victims to pay back any money that a jury awards if that health insurance company paid accident related expenses.
4. Why didn't this case settle?
There are lots of different reasons why cases don't settle. In our opinion, the most common reason is that insurance companies nowadays simply don't make fair offers to settle cases. While it is impossible to know what a jury will award, we do know that people are entitled to certain types of damages after they are injured by someone else.
It's hard to know what a jury will do in a particular case. We have some general ideas and can make an educated guess as to what we think a jury might do with the case, but trying to predict exactly what will happen is impossible. Ironically, it's this uncertainty that helps make cases settle. In automobile accident cases we have found the insurance industry has three "red flags" that adjusters are trained to look for in auto-injury claims:
- A delay in treatment. Unfortunately many victims of an automobile accident wait several days or weeks before going to see a doctor or before following up with a doctor. The reason for this is usually that they hoped the pain would go away on its own without need of further care. Some injuries may take days; weeks or even months to manifest themselves. But skillful insurance defense lawyers often use this fact to try and minimize the victim's claim: for example, "If he was really hurt he would have gone to a doctor sooner."
- Minimal property damage. Despite the insurance industries own studies that show drivers who are involved in small "fender benders" get hurt 14% of the time, insurance companies know that their lawyers can hold up pictures of the nominal property damage and use those photos to question the validity of the victim's injuries.
- Pre-existing conditions. Countless medical studies have shown that certain health conditions or injuries prior to a motor vehicle collision or other incident can make a victim much more susceptible to re-injury. Yet skillful insurance defense lawyers use that prior injury as a smoke screen and try to blame all of the victim's problems and pain complaints on the old injury. If a case involves one of these
factors, even if liability is clear, there is a good chance it will end up in Court.
5. Why can't the two parties agree on a reasonable settlement?
Years ago, insurance companies used to evaluate cases using experienced insurance adjusters who would meet with the person who was injured, evaluate medical records and bills, and then try to get the case settled for a fair amount. Today, most insurance companies use computer software to determine the value of auto and truck accident cases.
Essentially, those insurance companies have data entry people input information from medical records, lost wages, the severity of the accident, and where the accident occurred. The taxpayer ID number of your personal injury lawyer which determines if your accident lawyer has a history of taking cases to verdict or whether they simply settle all of their cases. The computer then specifically looks to your injuries as described in your medical records. One of the most important questions is whether the injuries are permanent. The computer also gives higher values for objective injuries measured by diagnostic testing than soft tissue injuries.
The problem with computer-based case evaluation is that the programs can be skewed to spit out incredibly low settlement offers. As they say, garbage-in, garbage-out. There is no computer program that can ascertain the value of a person's pain and suffering or how an injury really impacted a person's life. How much is it worth to not be able to pick up your newborn baby without extreme pain? There is no way a computer can answer this question.
6. OK, if Insurance Companies are so unreasonable, why not use those low offers to show the world how unreasonable they are?
The law correctly wants parties to lawsuits to try and settle their disputes without the need of trials. For this reason, there is an evidentiary rule that generally makes settlement offers and negotiations not admissible. The rationale is that if settlement offers were admissible in court, then they would look bad in front of the jury. Such a result could then discourage parties from entering meaningful settlement negotiations for fear it could hurt their case if it went to trial.
7. An Independent Medical Examiner said that the plaintiff wasn't hurt that bad. Shouldn't that doctor decide what really happened?
Under the Rules of Civil Procedure, the insurance company’s lawyers can hire a doctor to perform an examination of the plaintiff, review medical records and tests, and then testify at trial. In theory, this sounds like a fair and reasonable method for an insurance company to ensure that they are only paying valid claims.
Unfortunately, many insurance companies have a policy of using "hired gun" doctors who are paid far beyond their normal charges, who see the patient for only a few minutes and find some reason to say that the person was not badly hurt or that the accident did not cause the problem. Not all doctors will tailor their opinions to what the insurance company wants to hear. But remember this: This is one of the most profitable types of work for doctors to do, especially in this era of managed care. There are doctors who will slant their opinions towards the insurance company.
Sadly, the insurance companies know that certain doctors can be counted on to testify in their favor, time and time again. The doctors, knowing they can count on repeat business from the insurance companies, make sure that the people writing their paychecks are kept happy.
If the juries could find out that some doctors make hundreds of thousands of dollars from insurance companies, they would be much more reluctant to consider the doctors to be "independent." It would be far more appropriate to call these doctors "insurance medical examiners."
8. Why is a trial necessary when there is a police report?
At some point in their lives, most people either have been in a collision or know someone who has been in a collision. These folks know that after their own accident there was an accident report completed by the investigating officer. In fact, these accident reports even go so far as to show who the investigating officer believes was at fault for the collision. Further, there is information about how much damage was done to the vehicles and whether anyone was hurt in the collision.
Unfortunately, accident reports and incident reports are often excluded from evidence because the officer or person who completes the report is usually doing so with information he or she has received from other people. This means these reports contain a lot of "hearsay." Although it is a complicated topic, most hearsay is excluded by operation of the Rules of Evidence.
9. If the Defendant loses, does he pay for the costs associated with bringing the case to trial?
No. The insurance company usually pays for the defendant's attorneys and for the cost of defending the lawsuit. The defendant's lawyer usually is paid directly by the insurance company. The expenses associated with defending the case including hiring doctors and experts, are usually paid for by the insurance company. However, even if the plaintiff wins the case, he or she must pay for his or her own attorney and the costs associated with bringing the case to trial. These costs include deposition costs, costs of deposing the doctors, investigators, and exhibits. Even in a small case, these expenses and fees can amount to thousands of dollars. These costs must be paid out of any verdict returned by the jury.
10. Will a jury verdict cause the cost of insurance to rise?
While this is what the insurance companies would love people to believe, nothing could be further from the truth. Even with natural disasters like Hurricane Katrina, insurance companies are enjoying record profits. Don't take our word for it, simply go to Google or Yahoo and type in RECORD INSURANCE COMPANY PROFITS. Those profits are measured in billions and not millions of dollars. When was the last time you saw an office park or a golf tournament that is named after a personal injury victim or a law firm? Never. This rarified financial world is reserved for the biggest, most profitable corporations in the world. the insurance companies. We all pay the price so that these companies can profit. Yet the only reason they exist is to pay the honest claims they most often deny. Clearly their first loyalty is to their stockholders and not the insured. Is that fair?Source: www.hugginsmaxwell.com