Trial Lawyer Resource Center

Every day, I speak to insurance claims adjusters on the phone attempting to resolve personal injury cases.  It is dangerous to try to put people with complex goals and motives into simple boxes.  But let's do it anyway. 

There are three categories of insurance adjusters: (1) "It is not my money, I just want to get this file off my desk one way or another and keep my job"; (2) "It is not the insurance companies' money, it is my money.  Moreover, all claimants are liars and I'm dying to litigate these cases over the phone with you in an effort to repeatedly underscore my view of personal injury victims generally;" and (3) "I know my job is important, I am competent, and I evaluate cases fairly on a case-by-case basis.  I'm not paying more on a case than I think it is worth but I'm also not afraid to pay it what it is worth." Luckily, most adjusters fall into category one or three. 

The Category 2 adjusters are pretty difficult to have a meaningful conversation with because they are so dogmatic in their thinking that is generally limited to Colossus and its brethren.     But I think it is very important to fully hear out Category 1 and Category 3 adjusters.   An insurance adjuster is a human being (save your jokes) like everyone else and wants not only to articulate their position but also to feel like the lawyer on the other end of the conversation is listening to them.  The human psychology is to just shut them down because, subconsciously, attorneys think that the more the adjuster is able to articulate that hurts our case the more closed minded the adjuster will be.  But just the opposite is true.  Respect begets respect and you more likely to reach common ground with the perception that you fully considered all sides of the story in making your arguments.

A few more random thoughts on negotiating with insurance adjusters, in no particular order:

1.  The Adjuster Is Not Your High School Girlfriend:  If negotiations end badly, agreed to disagree and file suit.   Do not get mad at the claims adjuster. You can remind the adjuster that you have facts about the case (the quality of the client or whatever the facts may be) that reviewing the medical records could not possibly give the adjuster.  If this is the problem, it is obviously not the adjuster's fault that the medical records don't fully give a lens to the value of the case.  Discovery can resolve this and, if it does not, this is why we have juries.  Don't take it personally.

2.  Send a Copy of Your Discovery and Complaint with Your Demand Package:  The reality is that most personal injury lawyers have no interest in filing a lawsuit.  If you are different, remind the insurance adjuster of this fact by including a Complaint and detailed discovery.  For sample Complaints and discovery, visit the Personal Injury Lawyer Help Center for samples. (This will offend a few who think this is a declaration of hostilities. But I think most accept it for what it is, a message that you are ready to go if the case does not settle.)

3.  Filing Suit Is Not a Declaration of War:  This is particularly true in smaller cases.  Most adjusters do not fear a lawsuit, so do not act like it is magic elixir you have to take away the adjuster's power.  Acting like a lawsuit is a major event often underscores to the insurance adjuster that you are not an experienced lawyer because experienced lawyers file case on a routine basis.

4.  Save the "I'm a Lawyer" nonsense: This is the great way to alienate an adjuster.  It is also obnoxious. 

5.   Meet the Adjusters: This is hard to do in the real world.  But I have visited a number of insurance companies during "Settlement Days" where companies try to settle a large number of cases at one time.  My relationship with the adjusters I have met is always different than before we met.

  

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I'm at the WILG Convention and listening to a great presentation by Jeff Wehe. Jeff is an insurance adjuster with 12 years experience and currently independently evaluates cases. Here's some of Jeff's advice:

Insurance adjusters have to set their reserves early. Typically they have to have the reserves set at 75% of the final value within 30 days and at least 90% of the final value of the case within 90 days. The more information you can provide the adjuster, earlier in the process the easier you make it for the adjuster.

Why should you help the adjuster?
Because they're the ones with the money. Helping the insurance adjuster can make the difference between whether your case settles or not.

Provide Information as Early as Possible
I used to put together a great demand package. Complete with a detailed demand letter, incident report, detailed breakdown of the medical bills and all of the medical records. We would also include any supporting information that was needed, future costs workups, IME's, vocational reports, lost wages information, plus any witness statements that would be helpful. We pulled together all of the information that we would need to go to trial and presented it in one complete, tabbed, indexed demand package. Very thorough, very professional and totally the wrong way to go.

Right now, we're providing information to the adjusters as we go along. If there is going to be surgery or a lot of treatment, we let the adjuster know that up front. Before it happens. A short letter to the effect of "We anticipate that Joe will require a hip replacement surgery. We will update you as soon as Joe has the treatment and we receive the records".

We also update the adjuster as we get the information in. For example "Here are the medical records for Joe. With his injuries, we anticipate that he will have a significant impairment rating, extensive future medical costs and a serious vocational impairment. It is my guess that he will have an whole person impairment rating of at least fifteen percent, future medical costs of at least $200,000 and loss of earning capacity of at least $175,000. We will forward these reports as we receive them".

Why Update The Adjuster So Much?
The adjuster has to set her reserves based on what she thinks the case is worth. The reserves are often set within the first 30 days before much is known about the case. If you have a $150,000 case that is legitimately a $150,000 case and it's well documented, but the adjuster has her reserves set at $50,000, it makes it hard for the adjuster to settle the case.

Do you know what the number one criteria is for insurance adjusters for their performance reviews? The number one criteria is how well their settlements match their reserves. So what can you do to help? Give information to the adjuster. Give them as much information as possible to evaluate the claim as early as possible. Each step of the way, each touch allows them to re-evaluate the claim and determine how much your client's claim is worth.

How do you think it looks to the adjuster's boss if she's been telling him for a year to a year and a half that the case was worth $50,000 and then upon review of your super-duper tabbed, indexed, documented demand package she realizes that it's a $150,000 case. What is her boss going to say "If it's worth $150,000, how come you've been telling me for a year and a half that it's worth $50,000? Don't you know your cases? Don't you know your job?"

Help the adjuster by letting them see the true value of the case early on. You're going to be sending the information to them anyways. Get it to them early.

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I read with interest Mark Zamoras's blog post on demand packages.  I fully share Mark's thoughts.  Another good idea we think is to send out your discovery and the complaint with the demand package.   Our thinking is that most insurance adjusters have between 100 and 300 pending files at any given time.   As Mark indicated in his post, it is a good idea to set a certain date upon which you expect a response.  Sending the complaint and discovery also sends the right message to the claims rep in terms of getting a more immediate response.   It takes a little extra time to prepare the pleadings but will get the attention of your adjuster, particularly if you have a history of successfully trying cases against that insurance company.  

Perhaps more importantly, it will also help from an administrative point of view because there is one less time you need to meaningfully touch the file before filing suit.   One of the great benefits of being a Plaintiff's lawyer is the ability to "preload the gun" for lack of a better metaphor.   We even include in our demand packages our expert designations just because, again, it is one less filing deadline we have to meet if you have all of your filing documents ready to go.  (If you doubt the efficacy of this, get on Westlaw and look to see how disputes arise because someone failed to name experts in a timely fashion.)   Of course, you still need to note the expert's deadline in the event that new experts have been uncovered over the course of discovery. But 75% of the time, this is not the case, and you have saved yourself one more hoop to jump through. 

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Matthew L. Garretson & Sylvius H. Von Saucken

In the recent case Amos v. Commissioner of Internal Revenue, the United States Tax Court stated that "if a settlement agreement lacks express language stating what the amount paid pursuant to that agreement was to settle, the intent of the payor is critical to that determination."  2003 WL 2289795 (U.S. Tax Ct, 2003).  As most personal injury attorney's understand, the correct "intent" is very important to memorialize in your settlement documents because IRC §104 (a) (2) provides that "gross income does not include the amount of any damages (other than punitive damages) received (weather by suit or agreement and whether as lump sum or as periodic payments) on account of personal physical injuries or physical sickness." 

The Supreme Court of the United States summarized the requirements of §104 (a) (2) as follows:

First, the taxpayer must demonstrate that the underlying cause of action giving rise to the recovery is "based upon tort or tort type rights"; and second, the taxpayer must show that the damages were received "on account of personal injuries or sickness." 

In Amos, the Court found that the dominant reason that the Defendant, Dennis Rodman, paid plaintiff the settlement amount at issue was to compensate petitioner for his alleged physical injuries arising from an incident involving the two individuals (Dennis Rodman allegedly lost his cool and had an altercation with Amos while Amos was photographing a Bulls Basketball game).  However, the Court also found that the settlement was in consideration for several other requirements (mainly a confidentiality agreement).  Since the settlement agreement identified those "other requirements" as consideration for the settlement proceeds, the Court determined that the parties did not intend all of the settlement proceeds to be allocated to the component for payment on account of personal physical injuries.  As a result, the Court allocated 80% of the settlement as paid in consideration for the other requirements stipulated in the Settlement Agreement.  The Court's allocation resulted in 20% of the settlement proceeds being (for non-physical injuries) included in Plaintiff's gross income and not exempt from IRC §61 (the general taxing statute).

 

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Last Summer at the ATLA Convention I met Adam Rosen of JuryTest. Adam  has an interesting business in that he conducts on-line focus groups. I was giving a presentation on in-house focus groups a month later and had a case coming up for mediation, so Adam offered to give me a sample focus group on the same case if I shared the information from our live focus group for him to compare. We had a case with strong damages, but we were concerned about liability. The results were rather interesting. The ‘live’ and ‘online’ focus groups tracked each other much closer than I thought they would. Here are my thoughts regarding on-line focus groups:

Pros

• Fast and Easy to Set up – It took about 5–10 minutes to set up the presentation. I e-mailed Adam two or three pictures and one or two scanned pages of medical records. I then gave a 3–5 minute presentation on the phone.  That’s all it took.
• Fast Results – JuryTest can get the results within 24 hours of when you give them the information.
• Tremendous Breakdown of Results – The results are online in a spreadsheet / pie chart. You can very easily sort by age, income, gender or other demographic considerations. I had never been a big fan of demographics until I saw the breakdown on our case. We had a nearly unanimous consensus on liability except for men over 40 years old making over $50,000 a year, who were only 50/50 for us. Good stuff to know before picking a jury (especially in South Carolina with our limited voir dire).
• Inexpensive – The cost is scaleable based on the number of  jurors you have, but I think you can get 8–12 jurors for about $500. Additional jurors don’t cost that much extra. Call Adam for pricing, I don’t want to put words in his mouth, but it is a very modest fee.

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My office writes and sends 200+ demand packages/settlement letters/demand letters each year. Over the past ten years, we have hired on former adjusters, spoken with those that have left the profession, and tried to hone the messages conveyed for our clients and to insurers. Here are a few items that I see working for my office:

Demand letters that do not demand a sum certain: With few exceptions, none of my demand letters states a dollar amount to settle. My clients always receive a copy of the demand letter sent out, and it has become too cumbersome to inflate a number in the letter only to have to convince our injured client to accept an offer that is lower than a stated amount. Exceptions of course are demand letters seeking policy limits.

Thirty-day deadlines:  I have been surprised by the number of attorneys who send demand letters without a deadline to respond. Our demand letters always inform that a deadline will not be extended unless the request is made in writing before the deadline runs and the deadline extension is approved by the client.   With perhaps Safeway Insurance being the only exception, nearly 100% of insurers will extend a settlement offer by the deadline I set.

Graphics in Demand Letters:   I am a fan of graphics from sites such as www.emedicine.com and www.wheelessonline.com. Wheeless’ Textbook of Orthopaedics provides helpful information regarding injuries that are often explained in plain language.

Diagnosis Codes: By now most know that Allstate uses Colossus to determine values in injury cases. All information I have tells me that it is critical to list and explain all diagnosis codes listed in medical notes, and to have treating doctors list all relevant codes. I use www.flashcode.com extensively to unravel the codes and their meanings. The site is free. In demand letters I send to Allstate, it is not uncommon for me to explain more than a half dozen codes.

If you have any tips that work, send them along to me and we will try to post them here.

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