The Plain Truth About the Practice of Personal Injury Law

Thursday, June 16, 2011

How do Insurance Companies Value Automobile Personal Injury Claims

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As Chicago’s Top Personal Injury law firm we are often asked how insurance companies determine how much to pay to settle a personal injury claim.  Many companies use a computer software program known as Colossus. The program takes all of the feel and experience of the insurance adjuster and replaces it with a mechanical process that fails to consider the intangibles or non-legal issues  which are often the most important part of setting values. These would include whether injured party is attractive or ugly, smart or dumb, likeable or unlikeable and so on. Often jurors decide cases for reasons other than the law. The insurance industry maintains that the software is a useful tool because it considers a great many factors, and the settlement values are just a range for use in any way the insurer wishes. Plaintiffs' attorneys, including Steinberg Burtker & Grossman, Ltd. on the other hand, maintain that the software is a device that permits the insurance companies to discharge its adjusters and save labor costs. It is a penny wise dollar foolish concept that the insurance company has adhered to without much success.

A computer cannot quantify your emotional distress, or the loss of enjoyment of life because you no longer can take long walks with your spouse, or the pain and despair you suffer each day because your work hurts you and interferes with your healing? Unless all of your circumstances are included, is it fair to quantify all you have suffered and reduce to a dollar value based upon some factors that may or may not reflect your condition?

That is the pathetic Colossus software. It is an attempt by some insurance companies to value injury claims with no consideration at all given to whether or not a jury might award you more than the "average" claimant. They plug in such things as damage to the vehicles and expected length of treatment and allowable cost of treatment and many other variables and then come up with a number for the value of the personal injury claim. No consideration is given to the extent of your actual pain and suffering.

No consideration whatsoever is given to the fact that you might have a job where your injuries cause continued pain, or which slows your healing (consider, for example bank guard, or a person who has to stand all shift). They do not know, nor do they care, that you cannot hold your child because of the pain in your neck and back. There is no room in the formula for such information.

But the problem is that in our system, it is the jury that is supposed to be the basis for determining the value of a claim, and juries
do tend to listen to and consider many of the factors that Colossus ignores. Juries do make a distinction based upon whether or not they think the plaintiff is believable, or has attributes we value in our society, such as the virtues of honesty, perseverance, humility, or patience, for example.

Colossus has no way to evaluate those positive traits, so if you are possessed of anything positive that is likely to bring you a larger jury verdict, it will not be included in the Colossus valuation. You will have become a magnetic image, no different in regard to your positive characteristics than the magnetic image of any other of thousands of claimants with injuries similar to yours.

The real problem with Colossus is that the adjuster for your insurance claim is just about stuck with the results that come out of the computer. Of course the insurance company will deny this, and will tell the media that Colossus is nothing more than an evaluation tool. It just gives a starting point, they say, from which the adjuster can move up if the facts of the case merit it. This absolutely false.

The Colossus result is a position that is increasingly locked in, and the adjuster who wishes to vary from it because of the facts of an unusual case, had better be ready to justify it. Furthermore, how many times do you think any adjuster trying to make the cut at an insurance company is going to go to her boss and ask for permission to exceed the Colossus determination of value? Considering that her evaluation and merit pay will be based upon how "efficiently" (read that to mean cheaply, or "hard-line") she settles her cases, do you think she will ever go to her boss to ask for more money than allowed by Colossus? Not very likely. In fact the qualifications of an insurance adjuster has dropped from a skilled to unskilled position. Chicago Injury Attorneys no longer even bother talking to them to settle claims.

Colossus is a well-kept secret by the insurance companies that use it, and they will likely not tell you if they have licensed the software. It is the market leader bodily injury claims-handling software used by an increasing number of insurance companies in the world. According to Computer Sciences Corporation, the company which produces Colossus, it is used by more than 50 per cent of the nation's claim adjusters and by more than 300 insurance companies.

Colossus is regularly beaten by skilled Chicago trial lawyers.

Rick Grossman

Sunday, June 12, 2011

Federal Efforts at Tort Reform

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Last year, the Illinois Supreme Court rejected damage caps in medical malpractice cases. Now federal legislation has been introduced seeking to limit non-economic damages in nursing home negligence and medical malpractice claims while shortening the statute of limitations. This of course represents politicians efforts to once again cater to the insurance lobby. This is of course contrary to objective evidence that such measures have a negligible effect on overall costs while drastically curtailing individual legal rights.

The Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2011 (H.R. 5), introduced in January, would also restrict liability in cases involving unsafe drugs and medical devices. This results from the efforts of the drug manufacturer lobby. The primary feature of the bill is a $250,000 cap on non-economic damages. But this rush to radically alter America's system of civil liability is not without vocal opponents.

Approximately 24 state and national consumer and public interest groups recently voiced their strong opposition to the proposed law in a letter to the House Judiciary Committee. The group roundly condemned the short-sighted strategies outlined in the bill, arguing that "caps on non-economic damages do nothing but stop the most severely injured patients from getting adequate compensation." But other aspects of the bill are also very troubling:
H.R. 5 would impose a statute of limitations that is much more restrictive than current provisions in many states
The bill eliminates the concept of joint and several liability, which allows a plaintiff to obtain full damages from any single defendant who is fully responsible for an injury
The proposed HEALTH Act of 2011 limits contingency fee arrangements, which are the only means by which most citizens can afford sufficient representation to oppose insurance company lawyers

H.R. 5 would impose a strict new standard for proof of the need for punitive damages, which are often the only way to make the most negligent providers change their ways

Perhaps worst of all, such federal reforms would impose from above the types of "tort reform" that have already been definitively rejected in many states. The authors of the letter conclude with a powerful statement: "Health care reform should not be accomplished by taking away the legal rights of patients who are injured through no fault of their own, or reducing the accountability of those who commit wrongdoing." Every concerned American should contact their Senators and Congressmen to express similar views.
Steinberg Burtker & Grossman, Chicago’s top personal injury attorneys continue to fight against tort reform and protect victims’ rights. Victims of medical and nursing home malpractice deserve full compensation for the negligent acts of others.