At Clark and Steinhorn, LLC, we often hear from our clients that they are disappointed in the offers that are forthcoming from insurance companies in their personal injury and accident cases. This is because the offers are routinely little more than the medical expenses plus solid lost wages, resulting from the injury itself.
We have written extensively on this site about how to optimize presentation of claims, including discourses on ensuring that the medical picture one presents to the insurance company is persuasive and also that any lost income claim can be supported. Despite these admonitions many straight forward claims produce inadequate offers.
Allan and I are old-timers and recall a bygone era when the formula for settlement of a typical soft tissue injury case contemplated multiplying ones medical bills by 3 and adding in the wages and other expenses. Some of our clients either recall those days or have family members who do and have imparted their claims experience. That era is long gone and offers are frequently half those amounts or less.
Why? The answer is multi-faceted. First, the modern day fleet of eager, young insurance adjusters have been trained to recite perceived deficiencies in cases, identified by computer programs and assert that certain medical bills are being "reduced" for settlement consideration.
Think about that. You get hurt in a crash, you go to the hospital or urgent care, you go to an orthopedist and get physical therapy and some 25 year old Geico adjuster tells you they have "reduced" your medical bills! Does that mean you or your health insurer can "reduce" what is owed to the hospital or doctor? Of course not.
But this notion of "reduction" has gained purchase at every major car and truck insurer and in some instances has been accepted by the lawyers representing injured people. In virtually every case we hear this suggestion or if we are lucky we hear that there has been no "reduction".
This dynamic was identified by liability insurance companies years ago as an effective way to systematically reduce claims payments and increase insurance industry profits. When this is carried out by multiple multi-billion dollar insurance companies, the effect is irresistible. Victims rights lawyers are swept up in the flood of uniformly inadequate offers and are compelled to engage in a variety of practices that would have been anathema to them previously.
These include routinely badgering healthcare providers to accept substantially less than their bills, reducing legal fees and filing lawsuits galore. This has immersed the court system in a swamp of run of the mill, clear liability car accident cases. It is routine to appear in District Court in Upper Marlboro, Silver Spring or elsewhere and see dockets overloaded with such cases.
Judges work assiduously to process these cases but their time is finite and it is commonplace to file a lawsuit, wait four months for a trial date, appear in court with one's clients and witnesses and waste half a day without going to trial. Please come back in three months and hopefully we will reach you then.
Many injured people and their witnesses can't afford to take another day off for court and yet in the face of insufficient offers are given no choice. Sometimes this results in their ultimate acceptance of an offer that was previously unthinkable.
A recent case is illustrative. The crash victim went to the hospital after the accident and after seeing an orthopedist, chose to see a more conveniently located chiropractor who had successfully treated his dad. He had just finished college and in order to make ends meet had taken a job selling meat door to door, until he found something more permanent.
The meat sales job required extensive driving, and lifting large pieces of meat, both contraindicated by the chiropractor. So he didn't work for two months, he largely recovered and hoped to settle his case. Unfortunately, he had only worked at the meat job for two weeks and had been paid in cash.
No sick leave, no annual leave, no pay and no paystub, W-2 or 1099. The insurance company "reduced" his bills both because they were "too much" and because he "overtreated". The insurance company would not honor his two month lost wage claim for lack of documentation.
Their offer on $9,300.00 in medical bills was $11,000.00! If he settled he would lose thousands of dollars. Lets do the math. Lawyers work on these cases on a contingency fee basis. This means they receive nothing if the injured victim receives nothing. If the victim receives compensation then the fee is generally either 1/3 of the recovery or 40%.
Let assume the lesser amount. 1/3 of $11,000.00 is $3,666.66. So after the lawyers are paid, the victim gets $7,334.00 to pay his $9,300.00 in medical bills. That's right if the injured person is lucky they get nothing. So that case went into another unnecessary lawsuit and will be resolved, with any luck, four to six months from now.
The resolution down the road doesn't stop the medical bill collectors or make up for the money the client borrowed from his family, while he couldn't work for two months. That has to wait. But of course that assumes that a judge will award genuinely fair compensation when the trial occurs and as we will see tomorrow, there is no guarantee of that.