NEGOTIATING A SETTLEMENT WITH THE INSURANCE COMPANY

Transcription

1 NEGOTIATING A SETTLEMENT WITH THE INSURANCE COMPANY Michael J. Mohlman Smith Coonrod Mohlman, LLC 7001 W. 79th Street Overland Park, KS Telephone: (913) ; Facsimile: (913) mike@smithcoonrod.com A. Initial Investigation of Facts and Documents 1. Initial Documents to Obtain The initial investigation in most insurance related claims will revolve around the underlying incident, be it a car wreck, truck wreck, slip and fall or general negligence claim. As in those cases, there are basic documents and items you will want to obtain. Those include the following: Medical records (including records from any prior injury); Medical bills (including amounts billed and paid); Police Report or Incident Report (including witness statements and photographs); Photographs of any involved vehicles; Photographs of the accident site; Client s insurance policy; Any 911 recordings; Any traffic camera or CCTV footage; Wage loss information and employment records; Tax returns; Driver s license records; Medicare/Medicaid payment information; and Diaries and calendars. Other documents that may be helpful include: Workers Compensation records (if a work-related injury);

2 School records; Social Security Disability records; Health care insurance EOBs or records of payment; Reconstruction report (requested from the Missouri or Kansas Highway Patrol); Death Certificate (if applicable); Documentation of property damage; Newspapers for any coverage of the accident News footage of the incident; The vehicles involved in a wreck; Google maps of the incident site; Google street view of the incident site; and Documents available with a Sunshine Act request. There may, of course, be other documents you need. Collecting everything on this list, however, will give you a good head start on making a determination on the case. 2. Witness Statements Along with the documents, interviewing witnesses will be one of the primary tools used to investigate a case. The identity of lay witnesses can be obtained by talking to your client and by looking at the police report/incident report and medical records. You should find out who the witnesses are as early as possible and talk to them as soon as you can. Make sure to include every witness to the incident as well as tow-truck drivers, EMTs and other first responders. All may have valuable information for the case. You want to talk to the witnesses early for a several reasons. First, they will have information that may help or hurt you. You need this information to fully analyze the case. Second, memories fade over time and the earlier you talk to them the better. Third, the insurance company has probably talked to them. If you talk to a witness shortly after he has given that statement, you may gain some insight into what the insurance company is thinking.

3 You can speak with the witness yourself or hire an investigator to make contact. If you go the investigator route, make sure to hire someone familiar with the type of case you are handling. An investigator that knows nothing about semi-truck cases will not gain as much information as one that has experience in that field. There are several advantages to hiring an investigator. First, you have a thirdparty witness that can arguably testify at trial. This can be important if the witness changes their story. Another advantage is time. An investigator may be more able to pin a witness down quickly than a busy attorney. There are also advantages to taking a statement yourself. One advantage is that you (hopefully) know the case better than anyone else. That specialized knowledge should help you get the most relevant information. On the plaintiff s side, another advantage may be that there is no out of pocket cost to taking your own statements. If you do choose to take your own statements, you should make sure to memorialize it somehow. If the witness changes her story, an undocumented conversation isn t worth the paper it s not written on. Memorializing can be as simple as taping it with your Dictaphone, to as extensive as hiring a court reporter to transcribe everything word for word. If you tape the conversation, make sure to preface your recording with the following: Ask the witness if she understands that you will be recording the conversation. Obtain the witness permission to record the conversation. Identify the witness. Identify yourself. State the time and date. State the location of the interview. Ask the witness whether they are giving the statement voluntarily. When you are finished, have the audiotape transcribed. Once it is transcribed, you can either just keep it or you can send it to the witness to have them review and sign.

4 Another way to take a witness statement is to either write the statement yourself after talking to the witness or to have the witness write her own recollections. If you choose this method, make sure the statement includes the witness name, address and other identifying information, as well as a notation that the statement is given voluntarily. Once the statement is written, have the witness initial each page of the statement and sign the last page. 3. Site/Vehicle Inspection Arrange to visit the scene of the incident and inspect any involved vehicles as soon as possible. In a serious injury case where you have already retained experts, have the expert come with you. Many changes can be made to a site that can lead to a loss of evidence. For example, holes in sidewalks can be filled and skid marks and debris along a roadside can disappear. These pieces of evidence can be crucial to a determination of liability. Have someone take photographs of the scene from as many different angles as possible. If you can, try to photograph the scene at the same time of day and year to accurately capture shadows and sun angle. Take photographs of the approach to the point of impact, paying particular attention to road signs, intersections, foliage and other things that could have influenced the drivers or their vision. B. Proposing a Reasonable Resolution To send a proper demand, you need to have all the relevant documents. You will need all medical records and bills for the injuries you are claiming. You may also want to include prior medical records to show that the injury you are claiming was not preexisting. You will also want to provide any other documents that support your position. These could include caselaw supporting your position, the police report for the underlying wreck, a reconstruction report (so long as it is a report prepared by the state and not your expert), lost wage information, and photographs of the accident site, the vehicles and/or the injuries. You want to organize all this information in an easy to find manner and attach it to your demand.

5 Once you have your documents, simply write a letter setting forth your position. Start with liability and show why the insurance company is responsible for payment. Also, never call whatever happened an accident. Always be in the habit of calling it a wreck, collision, crash, fall, etc. Accidents are things that happen when no one is at fault. A wreck, a collision or a fall, on the other hand, all can have causes. After you ve shown why the defendant is liable, outline your client s damages. Although you will be submitting the records and bills, tell the adjuster exactly what your client had to go through and prioritize the injuries from the most serious down. Then itemize your damages. Show how much the medical bills were and how much the lost income was (and show your calculations, if necessary). The next thing you should include is a discussion of potential problems with the case. Only do this, however, when you are absolutely confident that the potential problem is not a real problem. For example, if you think that the adjuster will argue a pre-existing injury, raise that issue at this point. Then go about proving why there is no pre-existing injury affecting this case. Finally, make a demand. If you have prior jury verdicts or settlements that are comparable to your case, discuss them. If you have a rational basis for the number you are claiming, explain it. Do what you can at this point to show that you aren t simply picking a number out of the air. Once you ve made your demand, inform the adjuster that it is only open for thirty days and that, if you haven t heard anything, you will proceed as necessary. Once the thirty days is up, file suit. C. Prejudgment Interest Demands Sending a prejudgment interest demand is one possible way to give the insurance company a hot foot and potentially bolster your damages. The requirements for a prejudgment interest demand are much more strenuous than they were before A prejudgment interest demand must now be accompanied by an affidavit of the claimant describing the nature of the claim, the nature of any injuries claimed and a general computation of any category of damages sought by the claimant with supporting

6 documentation. To make such a demand, therefore, plaintiff must have all his ducks in a row by having all medical bills and, arguably, an economic or life care plan. The requirements are set forth in RSMo : Interest on judgments, how regulated--prejudgment interest allowed when, procedure. 1. In all nontort actions, interest shall be allowed on all money due upon any judgment or order of any court from the date judgment is entered by the trial court until satisfaction be made by payment, accord or sale of property; all such judgments and orders for money upon contracts bearing more than nine percent interest shall bear the same interest borne by such contracts, and all other judgments and orders for money shall bear nine percent per annum until satisfaction made as aforesaid. 2. Notwithstanding the provisions of subsection 1 of this section, in tort actions, interest shall be allowed on all money due upon any judgment or order of any court from the date of judgment is entered by the trial court until full satisfaction. All such judgments and orders for money shall bear a per annum interest rate equal to the intended Federal Funds Rate, as established by the Federal Reserve Board, plus five percent, until full satisfaction is made. The judgment shall state the applicable interest rate, which shall not vary once entered. In tort actions, if a claimant has made a demand for payment of a claim or an offer of settlement of a claim, to the party, parties or their representatives, and to such party's liability insurer if known to the claimant, and the amount of the judgment or order exceeds the demand for payment or offer of settlement, then prejudgment interest shall be awarded, calculated from a date ninety days after the demand or offer was received, as shown by the certified mail return receipt, or from the date the demand or offer was rejected without counter offer, whichever is earlier. In order to qualify as a demand or offer pursuant to this section, such demand must:

7 (1) Be in writing and sent by certified mail return receipt requested; and (2) Be accompanied by an affidavit of the claimant describing the nature of the claim, the nature of any injuries claimed and a general computation of any category of damages sought by the claimant with supporting documentation, if any is reasonably available; and (3) For wrongful death, personal injury, and bodily injury claims, be accompanied by a list of the names and addresses of medical providers who have provided treatment to the claimant or decedent for such injuries, copies of all reasonably available medical bills, a list of employers if the claimant is seeking damages for loss of wages or earning, and written authorizations sufficient to allow the party, its representatives, and liability insurer if known to the claimant to obtain records from all employers and medical care providers; and (4) Reference this section and be left open for ninety days. Unless the parties agree in writing to a longer period of time, if the claimant fails to file a cause of action in circuit court prior to a date one hundred twenty days after the demand or offer was received, then the court shall not award prejudgment interest to the claimant. If the claimant is a minor or incompetent or deceased, the affidavit may be signed by any person who reasonably appears to be qualified to act as next friend or conservator or personal representative. If the claim is one for wrongful death, the affidavit may be signed by any person qualified pursuant to section , RSMo, to make claim for the death. Nothing contained herein shall limit the right of a claimant, in actions other than tort actions, to recover prejudgment interest as otherwise provided by law or contract.

8 3. In tort actions, a judgment for prejudgment interest awarded pursuant to this subsection should bear interest at a per annum interest rate equal to the intended Federal Funds Rate, as established by the Federal Reserve Board, plus three percent. The judgment shall state the applicable interest rate, which shall not vary once entered. Before 2005, prejudgment interest was limited to nine percent interest. Under the new law, the interest rates now vary and are based on the intended Federal Funds Rate : The Intended Federal Funds Rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. Beginning August 28, 2005, pre-judgment per annum (or simple) interest is the intended Federal Funds Rate plus five percent; post-judgment per annum interest is the intended Federal Funds Rate plus three percent. Evaluating Damages Under HB 393, Kurt V. Krueger and John O. Ward (2006). To determine the interest rate, the practitioner will have to determine what the current intended Federal Interest Rate is as published by the Federal Reserve Board on the internet site: and then add in five or three percent. It is unclear why the intended Federal Funds Rate was selected as the benchmark for pre- and post-judgment interest by the legislature. The Federal Funds Rate as of December 16, 2008 (the last time it changed) was %. D. Negotiating Tactics Most times, negotiations revolve solely around the dollar amount paid. When that type of negotiation breaks down, remember that other options are available. You can always propose a mediation, which seems to be the fallback position of many attorneys. In addition, the parties could agree to a binding arbitration. An arbitration can offer both sides their day in court while significantly reducing expenses. You can also experiment with other types of settlement options. Possibilities include high-low settlements and Mary Carter agreements. Both can reduce risk, while insuring some payment to your client.

9 With a high-low settlement, the defendant agrees to pay a minimum amount (the low ) regardless of the size of the verdict and the plaintiff agrees not to collect that portion of a judgment in excess of a certain amount (the high ). If the verdict falls between the high and the low, the plaintiff recovers the amount of the verdict. The highlow settlement protects both sides from an excessive verdict (either excessively high or excessively low). It can be a useful tool when both parties agree on liability, but have a drastically different view on damages. Keep in mind that judicial approval of the highlow agreement will be necessary in wrongful death or minor-plaintiff case. That approval should be obtained before trial. A Mary Carter agreement is an agreement between the plaintiff and some, but not all defendants, to limit the financial responsibility of the settling defendants. The agreement does not act as a release, so the settling defendant remains in the case. The agreement gives the settling defendants a financial incentive to help plaintiff s case against the other defendants. For example, defendant agrees to pay plaintiff $50, and remain in the case. If, however, the total judgment against all other defendants exceeds $150,000, the settling defendant s liability is decreased on a dollar for dollar basis for every dollar over $150,000 that is awarded. If the jury awards $200,000 or more against the non-settling defendants, the settling defendant s liability to plaintiff is completely extinguished. The classic Mary Carter agreement is kept secret from the other defendants and the judge. Most courts that have examined true Mary Carter agreements have found problems with them, especially when the agreement is kept secret.