Wednesday, January 6, 2010

Is There A Formula For Settling A Personal Injury Case?

In short, no. Occasionally, clients will ask: "I've heard that insurance companies will take your medical bills and multiply them by three to make their offer--is this true?"

Perhaps 15 or 20 years ago, this was not uncommon in our experience, although not an ironclad rule. However, times have changed. First, as jury verdicts started to trend downward in the mid-90's and beyond, this "rule" started to disappear. Second, many insurance companies invested millions for fancy computer modeling programs designed to ratchet down claim evaluations. Allstate, for example, invested multi-millions for a program known as "Colussus," which inputs "data" regarding an accident victim's injuries and bills, etc, and spits out an offer, frequently more pinched than a traditional "3 times" multiplier. Some people would characterize this as "garbage in, garbage out," but the point is that any rigid formula or equation for evaluating injury claims frequently doesn't hold water.

Here's why. There is a saying in our profession: each case sits on its bottom, so to speak. Two examples may help illustrate the point.

Example No 1: Two people suffer identical injuries in a collision--multiple fractures of both hands. One victim is a sales manager who works mainly at his desk. Despite his injuries, he's able to do his job. The other victim is a concert pianist for the local symphony and also gives private lessons. She is not only unable to perform in concerts and teach, but loses her job and substantial income.
Same injuries, but with different outcomes. Guess who has a more substantial claim? A rigid "formula" does not do justice to the pianist's claim versus the sales manager's.

Example No. 2: Again, two people suffer the same injuries in a collision--an odontoid fracture of the 2nd cervical vertebrae. The first victim was hit by a nice elderly lady coming home from church who slid thorugh a stop sign. The second was hit by a drunk driver who blew the stop sign at 68 MPH and blew a .225, over three times the legal limit of .08.

Same injuries, same amount of bills, same recovery. Guess who's claim is worth more? I can assure you that the claim against the drunk driver is potentially more valuable due to the egregious conduct of the drunk, which subjects him to possible punitive damages (money damages returned by a jury to punish a person for their reckless conduct).

There are numerous other examples of why simple formulas don't work. The only generalization is that each claim must be evaluated based upon its own unique facts and circumstances, and not on what Uncle Joe or the neighbor down the street received for their claim a few years ago.

1 comment:

Mark said...

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