Games insurers play in wrongfully denying claims

Policyholders and claimants often do not recover from insurers because they simply presume the insurers are correct and do not contest or object to the coverage denial. Unfortunately, insurers sometimes play games when adjusting claims and insurance adjusters believe that many claims are not meritorious.

Telltale signs an insurer’s denial letter is improper

A number of telltale signs in an insurer’s denial letter may indicate the denial is improper. The following points are key indicators of wrongfully denied claims:

  • The insurer fails to refer to specific insurance policy provisions in its denial.
  • The insurer quotes language that it claims is in its policy to support its denial of coverage, however the quoted policy language does not exist.
  • The insurer refuses or fails to provide the policy holder with copies of the policies under which it is denying coverage.
  • The insurer fails to state the claim-related facts in its coverage denial. (This is an indication that the insurer may not have conducted an investigation prior to its denial).
  • The insurer refers to policy exclusions or conditions in its denial that are not relevant to the claim.
  • The insurer attempts to reserve its rights to assert additional policy defenses after the denial of coverage.
  • Although it is denying the claim, the insurer asks for more information related to the claim. (This additional information is usually used against the policyholder later on).
  • The insurer never meets with the policyholder before the claim denial, but makes sure the file contains “form letter” requests for information that are either irrelevant or unnecessary.
  • Simultaneously with the denial of coverage, the insurer attempts to retroactively rescind coverage and claim the policyholder made material misrepresentations in his or her application for insurance.

Avoid arousing adjuster’s suspicion

Claims adjusters generally do not treat an insurance claim as fraudulent unless the claimant or policyholder does something to arouse suspicion. To avoid the adjuster’s suspicion, the claimant or policyholder and his or her personal injury attorney should always do the following:

  • Indicate a willingness to work with the adjuster.
  • Promptly return the adjuster’s phone calls and letters.
  • Agree to allow the adjuster to visit the accident scene if applicable.
  • Provide or make a serious effort to provide documentation of expenses if the adjuster requests it.
  • Call the adjuster and seek clarification on upon receipt of information or a letter from the adjuster that is unclear or ambiguous.
  • Keep an even temper and business-like demeanor even when angry.
  • Contact the adjuster’s supervisor if a dispute cannot be resolved with the adjustor. If that is not satisfactory, go as high up as necessary.

Experienced claim adjusters will respond better to sincerity and persistence, than to anger and threats.

The objective — settlement and payment

In the claims game, the objective for the adjuster is to pay and close claims. Adjusters are usually not paid extra money to handle a claim, so they have a strong incentive to settle claims quickly. The claimant or policyholder has the same objective. Usually, neither the claims adjuster nor the claimant is bargaining for a day in court.

The claims adjuster knows that he or she will be receiving anywhere from 50 to 100 new assignments per month. If the adjuster challenged every claim, there wouldn’t be enough days in the week to give adequate attention to all of them.

The means to the end — salesmanship

The more sophisticated claims adjusters and claimants usually have a common denominator and that is salesmanship. The claims adjuster will attempt to sell his or her point of view to the claimant and the claimant will make a sales presentation or arguments as to why he or she is entitled to the full extent of damages.

The personal injury attorney — a willing seller

The personal injury attorney is usually a good salesman, even a superior salesman, when compared to a claims adjuster. The injury attorney has had the benefit of law school and often the benefit of a number of years of experience in “handling” claims adjusters. The attorney knows that he or she is selling a commodity, pain and suffering, as well as medical bills and lost wages.

The personal injury attorney will know how to package the product in order to make it most favorable to the client. The attorney wants to sell the package of pain and suffering, medical bills and lost wages rather than litigate those damages, which is time-consuming and costly for both the attorney and the client. Hence, most personal injury attorneys are willing sellers of their alleged damages.

It is easy to spot a good plaintiff’s attorney, based on the following ten points:

  • The personal injury attorney ignores the clock and spends quality time with the claims representative. Claims adjusters hate to feel like they are second class citizens when dealing with the attorney. A good plaintiff’s attorney will make the claims representative feel reasonably equal.
  • A good plaintiff’s attorney will share information with a claims representative. For example, a good plaintiff’s personal injury attorney will ask the claims representative, “Do you have a copy of the police report [or other document needed to resolve the claim]?” If the claims representative says, “No,” the attorney will then offer a legible copy to assist the claims representative in processing the claim.
  • The personal injury attorney knows something about and appreciates the information that the adjuster needs to evaluate the claim. The personal injury attorney will know, even though the claims representative may not, what documentation the representative needs. For example, if the claim involves an automobile accident, the claim representative is going to need a copy of the police report, medical bills, medical report, and lost wages statement. The personal injury attorney will take care to ensure that copies of documentation sent to the claims adjuster are legible and readable, otherwise they are worthless. Illegible copies result in additional time and expense for the claims representative who must contact the attorney and request additional copies.
  • The plaintiff’s attorney will communicate to the claims adjuster his or her theory of liability (unless obvious), and provide full documentation of any allegations of monetary damages. The attorney may even go so far as to give a “current” realistic evaluation of the client’s injury claim and give a “basis” for the opinion.
  • The plaintiff’s personal injury attorney will use innovative settlement techniques when necessary. For example, a video can illustrate an average day in the life of the plaintiff and help the claims adjuster better understand the case.
  • The attorney uses alternative means of resolving disputes to avoid the very costly and traditional approach of trying every case in front of a jury. Such examples of alternative dispute resolutions are the selection of professional mediators and arbitrators that are readily available in today’s marketplace.
  • A good plaintiff’s personal injury attorney will establish a professional relationship with the claims representative. This does not mean going out on the town together, but does mean that the plaintiff’s attorney is willing to meet with the claims representative at either the claim representative’s claims department or the attorney’s office or some “neutral” meeting place. Insurance companies generally do not encourage their adjusters to meet with claimants or their attorneys. Management knows that leaving the office to adjust a claim reduces the number of claims the adjuster can handle. However, it is very much in the policyholder’s and claimant’s interests to meet with the adjuster. Meeting increases the likelihood that the adjuster will pay attention to and fairly evaluate the claim. Two people, working together, can move mountains and settle cases when they are across the table from one another and eyeball-to-eyeball with disputes or hurdles that must be cleared before settlement can be reached.
  • A good plaintiff’s personal injury attorney will provide all the information an adjuster needs to justify the amount claimed so they can mutually work towards a resolution of a claim. Because the adjuster is often overloaded with cases, it is important for the plaintiff’s attorney to carefully and in detailed writing specifically request all items of damage for which a claim is being made.
  • The plaintiff’s attorney performs beyond expectations. For example, if the claims representative wants a narrative medical report from the plaintiff’s treating physician, a good plaintiff’s personal injury attorney will go one step further and secure legible nursing notes or other documentation to support the physician’s narrative medical report. It is not unusual for the nursing notes or a hospital log involving the plaintiff to be more valuable than a narrative medical report. That is, the nursing notes or hospital logs are usually in the form of a diary, in chronological order, showing the progress, or lack thereof, of the plaintiff’s recovery and complaints.
  • A good plaintiff’s personal injury attorney will anticipate the needs of the claims representative by reporting the total amount of the claim to the claims representative as soon as possible. This enables the claims representative to set the appropriate reserve so the money is available when the claim is due to be paid. Most plaintiff’s attorneys know that the insurance industry operates on a thirty day cycle. Claims representatives must report to their supervisors or the claims manager on serious claims. The claims manager has to report to either the regional claims manager or the home office. The insurance claims industry is a paper pyramid industry. Hence, the plaintiff’s attorney can make a lot of points with the insurance company by giving thirty to forty day status reports to the insurance company and by doing so participates in the “needs” of the claims department, all the way up to home office.

The adjuster — a willing buyer

Adjusters who have been on the job for a while have a fair amount of experience negotiating with attorneys. The adjuster knows that he or she has a constant influx of new case assignments and must maintain the current case load. The adjuster knows that he or she must buy up damages and settle as many cases as possible. Otherwise, the adjuster will be inundated with stacks of files.

It is interesting to observe the attitude of an adjuster who has a high case load of pending claims. The adjuster will sometimes be very liberal with the company’s money in order to close as many of those files as possible without giving away the company store.

The claims adjuster is an important cog in the wheel that makes private insurance go. Back in 1877, a handbook of settlements stated that the claims adjuster should be a combination of merchant, mechanic, underwriter, lawyer, and detective, and should possess the rare faculty of saying unpleasant things when necessary, in a way calculated to avoid unnecessary irritation.

The product — pain and suffering (damages)

In the claims game, the product, general damages, better known as pain and suffering, as well as special damages, better known as medical bills, lost wages and property damage, are the substance of the sale. Since the hands of time cannot be turned back, the usual commodity used to conclude claims of damages is money.

In order to properly document pain and suffering, medical records should not only document the treatment provided but also the physical pain endured by the claimant. For example, use of pain killers or anti-inflammatory medications and their dosage should be emphasized. In addition, the demand to the insurer should document if the claimant is still taking this medication, or alternatively the length of time pain medication was used. Also, any injuries that resulted in temporary or permanent loss of use or range of motion of a body part should be emphasized. In most states, if the claimant had a pre-existing medical condition that was worsened by the accident, the claimant can recover damages for the additional pain and suffering that is related to the aggravation of the pre-existing condition.

Adjusters will rarely accept a pain suffering claim at face value. For example, if the alleged pain from the injury resulted in lost wages, the adjuster will require a statement verifying the lost work time not only from the physician but also from the employer.

Any reasonable settlement offer or payment should take into account not only past pain and suffering but also any projected future pain and suffering, whether it is from the ongoing unresolved medical condition, or prolonged chronic pain that was a result of the accident or exposure.