Certain insurance company negotiation tactics are extremely effective for the insurance industry. An experienced personal injury attorney will be aware of these tactics and prepared to deal with them successfully to maximize your personal injury settlement.
Below is an explanation of several common insurer negotiation tactics and some of the techniques that skilled personal injury attorneys use to respond to them.
Assume your personal injury attorney evaluates your case to be worth something in the $15,000 to $20,000 range. Your bottom line is $12,000 and you and your attorney’s goal is $15,000 or better. Your attorney sends a letter of demand for settlement in the amount of $27,500. The adjuster phones your attorney and states he has reviewed the demand and is prepared to make an offer of $3,000. There is little or no explanation for the low offer.
The above tactic can mean one of several things:
There are several ways your personal injury attorney may attempt to deal with the so-called lowball offer, depending on the circumstances and your attorney’s prior experience with the adjuster.
Every adjuster has to get some authority from someone. Many adjusters, especially claims managers and supervisors, have an excellent idea of what a case is worth even before they receive a demand letter from your attorney. Some adjusters repeatedly claim the need to get authority as a delaying tactic. In this case, your personal injury attorney should consider filing suit. Furthermore, if the adjuster constantly raises the need for authority as an obstacle to settlement, your injury lawyer can make similar excuses for not being able to accept the offer. Your attorney can tell the adjuster that you haven’t authorized such a low settlement and give the adjuster a taste of his own medicine.
The adjuster may have refused to respond to your personal injury attorney’s letter of demand, even though your attorney has waited thirty days and sent a polite follow-up letter. Before deciding what to do, it is appropriate to consider the possible reasons for the adjuster’s failure to respond:
There are several ways for your injury attorney to deal with the failure to respond:
One of the more frustrating and unfair techniques used by claims adjusters is stalling with the “carrot tactic.” After more than 30 or 60 days, the adjuster still has not made a settlement offer. The adjuster typically responds that the claim is “still in committee” or “being evaluated at the home office,” or “has to be retrieved from the supervisor’s desk.” The purpose is to stall with the “carrot” of an early settlement, hoping that your attorney will continue to wait, sometimes over a period of several months.
One option your personal injury attorney may elect to deal with this delaying tactic is to try to pin the adjuster down with the following question: “I am hoping that you are being honest with me when you say that the claim is being evaluated in committee. Could you please give me a specific date by which I will receive a response to my request for settlement?”
Another is to go ahead and file suit.
The “what’ll you take” response is one of the most common for insurance adjusters and defense attorneys. The adjuster or defense attorney will call your injury attorney after receiving your demand and in a friendly, nonadversarial manner, will indicate a desire to cut through the formalities of negotiation. He will acknowledge your demand and then ask what it will take to settle the claim. The goal is to get your attorney to reveal your bottom line or close to it.
A sincere response to this question rarely leads to a reasonable settlement. The purpose of the technique is to get your injury attorney to cut your demand substantially thereby reducing the probability of a high value settlement. In the “what will you take” situation, the adjuster attempts to get your attorney to move from the initial request for settlement to a “bottom line figure” thereby making you bid against yourself. But, the lower you go during negotiations, the lower the potential courthouse settlement will be.
The best way for an injury attorney to respond to this technique is by saying that you will certainly take what you demanded in your request for settlement or more if they are willing to offer it. The attorney can emphasize that the original letter of demand was serious and you are both looking for an offer before negotiating any lower.
The preliminary evaluation technique is similar to the “What will you take” technique, but has an interesting twist. Assume, for example, that a personal injury attorney has evaluated a case as being worth between $40,000 to $50,000. The defendant’s liability is clear and the primary issue is value. The attorney’s goal is to settle the case for as close to $50,000 as possible, and with good luck, even as high as $52,000 or $53,000.
In the demand letter, the attorney has requested settlement of $85,000. After stalling for several months, the adjuster responds as follows: “I have been working on the file and I am trying to work up a preliminary evaluation of the case before I take it to the claims committee (or claims supervisor.) There is no way that I can meet your figure of $85,000, and I have placed an initial evaluation on this case at between $45,000 and $55,000. How does that meet with your expectations?”
The adjuster has indicated a settlement well within the hoped for range, with a high point even greater than the attorney’s expectations and a mid point at close to the top of the ultimate goal. The attorney assumes that, even if the adjuster comes back with a mid-point of $50,000, she will have settled the case for close to an “A” settlement. If the attorney can talk the adjuster up to $55,000, she is $15,000 above the low point and $5,000 above the top of the range. Therefore, she responds with any one of several positive comments ranging from “That sounds pretty good to me” or “If you come back with $55,000, we sure will take it.”
Several days later she receives a telephone call from the adjuster who now wants to make a firm offer. The adjuster tells her that the case went to the claims committee and that the preliminary evaluation was shot down by the committee or the claims supervisor to $35,000. However, the adjuster continues, that with strenuous “arm pulling” he convinced the claims committee to increase their evaluation to a firm $40,000 final offer.
The result is that the attorney is struck with the low point of $40,000. When the adjuster threw the $45,000 to $55,000 curve ball, it sounded so good that she responded with a positive reaction. The adjuster then realized that since the attorney was so happy with that range, she would be willing to take lower and, therefore, came back with a settlement that was reduced by 25% or more. The very best that she will be able to do is to get the adjuster to move perhaps $1,000 or $2,000 which means that the case will settle near the lowest end of the range rather than the highest. The adjuster knows that the attorney will probably not go to trial over a difference of $3,000 to $5,000 and, therefore, she will be forced to settle for a “B” or “C” settlement rather than an “A” settlement.
The reason why this tactic is similar to the “what will you take” tactic is that the adjuster simply throws a non-binding range up the flagpole to see if the attorney will salute it. When she does, the flag gets lowered to half mast.
The best way for a personal injury attorney to deal with this tactic is to tell the adjuster she will respond only to a “real offer” that can be taken to the client, that is, a firm offer of settlement for a specific figure.
Many insurance carriers use local or national adjustment companies to handle their claims. These independent agencies seldom have full settlement authority and most importantly, they are extremely conservative in their dealings.
If your personal injury attorney is confronted with an unreasonably low offer from the local or national adjustment company, your attorney can request to negotiate with the insurance carrier directly. If the request is refused, your attorney can then file suit and send a letter directly to the insurance carrier indicating willingness to negotiate with them directly.
Another technique employed by adjusters is to call your injury attorney after receiving your letter of demand and state that they do not like to waste time negotiating back and forth. Therefore, they say, the offer will be their best and only offer.
Before the offer is made, an experienced personal injury attorney may respond by stating that if the offer is going to be the equivalent of the demand figure, then the prompt settlement is appreciated. Otherwise, the attorney may remind the adjuster that settlement of personal injury claims requires a give and take process and that a first and only offer technique is not negotiating in good faith. Also, the attorney may tell the adjuster that the client would not be amenable to a first and only settlement offer and ask him to make an offer that gives him some room to move.
Some insurance carriers have a technique that is similar to the ridiculously low offer. Call it the “bounce back double lowball.” Assume the personal injury attorney makes a demand of $25,000 in a case he hopes to settle for approximately $15,000 or perhaps a little less. The first offer is $6,000. The attorney reduces the demand from $25,000 down to $19,000 hoping for a reasonable response. The carrier responds with a $500 increase to $6,500—hence the term “bounce back double lowball.”
In most cases, the way to deal with this tactic is to file suit. The message from the carrier is obvious that there are no intentions to settle the case at this time. The claims manager has already established a take-it-or-leave-it attitude and expects the attorney to either accept or litigate.
Another adjuster delaying tactic is to constantly request more documentation. A response is never offered on the demand, just requests for more documentation. If the personal injury attorney has already supplied medical bills, medical reports, lost wage information, and the carrier continues to ask for more detailed documentation, the attorney can demand an offer before sending additional materials or ask what the offer would be when the information is received. If the adjuster refuses, the attorney can respond that the information requested can be obtained during the discovery process after suit is filed.
The request for medical records for the five-year to ten-year period prior to claim
It has been a very common practice for most insurance carriers, especially the major conservative carriers, to request medical records for either the five or ten-year period prior to the claim. Needless to say, obtaining all of your medical records for the five or ten-year period prior to your claim is costly, time-consuming, and will obviously delay settlement.
There are several things that a personal injury attorney can do to deal with the five or ten-year medical record request.
One of the most used and abused tactics of insurance carriers is to take your statement before you are represented by an attorney and to write it up in a way that is extremely prejudicial to your case. The adjuster asks questions and then paraphrases the answers in the adjuster’s own words and handwriting. The injured person is then asked to review the entire statement, and if it is “essentially correct” the adjuster requests that the injured party sign the statement. There is usually language such as the following: “I have read the above statement, and it is true and correct to the best of my knowledge and belief.” The insurance company then uses the statement in settlement negotiations and later in negotiation against you.
Here is an example. A husband and wife were riding a tandem bike in a rural camping area. A pickup truck took a tight turn on a corner at an intersection and struck them, forcing them and their bike into a ditch. Both the wife and the husband received moderate to serious injuries with medical bills of several thousand dollars.
Within one week after the incident, an adjuster for the truck driver went to the couple’s home to obtain statements from each of them. They were still recovering from the incident and the insurance adjuster did not make it crystal clear which party she actually represented in the case. More importantly, the insurance adjuster did not inform the couple that the statements could be used against them later in the claim.
During his deposition, the husband stated that he was about two or three feet from the side of the road. The defense lawyer pulled out the signed statement and pointed to a sentence that read: “I am not exactly sure how far we were from the side of the road before the collision occurred.” The husband replied that he remembered telling the adjuster that he believed he was approximately two or three feet from the side of the road. When the adjuster asked if he was exactly sure, he replied that he was not exactly sure. The adjuster simply wrote down that the husband was not sure how close he was to the side of the road before the impact.
Despite the fact that the husband always had a reasonable explanation about the language in the statement, it was clear that the statement and the inconsistencies between it and the deposition testimony would be used at trial against the couple.
Here are some steps a personal injury attorney can follow to deal with prejudicial statements obtained by the insurance carrier.
In the past few years, the use of independent medical examinations (IME’s) has increased substantially, especially in soft tissue cases involving neck, back, or other injuries. IME’s are not really “independent” medical examinations. They are more properly called “defense” medical examinations or insurance exams because they are requested, used, and influenced by the defense or insurance carrier. Unfortunately, at trial both defense attorneys and judges routinely refer to these examinations as “ independent” medical evaluations, implying that they are objective, neutral, and unbiased when, in fact, they are exactly the opposite.
If your case goes to trial, your attorney may make a motion in limine requesting that the court and defense counsel be precluded from referring to the defense medical exam as “independent,” and be required to call them “defense medical examinations” or simply “medical examinations.”
1. Lower your demand to prevent the examination. The insurance carrier will usually request an independent medical examination before or during settlement negotiations, or after suit has been filed. Insurance carriers seldom request independent medical examinations early on in the case. A carrier will request a medical examination when there is any doubt in the carrier’s mind about the nature and extent of your injuries. The carrier will also request an independent medical examination if your attorney has submitted a demand that is far beyond their evaluation. If your attorney has issued a demand that is several times your actual goal, reducing the demand to a more reasonable figure may be a good idea to avoid an independent medical examination.
2. Select the independent medical doctor. This is the most crucial step in the independent medical examination process. If your attorney has not yet filed suit, your attorney has some control over the selection of the independent medical doctor and can negotiate the selection. Your attorney can ask the insurance carrier to provide several choices that your attorney can investigate. Most carriers will agree to give you several names. Your attorney may be familiar with doctors on the list and can choose the one with the best reputation for fairness. You attorney can also talk with other experienced personal injuries to find out their opinions of the doctors. Some physicians will try to be neutral and will provide fairly extensive exams.
If your attorney has already filed suit, your attorney will have very little say in the selection process, as most judges will let the defense attorney select the physician, especially if the physician has credentials such as board certification or teaching experience. Even if the doctor has a reputation as being a defense medical expert, judges will lean toward allowing the independent medical examination.
3. Prepare you for your independent medical examination. Many problems of independent medical examinations can be alleviated with good preparation. Here are some guidelines for how your personal injury attorney should prepare you for your examination.
4. After the examination. If suit is pending, your injury attorney may want to meet with you immediately after the examination to discuss what happened while your memory is still fresh. If no suit is pending, your attorney or office representative should call you soon after the exam to find out what notes you took.
When the report comes in, your attorney should review it carefully comparing the important parts with medical information contained in your other medical records and reports. Your attorney will want to show you the report to get your impression of its accuracy. And if the report is incorrect with respect to an important detail such as a date or other objective criteria, your attorney can send a letter to the doctor that clarifies or succinctly outlines the nature of the inaccuracy.
If the report contains information that is inconsistent with your doctor’s findings, your injury attorney can schedule a conference with your doctor to ascertain whether the doctor stands firm on his or her opinion with respect to important issues. If your doctor changes the opinion based upon the independent medical examination, your and your attorney may need to reevaluate your settlement position. Your attorney needs to understand the reasons why your physician either stands behind or refutes the findings of the independent medical doctor.
The last major technique that deserves mention is the unilateral reduction or complete withdrawal of the original offer from the adjuster. Assume a personal injury attorney has issued a demand of $25,000 in a case with a settlement ranue of between $10,000 and $15,000. The first offer from the adjuster is $6,000 and after the attorney reduces the demand, the carrier responds with a $5,000 offer, obviously less than the first offer or withdraws the offer of $6,000 completely.
The adjuster may give several reasons for the reduction including previous lack of authority, reevaluation of the case, or reassignment of an adjuster.
The technique of reducing or withdrawing the offer is intended to shock a personal injury attorney into begging for reinstatement of the offer with the indication of willingness to settle for something in the very low range. Dealing with such a technique can be very frustrating. In these cases, it is usually necessary for your attorney to file suit and request to speak with the claims supervisor or manager.