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Medical Bills and Insurance Claim Adjustment

How (TV) Insurance Companies Are Now Valuing Claims

There is an old saying among personal injury lawyers that where you get hurt is just as important as how you get hurt. In other words getting hurt in a car accident in New York City, all things being equal, will result a higher settlement offer compared to getting hurt in a car accident in Charlotte, NC. What is just as important today (more so than 20 years ago), is who is the insurance company of the at-fault driver. In other words, two accidents in Gastonia will result in two different offers, all things being equal, when you are dealing with different insurance companies.

Experienced personal injury attorneys have understood for years that different insurance companies value the exact same injury differently. We have handled hundreds of cases where there are multiple negligent parties wherein the liability carriers agree to pay an even share of the damages. Invariably, the same cadre of insurance companies always attempt to get out of paying full value for the case.

The typical rule of thumb is that TV insurance companies value cases significantly less than insurance companies that don’t advertise as much. The question I am asked more than others is, why? The simple answer is money. Many TV insurance companies have engaged in a race to the bottom. This has resulted in advertising as much as possible and writing as many low-end policies (minimum limit) as possible. Many of these small policies (which represent the majority of polices) also have a significant amount of churn, i.e. moving from one insurance company to another. Because of the policy holder’s willingness to switch for even the slightest decrease in rates, it forces insurance companies to advertise significantly more than they did even 20 years ago to remain relevant and viable.

The real cost of advertising is paid by the injured parties in a car accident. Insurance companies when they value claims do not simply look at the injury complained of or the medical documentation. They look at how the accident occurred, the property damage (if a car accident) where the accident occurred (State and County) among other elements. However, the carrier also values the claim within the vacuum of their own policies and procedures. In essence, the carriers cap the value of the claim regardless of all other factors. This is done again for only one reason, money. The less the carrier spends on claims the more profit they receive at the end of the year. Further, and just as import, with a ballooning advertising budget the only other place for the insurance carrier to control costs is claims.

In June of 2016 there was an ACE seminar attended by many TV insurance companies including Allstate, State Farm, etc. Reportedly, consultants reported that the insurance companies’ profits would be increased by not settling and litigating 67% of the cases they were settling. These consultants argued that only 14% of cases were justifiability settled. What this means is that insurance companies might, once again, lower their valuation of claims.

We have already seen this playing out in how insurance companies value claims with new laws like Rule 414. Briefly, in 2011, the General Assembly enacted Rule 414 and amendments to GS 8-58.1 to limit evidence of medical expenses to "the amounts actually paid to satisfy the bills" and "the amounts actually necessary to satisfy the bills that have been incurred but not yet satisfied." Since 2011 insurance companies have been moving the bar even further. Progressive (among others) has recently instituted a policy that they will only pay 200% above what Medicare would have paid to a medical provider. Of course, this is irrespective of whether the injured party had Medicare. This typically plays out as follows: Following a car accident the injured party presents to the ER. The bill from the ER may be $2,000.00. The injured party is the guarantor of the bill and owes the ER $2,000.00. The injured party presents the ER bill to Progressive, which is the insurance company of the at fault driver. Progressive, however, is now only paying 200% above what Medicare might have paid. This means that they would only pay approximately $800.00, with the remaining balance being the responsibility of the injured party. There have been multiple attempts to fight these kind of tactics outside of the courtroom. Please see our previous article personal injury Damages Revisited. However, as of the writing of this article, this is still the law of the land.

Our personally injury lawyers get calls on a daily basis with people who have tried to handle their own claims. Their experiences are similar to the example above. Many times the only answer to this issue is filing a lawsuit. For years we have been arguing that personal injury lawyers, especially ones that handle car accidents in North Carolina need to file more lawsuits. It is only by filing lawsuits and winning the cases that North Carolina lawyers can start changing the policies and practices of insurance companies. The failure of attorneys to file suit and win not only hurts the immediate client but also all other current and future clients since it only validates the practices of the insurance companies.

Therefore, when we first speak with clients, we remind them that their case could be heard by a jury. In fact, many times to get a chance at getting full value they may have to file suit. Therefore, they need to place the entire focus of the case on their medical treatment. There should be no discussion or concern about money, or lawsuits, or insurance, it should only be about the injury. Many clients have been influenced by the media advertisements of insurance companies and believe everyone is faking it or just trying to get rich following an accident. Many clients have told me just that when we first meet. However, now that they have been injured and have experienced poor treatment by insurance companies they understand just how dangerous this kind of thinking can be.

The deck has never been more stacked against individuals bringing claims in North Carolina. Navigating these issues requires a deep understanding of not only the issues and the law, but also the options available to the injured party. It is my sincere hope that 2017 will result in significant changes to the Tort laws of North Carolina. Otherwise, we will continue to fight with the deck stacked against us but undeterred.

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