Negotiating With Insurance Companies in High-Stakes Personal Injury Cases

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Personal injury cases are among the most common types of insurance claims. Insurance coverage allows injured people to recover damages without having to worry too much about whether the at-fault party has sufficiently “deep pockets.” Different kinds of insurance may apply to different cases, such as car insurance in auto accident cases. Much like how most criminal defense matters end with plea bargains, the vast majority of personal injury cases settle before going to trial. Many claims settle before a civil plaintiff has even had to file a lawsuit. Insurance companies may see the value of paying a settlement to avoid the expense and risk of a lawsuit and trial. Plaintiffs may recognize that a guaranteed payment now is better than the mere possibility of a bigger award at some point in the future. Personal injury lawyers are there to advise their clients of their options, advocate for their rights, and negotiate on their behalf.

Claims involving personal injury can range from relatively simple cases that primarily seek recovery of medical bills and lost wages, to matters involving severe injuries, complicated fact patterns, and unusual or untested legal issues. The bigger or more complicated the case, the more likely it is to be considered “high-stakes.” In high-stakes personal injury matters, zealous legal representation is critically important to ensure that the plaintiffs have every opportunity to have their claims heard and receive compensation for their injuries. An insurance settlement may still be a preferable outcome, especially when a lawsuit and trial would be quite costly. This article offers tips and tactics that attorneys may be able to use when negotiating with insurance companies in high-stakes claims.

What Is a “High-Stakes” Personal Injury Case?

“High stakes” is not a legal term, meaning it has no precise definition. People often think of a high-stakes case as one in which a substantial amount of damages is on the line. While this is certainly one example of a high-stakes case, it is far from the only one. Other types of personal injury cases that could be considered high-stakes might present any of the following:

  • Novel questions of law or fact;
  • Large numbers of plaintiffs;
  • Test cases that, if successful, would allow many more plaintiffs to join a class;
  • Particularly severe injuries, such as paralysis, amputation, or neurological damage;
  • Particularly vulnerable plaintiffs, such as children, elderly people, or people with disabilities;
  • Wrongful death claims; or
  • Alleged acts by defendants that go far beyond ordinary negligence, including gross negligence and intentional harm.

Personal injury cases involving toxic torts and product liability are often considered high-stakes. These cases often involve large numbers of claimants, either as a mass tort or a class action.

What Are Some Tactics for Negotiating in High-Stakes Personal Injury Cases?

Very few legal disputes ever go to trial. This is true for all parts of our judicial system, including both criminal defendants and civil plaintiffs. The U.S. Department of Justice has estimated that as much as 96% of all personal injury cases settle before reaching trial. This estimate might only include claims that make it all the way to a lawsuit. Many more claimants could settle before they have to file suit. Lawsuits and trials are risky and expensive, and the cost will come from an injured person’s settlement or award. A negotiated settlement is often the best way to ensure that a plaintiff gets the compensation they need and deserve.

Know How the Insurance Company Is Likely to Value the Claim

Settlement demands in personal injury cases often follow certain formulas based on a plaintiff’s economic damages and an estimate of their non-economic damages. Insurance companies have their own ways of valuing personal injury claims, and their methods rarely match those used by plaintiffs’ attorneys. Knowing what factors an insurance company will consider can help you know what to expect in an offer or counteroffer.

Plaintiffs’ settlement demands typically include the following:

  • Medical expenses arising from their injuries;
  • Future medical expenses that a plaintiff is likely to incur;
  • Lost income caused by their injuries;
  • Future lost income or lost earning potential;
  • Property damage resulting from the accident;
  • Compensation for non-economic damages like pain and suffering, mental anguish, or disfigurement; and
  • Compensation for temporary or permanent disability, if applicable.

Calculating economic damages can be as simple as adding up all of the out-of-pocket expenses and lost income related to an accident and injury. It might also involve estimating future expenses and lost earnings.

Non-economic damages are much more subjective since they seek to compensate a plaintiff for the impact of their injuries on their quality of life. The amount a plaintiff might demand in non-economic damages will depend on factors unique to them. Two standard methods that personal injury attorneys use are:

  • Daily rate: The plaintiff and their attorney determine how much it is costing the plaintiff to live with their injuries on a daily basis. The demand might consist of this rate multiplied by the total number of days the injury has affected them and is likely to continue affecting them. In many cases, this might be the sum of the number of days since the injury and the number of days remaining in the plaintiff’s average life expectancy.
  • Multiplier: A simpler, if less precise method involves multiplying a plaintiff’s total economic damages by anywhere from one-and-a-half to five, or possibly more. If a plaintiff has economic damages of $100,000, for example, their demand for noneconomic damages could be an additional $150,000 to $500,000.

Insurance companies have their own ways of valuing personal injury claims. They tend to be much less flexible, basing settlement offers on specific facts and circumstances. Insurance policies often cover medical expenses, lost wages, property damage, future lost income and medical expenses, and limited noneconomic damages. They often base noneconomic damages on a limited version of the “multiplier” method described above. After determining which medical bills they are willing to cover, an insurance adjuster multiplies that total by a factor that depends on the severity of the plaintiff’s injuries:

  • 1.5 to 3 times for relatively minor injuries;
  • 3 to 4 times for moderate injuries; or
  • 5 times, or more, for injuries that are severe or permanent.

Note that this formula omits all economic damages other than current medical bulls. It does not include lost wages or future damages.

Each insurance company might have its own approach to settlement offers. Individual adjusters could have authority to settle claims, or they might need approval from someone higher up for larger settlements, The more you can learn about how a particular insurance company values personal injury claims and handles settlement negotiations, the better position you will have.

Document Everything as if You Were Going to Trial

When going to trial, you need to present evidence to a judge or jury that supports every element of your claims, and you need to do so in as straightforward a manner as possible. Applying the same standard to insurance company negotiations gives you a better chance of a larger settlement.

You need documentation of every factual claim that you are making. For economic damages, this includes:

  • Medical bills, including hospitals, doctor’s offices, specialists, and pharmacies;
  • Bills for related services like physical therapists;
  • Documents showing the amount of work that a plaintiff has missed;
  • Pay stubs or other records showing how much they would have earned in that time;
  • A timeline for recovery, along with estimates of ongoing medical costs and future lost wages; and
  • Estimates of repairs to an automobile and the impact on its value.

Proving noneconomic damages requires evidence of how injuries have affected someone’s quality of life. This might involve documents, photographs, or other materials showing their level of activity before their injuries, followed by evidence that they are no longer able to engage in those activities.

Appeal to the Insurance Company’s Business Sense

The main purpose of providing an insurance company with extensive documentation of a plaintiff’s injuries, economic damages, and noneconomic damages is to convince them that settling the case now would be in their and the insured’s best interest, financial and otherwise. Insurance companies and defendants might also have other reasons to consider settling.

Insurance companies typically settle because:

  • They believe that settling will cost less than litigation; or
  • They believe that the plaintiff has a good chance of prevailing at trial.

Another consideration that could lead an insurance company to settle for an amount that you and your client find acceptable might, for example, involve a preference that your client’s claim does not receive attention in the media. In that situation, it could be possible to get them to agree to your settlement demand in exchange for a non-disclosure agreement. Keeping an eye open for considerations beyond the cost of litigation can help you in negotiations.

Another example of this, which involves convincing an insurer that they have “bigger fish to fry” somewhere else, comes from the early days of the COVID-19 pandemic. As public health orders across the country caused businesses to close their doors, business interruption insurance claims spiked. Litigation alleging bad-faith denials of business interruption claims followed soon after. Many insurance companies realized that they would need to devote considerable resources to defending themselves against these claims, which would leave fewer resources to fight other claims.

According to some plaintiffs’ personal injury attorneys, this led to a rather abrupt shift in tone from those insurance companies. They were suddenly willing, if not outright eager, to settle high-stakes personal injury claims in order to free up resources to fight business interruption claims.

This example may not translate well to other scenarios, since it relies on the unique chaos of the beginning of the pandemic. Still, insurance companies are businesses, and they pay claims when it makes the most business sense.

Access Resources for Professional Education

Clients in personal injury cases are often in dire need of legal assistance. They may need financial compensation for their injuries in order to access medical care and make their lives whole. The National Trial Lawyers offers legal education programs that help plaintiffs’ attorneys improve their knowledge and develop their skills in order to be more effective advocates. Please visit our website or contact us today to learn more about the benefits offered by National Trial Lawyers.

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