Like medicine, law is more of an art than a science. Plaintiffs and lawyers who seek a mathematical formula for valuation of cases will be disappointed.
Insurers and their representatives — including claims adjusters, investigators, and attorneys — gather facts and evidence necessary to assess the value of a case. A diligent assessment includes obtaining copies of police and other investigative reports, identifying and interviewing witnesses, and obtaining pertinent evidence including photographs, video recordings, witness statements, EMS records, and hospital records. Insurers also consider details such as the qualifications of the plaintiff’s lawyer, the background of the judge, and the venue where the lawsuit is filed.
Insurers thoroughly review the facts of a plaintiff’s case. Insurers want to know background information on a plaintiff such as the name, age, employment history, prior lawsuits or claims filed, and medical history. Insurers will seek the deposition of a plaintiff and will evaluate the plaintiff’s demeanor, credibility, and presentation. Insurers will scrutinize any inconsistent statements made by the plaintiff and make a conclusion regarding whether the plaintiff is believable and likable. Insurers will gather information on the defendant’s case, and analyze the strengths and weaknesses. If there are any co-defendants, insurers will analyze each co-defendant’s case, witnesses, and possible counter claims. Insurers analyze the expected effectiveness of each witness for the plaintiff and that of each witness for the defense.
Insurers carefully examine liability issues. They determine whether there are liability issues that have been or are likely to be decided against their insured. Insurers will evaluate whether there are undisputed facts or questions of law that can be argued by way of a dispositive motion that will result in the dismissal of the plaintiff’s case without a trial. They will seek information regarding any expert witness testimony on behalf of the plaintiff. And they will consider the defense need for expert witnesses. Insurers hire experts to review the evidence and provide an analysis of technical and contested issues. Insurers seek to understand what the expert witness testimony will be of the plaintiff and the defense, and what the counter-arguments will be for any expert testimony provided.
Insurers consider damage issues including joint and several liability, comparative fault, pre-judgment interest considerations, statutory damages, and possible assessment for payment of the plaintiff’s attorney’s fees and costs. Insurers request details regarding plaintiff’s proof of damages. Medical bills should be itemized. Medical reports should clearly summarize the facts, the treatment received, the need for future treatment, and the future prognosis of the patient. A plaintiff who claims serious medical injuries but whose consultations and treatment by medical professionals consists of only a few visits to a chiropractor and no visits with a medical doctor or physical therapist may be suspect. Plaintiffs alleging damages for pain and suffering should have objective manifestations of the pain and suffering reflected in the medical records.
Past medical history of a plaintiff may reveal that a plaintiff’s claimed injury is pre-existing, and the question arises whether an incident exacerbated a pre-existing injury. A plaintiff who alleges lost income must present provable evidence such as earnings history, a wage statement, and proof from an employer regarding wage rate and days off due to plaintiff’s injury. Sometimes insurers retain an investigator to conduct a secret surveillance of the plaintiff. Undercover surveillance may uncover discrepancies or untruths in a plaintiff’s story.
After reviewing the pertinent facts, applicable law, and potential for liability, insurers consider options for resolution. Insurers seek information regarding prior settlement negotiations, including any settlement offers or demands that have been made. Insurers inquire whether a case is amenable to resolution by settlement or whether a trial is necessary. Insurers look at alternative dispute resolution options such as mediation or arbitration. The choice of a mediator and/or arbitrator and the cost will be evaluated.
Insurers assess the odds of a defense verdict or directed verdict, and analyze the probable range of damages in the event of a plaintiff’s verdict. Insurers consider the estimated length of the trial and attempt to determine what the costs will be to proceed to trial.
In addition to the facts and legal issues of the underlying case, insurers explore coverage issues such as their insured’s policy limits, subrogation, reservation of rights, and potential conflicts.
Some lawyers believe that the value of a case is determined by calculating special damages, including medical bills and lost income, and then applying a multiplier to determine pain and suffering damages. This valuation theory is too simplistic. Often insurers will not even offer the amount of medical bills to settle a case. On other occasions cases settle for much more than three times the value of special damages.
Insurers have too much to lose by way of runaway jury verdicts or a possible bad faith lawsuit from their insured to treat a case in cookie cutter fashion. Each case turns on its own facts. Plaintiffs should expect that insurers have engaged in due diligence and value cases based on careful research and analysis.