If you are a car accident lawyer in Maryland, Progressive Insurance claims present challenges we do not have with other insurers. To get a fair offer, you almost always have to file a lawsuit that we should never have had had to file.
Our plaintiffs’ personal injury lawyers frequently receive calls from defendants who have been involved in auto accidents who do not understand why they are being sued by an insurance company because of an auto accident they had that was not their fault.
Most people involved in an auto accident in Maryland do not realize that if they do not have auto insurance and the accident is their fault, the other party’s insurance company can sue them for the money it paid out in property damage. Many of these callers are surprised when, years later, they receive suit papers for an auto or truck accident in which no one sustained a personal injury, yet they are being sued for thousands of dollars, either for property damage or for medical bills paid by an insurance company. The insurance company is exercising its right to subrogation, which literally means the insurance company is substituting itself for the actual party involved in the auto accident and collecting the money for the damage done to that individual’s property (for which they have already paid under their insurance contract with that person).
How is this possible? The insurance company is exercising its right to subrogation, which literally means the insurance company is substituting itself for the actual party involved in the auto accident and collecting the money for the damage done to that individual’s property (for which they have already paid under their insurance contract with that person).
The Fourth Circuit decided a case that addresses an interesting insurance law question; while also touching on another issue that vexes medical malpractice lawyers in Maryland. The 4th Circuit overruled a great judge, Federal Magistrate Jillyn K. Schulze, who awarded summary judgment against a suspended surgeon for making a disability claim.
While cursed with a boring name, Certain Underwriters at Lloyd’s, London v. Cohen, is a case that has some interesting facts. The Plaintiffs are underwriters at Lloyd’s of London. The defendant was a general surgeon in Bethesda, who was suspended for three months from practicing medicine in Maryland, because he violated the standard of care, kept inadequate medical records and grossly over-utilized health care services. I’m not sure of all the details, but they are strong allegations against a surgeon. Anyway, the insurers wanted to rescind a disability policy, because the doctor made material misrepresentations on a disability policy, which he later sought benefits.
I have taught insurance law for the last 17 years at the University of Baltimore Law School. I think it is important to explain both the hornbook majority view and Maryland law. Typically, what I’m saying is that the majority view is this balanced, reasonable law… and then there is Maryland law which seems to bend over backward to favor insurance companies.
There is a political element to this. Maryland insurance law is stunningly conservative. Paul Ryan himself probably vigorously approves. Yet Maryland is an extremely liberal state. Sure, we went through that crazy college experimentation-like phase with Bob Ehrlich but we have consistently picked liberal governors and have consistently had a solid liberal majority in the Maryland General Assembly. So why are we the Rush Limbaugh of insurance?
It’s been a bit since I’ve written about how awful insurance companies’ first settlement offers are in serious injury cases. But I’m sure I’ve given a client the speech in the last 24 hours. I do it all the time.
The primary reason the first offer is usually far from the true settlement value is that the insurance company is giving a gut check to the plaintiff. They are implicitly asking them whether they will throw some punches to get the money they are entitled to get. Plaintiffs’ lawyers complain about this as if it is some holy war between good and evil as if insurance companies have some moral obligation to offer the trial value to settle. I hate insurance companies and all. But I have to admit that if I were them, I would do the same thing. Their job is to make a profit for their shareholders, not offer third-party plaintiffs what the insurance company really thinks the claims are worth. The game is the game.
But there is another reason the first settlement offer is wildly out of line with the true value of the case: most insurance adjusters are lazy (as are most plaintiffs’ lawyers). To get to the actual value of a case, peel that onion again and again. So they take just a cursory look at the case, knowing that even if the settlement offer is rejected, they have multiple more bites of the apple down the road. So think about it, what would you do if you were an adjuster in that environment? Dig deep and risk that someone auditing your cases will say you overpaid for it? Or just put it off a little while? With GEICO and a lot of other insurance companies, you are not even kicking that can to yourself, another adjuster will get the file after suit has been filed.
Among the major insurance companies, State Farm and Allstate are the two that will often stick their feet into concrete on what they think the case’s value is. They stick to their early values more than the others, probably because they rely on computer-generated data to value claims more than many others. Why is this? Ever read or hear about the Checklist Manifesto? That book is that ER doctors looking at cardiac patients are better off using a checklist to evaluate the risk of a heart attack or stroke, then they are using their own independent judgment. Sounds crazy. But some data seems to bear out that you would be better off with a nurse with a checklist than an experienced board-certified cardiologist in a lot of cases.
I like to brag on this blog and our website about the times Allstate and State Farm – particularly State Farm because it happens a lot – get it wrong, and we hit in excess of their insured’s policy limits. There is an implicit, “they are so dumb, we are so smart” aroma to the whole thing, I’ll admit. “We got 35 times the settlement offer,” I like to brag. And I will not stop, either. But that does not mean in the big global picture it is not a smart strategy. Continue reading
An adjuster with Selective Insurance called this week to ask to meet at my office to discuss the settlement of a personal injury car accident case. She said that Selective is looking to meet with counsel as much as possible to discuss these claims.
Selective is a regionally based insurance company that does business in 22 states and is around 46th in market share in Maryland. I’m surprised they would want to dedicate the resources to a face-to-face meeting, but I appreciate the sentiment. I mean, they will probably offer half of what the case is worth, but I bet they are a lot nicer about it in person.
State Farm used to invite us to its yearly Settlement Day where we would traipse down to their offices in Owings Mills for some food and drink for the same awful offers they would have given me on the phone. For reasons that escape me not in the slightest , they have stopped inviting me. Actually, I don’t think they do it anymore, but I prefer the more conspiratorial version.
I just hung up with an Allstate adjuster. At-fault carrier (Safeco) put up 50,000 so we turn to the UM carrier for the additional $50,000. She offers $2,500 on top of the $50,000. She said something to the effect of, “There is only $50,000 left so what incentive do we have to offer that anyway?” When I reminded her of the fact that she just committed an offense that the Maryland Insurance Commission would fine Allstate for, she quickly backed down.
I’ve defended Allstate in the past, arguing that they are comparatively not as bad as everyone says. I’ve made flowery, loving statements like, “in spite of Allstate’s reputation, our Maryland accident lawyers [geez, that’s a painful use of keywords to pander to Google, I have to fix that] do not see Allstate as the most difficult car insurance company to deal with in Maryland.” I even said once that I thought GEICO was worse.
I take all of that back.
Realizing I was getting nowhere, I said, “Look, there is not a lot of money at stake, why don’t we just agree to arbitration.” She categorically dismissed the idea. Why? The Oliver Stone in me thinks it is because they want the client to spend money on experts and preparing the case, in part to induce settlement, but in part out of spite. Keep in mind, this is their own policyholder.
As I mentioned last week, I’m pretty excited about our law firm’s win in Buckley v. Brethren Mutual. I think this is an important case for two reasons. First, it shows that the Maryland Court of Special Appeals respects the actual intent of Maryland’s statutory scheme for uninsured motorist claims.
But this case also tells us something about Brethern Insurance Company. You don’t see them a ton in Maryland accident cases. And I’ve actually always liked the company. They have been easy to deal with in the past. But what we learned from this case is that Brethern will not stand by their own insureds. Because Brethern played an awful trick on its own insured in this case, a trick that GEICO, Allstate, State Farm, etc. never would have pulled. You understand the gravity of this, right? They are worse than those guys. If you have to take a brief walk around the block to let marinate the magnitude of this, feel free. Continue reading
Sometimes it is easy to miss the federal court opinions that involve car crash cases because you just do not expect to see them there. Probably 1% of the car accident cases that we handle end up in federal court – although probably 20% of our truck accident cases get removed to federal court.
Anyway, you are paying me for a reason; I just found an interesting bad faith claim decided last week – Hughes v. Progressive – involving our friends at Progressive. It is an interesting case with a bad outcome that may very well show up on my students’ Insurance Law exam in December.
The plaintiff is broadsided by another car, driven by the defendant (insured by Progressive Insurance and later ends up being plaintiff’s use plaintiff). Plaintiff sues the defendant in state court in Baltimore City. Plaintiff also sues GEICO for uninsured – really underinsured – motorist coverage benefits. The defendant had a $100,000 per accident policy with Progressive which, sadly, is the Cadillac of Progressive’s policies.
Progressive does exactly what I always complain that Progressive does: they jerk you around, refusing to settle by offering its policy limits, and then finally tendering the limits after talking tough for a year. It must be in their adjuster’s manual.
Progressive sent out a pay-to-play letter (learn more here) to GEICO, who did not respond within 60 days after receipt of notice as required by Maryland insurance law (§ 19-511) if it wishes to retain its subrogation rights. But, somehow, GEICO later claimed it had responded by email. The Baltimore City trial court found that the email amounted to proper notice as a matter of law under §19-511.
The plaintiff tried the case and got a $725,000 verdict against GEICO and the defendant. GEICO had $500,000 in coverage. So, the defendant owed the balance to the plaintiff. So the plaintiff and defendant hug it out and join forces. Plaintiff, as defendant’s assignee or use plaintiff, filed a bad faith complaint against Progressive in Baltimore City Circuit Court. Specifically, the plaintiff alleged that Progressive fought for the defendant in this case “with the vigor and energy of a 10th grader in study hall detention.” Continue reading
I wrote a blog post last month with the antagonizing title “Insurance Adjusters Say the Silliest Things,” discussing an article written by one insurance claims adjuster that fell into the worst stereotypes of adjusters. The post was recently picked up by an insurance claims journal (which I have since cannot find) which I thought led to a few interesting comments from other plaintiffs’ lawyers and a few insurance adjusters. One, inexplicably, contends that insurance claims adjusters are people too.