With the retirement of JusticeJohn Paul Stevens and the Senate battle over Elena Kagan taking atop place in the news this summer, I'm taking a look back at theSupreme Court and the implications for those of us in the claimindustry.

My first encounter with Constitutional law was during myundergraduate years when I commuted my way through college, workingfull-time and carrying a full course load. This is a plan thatmight get a person through four undergraduate years in four years,but probably not into Phi Beta Kappa. Political science had uniqueattraction and, as a journalism major working the afternoon-eveningshift at the Wall Street Journal, I was able to follownational and international politics right off the newswires.

My earlier full-time job had been with a title insurer,abstracting title records at the county court house, a young idiotjust out of high school rubbing shoulders with attorneys and localpoliticians running the county political machine. The attorneys,including my boss, used to bum money from me. I decided right thenthat being a lawyer was not the profession for me.

During the 1960 election I waved flags when Eisenhower, Kennedy,and Nixon came to town and saw them up close and in person. It wasthe post-Joe McCarthy era, but the John Birch Society was in fullbloom, and the civil rights battles had just started. Having grownup in Cleveland's integrated schools, working and eating lunchside-by-side with Blacks and Hispanics, it took a while forprejudice and segregation to sink into my head. In theConstitutional law course between my junior and senior year, we hada young Bircher in the class. He argued every issue with theprofessor. Still, the words liberal andconservative were rare. The issues were centralized(Washington) versus localized governmental control, with variousmodifications.

Eisenhower had appointed California Governor Earl Warren asChief Justice, an appointment he later termed his “biggestdisappointment.” In 1979, Bob Woodward, of Watergate fame,published a book detailing the background of the then-currentWarren Berger Court, called The Brethren: Inside the SupremeCourt. I was hooked and became a Court buff. At that time,there were no women on the court, although President Johnson hadappointed Thurgood Marshall in 1967, breaking the history of theCourt consisting only of nine grumpy White Anglo-Saxon Protestants(WASPs).

In the 1920s, one such Justice was so prejudiced that he refusedto have his picture taken while sitting next to Justice Louis D.Brandeis, a Wilson appointee, who was Jewish. Brandeis (for whomBrandeis University is named) and Oliver Wendell Holmes were the“liberal wing” of their day, voting for human or civil rights overproperty rights. It was a collection of stubborn old Justices thatFranklin D. Roosevelt encountered when he became President, and allof his early Depression-fighting programs were ruledunconstitutional. He remedied the matter by loading the Court withhis own Justices, including Felix Frankfurter and Hugo Black.

Proud to Be a Luddite

In a pros-and-cons print debate a number of years ago withformer co-columnist Kevin Quinley, with whom I shared a podium withat a Florida claims conference in June, I assumed the position ofLuddite. I cited the Amish, who maintain that technology is likecandy: the more you get, the more you want. While everyone else isrushing off to get the latest, I save my money until the best isperfected. These words are written on a computer, with facts andnames verified by Google, and submitted via e-mail. Let's considerthe frenzy over the recent release of the iPad. Doesn't everyonewant the latest gizmo? Well, not I.

When it comes to most technology, I'm with old Ned Ludd. In 1779Ned, a fine half-witted Englishman, took an ax to the steam-poweredwoolen looms or knitting frames in his Leicestershire textilefactory, protesting that the enslaving Industrial Age had broughtabout a loss of the cottage industries of the past, creatingunemployment and reduced earnings for workers.

The new machinery led to the world Dickens described in hisnovels. It occurred in America, too, and any attempts at organizinglabor that led to court cases usually ended up before those nineold guys on the Supreme Court, with the factory owners claimingeasy victory over the demands of depressed and overworked, mostlyimmigrant factory employees. Consider all of the labor strikes ofAmerican history: the Chicago Haymarket Riots, the Pullman Strike,the Homestead Strike against Carnegie, and similar labor protests.We forget too often that in the 1920s and 1930s, the CommunistParty movement almost brought to America what it had brought toRussia in 1917.

Power Is in the Middle

Time and again in its key decisions, the Supreme Court has shownthat the most powerful position is that of the middle. The mostliberal or the most conservative votes are balanced by the centristvotes. Currently the Court leans to the right of center. Unless twoor three of the conservatives also retire in the next few years, itis likely that the balance will remain lopsided. John Paul Stevenswas appointed by President Gerald Ford, who thought he wasappointing a conservative. However, time does swing that pendulum,and time put Stevens on the left. As the ranking senior Justice, hewas able to influence some of the votes.

Such is the case with claims. Those who buy into the idea thattechnology can do it all — “the scalpel performed the surgery” —forget that even in robotic surgery there is a human being, namelya well-educated surgeon standing behind that Ozian curtain, pullingthe levers and strings. For example, in the March 22, 2010, issueof National Underwriter, Tom McCarthy and Randall Smith,executives with Decision Analytics, stated, “By deployingtechnologies such as consensus modeling and knowledge basecreation, insurers will gain more control over the process andachieve a higher level of consistency in managing claimssuccessfully.”

The alternative they suggested was “starting from scratch with anew generation of novice adjusters…” What they seem to be saying isthat technology can replace the adjuster. I don't think so.

Technology is a great tool, but those on that side of thependulum who think that technology has replaced the old-fashionedhard work of getting out in the street and gathering the factsshould look at the results: $30 billion a year lost to the P&Cindustry because of fraud, according to the Insurance InformationInstitute. For those old enough to remember the adjusting practicesof the 1960s and 1970s, when both company and independent adjusterswere on the street digging into the facts of a loss, the pendulumwent too far. Maybe we need to find some middle ground wheretechnology is correctly viewed as a tool, just as the telephone andthe typewriter were when they replaced carrier pigeons and quillpens, tools that assisted the adjuster in investigation, not toolsthat tried to leave the adjuster unemployed while some othercomputer tried to do the job.

Folks, we're talking about jobs here. According toBest's Review, between February 2009 and February 2010,the number of claim adjusters decreased 15 percent, and theiraverage weekly pay dropped more than one percent. The number ofthird-party claim administrators also dropped by 6.3 percent, theirpay by 2.3 percent. If you are interested in your job, then payattention. Remember that scene from Billy Wilder's 1944 movie,Double Indemnity, in which claim manager Edward G.Robinson lectured the young claim adjuster, Fred MacMurray.

“A desk job? Is that all you can see in it?” Robinson askedMacMurray. “Just a hard chair to park your pants on from nine tofive? Just a pile of papers to shuffle around and sharp pencils anda scratch pad to make figures on, with maybe a little doodling onthe side? That's not the way I see it!”

The Court and Claims

Most claims in the P&C industry do not reach the SupremeCourt. Those that have were significant. State Farm v.Campbell (538 U.S. 408 [2003]) was an attempt to rein inhorrendous punitive damage awards by suggesting limits or formulas.But the states in effect told the Supreme Court to mind its ownbusiness, and went ahead approving monster awards anyway. TheKumho Tire and Daubert v. Merrell DowPharmaceuticals (113 S.Ct. 2786 [1993]), in which the Courtlimited the use of pseudo-scientific expert testimony in tortclaims, also comes to mind. Insurers can no longer rely on quacktheories to bail their insureds out of pickles.

As of March 31, another case, Shady Grove Orthodedic Assoc.v. Allstate, touched our industry. In the majority opinionwritten by Justice Stevens, the Court found that federal law maypermit class-actions even where state laws may not. A surprisingdissent, written by Justice Ginsburg and joined by JusticeScalia—the two opposite far edges of that pendulum'sswing—suggested that federal rules should reflect a sensitivity tostate interests.

None of us, in handling a claim, have any way of knowing whichof our files may end in litigation, perhaps eventually reaching theSupreme Court. Any of us who have been around long enough haveundoubtedly had some lower court decision for or against usappealed to a higher court. We may have won, or we may have lost.But the one thing we cannot predict—either at trial court level orat the Supreme Court level—is how the jury or the judges will rule.We have arguably better odds playing the tables in Las Vegas.

As adjusters, the issues we face each day fall into neatcategories for dispute. It may be coverage: Does the coverage applyto the loss? Or it may be liability: To what extent did the insuredcontribute to the loss? What about damages? Which damages arecovered, which are subject to depreciation, and which are indirector excluded?

Each of these issues produces hundreds of court decisions amonth across the nation. An issue of Thomson Reuters West'sInsurance Litigation Reporter hardly ever contains lessthan 15 state or federal appellate or state Supreme Courtdecisions. Virtually every one of those cases began with theassignment of a claim file to an adjuster.

Losses vs. Claims

If all an adjuster sees is a stack of papers and a nine-to-fivejob that produces a paycheck on a regular basis, then he is in thewrong chair. Claim adjusting should be a profession. It is not,because it lacks the basic requirements of what makes a profession,such as a graduate degree, strict rules of membership to theprofession after a stiff battery of tests, ethical altruisticbehavior, and other factors. The fact that one takes an exam andgets a license does not make the licensee a professional. Dogs andbicycles get licensed, too, and passing a driver's test doesn'tmake one a professional driver.

What makes adjusting a professional vocation, however, is theability to see beyond the claim, which is simply a demand forpayment under a contract or at law, to the concept of loss, aprocess that begins with the building of hazards, creates an event,and continues to cause damage until controlled.

Professional adjusters are not in the claim business. Rather,they are in the loss business, ferreting out the causes of a loss;seeing what is covered or excluded; and finding ways to quicklyresolve the loss and bring it to a conclusion — all while providinginformation that may help prevent future similar losses.

Nine wise guys (and gals) sitting in Washington can tell us theyare trying to understand the Constitution and make their decisionsaccordingly. However, the “strict constructionist” who seeks tomake decisions based on what he believes the so-called FoundingFathers would have thought may be as far off base as the wild-eyedmodern who wants to create legislation by court decision.

When the Supreme Court tackles issues such as tort reform, whatis meant by “comparative negligence,” or what the rights ofinsurers are as opposed to the rights of the insureds, adjustersneed to pay attention. Those decisions affect what we do. So webetter start shoving on that pendulum.