NU Online News Service, June 5, 12:56 p.m.EST

Adjusters using computerized-claims systems to evaluate claimspayouts can manipulate the systems to substantially lower injuryclaim payments, according to a report by the Consumer Federation ofAmerica.

In the report titled “Low Ball: An Insider's Look at HowInsurers Can Manipulate Computerized Systems to Broadly UnderpayInjury Claims,” CFA Claims Project Director Mark Romanospecifically calls out the Colossus claims system, sold by ComputerSciences Corporation (CSC).

Though the product is marketed to achieve consistency in claimshandling, Romano says adjusters can manipulate claims payoutsdirectly by tampering with Colossus' tuning system. Tuning theprogram allows the software to render a desired payment amount toparticular types of injuries.

Romano says adjusters can reduce the tuning across the board bylowering a predetermined percentage amount, selectively removing orexcluding higher-cost claims from the tuning sample, and loweringthe average number of claims payments through a process called“dragging the trauma severity line” to keep payments calculated bythe system down.

Adjusters can also indirectly manipulate Colossus through dataentry, Romano says. He provides an example where insurancecompanies require adjusters with no medical credentials to “secondguess” medical professionals and select a less-expensive injurycode to input into the software.

In instances where a claimant needs further medical treatment,adjusters can select a “final prognosis” code, resulting in a lowerpayout that does not cover the additional care.

The report also cites excerpts from court records in Hensleyv. Computer Sciences Corporation in which CSC executives admitto the claims made in the CFA report, Romano contends.

“CSC told insurers that they could produce huge reductions inclaims payouts in their sales pitches, which insurers achieved inmany cases,” says Robert Hunter, director of insurance at CFA, in apress conference. “CSC promised savings in many documents, but theuse of the word 'savings' became controversial.”

According to Hunter, court documents “reveal that CSC decided tosubstitute the word 'consistency' for 'savings' out of concern forlitigation.”

A call to CSC was not immediately returned.

According to Robert Detlefsen, vice president of public policywith the National Association of Mutual Insurance Companies(NAMIC), the report places a great deal of emphasis on thesemantics of the words “savings” and “consistency” withoutexamining the many meanings of the words.

“One could interpret 'savings' in this context as the amount aninsurer would save by virtue of not over-paying claims—there is alot of evidence that overpayment does in fact take place in thiscountry,” says Detlefsen. “The assumption that's made [in thereport] is that savings are made by under-paying.”

Detlefsen went on to say the report is “fatally flawed” for notacknowledging a legitimate purpose for Colossus to provide insurerswith savings.