Vince Lombardi once said, “If winning isn't everything, then why do they keep score?” This is some sage advice in a day and age when mediocrity is far too frequently accepted as the norm. When it comes to claims, we need to ask ourselves whether we want to win or settle for mediocrity.

But what truly defines a win when negotiating a claim settlement? One could argue that it is accurate outcomes. We win our negotiations by paying exactly what we owe; no more and no less. Beyond the ultimate outcome, are also the investigative steps taken to be in a position to effectively negotiate this outcome.

In negotiations we often talk about win/win situations. This is where everyone comes away feeling like a winner. But there are also win/lose situations where one party wins and the other loses and lose/lose, where both parties come away with a bad result.

When it comes to insurance, the perception is often that the insurer wins and the claimant loses. This is driven in large part by unrealistic expectations about what is owed. If a claimant feels that a car is worth $15,000 dollars but the realistic replacement cost for a like kind and quality vehicle is $13,000, then the latter is what the claim is worth. To create a win/win situation, it is incumbent upon the adjuster to empathize with the claimant, while also providing factual evidence to support his/her own position.

Perhaps this is easier said than done, especially among those who don't spend time in the field negotiating face to face with body shops, injured parties and plaintiff attorneys. Negotiation is a skill that is developed over time and must be continually honed to maximize ability. To support the strategy there must be a framework to make the negotiation effective.

Beginning with liability, adjusters need to give consideration to all aspects of duties owed, duties breached and the degree thereof. Far too often claims are settled at 100%. After all, it is much easier to pay 100% than to effectively negotiate a comparative result. But is that the right thing to do as a fiduciary?

The reality is that most claims are not full liability situations, yet across the industry only 3% of claims are assessed with comparative negligence. When compared to juries, who routinely assess shared liability in more than half of cases adjudicated, a great opportunity for improvement becomes evident.

One of the challenges facing claims organizations is the push to increase productivity expectations while streamlining staffing. Doing more with less certainly accomplishes some goals, but it can have a detrimental impact on the quality of claims being processed, if appropriate processes are not put in place to improve for organizational efficiency.

Another challenge is the intervention of an attorney on behalf of the plaintiff. In far too many situations, claimants are paid 100% in an attempt to control the claim, only to see the claimant retain an attorney. BI adjusters sometimes feel hamstrung by the decision of the front line liability adjuster without fully realizing that they aren't bound by it. These situations provide a great opportunity to coach adjusters on the importance of accurately assessing liability and educating the customer at the outset of the claim.

In many situations where an attorney becomes involved, there is indeed an element of comparative negligence. Even in seemingly clear liability situations, such as rear-end accidents or parked vehicles, there can be a subset of claims where some negligence, albeit minimal, can be imputed on the other party. Leaving no stone unturned is what separates the extraordinary adjuster from the ordinary.

Some claims organizations have found success with decision support tools, such as ClaimIQ, that assist the adjuster in identifying duties owed and assessing a degree of breach, all the while laying out strengths and weakness of the claim, yet fully empowering the adjuster to make their own decisions based upon organizational best practices.

Medical form

Moving beyond liability, negotiations will focus on special and general damages. Just because the treating doctor says the treatment rendered was reasonable, doesn't make it so. It is estimated that as much as 30% of auto related medical bills may contain some level of fraud or deception. Let's consider two very basic situations: upcoding and unbundling.

Upcoding involves trying to bill a higher level of service than was rendered. Consider an initial office visit billed at $500 for CPT code 99205, which is a “high-level office visit for a new patient” requiring three key components:

A comprehensive history
A comprehensive examination
Medical decision making of high complexity

Most certainly $500 dollars for this type visit isn't unreasonable. In fact, it is well within the norm across the United States when there is a serious medical condition. However, when looking at the requirements to bill this CPT code, questions should arise.

Was this a serious medical condition?
Were there potential complications?
Was there threat of mortality?
Did the doctor spend 60 minutes face-to-face with patient?

If the answers are no, then this CPT code is not proper. While this code may be accurate for a patient needing triple bypass surgery, it is not reasonable for a fender bender resulting in subjective complaints of neck and back pain. In order to maximize billings, some providers will upcode bills, hoping to slip them by very busy adjusters. Without medical bill review tools, such as Decision Point or Smart Advisor, many of these bills do just that.

Other providers will unbundle bills, charging for individual services that should have been included together, such as the following example involving a lumbar MRI:

A bill is provided with CPT code 72148 (Lumbar MRI with contrast) for $2400 and CPT code 72149 (Lumbar MRI without contrast) for $2600. The total billed by the radiologist is $5000.

By having an effective medical bill review process in place, the adjuster would quickly learn that 72158 is the proper CPT code for a lumbar MRI with and without contrast and that the reasonable cost was substantially less than the unbundled amount.

It is no secret that bills can be manipulated with the full expectation that they will be challenged by savvy negotiators, but certainly not by all negotiators. The challenge to the industry is the latter, as many bills are simply accepted. The plaintiff attorney certainly isn't accepting them though. Rather, once they have settled the BI with the insurer, the savvy attorney is turning around and haggling with the provider, creating a higher margin on the settlement than if the claim had been effectively and accurately negotiated by the insurer. By effectively arguing bills, adjusters are merely paying what is owed to all parties involved in the claim.

Moving beyond specials, consider generals. One of the biggest challenges in BI negotiations is the focal point being a single number. This allows plaintiffs to gain a strategic advantage, since it forces adjusters into a reactive posture.

A better approach is to proactively look at each component of the claim individually: liability, special damages and general damages. Focusing on each aspect allows for a more accurate evaluation and enables the adjuster to more effectively identify the strengths and weaknesses of each of the individual components in order to formulate a far more effective negotiating strategy.

In many venues, the first question asked of the jury isn't the value of the claim, but rather the liability of each party. If the claimant is at fault for a percentage, then that needs to be a focal point of the investigation. Let's face it, many claimants bear some responsibility for the claim, even if it is minimal. In some instances, intense scrutiny on liability can also yield other potential tortfeasors.

Other considerations should also be the impact on lifestyle, the credibility of all parties to the claim and the venue. When looking at such factors, they may add or detract from the value of the claim. If there is no impact on lifestyle, is there really any pain and suffering? Conversely, if a person is unable to work for three months, just how much is that pain and suffering worth? What if the claimant has three prior claims and a felony conviction? What if your insured does? These and other vital questions play a key role in the claim negotiation.

Next we come to venue, which is often a crutch to justify overpaying claims. Not that venue doesn't matter, it does. It matters a lot. But it matters only to the extent that a detailed and thorough claims investigation has been conducted.

The important thing to remember when investigating claims is that no two are identical. We often have to take claimants as they come, but that doesn't mean we owe more than the claim is worth. Each claim needs to be evaluated based upon its individual merits. Adjusters need to not only identify strengths of their case, but that of the other side. The best negotiators understand their opponent's position and effectively formulate rebuttals.

While claims can vary in complexity, it is important to never forget that the foundation of claims requires establishing two key elements: liability and damages. To achieve mastery of negotiations, it is critical to understand each aspect of the claim, leverage proven tools, formulate a plan of action and execute effectively on claim fundamentals to deliver the most accurate possible outcomes in all negotiations.

Special Reports /

Who wins when negotiating a claims settlement? Here's how to make sure it's you

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