When it comes to mediation, it is said attorneys settle theirgood cases and try their bad ones.

But does the same hold true for subrogation? Do claim professionals settletheir good files and arbitrate their not so great claims?

Does it make sense to pursue subrogation for an auto incidentand what is the likelihood that your company would prevail inintercompany arbitration?

Lane change disputes, parking lot accidents and left turns onyellow at intersections all have a common thread — defineddynamics. It is through the claim professional's recognition ofdefined dynamics that an astute decision can be made as to whetherit is worthwhile to proactively pursue subrogation negotiation andif the claim goes to arbitration, what evidence is needed toprevail.

The two areas for defined dynamics within claims are facts ofthe loss not in dispute (such as two cars backing into each otherin a parking lot) and facts of the loss in dispute (such as greenlight/red light). At this point, the focus is on the facts of theloss and not who may or may not be at fault. These dynamics areimportant as they help qualify the evidence necessary tosuccessfully support and negotiate the subrogation demand orpersuade an arbitrator to rule in your favor if you go tohearing.

Fundamental arbitration advocacy says to work within theevidence, knowing what is clearly in dispute and what is not.(Photo: Shutterstock)

Planning for a successful hearing

The variables inherent in so many auto claims include point of impact,eyewitness accounts, transcribed statements of each party'sinsured, photographs, adjuster's notes and police reports. Whilenot an all-encompassing list, many of these are vital to anysubrogation demand and the negotiations that take place for a partyseeking to recover. However plausible to establish fault, what ifthat is not enough to get the check issued and you are headed tosubrogation arbitration? What approaches might be helpful tosucceed at hearing?

The first thing to establish is the kind of case going toarbitration. Chances are you already identified much of that withthe initial subrogation demand. If not, consider whetherthis case is one where the facts of the loss are not in dispute bythe parties, such as two cars backing into each other across anaisle parking lot or two cars side-swiping each other on thefreeway. Or is it a claim where the facts are very much in disputebetween the parties, such as a claim where the asserted tortfeasorturned left at the intersection on a changing light or swervedaround a truck backing up in the middle of the road.

Next, identify all possible scenarios including position of thevehicles, points of impact, speed, conditions and the negligencelaws applicable to the fact pattern. From there the theory beginsto take shape around how the accident occurred and an all-importanttheme develops that will be used to traverse the entirety of thestoryline presented to the arbitrator. Given the dynamic that thefacts of the loss are not in dispute, the question becomes: Will webe asking for 100 percent recovery in arbitration or taking a morereasonable tone toward comparative negligence and perhaps seeking75 percent?

Core issues & turning points

Why are the defined dynamics for facts of the loss important? Itinvolves what one must prove to the arbitrator within the confinesof the case presentation. If there is no dispute that both vehicleswere backing up; that is one less element of the case you have tosupport. If there is a dispute as to the color of the light whenthe driver turned left; then this is clearly an element of the caseyou need to be ready to prove.

Fundamental arbitration advocacy says to work within theevidence, knowing what is clearly in dispute and what is not. Thisestablishes the foundation of the core issues on which thearbitrator must rule and the key turning points on which he or shemust decide. Core issues in arbitration are things like liability,damages or a noted discrepancy in a police report. Turning pointsare items such as the light was yellow or red when the driverturned left or the insured had already backed out of the parkingspace and was actually moving forward when hit by the other driverin the lot.

When writing contentions in an intercompany arbitration case,consider using the following questions as a template: What is thecore issue for the arbitrator to rule on in this case? What is thekey critical turning point on which the arbitrator must decide?This helps establish in the arbitrator's mind a rolling hypothesisabout what the claim dispute entails and what the parties'intentions are likely to be towards proof.

Related: What do claimants really want? The answer mightsurprise you

Claims professionals who process a good deal of intercompanyarbitration cases develop an innate ability to breakdown theadverse party's contentions. (Photo: Shutterstock)

Evidence matters

How does one leverage evidence to succeed in challenging theauto liability case? The decision to pursue recovery may have beenmade if the adverse party initiates an arbitration filing. Assumingthere are damages to recover; it would be wise to answer that caseand file as counter applicant. If your team is going second, readthe adverse party's contentions and look for unsupported assertionswhile scrutinizing their declared evidence list.

Intercompany arbitration works on a preponderance of evidence standard, so it isimportant to convey a more than likely scenario for the factpattern present to the arbiter while meeting the prima facie burdenin order to succeed. Filing the counterclaim provides a window intothe adverse party's world. Claims professionals who process a gooddeal of intercompany arbitration cases develop an innate ability tobreakdown the adverse party's contentions; look for what is saidand not said, and tabulate what is missing from the adverse party'snarrative and evidence. They then use their instinctive skill setto transition the arbitrator away from the opposing party'sportrayal and toward their own via their contentions.

Parties may not pursue subrogation or arbitration because they believethe fact pattern and evidence are insufficient to induce asettlement or be successful in arbitration. The problem with thatlogic is not knowing what evidence (or lack thereof) the adverseparty has.

Good faith effort to settle

Under the Rules of Arbitration, a good faith effort must be madeto attempt to settle a claim before filing subrogation arbitration (ConditionPrecedent), so some form of a demand is forthcoming. Thequestion is do parties fully exchange all available proofs in thateffort to settle or are some held back and put forth once the casegoes before an arbitrator? One may be able to prevail inintercompany arbitration even with a tough or marginal case basedon the preponderance standard and the weight of the evidence inyour favor since the arbiter evaluates both parties' proofs. Keepin mind the explanation for the way the accident occurred does haveto be the only explanation for what happened, it simply has to bethe more logical of any offered.

Lastly, how you construct the challenging liability case canalso have an impact on whether the intercompany arbitrator acceptsyour theory. Develop a well thought out narrative that incorporatesdemonstrative exhibits; things like scene photos and diagrams (toshow what occurred), compliment that with direct evidence (thatmaintains the theme) of what parties actually said at the scene orwhen giving a statement.

Mix in documentary supports like police reports or adjusters'notes to validate the theory. Consider adding in somecircumstantial evidence (like skid marks or the adverse driver'sactions at the scene that may infer fault), since arbitratorsfrequently draw inferences in their decision-making.

Recovering a company's dollars on a tough auto liability caseneed not be so arduous if one establishes the defined dynamics;appreciates the preponderance standard inherent in arbitration, andstrategically leverages evidence to construct a narrative that ispersuasive and impactful.

Kevin Pike ([email protected]) is with arbitrationclient services at Claims Resource Services, one of the nation'stop five firms filing intercompany arbitration cases. Hisbackground encompasses 30 years in arbitration and the disputeresolution field, and he writes a weekly blog on intercompanyarbitration disseminated throughout the insuranceindustry.