New York City Settling Claims Via The Web

The White Plains, N.Y.-based company's operation is no stranger to attorneys involved with insurance company cases. Over the past five years, Cybersettle said they have processed 83,000 transactions representing more than $500,000 in settlements. By the firm's count, more than 100,000 attorneys and 10,000 insurance claims adjusters in 1,900 claims offices have used the system.

Charles Brofman, Cybersettle's president and chief executive officer, said the firm has had no competitors since they secured a patent for the operation.

The Cybersettle system that New York activated Feb. 12 is available not only to process claims brought by negligence attorneys representing plaintiffs against the city, but also for the city's claims against insureds, city officials said.

Using Cybersettle's process, the comptroller's office enters claim data. The system notifies plaintiffs' attorneys of the city's intention to negotiate and requests any needed documentation, the company explained.

Claims adjusters enter offers, which can't be seen by plaintiffs, and plaintiffs' lawyers can submit their demands, which are also screened from the city's view. When the offers from both sides overlap within an agreed-upon percentile range, the system notifies the two sides there is a settlement, according to Cybersettle.

The bargaining sessions are protected to prevent unauthorized access and Cybersettle does not reveal the settlement offer, even if the case is not settled, the company noted.

Despite its five-year history, when Cybersettle pitched their service to the comptrollers office last fall, at the beginning they were skeptical, said Mr. Brofman.

To make a case, Mr. Brofman said his firm displayed the results that some insurer clients have had using the system. Cybersettle also obtained city statistics on what New York spends every year in indemnity payments and allocated loss adjustment.

We showed them they were paying far in excess what private industry pays to settle claims–it was in the thousands of dollars per claim, the Cybersettle CEO said. It was also a process that generally took two years longer than with private insurers.

Mr. Brofman noted that in the New York State Courts, the city is the number one defendant, with lawsuits against the municipality clogging the system as plaintiffs wait five, six or seven years to settle their cases.

Before his company received the go-ahead, the executive said, the city did a study that included an analysis of the Cybersettle data, as well as talking with some of the company's customers, who include some property-casualty insurers that are among the nation's top 20.

New York City is the target of 24,000 claims a year, and Mr. Barbot said that the city expects to use the Cybersettle system for 9,000 of them in the first year of use.

In February, Cybersettle said it began taking data feeds directly from the city's data claims management system.

The cases the city is counting on settling over the Internet involve relatively small, easily settled damage or personal injury claims arising in relation to city properties, broken sidewalks, schools, roadways, malfunctioning traffic lights and city vehicles.

Mr. Barbot said the city will be inputting slip and fall cases on sidewalks and school injuries, as well as claims the city has against persons who have caused injury or damaged city property with vehicles or otherwise.

By using Cybersettle, the deputy comptroller explained, his claims analysts will be able to focus on more complex cases and city attorneys will have more time to prepare for actions that go to trial.

Michael Aaronson, chief of the New York City Bureau of Law and Adjustment's claims department, said the city estimates we can save, on settlement costs alone, $5,000 a settlement. If the city settles 3,000 cases, multiply by $5,000 to figure a $15 million savings, he stated. Until a few years ago, he added, the city did not even settle personal injury cases prior to litigation.

Mr. Brofman said that the city would start by using Cybersettle to work on newly arriving claims. If they determine the city is obligated, they want to settle before it goes into litigation, he explained, adding, It's cheaper to pay $10,000 today and avoid allocated loss adjustment expenses. These, he said, could add anywhere from $3,000 to $10,000 to the city's expenses. Mr. Barbot said the city will pay Cybersettle $100 per successful settlement.

The philosophy of the administration of Mayor Michael Bloomberg, the deputy comptroller explained, is to settle cases as early as possible. Ninety-eight percent of the cases we settle anyway, and this helps us settle even earlier. We don't have to call attorneys out of court and it facilitates the negotiation process.

In some cases it will help because it will take the personalities out [of the situation], he said, as for example when a particular attorney and claims analyst don't get along well.

Attorneys the city deals with on a Cybersettle claim are notified that there is an offer via e-mail, telephone call and fax, said Mr. Barbot.

The first case to go through the system involved a schoolyard accident at a Bronx public school where a child fell off monkey bars on the playground and broke a wrist. It was settled for $17,500.

Ironically, the city's first Cybersettle claim to go through successfully didn't happen via the Internet. That attorney wasn't near his computer, so he responded by phone. He called and spoke with a claims analyst, Mr. Barbot explained.

He said recent activity with the system has been most intriguing. We had two [settlements] over the weekend and one at midnight. Mr. Barbot said Cybersettle will help move claims faster because a lot of suits are filed by small two- or three-person law firms whose attorneys are generally not available for claims negotiation because they are tied up in court all day.

Attorneys aren't the only ones hitting the system during off hours. Because he wants to keep an eye on how things are going, I check it from home, said Mr. Barbot.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 12, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.