How much is my personal injury claim worth?
New Hampshire’s Attorney Andrew Myers talks cash.
The biggest question I get from people is “How much is my personal injury claim worth?”
There are a lot of factors to take into consideration when trying to figure out what a claim is worth.
Factors include:
- The nature of the injury.
- The impact on the injured person’s life.
- The dollar amount of medical bills.
- The length and extent of disability.
- Lost Wages.
- Scarring.
- Loss of function and residual symptoms.
- Other factors.
Is there a mathematic formula? How do we calculate how much my personal injury claim is worth?
What is the cost of a person injury claim for someone who’s been out of work for a week? Where do we find the dollar amount?
Personal injury attorneys and insurance adjusters add up the medical bills and would multiply this total to get a number. This is the special damages where available. The lost wages come into the mix and are very important. They may multiply this number by three, and multiplying the special damages by three gives you a baseline objective when negotiating with the insurance company.
The secret is that before you negotiate with the insurance company, you need to have a demand which is higher than your goal. Attorneys multiply the base goal by seven or ten in order to get to this basic demand. This would depend on the attorneys strategy, the insurance company, and even the dynamics between the attorney and the particular claims adjuster if such dynamics did exist.
Another factor driving the multiplier in the case would be liability. A lot of times in an intersection accident, there might be a question of liability. Someone says they had a green light, and the other guy had the red light. Well, maybe a traffic cam shows that it was a really pregnant yellow light and maybe they may or may not have had the true right of way.
So that affects the multiplier and the amount of the damages. In the end we are looking to achieve three times the specials damages. Why don’t we take a look at what a typical case would look like? Let’s pretend you had a car accident:
How much were your medical bills?
As far as medical bills go, we’re looking at about $3,000.
Did you lose any wages?
Being out of work for about a week? It was about $1500 dollars.
Quick math says that what we call your special damages is $4500. That is the out-of-pocket, the medical bills and the lost wages. And so that is what we call, again, special damages. The magic secret formula a long time ago was you would take the special damages times three and that gets you $13,500. So that is the basic value of your case.
That’s how much we want to get for you. But we don’t tell the insurance companies that because we need to negotiate. So we start with a higher number. And just for the sake of argument, we’re going to double that is $27,000. The base value that we want to get on your case, the case value is $13,500, but we double it so that we leave some room for negotiations and we look for $27,000 as our demand.
So we’ve talked about a couple of different things like liabilities and how to determine the personal injury case value. So it sounds like it could be simple math. What’s the big deal?
It would be nice if things were that simple, but in life, things are not always that simple. And a lot of insurance companies and claims professionals have rejected the simple mathematical view. And there are a lot of reasons. One of the reasons is the escalation of medical bills in recent years. For example, an MRI can cost you $1200 to $3000.
I caught a hospital one time charging $10,000 for an x-ray. Well, I thought it was a mistake. When I called the hospital and asked them how they could charge $10,000 for an x ray. They said “because we can”. So these huge medical bills that we see in our current era skew the whole mathematical approach out of all proportion.
Oh, the other reason that people didn’t like the old mathematical approach was it penalizes people who go on with their lives quickly and we call it mitigation of damages. And what mitigation of damages means is many people after an accident just want to ignore the pain possibly abilify online, and get on with their lives and they hurry up to get back on to their daily routines. The mathematical approach penalizes people for getting back to work quicker.
If we’re not able to use this formula, how are we going to figure out what my personal injury claim is worth?
Well, there’s another way to evaluate a personal injury case, and people draw a time line after the accident. In other words, the accident is day one. How long after the accident does the claimant find themselves with a disability and unable to work? How long did the disability last and are they still seeking treatment? So this approach puts numbers on periods of time that people are unable to go on with their average daily lives.
How long were you out of work?
I was out of work for about at least a week.
So when we evaluate the claim, we call that total disability. The next question is your partial disability. And generally speaking, this is the period of time that you still needed some medical attention. How long did you treat with the medical professionals after the accident?
I was still seeing medical professionals for physical therapy for 13 weeks after the incident.
Okay, so your total disability was one week and at one week that was $1200. We’re going to say that’s the number where you gave your total disability. Your partial disability was 13 weeks. And the number we’re going to give that is $750. 13 times the $750 comes up to $9750. After you were done with your doctors, did you still have some residual issues?
Yeah, I’ve been having some range of motion issues that have kind of been limiting my day to day life. But you know.. What can you do.
A residual number where you’re still having issues would be $2500. And so now we take those numbers and we add them all up and we get $13,450. And note how close that is to the number we got in the other method of evaluating the claim, which was $13,500, and I use this as a check. In other words, when I evaluate a case, I’ll do method one and then I’ll do method two. And that shows me that I’m pretty much on point.
Is there software to calculate the cost of what my personal injury claim is worth?
The problem is insurance companies now use computer evaluation software. One of the very first programs made answered the question “What is my personal injury claim worth?”
The program “Colossus” crunches some or all of the above factors we’ve been talking about. As attorneys submitted information, insurance adjusters would simply crank those numbers into the computer.
Isn’t a computer program better at calculating these costs?
Well, you might think so, but you have to look at it in a little bit more depth. The program Colossus calculates value based on numerical weight assigned to coded criteria that was built into the system. This actually represents the most arbitrary but most widely used claim evaluation approach among many problems. A subluxation that is diagnosis by a chiropractor gets little or no weight.
That same subluxation that is diagnosis by a medical doctor gets a lot more weight. Not too fair or objective, is it? So computer evaluation of personal injury claims is generally the least accurate, but at the same time the most used by the insurance companies. The idea of using computer software to calculate the value of an injury claim sounds great.
It sounds benign, but because when you think about it, business industry, people at home, if you have a hobby, we all use computers for all of those applications. And at the same time, what if it makes a mistake and undervalues your claim? It is no secret that insurance companies use their software to calculate the value of personal injury claims.
Whether they admit it or not, they’ve used computer software to evaluate injury claims since the 1990s. The important thing is what the software is up to. Insurance companies will tell you. Claim evaluation software brings uniformity and efficiency to the process.
Let’s talk a little bit more about what these insurance companies software is actually doing. We use computers for everything. Why wouldn’t we be able to use them to figure out the cost of a personal claims case?
Well, it would seem logical, but first, we have to look at just a little bit of the history. The first popular personal injury evaluation program was Colossus, used by Allstate insurance company in the 1990s. It is still popular and there are other software programs that other insurance companies use. The software programs are called decision point med Med Bill helper and outcome Advisor.
Believe it or not, insurance companies at first actually denied that they were using computers. They actually said, “Oh no, we don’t use computers to evaluate the claim.” But then some of the insiders in the insurance industry outed the insurance companies. They left the insurance companies and they actually started writing books and articles that told the rest of us about how these programs were being used.
So let’s take a look at all these questions so far. Insurance claim evaluation software requires entry of basic data located in medical records and bills. The software calculates claim value by assigning points to various value drivers associated with an injury, an algorithm or another type of a mathematical formula, then calculates the claim value. There are a lot of variables in this process, and those variables include injury, diagnosis, reported symptoms, treatment, specifics, the need for future treatment and many other variables.
So what’s the problem with the computer math approach in finding out how much my personal injury claim is worth?
The mathematical nature of the evaluation fades away when we look at the fact that the insurance companies themselves program the value of the data points that are given to each driver when they set up the software. Here is a quote from one of the accident attorney groups. This one happens to be in Maryland, and here’s what they say.
“Colossus allows Allstate, Aetna, USAA and any other auto insurance company using it to artificially drive down injury values. Allstate’s adjusters controlled the information fed into the Colossus program, and in turn, they reduce the benchmark or baseline values by only inputting the lowest settlement amounts.”
But if it’s a computer software program, how are these companies adjusting and changing the amounts?
The computer companies or the insurance companies that are using the software set it up based on some driving values that they assigned to this various medical data. One injury in one computer, the same injury, and another computer might have different drivers behind them. Insurance companies spending millions for use of the software get to tweak the software to reduce the claim values as claim departments set up the software.
They use a process called benchmark tuning to give whatever value they choose to. Various elements of a personal injury claim in step two, known as fine tuning insurance companies, simply fix the output downwards to meet profit goals that were set by management. Here is a quote The use of Colossus produced immediate results in reducing claim payouts, the use of evaluation, decision support tools and a second look have resulted in lower settlement values.
“The Colossus sites have been extremely successful in reducing severities, with reductions in the range of 20% in Colossus evaluated claims by using Colossus computer evaluation, Allstate Insurance Company reduced what they paid on claims by 225 to $250 million annually.” – A quote from the book Delay, Deny and Defend by an insurance industry Insider. And also a Rutgers professor by the name of Jay Feinman.
Can’t there be some kind of personal factor that takes into consideration when we’re using these computer software programs to determine the amounts of the claims?
You might think so. But through that initial report of injury, through the entire process, you and your attorney may describe symptoms that you sustained after a car accident, such as headaches, scarring or actual severe injuries. The problem is none of that goes into the computer program. None of it. The only data that actually is entered into the computer program is placed on your medical records.
And it all has to be coded and so unless the things that you’ve just talked about, you know how it affected your daily life, whether you could cook, whether you could ride your bicycle, or whether you could go to work, none of that goes into the claim evaluation unless a doctor enters it into your medical records.
But insurance companies have been around for a really long time. Don’t you think that there would have been some improvements or changes done to kind of counteract those negative implications?
The problem is, is in the mid 2010’s, all of these code sets were changed. They call them ICD dash ten dash CRM code sets this significantly changed the codes that all medical providers must use in order to get their bills paid. The new system costs so much confusion that regulators who require these numbers delayed the implementation of the numbers for quite a long period of time until people could take training seminars to learn them.
Whether you have suffered catastrophic injuries, traumatic brain injury, sprain, strain, nothing at all factors into that computer unless it is properly coded into your medical records by the medical care provider. If the medical providers themselves found changing the code systems challenging, it’s really wishful thinking on all of our part to think that the applicable codes will be included in the records.
So unfortunately, the amount of detail that is required to accurately support full and fair claim evaluation is just lacking.
How can we combat that? How can we get the money that we deserve from our injury?
I had a client a number of years ago who came to me and he had been fighting with the insurance company. He had had an accident and he had gone online and read a lot about what we’re talking about and he read a book and he decided to do the claim himself. And he got all of his medical records together and his medical bills, and he sent them into the insurance company with a demand.
They didn’t even respond to him. So he came to me and I agreed to take the case. And I looked at it closely and I found that he had far undervalued his own case. He had an undervalued his own case, and even the insurance company didn’t want to really deal with that. So they didn’t even talk to him.
So I took his medical records and his bills and some things that he had left out, like I think, a photograph of his scarring, the fact that the liability was clear as the day is long and also some other things that were in his medical records. And I took photographs of the damage to his car and things like that.
I put together a demand package. I sent it into the insurance company and I ended up settling that case for double what he had even demanded. He had low balled himself. And so even after he himself tried to settle his own case, I got him double what he had demanded in his own case.
You really have to kind of fight just to get what you deserve and without representation. They didn’t even want to work with him. What’s the big secret behind all this?
Well, that depends on whatever insurance company you’re dealing with. I mean, sometimes attorneys have a personal relationship with an adjuster. Sometimes attorneys know exactly what software they’re working with. There are little quirks, as Have you ever had a computer program work perfectly the way it’s supposed to? In my dreams. Maybe.
So even some of the programs that they’ve used, and I mentioned the names of them earlier, have some little quirks. And as I also mentioned, Allstate and the other companies tune these to their own needs. And so there are if you know the company, you know the adjuster, you know, the way they’ve adapted this software, there are little quirks that are beyond the scope of this particular podcast that we can kind of dig into it and get around these little quirks in the software.
So it’s not easy. It’s become evaluating a claim has come from the simple mathematical formula that I showed you that I learned way over 25 years ago to now doing it all on the computer. The problem is, is that the software just has too many quirks, too many variables, and they’re stacked to help the insurance company and not help us.
There’s a lot of different things that go into this. And from what you’ve told me, I need to find representation. Can I just get those big lawyers that you see on TV? How do you know who to contact? I’m assuming that if somebody is advertising, you could just go after them, right? And get them to get work on your case.
Big TV lawyers, would love what you’re saying. I go to the gym and they have eight huge, big screen monitors that I’m looking at when I’m on the treadmill. And I’ve seen five or six of the screens all have lawyer ads. And so, you know, sure, you can call those guys, but there’s a couple of problems with that.
One is that I’ve had people come to me after they retained one of those attorneys and they said, “I drove all the way into the city to meet with this attorney. And I just got a staff member, not even a paralegal. I got a staff member. They sat me down. They made me fill out a form. And you’re not even going to meet with an attorney.”
If you meet with an attorney, it’s a cameo appearance. He’s going to come in. He’s going to take a look at the form, and then he’s going to be out of the office and you’re never going to deal with them. So if you hire a local attorney like myself, you’re actually going to sit down like we are right now and talk to them as a human being and ask them questions and make sure that they answer your questions.
That’s problem number one. Problem number two is, do you want a local attorney who goes to court who will review your file, look at your medical records, call you up on the phone and ask you a question about your case? Do you want that attorney that’s going to spend time on your case? Or do you want a guy that’s too busy in the TV studio making his next, you know, TV ad?
Is there anything else that you think that someone who’s been in an accident should know?
There’s one more insider tip that a lot of people, even a lot of experienced attorneys, don’t know. And that’s an accounting trick that the insurance companies all use. A reserve is a cap that insurance companies, for financial reasons, set on every single claim that comes in.
So, for example, when you first have a car accident, then you call the insurance company to report it. They’ll ask questions and you might say, “Oh yeah, I was able to fix my breakfast and walk my dog this morning.” And so from that they’ll think, “Well, you know what, Lainey? He’s okay.”
And so we’re going to set a low reserve. Well, the problem with that is what if your medical treatment lasts longer than you think? Or what if you have injuries that don’t manifest themselves until later on? The reserve is set so that the insurance company can calculate what their top dollar liability is on that claim. Their actuarial and tax people require they do this if you have obviously tried to undersell yourself in the claim. If this is the case, you’re going to have a low reserve.
And in the end, the claims adjuster might just actually say to you, “I just don’t have that money.” And they won’t settle it for any more than that reserve And you’re going to end up with a lawsuit.
Where can our readers learn more about your practice?
If you got here from searching “How much is my personal injury claim worth” or “Personal injury lawyer near me,” consider sending me an email. I practice personal injury law in both Massachusetts and New Hampshire. I have offices in Derry and in Methuen, Massachusetts. Please don’t do this yourself. If you have suffered from an injury accident call our office. If you have any questions for me or you like to contact me, or please go to my website.
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