Eric Shapiro is a highly successful and well-known personal injury and wrongful death attorney who represents individuals and family members who suffered harm as a result of someone else’s actions.
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“Like a Good Neighbor, State Farm Is There” ... to Ensure that You are Going to Be Involved in a Lawsuit
If you are pursuing a claim with State Farm, do yourself a favor: Retain an experienced personal injury law firm, like Shapiro Injury Law (Formerly know as Shapiro Law Group), to ensure an end to these types of games and to obtain a fair settlement amount on your injury claim.
Shapiro Injury Law (Formerly know as Shapiro Law Group)
has represented injured individuals since 1999. Over the course of the past two decades, I have seen first-hand how different insurance carriers handle injury cases. Some insurance carriers do a very good job of protecting the interests of their insureds. Others couldn’t care less, so I’m not usually surprised when I see a tenuous position asserted by an insurance carrier’s representative.
Every now and then, you see a shift in the way that a specific insurance carrier is handling injury claims. In the past year, I have witnessed State Farm make a seismic shift in its claims-handling procedures, and it impacts first-party claims (i.e., claims being asserted by an insured against his/her own insurance policy, such as uninsured and underinsured motorist claims) and third-party claims (i.e., claims pursued by an injured person against an at-fault driver’s insurance policy). In addition to my own experiences, I have spoken with a number of my peers and confirmed that State Farm has made across-the-board changes in the way that it is evaluating injury claims.
An insurance carrier is contractually obligated to perform a proper investigation into a claim, properly evaluate the claim, and extend a reasonable settlement offer (when appropriate). This applies equally to first- and third-party claims. Returning to State Farm’s claims-handling procedures, the focus of this post is on State Farm’s unreasonable evaluations of injury claims and the subsequent extensions of unreasonable settlement offers.
The law in Arizona is quite clear when it comes to determining the value of an injury claim. An at-fault driver is responsible for compensating an injured party based upon three major areas (setting aside property damage claims for purposes of this conversation):
- the cost of reasonable medical care;
- any loss in earnings; and
- pain and suffering (monetary compensation based upon the types of injuries sustained, how long those injuries impacted an individual’s life, and how an individual’s life was impacted by his/her injuries).
Items #1 and #2 are “black and white” damages. There will be something that is documented pertaining to the cost of the care (itemized bills) and lost income (pay stubs, tax forms, etc.). Item #3 is very subjective in nature and depends heavily upon the individual.
State Farm, like all insurance companies, has contractual duties to properly evaluate injury claims and extend reasonable offers to resolve such claims. In the past year, State Farm has breached this duty to its insureds by changing its evaluation process in a way that ignores the current state of the law in Arizona.
Arizona follows the “collateral source rule.” The collateral source rule, for simplification purposes, allows an injured party to present to a jury the full amount of the medical bills incurred, even if a portion of the medical bills have already been paid by some other source (such as an injured party’s health insurance carrier). The reasoning behind this is complex, but it deals with concepts such as “balance billing” liens, out-of-network provider bills, etc. ).
When it comes to claims evaluation, the insurance carrier is obligated to evaluate the claim based upon the same evidence that would be presented to a jury. So, if a jury evaluates a case based upon the full amount of the medical bills incurred, an insurance carrier must do the same.
State Farm has deviated from this course over the past year. State Farm’s claims evaluation procedure now disregards the full amount of an injured individual’s medical bill and, instead, arbitrarily applies a significant lesser value to the bill, which in turn reduces the overall value of the claim and the amount that State Farm extends as a settlement offer.
In the case of State Farm’s claims-handling procedures, State Farm instructs its adjusters to reduce the bills to an amount similar in value to the amount that Medicare pays for such services. This procedure “allows” State Farm adjusters to take a $10,000 emergency room bill and reduce it to $800 (the amount Medicare would pay on the bill) as part of its claims-handling procedure. In a practical sense, it reduces the evaluation of the claim by $9,200 (which in turn reduces the amount that State Farm will offer to the injured individual to settle the claim).
Here is the kicker, though: State Farm is not reserving this reduction to injured individuals that have Medicare insurance. It applies this reduction TO EVERYONE’S CLAIMS. Thus, if an injured individual did not have any health insurance coverage, State Farm would still apply this reduction to the injured individual’s claim ... even though the full $10,000 is owed by the injured party.
This type of claims handling is substandard and disregards the current state of the law in Arizona. Here are some examples of the offers that I have received from State Farm during the past year:
- Client had $27,000 in medical bills. State Farm’s offer was $22,000. The offer was $5,000 less than my client’s medical bills.
- Client had $13,200 in medical bills. State Farm’s offer was $7,942. The offer was $5,258 less than my client’s medical bills.
- Client had $24,400 in medical bills. State Farm’s offer was $11,440. The offer was $12,960 less than my client’s medical bills.
- Client had $15,600 in medical bills. State Farm’s offer was $9,598. The offer was $6,002 less than my client’s medical bills.
- Client had $29,925.52 in medical bills. State Farm’s offer was $15,143. The offer was $14,782.52 less than my client’s medical bills.
Some of these claims were first-party (uninsured motorist) claims, and others were third-party claims (claims against State Farm’s insured, who was at fault for the crash). State Farm treated all of these claims the same way, with the same substandard level of claims evaluation. Had State Farm extended fair offers, each of these cases would have been settled without the need to file suit against its insureds. Instead, we were forced to file suit on each of these cases, with State Farm ultimately extending significantly higher offers during the course of litigation.
Returning to the first line in this post, if you are insured through State Farm, be very wary and accept the fact that, if you are at-fault for a motor vehicle collision and injure someone, you are going to get sued, because State Farm is not going to make a fair settlement offer. If you are insured through State Farm and someone else is at fault for the crash, but the at-fault motorist was uninsured or underinsured, and you have to pursue an uninsured or underinsured motorist claim, you are going to have to sue State Farm to seek fair compensation, because State Farm is going to offer you significantly less than the amount of your medical bills to resolve your claim.
State Farm’s claims-handling process is truly an embarrassment. You are anything but “in good hands” with State Farm. If you are pursuing a claim with State Farm, do yourself a favor: Retain an experienced personal injury law firm, like Shapiro Injury Law (Formerly know as Shapiro Law Group), to ensure an end to these types of games and to obtain a fair settlement amount on your injury claim.
