Let the jury decide?

In the best scene of the film classic, Double Indemnity, Edward G. Robinson plays the over-stressed claims manager Barton Keyes, who tries to convince salesman Walter Neff (Fred McMurray) to transfer to the claims department to be his assistant:

Keyes: How would you like a $50 cut in salary?

Neff: Do I laugh now or wait until it gets funny?

Keyes: No, I'm serious. I've just been talking to Norton. Too much stuff piling up on my desk, too much pressure on my nerves. I spend half the night walking up and down in my bed. I've got to have an assistant, and I thought of you.

Neff: Me? Why pick on me?

Keyes: Because I've got the crazy idea you might be good at the job.

Neff: It's crazy all right; I'm a salesman!

Keyes: Yeah - peddler, glad hander, back slapper; you're too good to be a salesman!

Neff: Nobody's too good to be a salesman!

Keyes: Aw, phooey! All you guys do is just ring doorbells and dish out a smooth line of monkey talk. What's troubling you is the fifty buck cut isn't it?

Neff: Well, it would trouble anybody!

Keyes: Now look Walter, the job I'm talking about takes brains and integrity. It takes more guts than there is in fifty salesmen. It's the hardest job in the business!

Neff: Yeah, but it's still a desk job. I don't want to be nailed to a desk.

Keyes: Desk job? Is that all you can see in it? Just a hard chair to park your pants on from nine to five, huh? Just a pile of papers to shuffle around and five sharp pencils and a scratch pad to make figures on? Maybe a little doodling on the side? Well, that's not the way I look at it, Walter. To me, a claims man is a surgeon; that desk is an operating table. And those pencils are scalpels and bone chisels. And those papers are not just forms and statistics and claims for compensation. They're alive! They're packed with drama, with twisted hopes and crooked dreams! A claims man, Walter, is a doctor and a blood hound and a cop and a judge and a jury and a father confessor all in one! And you want to tell me that you're not interested? You don't want to work with your brains. All you want to work with is your finger on the doorbell for a few bucks more a week...

Keyes never got his assistant. Give Neff credit: he certainly knew that in an insurance organization, the claims department is the lightning rod that generates criticism for paying too much or too little, too fast or too slow, without enough compassion for the victims and with too much sympathy for the undeserving.

What is the most common complaint?

Probably, that claims people are too fixated on trying to reach a quick settlement; they "never try any cases." This, despite the fact that the natural tendency for anyone, even insurance people, is to want a final, definitive answer from a neutral party as to who is right, who is wrong, and to what degree. Even though each League Pool member retains the ultimate right to prevent the settlement of a claim, some may feel pressured to go along with the recommendations of the League Pool or the League Fund. A settlement, to many, represents a loss.

Of course, the League Pool and the League Fund try many cases. In fact, because of the nature of the organization and the aggressive defense posture mandated by the member-represented Board of Directors, the League Pool and League Fund proceed to trial much more frequently than most commercial insurance carriers, and at times will go to trial even when an adverse outcome is likely, on purely philosophical grounds.

Economically though, it would be impossible for any insuring organization to bring every, or even most claims or lawsuits through a trial. Throughout the life of a claim, it is the job of the claims staff, in concert with the member, their defense counsel and the Board of Directors to decide whether to settle or try a case. Why settle so often?

Believe it or not, the claims staff and the attorneys assigned to represent the interests of the members would love to bring most cases to trial; all of the internal debate and analysis on each claim would finally get answered in court, once and for all. Even a great settlement can be criticized as being too high. To prevail at trial is always more satisfying. The job of the insurance professionals and defense attorneys, however, is to recommend which cases to try and which ones to settle, to decide how much the pain and disability are worth, and to what degree each party involved is at fault.

What are some of the reasons that cases get recommended for settlement?

* Ethics:

Insurers are obligated to settle claims in good faith, fairly, promptly and equitably whenever liability is reasonably clear. Although it may be difficult to accurately define what "good faith" is in any particular instance, the League Pool and the League Fund have a legal and moral obligation to consider fair settlement offers and to attempt to reach a reasonable claim resolution when the actions of a covered member result in an injury to a claimant that would likely be recoverable in court. The League Pool potentially has an even higher obligation in cases where some allegations made by the claimant may not be covered under the policy, or the probability exists that a verdict will exceed the policy limits. In any settlement decision, the exposures faced by the governmental entity and its elected and appointed officials must be evaluated in conjunction with the coverages afforded, and in light of the legal liability presented and the reasonably foreseeable damages that would be awarded if the case were tried.

* Economics:

Taking a case to trial is expensive both in legal defense costs and in the time and energy spent answering interrogatories, gathering documents, and attending depositions, court ordered settlement conferences and trial. It is not unusual to defend a case for several years or more before finally getting one's day in court. When lawsuits are unnecessarily brought to trial, scarce resources that could be devoted elsewhere are instead siphoned off in legal fees and unproductive work hours by member employees.

* Publicity:

A large, adverse verdict certainly has the potential to generate more lawsuits; often, however, favorable verdicts go unnoticed by the media. Even when a win is reported, the publicity can cause more suits to be filed. Most plaintiff attorneys are not going to be frightened off from filing a suit simply because another attorney lost at trial. Typically, settlements receive less publicity, and in certain cases, confidentiality agreements can help reduce concerns that the settlement will spur more lawsuits.

* Predictability:

When a case is tried, the outcome is controlled by a group of individuals whose decision is completely unpredictable. They will make their decision based only on what they see and hear in court, and going in, juries are often predisposed to accept the plaintiff's version of events. The League Pool and League Fund can cite numerous examples of cases that have been tried where seemingly fraudulent plaintiffs are paid large sums, while apparently legitimate plaintiffs walk away empty handed. The overriding element controlling a jury is emotion, not necessarily who is right and who is wrong.

* Legal Precedent:

Following many trials, the loser appeals. If an unfavorable appellate court decision is reached on the "wrong" case, a precedent may be set that the lower courts are obligated to follow, which could have a far greater negative impact on all League Pool or League Fund members than just the loss at trial.

The decision

In the end, the decision to settle or try a case becomes a complex balance of numerous factors. Under the proper circumstances, each of the items listed above as reasons to consider settlement could also be used as reasons to go to trial. For example, the League Pool sometimes takes apparently minor cases through the expensive appeals process if a larger question of law could go in favor of its membership. In one instance, a case involving a slip and fall in a municipal parking lot ultimately led to a court decision that narrowed the exceptions to governmental immunity, saving a great deal of money for all League Pool members and other governmental agencies.

The League Pool and League Fund must use their best professional judgement in determining when to recommend settlement. The aggressive defense philosophy adopted by the Boards of Directors must be pursued in light of our obligations to the entities and individuals being defended, and the membership as a whole. While recognizing that the perceptions generated by our actions among plaintiffs, members, reinsurers and the public must always be considered, our obligation of good faith claims handling and fair dealing prevents us from establishing a firm policy on how we will respond in each instance. The need for local governmental agencies, as target defendants, to discourage unnecessary litigation is especially pressing as revenue sources continue to decrease and costs continue to spiral. The League Pool and League Fund must play their part in protecting the best interests of the membership by providing the best claims staff and attorneys possible, maintaining an aggressive defense posture, knowing when to try a case, and even when it's unpopular, recommending settlement.