A.M. v. Encompass Home & Auto Insurance Company (MIA #14-00007)
Encompass low-balled its insured by misusing Colossus
The Maryland Insurance Administration held that Encompass acted in bad faith by lowballing its Insured. Encompass had determined what settlement offer to make using Colossus, a program that helps adjusters value cases. The Maryland Insurance Administration found that Encompass could not explain how it chose to give Colossus data. The Maryland Insurance Administration therefore held that blindly relying on Colossus rose to bad faith.
Plaintiff was injured in a collision on January 11, 2012 when the another driver of failed to stop at a stop sign. Plaintiff’s car was totaled and he was taken by ambulance to Sinai Hospital.
Plaintiff had UM/UIM coverage with Encompass with limits of $100,000/$300,000.
The other driver had $30,000 in coverage. The other driver’s insurance company tendered the policy to Plaintiff. Plaintiff accepted the money and waived subrogation.
The Claim Handling
On September 12, 2012, Plaintiff informed Encompass that he would make a UM claim. Encompass assigned the claim to an adjuster, M.M.
Plaintiff had injuries to his head, neck, back, abdomen, chest, shoulders. Plaintiff wound up seeing three doctors: Dr. Goldberg, his personal physician, Dr. Friedler, an orthopedic surgeon, and Dr. Matz, another orthopedic surgeon. The eventual treatment regime involved physical therapy, several MRIs, and eventually knee surgery.
Encompass never required Defendant to submit to an IME, hired a medical reviewer to look at the file, or otherwise procured expert medical opinion on this matter.
Plaintiff eventually submitted lost wages of $12,718 and medicals of $37,536.95.
On February 26, 2013, after Plaintiff’s surgery, Encompass used Colossus to evaluate the claim. Based on Colossus, Encompass offered $33,589.89 (on top of the $30,000 from the other driver.) Encompass said it would offer more money if and when Plaintiff sent it more money.
On July 3, Dr. Friedler opined that shoulder surgery would cost another $10,000 to $12,000 and the loss of two weeks of work. Right thumb surgery would be around $8000 and two weeks of work. If Plaintiff’s neck pain got worse, that could involve $40,000 in medical work. Finally, Dr. Friedler opined that Plaintiff had a “25% disability of the cervical spine; 18% disability of the left shoulder, 20% disability of the right thumb” and a “30% disability” in his right knee.
On August 27, Encompass compiled a new Colossus report and put in the wrong data. Encompass put in actual medicals of $32,302, wage loss of $12,126, $0 (sic) for future medicals, medical adjustments, future wages, and wage adjustments, and a 4% disability in the right knee. Encompass set the adjuster’s range at between $41,549 and $48,928. Colossus recommended offering $48,928.
On August 29, Encompass offered $45,000. This went nowhere and Plaintiff apparently asked Encompass if it had actually read the file. On October 23, Encompass “assured the Plaintiff that it ‘did in fact take into account each and every report and bill received.’ ” On November 25, Encompass offered $49,928, claimed it had taken into account Plaintiff’s disability, and questioned the Dr. Freidler’ future treatment estimates. On December 9, 2013, Defendant offered high-low arbitration with a floor of their last offer and a high of their remaining limits ($70,000 after the $30,000 settlement.)
Plaintiff argued that Encompass had lowballed them. Encompass claimed its claim handling was reasonable, disputed that the knee injury was related to the accident, and denied any future treatment was necessary.
The MIA held that Encompass acted in bad faith because it could not explain its position. It “failed to describe the analysis it used in valuing the case, and the claim notes did not sufficiently demonstrate the mental thought processes by which [the adjuster] concluded that $48,928 was an appropriate valuation of the claim.” Encompass did not even explain what medical records it relied on. Encompass also on “selectively provided” sections of Dr. Friedler’s analysis in an attempt to show that Plaintiff did not want further surgery. The MIA found that this desire to avoid surgery was “understandable” and could not be “the sole basis” to set future medicals at $0. Encompass also pointed to Plaintiff’s lack of physical therapy even though his doctors had told him that if he wanted to keep exercising on his own, he could.
The MIA’s bottom line was that Encompass’s argument was simply a “refusal to believe the Plaintiff’s evidence” and that it “failed to provide credible evidence” to show it acted in good faith. Plaintiff, meanwhile, had proved its case.
Plaintiff’s attorneys asked for one third fees under a contingency fee agreement. The MIA ignored the agreement and awarded them $15,000 as the fair value of their services.