Mediation: The Wider Context

When I read the article ‘Why Mediations Fail’ (published in Canadian Underwriter’s March 2009 issue), I felt compelled to respond.

Contrary to how it is presented in the above article, there is a much broader context to the negotiation and settlement of a loss, of which mediation is one aspect. For example, the article leaves out the frequently acrimonious relationship fostered by many plaintiffs’ counsel in the lead-up to the mediation, negotiation or litigation. When the table is set in such a fashion, why would the plaintiff lawyer expect the defence to bring sugary treats?

Here are some specific examples of plaintiff lawyer tactics that foster this acrimonious relationship:

First, it has happened that plaintiffs’ counsel have been secretive about their client’s injury and didn’t provide enough information for an adjuster to properly quantify the loss and reserve appropriately. Without proper information, we are left to speculate as to what the reserve should be. If we undershoot the mark and we need to significantly increase the reserve several years later there is a lot of explaining to do. There is a stunning lack of understanding by plaintiffs’ counsel that we are a highly regulated financial institution that must get our reserves right for a multitude of reasons.

Perhaps plaintiffs’ lawyers should read the ‘Why Insurers Fail’ article, written by the Property and Casualty Insurance Compensation Corporation (PACICC), and published in the June 2009 edition of Canadian Underwriter. When you have spent several years speculating about the magnitude of the injury, and you get binders of information dropped on you on the eve of mediation, arbitration, negotiation or trial involving a claim that is presented as a very serious injury, you look at that information from a jaundiced perspective.

Anecdotally, I would say 80% of surveillance is done because we get little or no information from plaintiffs’ counsel, or because our dealings with a certain firm or lawyer indicate they are engaged in ‘file building.’ Adjusters are under extreme pressure to reserve accurately within the year a loss is reported. If they can’t get it overtly or don’t trust the source, what other options do they have?

Plaintiffs’ counsel have encouraged clients to ‘doctor- shop.’ Any adjuster who has been working on personal injury files for three years can rhyme off a list of doctors a plaintiff has or will have seen throughout the life a file upon finding out who the plaintiff’s counsel is. If a plaintiff has a family physician they have seen for 20 years and gets injured, does that physician suddenly become so incompetent that they can’t comment on the injury or make the necessary referrals?

We in the insurance industry are wise to ‘sanitized’ medicals that plaintiffs’ counsel have sent back to physicians several times in order to delete information that they think might be detrimental to their clients.

Alas, plaintiffs’ counsel have been known to plant the seed of unrealistic expectations in their clients’ minds and then blamed the insurer for failing to pony up with the lotto. In addition, there have been instances in which plaintiffs’ lawyers have acted in a totally uncooperative fashion, delayed bits and pieces of evidence, didn’t return calls, ignored an insurer’s correspondence that virtually pleaded for information and then told their clients the insurance company was deliberately delaying matters as a stall tactic.

So when the plaintiff finally agrees to mediate and we arrive on the scene, it’s not a complete picture to suggest, as Kwinter’s article does, that mediations fail primarily because insurers are supposedly not providing appropriate authority.

Lest you think I am accusing all plaintiff counsel of such behaviour, this is simply not the case. The only practice I have listed above that is frequent, I would say, is the withholding of information by plaintiffs’ counsel.

Our company has piloted a ‘Planned Settlement’ program, which we rolled out 18 months ago. The entire program is based on a principled approach of cooperation and early mutual disclosure focused on the injured party. Despite interest in the program, the uptake has been disappointing.

More recently, we have taken what we believe is a very principled approach to claims falling within Alberta’s Minor Injury Regulation (MIR) cap. Essentially it offers a two-tiered settlement: it allows a plaintiff to collect the cap amount now and, if the cap is ultimately declared unconstitutional, an agreed-to amount plus interest at a future date. The uptake has been modest to say the least. Exactly whose interests are paramount when plaintiffs’ counsel won’t even consider it?

I cite these two examples of our initiatives — there are more — to illustrate that we continue to engage in initiatives that promote a cooperative relationship with plaintiffs’ counsel. We will continue to do so in spite of the reluctance of plaintiffs’ counsel to join us in setting the table together, so that all may walk away feeling they have been treated with decency and respect.

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When the table is set for an acrimonious relationship, why would the defence be expected to bring sugary treats?