Maximizing
Subrogation Recoveryby Paul
Vigushin
Law Offices of Paul Vigushin, P.C.
Dallas, TX
972-705-9911
This article is for the do-it-yourselfers. Let's face it-the
best way to maximize recovery through subrogation is to not have to share a portion
of the recovery with lawyers. Now, I am not talking about larger, complex, losses,
which require the attention and skill of legal professionals. I am talking about
the thousands upon thousands of cases where the losses total less than $100,000.
For one thing, on many of the smaller cases, once you have paid expenses and legal
fees, hardly anything is left to be termed a "recovery." But more importantly,
there are many things that you, the subrogation professional, can do to bring
smaller claims to a successful conclusion on your own. Too many small losses are
turned over to attorneys at the first signs of resistance from the other side.
After the company you work for pays its insured on a claim, and someone else is
deemed to be responsible for the loss, the subrogation department normally sends
out a form letter advising the third-party or its insurance company that they
are responsible for the loss. Not surprisingly, very few check marked "paid
in full" come back by return post after such a notice. But this is not the
time to give up and turn the case over to an attorney. There are additional things
you can do to break the log jam and, at the very least, discover whether the loss
may be subject to arbitration. It is, you may already have everything at your
fingertips to bring an arbitration to a successful conclusion. Here are a few
tips to help you maximize your recovery.
When you are advised of a loss,
make sure the damage documents are in order.
Even if liability facts
are great, your chances for recovery are only as good as your damage documentation-and
I don't mean copies of cancelled checks, either. From the beginning of every new
file, your focus should be on both liability and damages. If the file shows that
the insurance company paid $X for damage to contents, is there corroborating documentation
from an adjuster? If policy limits were paid for building repairs, are there back-up
estimates and invoices? Does the file contain a subrogation receipt? Proof of
payment is only one piece of the damages puzzle. There must also be proof that
the payments were reasonable and in line with prices of that particular town or
region. Pay special attention to payment related documents. Otherwise, you may
discovery at the last minute that you only have documents to support eighty percent
of what your company actually paid.
Arbitrate smaller cases yourself.
One of the best ways to maximize subrogation recoveries for your company is to
arbitrate the smaller cases yourself. Hundreds upon hundreds of insurance companies
are signatories to various arbitration agreements administered by Arbitration
Forums, Inc., located in Tampa, Florida. The arbitration process is relatively
simple, if not a bit unruly for the uninitiated. Do not be afraid to arbitrate
cases, since you can, oftentimes, do as good a job of putting your case together
as an attorney. Because arbitration rules do not allow for discovery of additional
evidence, a lawyer's role is largely limited to filing out an application and
appending pertinent exhibits, which are usually culled from the documents sent
over by a subrogation recovery specialist.
Property damage claims for
less than $100,000 can be arbitrated if both insurance companies-the insured's
and the third-party tortfeasor's-are signatories to the Property Arbitration Agreement.
If the tortfeasor's insurance company is not a signatory to the Agreement, it
can still agree to submit the dispute to arbitration if it does so in writing.
To start the arbitration process, an application is filed with Arbitration Forums,
naming as respondent the tortfeasor and its insurance company. Prior to filing
the application, contact the third-party's insurance company and obtain a claim
number, which you will include with the application. The respondent has thirty
days to file a response, after which time the case is set for hearing. Supporting
evidence is submitted to the arbitration panel only and no discovery is permitted
by either side, as it is in litigation. You may attend the hearing in person and
argue the case, but need not. Panels are composed of one or three arbitrators,
and are required to render their decision within thirty days of the hearing. If
you win, you should receive payment within thirty days of the decision. There
are procedures to collect the judgment if it is not timely paid.
Often,
the most difficult step is finding out the identity of the alleged tortfeasor's
insurance carrier and then determining whether that carrier is a signatory to
any arbitration agreement. The person against whom you wish to subrogate may not
always disclose the identity of his or her carrier. There are several things you
can do to discover the identity of the other side's insurance carrier. Many building
and construction trades are regulated by a state agency. For instance, in Texas,
HVAC installers, who are sometimes the culprits in water leak and mold cases,
are regulated by the Texas Department of Licensing and Regulation. As part of
the requirement for obtaining a license, license holders are often required to
provide proof of insurance, which the Agency maintains in its files. This information
is discoverable under most states' open records laws. A letter to the proper regulatory
agency is all that is usually required to obtain a copy of the license and insurance
information for the person or company against whom you wish to subrogate. Then,
it is just a matter of determining whether that insurance carrier is a signatory
to any of the arbitration agreements and, if so, filing a claim with the carrier
and proceeding to arbitration. The best way to find out whether a particular trade
is regulated by a state agency is to search the internet or to call the reference
desk at the state's legislative law library. I have found reference librarians
to be extremely helpful in finding this type of information.
Another way
to discover the identity of an insurance carrier is to conduct pre-suit discovery.
Granted, this will require employing an attorney. But you may wish to employ the
attorney for the limited purpose of discovering the identity of the carrier, at
which point you can take over, if that carrier is a member of Arbitration Forums.
Pre-suit discovery usually involves deposing the third-party and subpoenaing his
insurance policy. Once the policy has been produced, it is relatively easy to
determine both coverage and the arbitrability of the dispute.
Once you
have submitted the application and supporting evidence, your work is mostly done.
All that remains is for you to attend the hearing and present your best case.
Arbitration will not serve your needs where there is more than one wrongdoer and
the insurance carrier for one of the wrongdoers is not a member of Arbitration
Forums. You can still file an application against the member company, but your
claim will be kicked-out without consideration under a rule that requires all
potential wrongdoers to be part of the case.
Be careful not to destroy
or lose evidence.
Nothing will diminish the recovery value of your
case quicker than destroyed or discarded evidence. Destruction of evidence, otherwise
known as spoliation, can result in anything from the dismissal of your case altogether
to a jury instruction that you destroyed the evidence because it was unfavorable
to your case. There are things you can do ensure that spoliation does not happen
or to minimize its adverse effects:
1. Communicate with your claims department.
Constantly remind your claims adjusters (and tell them to remind any independent
adjusters and cause and origin investigators they hire) not to discard or destroy
any evidence which is potentially related to the cause and origin of the fire.
It is easy to retain something that is mobile for later inspection. But if the
damage was caused by poor workmanship, instruct the adjuster to preserve the loss
site until potential defendants are put on notice of the loss.
2. Put all
potential defendants, even if they have a slight relationship to the loss, on
notice and them give a chance to inspect the loss site. If there is an initial
indication of a product defect or faulty installation or workmanship, the best
way to prevent future claims of spoliation is to put the potential defendant on
notice of a claim and to permit that defendant to inspect the scene immediately
after the fire. It is not possible to preserve the fire scene indefinitely. Owners
want their property rebuilt, and rebuilt quickly. But, if the identity of a potential
defendant can be established during the initial investigation, do everything you
can to put that defendant on notice and give it a chance to investigate and photograph
the scene. Call the potential defendant's corporate office and ask to speak to
someone in the legal department. If they do not have an in-house legal department,
ask to speak to the president, vice-president or risk manager. Get an address,
telephone and fax number and send a notice of potential claim, giving the other
side a week to ten days to inspect the damage. So long as you gave notice of the
loss, and the other side fails to inspect the loss site before it is rebuilt,
you will avoid claims of spoliation.
3. Do not permit retained evidence
to be discarded or sold for scrap until after you have a chance to consult with
subrogation counsel. Too often, counsel receives a file months after the loss,
only to find out that evidence which has been retained no longer exists. It is
very difficult to prove a defect or some wrongdoing without the crucial evidence.
Remind your colleagues, and yourselves, not to destroy or discard evidence where
there is potential for recovery through subrogation.
Give timely notice of
claim to government entities.
There are times when an insured's property
will become damaged by a broken pipe or sewer line maintained by a government
entity. While a governmental entity, like a city, enjoys immunity from both suit
and damages for its activities, many states have waived this immunity on a limited
basis. In Texas, and in many other states, for instance, a governmental entity
may be held liable for property damage, personal injury, or death, that arises
from the operation or use of a motor-driven vehicle or motor-driven equipment
during the entity's performance of a governmental function. In every instance,
liability hinges on giving proper and timely notice. In Texas, Arizona and Colorado,
for instance, this means sending notice to the government entity no later than
six months after the date of the incident. Some states, like New Mexico, have
shorter notice periods (90 days), while others require that notice be given within
a year of the event (e.g., Oklahoma and Utah). The notice has to describe the
damage or injury claimed, the time and place of the incident and the incident.
If the notice is not timely, the claim is waived. You should review the notice
requirement in your individual state's Tort Claims Act.
Proper Selection
and Use of Technical Experts
More often than not, the success of your
case depends on the opinion your expert is able to give and support. Choosing
the right expert can make all the difference. Many of you may already have established
relationships with cause and origin experts and engineers that you use time and
again. But when those individuals do not have the type of expertise you are looking
for, finding an expert who does may be the most important move you make.
The
internet may be the best place to begin your expert search. First, find out whether
there is an association for the type of specialist you are looking for. For instance,
if you are looking for a safety engineer, you may be interested to know that there
is an American Society for Safety Engineers. There are societies and groups for
a myriad of professions and activities, most with web-sites and on-line member
lists. It should come as no surprise that people know others in their profession.
So, even if the first several people you call cannot assist you, they may know
someone who can. Then, it becomes a matter of tracking down leads and finding
someone who has the type of expertise you are looking for.
After you come
across someone who "sounds" like the person you need-be it an air conditioning
technician, electrical engineer or OSHA specialist-request a copy of that person's
CV, list of cases they have testified in and the names of references. This information
is not as crucial if you are thinking of putting your case in arbitration, but
if you think the case may end up in court, it is imperative that you find someone
with not only credentials, but also balance and experience. Let's face it, experts
are hired guns. Unless you find someone who works in the industry and testifies
on the side, most of the "experts" you will come across offer opinions
for a living. Still, you want to retain someone who has testified on both sides
of the docket. Hire someone who has testified too heavily on behalf of plaintiffs
or defendants and you risk having bias color that person's opinions. Again, the
expert's background is not as important if you are going the route of arbitration,
but is something to keep in mind.
Other places to look for expert witnesses
include findlaw.com, claims.com,witness.net
and experts.com, among others.
Conclusion
We wish you continued success on your road to recovery!
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