Negotiating with Computers | Part 1

by | May 17, 2023 | Negotiating with Computers

Understanding the Evaluation Process

Insurance companies use software programs to determine settlement value. The adjuster plays no role in this determination. For this simple reason, your settlement demand must speak computer, not human.

The evidence shows that the formatting of the settlement demand directly correlates to settlement value. Since you will send a demand letter in every case, it pays to learn what you must do to achieve maximum settlement value.

Treatment Summaries Are Not the Answer

In the early 1990s, insurance companies moved away from having their adjusters calculate settlement value. While it was commonplace for the adjuster to use their experience and skill to make this determination, it produced widely-varied results between adjusters and geographic regions. As any large company seeks to do, they sought out a solution that provides them predictability and control over their highest cost of doing business…paying out claims.

This ushered in the era of using computer evaluation programs to calculate settlement value. These programs are relied on exclusively to determine settlement range. That means an adjuster’s opinions on claim value and their sympathy for your client are wholly irrelevant.

This is why narrative treatment summaries do not allow a case to reach full value. A treatment summary, at best, is a chronological sequence of events following some type of incident. Even if an adjuster took the time to read the summary and was therefore educated on the claim, it has no effect on the value of the case. Why? The adjuster is not involved in the process of calculating settlement value.

Regardless of how detailed and well-written a medical summary is, the information contained in that summary is not in a form that a computer program understands. Events and stories do not mean anything to a computer program. A computer only understands what it has been programmed to understand.

The only thing a medical summary accomplishes is waste you and your staff’s time. Wasted time equals wasted overhead. To remain profitable in an era that has seen lower and lower settlement offers, you must adapt to using time wisely and keeping costs in check.

This is How Insurers Evaluate Settlement Demands

As mentioned earlier, adjusters no longer use their skill, experience, and judgment to calculate settlement value. Their role when receiving a settlement demand package is very different for this very reason.

Their first priority will be to go through the medical records and bills and fill out a dissection sheet, referred to as a medical summary at some insurers. As the name implies, this is a one or two-page form that has the meat and potatoes of your client’s injury and treatment history crammed into a standard template.

Adjusters originally filled this out independently because of the timeout feature within Colossus. If Colossus sits idle for a period of time, the program logs the adjuster out. This is yet more proof they are not going to comb your narrative style demand looking for information to be inputted. They simply do not have the time in their day to do so and Colossus will not give them the time even if they had it. Today, it is required to be filled out at most companies to increase productivity.

Ideally, you should be providing the adjuster the dissection sheet already filled out. Imagine if someone gave you a settlement demand already drafted…that is how gracious the adjuster will be when you send them the dissection sheet.

Chances are you have never heard of one. We at Warrior Injury Law send a dissection sheet with all settlement demands. Get in the adjuster’s good graces now and it will pay off in the long run.

Once they fill out the dissection sheet, they will compare the information on the form to what is in your settlement demand. Think of the sheet as all the possible information that could be inputted into Colossus for the claim.

This is where the major obstacle appears. If you did not mention value drivers in the demand, such as CPT or ICD codes, justify complaints based on the injuries, and cross-reference the date in the records with what you are asserting in the demand, they will cross it off on the dissection sheet.

What’s the significance of this? It means the pieces of information are not inputted into Colossus. If it is not inputted, it is not given value. We cannot stress this point enough. Colossus will not give them value if you do not include value drivers in the demand and in the correct format. This is why narrative demands are settlement death.

There are over 11,000 value drivers that can be inputted into Colossus. If you do not know how to list and support them in your settlement demands, the adjustor is going to treat them as if they never occurred. That means you are leaving money on the table that Colossus would have otherwise given value.

If an adjuster has told you they are not considering certain injuries or treatment, now you know why. Something within Colossus is rejecting the information, or it was never inputted in the first place.

Note that the adjuster is only entering pieces of information. This can include the ICD codes, permanent impairment rating, and duties under duress. At no point are they entering in a chronological summary into Colossus. The program would not understand it. Colossus is coded to understand value drivers, not stories. Colossus doesn’t care that your client presented to Dr. Feelgood complaining of neck pain. Colossus cares about CPT codes that are used to treat the ICD codes that are entered.

This is How Colossus Calculates Value

When a value driver is entered into Colossus, the piece of information has a specific number of points pre-assigned to it. As an example, an ICD code for a rotator cuff tear is worth more points than one for lumbago. The same goes for everything that potentially can be entered.

Colossus will assign a dollar value to each point based on the totality of what is entered, and additional factors including everything from the incident’s location, your client’s age and income level, and suspicion of pre-existing injuries. Add up the value of the points, subtract 25-35%, and you end up with a settlement range the adjuster is allowed to settle the case within.

Potential clients always ask, but what about my client’s specific circumstances that are unique to them? Remember what we said earlier. Colossus is purposefully designed to remove the claim’s individuality from the equation.

Colossus does not care your client is a single mom with three young children. While the program can potentially consider this, it is designed to not give additional value for these factors unless you have a permanent impairment rating (which we will discuss in future article).

So, what it is an attorney to do? Use this information in the right way to negotiate your way to the top of the settlement range generated by Colossus. Adjusters are monetarily rewarded for consistently settling claims at or below the bottom end of the range Colossus generates.

That does not mean they will not settle cases at the high end of the range. They are also rewarded for how many cases they settle and penalized for cases that go into litigation.

So What is My Demand Supposed to Look Like?

Consider this snippet that likely reflects your current narrative style settlement demands:

On June 26, 2018, Ms. Claimant presented to Dr. Chiro who noted that she experienced a whiplash-type motion. After the collision, she started progressively feeling headaches, left neck and upper back pain, and nausea. At the time of her presentation on June 26, she was reporting increased headaches, left neck ache, and left upper back tension.

Based on what we have talked about, what information from this snippet will be inputted into Colossus? If you guessed absolutely nothing, you are correct! Headaches, upper back pain, and a July 26, 2018, chiropractic visit are not enterable into Colossus. Only ICD codes, CPT codes, and things such as complaints (headaches) may be entered.

We understand what it feels like to be told you have been doing it wrong. This is not an attack on your credibility or skill, because more than likely, this is how a senior attorney taught you back in the day. Times have changed and we are at the forefront of understanding it, so hang in there with us.

You may be thinking, okay, let me just simply list out the CPT and ICD Codes in the demand. Not quite. Colossus is designed to recognize and then reject information as it is being entered. If every possible piece of information was entered from your client’s claim, the insurer would start paying out claims for a lot of money, and lose a lot of money. That is not going to happen.

It is not enough to simply, or even properly, format your demand to list ICD codes. Colossus will only give value to ICD codes if proper CPT codes are used to treat those injuries. This is why the doctor’s skill in putting together medical records has one of the greatest impacts to the potential settlement value (we will devote entire article to this in the coming weeks).

The data from the records and bills must be supported by itself. Think of a value driver as a 2×4 pine board. It cannot support itself on its own. Properly fasten a couple thousand of them together and you get a structure that can fend off a hurricane. Think of your settlement demand the same way.

You must cross-utilize the data within itself to support what it is that you are claiming, i.e.: injuries, treatment, and complaints. Support the treatment, build on injuries, and get value placed on complaints and the impacts to your client’s life.

we spent over two years testing out different methods and formulas for ways to present the information to increase the amount of information that Colossus accepts. We continue to refine our demands based on feedback from clients.

It typically takes 3-5 hours to assemble one of our settlement demands, thirty minutes if we use our custom-built software. Our software determines how the demand is formatted based on what information is contained in the records.

We started Demand Drafter because we recognized how few attorneys understand how to maximize value with Colossus. You can be an expert negotiator and a skilled trial attorney. It means nothing unless you get the information inputted into Colossus and past the program’s triggers.

We have devoted thousands of hours to understanding how these programs operate so that together, we can make a measurable impact to victim’s lives and reverse the trend of lower and lower settlements.

The Benefits of a Properly Formatted Demand

A properly formatted demand gives you the best opportunity to settle for maximum value, spend less time negotiating, and resolve more cases in less time.

Clients that walk away with bigger and faster settlements are more likely to refer their family and friends to your firm and write positive reviews on Google, Yelp, and Facebook.

Additionally, bigger settlements mean you will not have to ask medical providers for big reductions. Doctors that get paid more will send you more clients! Free marketing while you make more money with less work.

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