Best Practices For Handling A Property Damage Claim?

When it comes to car accidents, the vast majority of the attention given by first responders, insurance companies, law firms, and others involved is to any personal injuries arising out of the accident. Fortunately, not all accidents involve personal injuries, but virtually all accidents involve some degree of property damage to the vehicles.

If your vehicle is damaged in a car accident caused by the negligence of another driver, you are entitled to receive compensation from the negligent driver’s insurance company for the damage to your vehicle.  At Boling Rice LLC, our Atlanta car accident lawyers represent injured clients in resolving any vehicle property damage claims as part of our total representation at no additional charge. Below is an overview of how a property damage claim usually works.

At The Scene Of The Accident

The property damage claims process really begins at the scene of the accident. The initial decision for the driver involved is whether or not the vehicle can still be driven safely and legally or whether it should be towed to a body shop or tow yard. If the vehicle has only cosmetic body damage but all lights and systems still work properly then it is usually safe to drive the vehicle home from the scene of the accident. If, however, any lights are not functioning or there is any doubt that the vehicle’s equipment and systems are in proper working order then the vehicle should not be driven from the scene, and a tow truck should be contacted.

Many tow companies have rate agreements with car insurance companies, and you can ask the tow company when you contact them if they have such an agreement with the at-fault driver’s insurance company. If they do, that will make your claim for payment of the tow truck bill and storage fees simpler.

Make sure to take photographs of the damage to your vehicle as soon as you can safely.  Photos before the vehicles are moved are best but not a necessity.  Take more photos than you think you will need to make sure you document everything.  

Is Your Vehicle Totaled?

Once the vehicle is removed from the scene then the issue becomes repairs. Typically, the negligent driver’s insurance company will assign a separate claims adjuster to the property damage claim from the adjuster who is assigned to any personal injury claim you may have from the accident. The property damage claims adjuster will usually send a field representative out to physically look at the damaged vehicle and assess the total value of the damage.

If the total cost to repair the damage exceeds the value of the vehicle, the insurance will consider the vehicle a total loss or “totaled” and will purchase the vehicle from you for fair market value rather than pay for repairs. If the vehicle can be repaired, then the insurance company will be responsible for the cost of the repairs as well as the depreciation in fair market value that the accident has cost the vehicle.

Insurance companies also negotiate rates with auto repair and body shops, and will often try to steer you to their preferred shops. You are not required to use the shops the insurance companies prefer if you have a mechanic or body shop you prefer to use. In fact, it can often be a good idea to have a mechanic or auto body repairman you trust evaluate the damage and provide you a repair quote. Because body shops work on cars that have been in accidents so frequently, the good ones usually know how to explain the repairs needed to an insurance adjuster on your behalf to make sure insurance will cover the full amount before the shop commits to doing the work.

How to Value Your Vehicle

Always make sure insurance approves the repair quote and agrees to pay it before authorizing the work. Under Georgia law, if repairs are done on your vehicle which are not paid for, the repair shop has a lien on your vehicle which they can enforce by keeping your vehicle and not returning it to you until full payment for the work is received. So if you authorize repair or body work before receiving approval from the insurance company, you could be forced to pay out of pocket for any amount of repairs that insurance later objects to as being unreasonable or unrelated to the accident before you can get your car back from the shop.

If your vehicle is a total loss, insurance must pay you the fair market value including your tag and title fee plus any additional considerations which add value to your vehicle. Usually fair market value can be determined using valuations provided by organizations such as Kelley Blue Book, Edmunds, NADA, and similar tools available to insurance companies. Each of these organizations provide tools on their website which enable you to obtain an approximate value for your vehicle in the condition it was in prior to the accident.

By obtaining fair market value reports from multiple sites, you should have pretty good evidence of the value of your vehicle. This can be used to negotiate with the insurance company if their valuation differs greatly from yours.

Usually, however, because of the widespread availability of these vehicle valuation tools online, the fair market value of your vehicle is not a hotly disputed issue with insurance companies. While their valuation will be based on multiple factors including the field adjuster’s report and their own valuation tools, their determinations of fair market value are typically close to those provided by Kelley Blue Book and others if the vehicle data being entered is accurate.

Overall, while it can still be a headache to have to deal with, the property damage claims process is much faster and much more straightforward than the personal injury claims process because repairs needed and vehicle values are much quicker and easier to objectively determine than medical diagnoses and pain and suffering. Thus, there is usually much less to fight about in property claims and much less money at stake than there often is in personal injury claims.

Nevertheless, if your vehicle is damaged in a car accident and you are unsure of your rights or how to proceed or if the insurance company is not treating you fairly, contacting an experienced auto attorney who can help you through the process is always a good idea.

Stop Loss Insurance Situations

Many benefit plans these days use stop loss insurance to pay claims.  Stop loss insurance is an arrangement between the employer and an insurance company whereby  the Plan is self-funded up to a certain predetermined maximum loss (either per employee or in the aggregate) and once that level is breached, the insurance company pays the rest of the benefit.  Again, this will be revealed on the Schedule A.

One would think that stop loss insurance situations would create an argument for state law application since a portion of the Plan is covered by an insurance policy—- in fact very often, the insurance portion of the Plan covers the vast majority of benefit payouts (employer contribution is more like a deductible payment).  Instead, circuit courts that have heard the issue of how to treat stop loss Plans have ruled that such Plans are still self-funded plans preempting state law.  This despite the fact that the employer is vastly limiting its liability by purchasing stop-loss policy coverage.

The stop-loss situation is the next area of ERISA law that the Supreme Court should take up and resolve once and for all.

Documents To Request

While the Form 5500 and related schedules will more often than not reveal whether the Plan is self-funded or insured, it remains important to request documents from the Plan to be sure you have the funding relationship correct.  In addition and even more important now in light of the McCutchen ruling, ERISA negotiations come down to what the Plan language itself says or does not say so getting the Plan itself is absolutely necessary.

Every time we receive a response from a Plan administrator or third party administrator, we send a letter requesting at least the following Plan documentation:

  1. The Summary Plan Description;
  2. The Actual Plan or Contract;
  3. The Latest Summary Annual Report;
  4. The Latest Terminal Report;
  5. The Bargaining Agreement;
  6. The Trust Agreement;
  7. Any evidence your client was supplied with a copy of the Summary Plan Description.

If you are dealing with a third party administrator (Optum; Rawlings etc.) that is representing the Plan and/or the Plan Administrator, they should be able to get all of this documentation.  Usually we will start with a simple request to this entity for these documents.  Often times however the third party admin is only able to get the Summary Plan Description.  In those situations, we end up sending a statutory request pursuant to Section 1024(b)(4), Title 29, US Code.  Under this code section, should the Plan Administrator fail to provide the documentation within 30 days, a fine of $100 a day until production can be obtained by the plan participant.

The Aftermath Of ERISA Liens After McCutchen

The McCutchen ruling confirms that the Plan language will rule all decisions regarding reimbursement of an ERISA lien when it is a self-funded Plan.  Everything from the ability to use equitable defenses to who pays the plaintiff’s attorney’s fees are now controlled by the language in the Plan.  Only if there is a gap in the Plan language on an equitable principal or lack of mention of how attorney’s fees will be handled is an argument created in favor of the plaintiff against the ERISA lien.

Here are some tips on what to look for in the Plan language to help with legal arguments for the plaintiff on a lack of reimbursement right or reduction for such things as attorney’s fees:

  1. Can You Argue the Made-Whole Doctrine: Look to see if there is specific Plan language that abrogates the made-whole doctrine. Most Plans now contain this language and certainly under the McCutchen ruling it is not crystal clear that such language will prevail over any circuits use of the made-whole doctrine as the default rule. If you are lucky and the Plan does not eliminate the use of the made-whole doctrine, this is likely your first and best defense against reimbursement of the ERISA lien.
  2. Does Plan Contain Specific Language Authorizing A Valid Right of Recovery : 

    McCutchen did not touch the prior ruling by the Court in Sereboff v. Mid Atlantic Medical Service, Inc. wherein it held that an ERISA carrier can only enforce its subrogation rights if the Plan specifically identified a particular fund out of which reimbursement much occur separate from the beneficiaries general assets. If it does not then the carrier has absolutely no right to recovery.

    The simplest way to illustrate this distinction is looking at two contrasting Plans analyzed by the 11th Circuit in Popowski v. Parrott :

    Plan 1:   Language stated that a lien was created “on any amount recovered . . . whether or not designated as payment for medical expenses” and “the Covered Person . . . must repay to the Plan the benefits paid on his or her behalf out of the recovery made from the third party or insurer.”

    This Plan language was enforced by the court because it created a lien on the amount recovered and only from that amount (i.e. specific fund).

    Plan 2:    Language claimed a right of reimbursement “in full and in first priority, for any medical expenses paid by the Plan relating to the injury or illness.”  No mention was made in the language regarding from what funds this payment was to be made and therefore claimed a right to reimbursement not only from any third party or insurer but from the plaintiff’s general assets.

    This Plan language was not enforced by the court because it did not create a line on the amount recovered only.

  3. Like in McCutchen, Look For Attorney Fee Payment LanguageLike in McCutchen, Look For Attorney Fee Payment Language : This is the common-fund doctrine equitable principal. McCutchen is your guide to this analysis. Is there language in the Plan disavowing the duty to pay for any portion of the plaintiff’s attorney’s fees owed in recovering the money from the third party? Again, if the Plan lanuage is silent as to whether attorney’s fees are to be taken into account in reimbursing the Plan, then you can argue using McCutchen that the default rule is that attorney’s fees are to come out of the amount owed. See McCutchen for how that is calculated.

Suggested Outline of Negotiation Positions To Take

1. State Law Preemption:     If you have favorable state law subrogation law that would eliminate or potentially eliminate the entire claim, start with the argument based on your investigation that the Plan is not self-funded and therefore State law applies.

2. Lack of Specific Fund Language:    If you have favorable Plan language that mirrors the Plan found unenforceable in Popowski then argue that there is no right of reimbursement under ERISA law.

3. Make Whole Doctrine: If the Plan language lacks the disavowing of this doctrine argue the make whole doctrine means no recovery for the Plan in your case.

4. Common Fund Doctrine:    If the Plan language lacks language addressing attorney’s fees argue at the very least that the amount should be reduced for recovery of attorney’s fees.  See McCutchen.

5. Reduce Amount of Settlement That Applies to Medical Expenses:    The Plan is only allowed to recover for medical benefits it provided and therefore should only be allowed to seek reimbursement from that amount of the settlement or verdict that paid for those expenses.  If your case had a large pain and suffering and/or lost wage component and the recovery was small in comparision to those damages, argue that most if not all of the settlement proceeds were for things other than medical expenses.  This is the whole point of Sereboff.  The Plan only has a lien on the portion of the proceeds for medical expenses.

6. Argue will not pursue claim at all if plan is going to seek full reimbursement.  This argument is effective in those situations where the cliam is worth much more than the available coverage and the ERISA lien will take all or almost all of the settlement or verdict proceeds from your client.  What is the point in pursuing the claim if everything is going to go to the Plan. This argument brings up a good example of why it is important to start contacting the ERISA plan early in the case. If you wait until after the claim is settled then this point is lost.

7. Argue the Facts.   I call this one the Wal-Mart negotiation.  You may recall seeing the headlines a few years back where a Wal-Mart employee was injured in a motor vehicle accident and as a result was left with permanent brain damage.  Wal-Mart pursue in court its ERISA rights to collect the entire amount of the settlement the plaintiff received from the at-fault party’s insurance company.  It would have left the plaintiff with nothing.  After multiple negative news reports on the case, Wal-Mart dismissed its lawsuit and allowed the worker to keep all of the proceeds of his recovery.   If your client is facing a similar situation against a large employer, employ the Wal-Mart negotiation.

Without question it is impossible to go through every aspect of an ERISA lien negotiation in one article.  We have attempted to lay out here numerous startegies that can be implemented to fight against the inevitable argument from Plans and third party administrators they hire to collect on the liens that the McCutchen case is a complete game changer in their favor and therefore your client must reimburse the Plan in full.   This is simply not the case in most jurisdictions.



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