The Economics of Justice in a Small Bicycle Injury Case

It’s common to receive phone calls seeking legal representation for “small” bicycle injury cases. My intent in this article is to give you a realistic perspective, so you can decide how to proceed in small injury or damaged bicycle cases. Looking back over thirty years of handling bicycle injury cases, I can tell you the legal playing field has tilted in favor of the big insurance corporations. In the early 80’s even “small” cases could be fairly settled out of court, for three times the medical bills. This gave the victims money for pain and suffering on top of attorney fees and medical costs. So, a case with $1,000.00 in medical bills would settle for $3,000.00.

As the insurance industry pumped millions of dollars into tort reform by way of advertising and politics, life changed for consumers, including bicycle crash victims. Currently it’s common place to see a settlement offer of only $1,000.00 on a $3,000.00 case, with an offer to pay only your medical bills. Attorney fees and victim pain and suffering have taken a big hit.

What is a small case?

Generally speaking, a small case is one where there is proof of clear liability or fault, but limited damages. I’m referring to bicycle damage or temporary injuries like a sprain, strain, whiplash, abrasions and contusions. Whereas, a large case involves serious injuries, broken bones, displaced fractures, head injuries and even death. Most serious cases require surgery, and victims often sustain permanent disability. Even small non-displaced fractures fall into the “small” case category because they are not permanent, nor do they generate a lot of medical costs or lost wages. By no means am I minimizing the trauma, fright or change of lifestyle of such an injury; including bicycle damage losses.

When I first started practicing law in 1983, I typed on an IBM typewriter. With the age of computers, the insurance industry got clever and generated litigation programs to standardize the claims negotiation process. That’s right, your case may now be handled by a computer called “Colossus”. Allstate is famous for this. In many companies, the hands of the frontline claims adjusters are tied. Their discretion is limited. Then came the appointment of judges and politicians who developed anti-consumer laws and decisions. Such punitive laws factor into whether a lawyer will take your “small” case.

Insurance Hurdles

One law that has been abolished is what’s known as the collateral source rule (Howell v. Hamilton Meats case). Historically when you pay for health insurance, the law for decades was pro-consumer. It rewarded citizens who invested their hard-earned money into paying premiums and obtaining healthcare. They could claim the full medical bill in court, not the HMO/PPO reduced or discounted rate. Insurance reductions or deductions per the HMO/PPO plans were irrelevant. For example, a $100.00 medical bill was just that. Now you only get to submit $50.00 (the discounted rate) to a claims adjuster or jury. In effect, your case has been devaluated. This misleads the jury because they will never see the true correlation between the medical costs and harm.

Then came new case law from the United State Supreme Court in the area of Erisa (U.S. Airways v. McCutchen case). In many instances, your work self-funded HMO/PPO medical plans require you pay them back at 100% for any bills they paid if you recover from a negligent motorist. So you pay premiums and your health plan only “loans” money to you by paying your bills. This is called reimbursement or subrogation. These health benefits are illusory to a degree. Luckily, I’ve studied this area of law for years and know most of the exceptions to the reimbursement laws. This means that the $1,000.00 offer to settle your “small” case, must be paid back to United Health Care, Kaiser, and Blue Cross etc. Which means you get a zero net settlement. To top it off, if you’re Medicare qualified, that’s another reimbursement maze lasting at least six months to get a final amount certain so you can negotiate a settlement. Uncle Sam is now involved in your case.

Additionally, the insurance “bad faith” laws were overturned. In a third party, bad faith claim, an insurance company cannot be sued for delay or unfair business tactics. This was made famous in the Moradi-Shalal v. Fireman’s Fund Ins. Co. case. They can’t be sued. So, insurers have little legal incentive to act fairly.

Throw in the down turn in the economy, which has caused budget cuts in our court system. Now, the courts close at 3 p.m. Monday – Thursday and 12:00 on Friday. Courtrooms are closing and many civil cases including South Bay and El Cajon court matters, have been transferred and are now only heard in San Diego Central court. This has translated into a drop in civil filings. In 2013 there were 61,465 and in 2014 57,442, a drop of 6.5%. It’s uneconomical to litigate small cases with all the delays. Access to justice is limited. There are also the costs of litigation that must be factored into fighting the case. Depositions, investigation, etc. Hopefully, the client can weather all the system’s hurdles.

Remember, most personal injury lawyers work on a contingency no win, no recovery basis. It’s a risky commission structure where we fund the case. Without a prompt and generous recovery, we are unable to pursue justice in the “small” cases. Understandably, the economic incentive is low in a small case which can leave the bicycle injury victim without a lawyer. Sure, you can go to small claims court without representation, with a cap of $10k.

Nevertheless, I often meet for free to help Triathlon Club of San Diego members and other bicyclists prove their cases on their own. Alternatively, as warranted, you can pay an attorney a flat reasonable one-time fee to help investigate, document, and prepare a competent settlement demand letter which empowers you to negotiate on your own with the insurance companies. If you are satisfied without having to pay out a percentage of your recovery to a lawyer you can then settle the case.

Lastly, please buy strong (500k) under/uninsured motorist coverage on your car, backed up by an underinsured/uninsured motorists umbrella rider of 2 million. If you or your loved one is seriously injured or killed, at least there will be compensation over and above payment of your medical bills and lost earnings. As you know, auto insurance will in most cases cover you on a bicycle. See my article and listen to the Podcast for “Bicyclist’s Don’t Skimp on Insurance.” I’ve also listed companies and their rates along with a podcast episode entitled “Shopping for an Umbrella Policy.”