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JUNK
SCIENCE - INSURANCE
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No or low property damage = no
injury
The major premise of this paper is that
all insurance companies will use any
excuse to keep insurance premiums and
profits. |
1) State Farm’s use
of paper reviews to deny medical payments claims
[1]:
Dateline, a syndicated television show, on June
23, 2000, revealed the results of a 15 month
investigation of a paper review of medical
payments claims by State Farm. This one hour
presentation revealed that State Farm and all
big automobile insurance companies used paper
review companies like Comprehensive Medical
Review (CMR) in San Diego, California that had
produced 27,000 reports over the past 15 years
for State Farm and many of the nation’s the
leading insurance companies.
The investigation revealed that the reports were
written by CMR employees with no medical
training who used 160 stock computer paragraphs
that were slanted to deny medical payments
benefits to State Farm insured’s. The doctor on
staff would look at and sign 50 medical reports
in one hour, about 1 per minute. Also, that
State Farm adjusters would call CMR to help
author the medical reports to reduce the amount
of money paid on the claim.
An economist hired by someone suing State Farm
analyzed nearly 100 claims State Farm sent to
CMR that proved how paper reviews profit State
Farm. He found that accident victims on average
had about $7,400 in medical bills. CMR’s paper
review recommended slashing those claims. In the
end, State Farm paid on average only $4,400,
saving State Farm about $3,000 in medical bills
every time it used a paper review.
Based on the above information, if State Farm
saved about $ 3,000 per medical payments claim
by using CMR, then, 27,000 reports during a 15
years period times $3,000 equals about $
81,000,000.00 profit to State Farm by cutting
medical payment benefit that were owed to their
insured’s.
2) Deliberate fraud
by State Farm in repair of insured’s vehicles
[2]:
In 1999, an Illinois jury awarded a $456 million
dollar judgment against State Farm and the Judge
Speroni added another $ 730 million dollars
because the company deliberately defrauded
policyholders by requiring body shops to use
inferior crash parts to repair their wrecked
vehicles. The combined award totaled $1.18
billion dollars.
During the trial, evidence proved that State
Farm used inferior crash parts for 11 years.
State Farm testified that in 1997 alone, such
parts saved its customers $237 million dollars.
If we multiple $237 million times 11 years,
State Farm defrauded its customers and made a
profit of 2.6 billion dollars by forcing body
shops to buy inferior crash parts instead of
original equipment manufactured parts to repair
policyholder vehicles.
3) Junk science, no
or low property damage = no injury:
Background leading to scam:
Prior to 1980, a minor collision could cost an
insurance company thousands of dollars to repair
a 5 MPH rear-end property damage loss. For a few
vehicles, the cost to repair a vehicle in a 5
MPH collision as of 2000 had not changed much. A
series of studies by the Insurance Institute of
Highway Safety [3] reported in the year 2000,
showed that many vehicles with the new energy
absorption bumpers showed no or less than $500
damage but a few had thousands of dollars of
property damage at 5 MPH. For example, a
mid-size utility Mitsubishi Montero had $2,609
in property damage in a low speed crash rear-end
crash at 5 MPH into a flat barrier.
To save billions of dollars in property damage
repair costs in low speed automobile collisions,
the insurance lobby in Washington DC was
instrumental in persuading the National Highway
Traffic Administration (NTHSA) to implement the “No
damage” 5 MPH Bumper Standard Part 581
in 1980 [4] forcing car manufacturers to design
“No damage” bumpers in low
speed collisions. In 1983, the 5 MPH standard
was reduced to 2 ½ MPH. [5]
Birth of the scam:
Between 1980 and 1990, the insurance industry
saved billions of dollars in repair costs
because they influenced NTHSA to pass the no
damage bumper for low speed collisions. The
industry knew that low speed property repair
costs were expensive and for some vehicles cost
thousands of dollars to repair prior to 1980.
As of 1990, the issue became how do we save
money on claims of whiplash injury in low speed
collisions. Prior to 1980, photographs of
property damage would show substantial property
damage in low speed auto collision and evidence
of property damage was consistent with claims of
whiplash injury. Some insurance claims person or
defense attorney realized that if a photograph
of the rear bumper or the car showed no/low
property damage, we can argue “No
property damage, no injury.”
This is the basis of the scam. The industry knew
that the amount of force is the same in a low
speed impact prior to 1980 and after the
implementation of the “No damage” bumper. The
only difference is that the property damage is
virtually non-existent after 1980.
Proof that “No property damage, no
injury” is a scam:
The insurance industry routinely hires defense
bio-mechanical experts to contest minor impact
soft tissue injuries. (MIST) The basis of this
defense strategy is based on no/low property
damage to the vehicles.
The Brault study [6], a low speed human crash
study, has refuted every basis of the the
defense strategy of no property damage, no
injury. Forty-two persons were exposed to
rear-end impacts speed changes of 2.5 mph and 5
mph. Objective clinical deficits were consistent
with whiplash associated disorders (WAD), were
measured in men and women at 2.5 mph and 5 mph.
The test vehicles were hit in the rear over one
hundred times without any property damage. After
impact, with no braking, the force of the
impacts caused the vehicles to roll forward 3
meters into a gravel pit before stopping. [7]
A study quoted in the Brault Study, Ryan and
coworkers, found that automobile occupants who
were unaware of the impending collision were 15
times more likely to have persisting WAD 6
months post impact. The Brault study
participants were hurt even though they knew of
the impending collision. If an injury victim is
unaware, his neck muscles are not tense, the
impact causes a 10 lb head to be snapped
backwards within a tenth of a second at a force
of 6.7 to 12'g’s of force. [6]. This necessarily
means that a 10 lb head is loaded with a force
comparable to 67 lbs to 120 lbs within a tenth
of a second. This is why injury victims get hurt
in a rear end, no property damage collision.
Plaintiff attorneys throughout California are
starting to file motions in limine or making a
request for a Kelly-Frye hearing to exclude the
defense bio-mechanical testimony based on junk
science that no property damage proves no
injury. Courts throughout California and our
nation are routinely excluding this junk science
testimony.
Carl Berkovitz, Esq.
Mr. Berkovitz has been practicing law for 25
years and is a former AllState Insurance
Adjuster.
References:
1. The Paper Chase by Dateline NBC New,
televised June 23, 2000.
2. Los Angeles Times news story, October 9,
1999.
3. Insurance Institute for Highway Safety crash
tests reported May 24, 2000.
4. National Traffic Highway Safety
Administration Standard Part 581, 1980.
5. National Traffic Highway Safety
Administration Standard Part 581, 1983.
6. Clinical Response of Human Subjects to
Rear-End Automobile Collisions, 1998.
7. Head/neck Kinematic Response of Human
Subjects in Low-Speed Rear-End Collisions.
1997
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