Archive for November, 2011

Pain and Suffering: damages in a personal injury lawsuit

November 17, 2011

Everyone has heard the term “pain and suffering” associated with damages in a lawsuit. Many people discount the legitimacy of such damages and consider them overblown or exaggerated. This suspicion of  “pain and suffering” appears to exist until you are injured, until you are thrown into a world of hurt and until your world is turned upside down. Because pain and suffering is difficult to prove it does not mean that it does not exist.
For example, many people believe in god but no-one has ever seen the Divine.

Pain and suffering comprises both physical pain and emotional pain. Let’s see if we can describe what it feels like to be in constant, severe and unremitting pain:

the worst of hells is continuous pain; hell is continuous suffering;

pain and suffering shrinks your life; pain reduces your reality.

if life is a river you stay on the shore in the same place as when you were injured.

life continues in its normal flow without you.

you are disconnected from yourself, other people and the life you knew.

your identity is snatched away from you and you are in solitary confinement with yourself.

says the Buddah; he who is in perpetual hell never dies even if he wants to die.

infinite suffering for infinity.

constant unrelenting pain, every instant and for every second without relief with only death being able to relieve the pain.

“they shoot horses don’t they” to relieve their suffering.

the pain scours you.

it strips you of your self-respect.

it makes a coward out of you.

it debases you.

it makes you feel ashamed of yourself.

It, the pain, robs you of your hopes and dreams.

There is not enough money in the world to balance the scales of life to endure this pain and suffering. It is your reality from the moment you open your eyes in the morning to the time you struggle at night to close them.

These are some of the reasons that pain and suffering are part of the damages considered by juries in personal injury cases.

Arthur F. Licata

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your recent blog responses

November 17, 2011

Thank you for kind words.
perhaps some of you can suggest specific legaL topics that interest you or that need explanation.

Arthur F. Licata

Punitive Damages (Part 1): Only Punitive Damages Will Deter Insurer’s Unfair Practices

November 8, 2011

The Supreme Judicial Court heard oral arguments on October 6, 2011 in the case of Rhodes, et al v. AIG Domestic Claims, Inc., et al., SJC-1091. The primary issue for the court was: “Upon finding a willful violation of Chapter 93, did the trial court commit legal error in failing to double the underlying judgment when calculating punitive damages?”

Pursuant to G.L.c. 93A and 176D, punitive damages are awarded against insurance companies in order to punish their unfair and deceptive claims settlement practices and bad-faith settlement offers.

Unless there is a clear rule that imposes severe monetary sanctions against bad-faith insurers, there is no incentive for the insurers to change their bad-faith behavior. It is only the sanction of punitive damages that has changed insurer behavior in the past and will likely do so in the future.

However, trial court judges must have “effective” punitive damages – that is, the multiplication of the jury verdict by two or three times. Limiting punitive damages to the interest lost on the use of money will not deter unfair and deceptive claims settlement practices. The award of interest for a violation of 93A is an inconsequential punishment.

Given the economic disparity between plaintiffs and insurers, the insurers will continue to engage in bad faith because it is cost-effective. The removal of multiple punitive damages will negate the public policy purposes of G.L.c. 93A and 176D.

Insurance companies try to frustrate the trial court’s consideration of punitive damages despite their bad-faith behavior. What seems a series of disjointed and random acts by an insurance defendant is, in fact, a very well-planned strategy. Its actions are not unique to any particular case, but a piece in a larger plan to delay accountability and to drag out the case.

An insurance company plans to pay as little as possible for as long as possible; it is the company’s philosophy of doing business. If seen in that context, the decisions of the insurance companies seem coherent and well-executed. It is their attempt to frustrate the trial court’s application of 93A and 176D. All the while, they claim their actions are in response to unreasonable demands by the plaintiffs and their intransigent attorney.

In order to understand an insurance company’s tactics of delay, one must first understand the role that insurance plays in a lawsuit. Is there insurance to pay for a settlement or jury verdict? How much insurance? Who controls the insurance? Is it controlled by the insurance company or the insured?

Even the particular insurance company covering the loss makes a difference. Each insurance company has its own personality and levels of competence or incompetence. The adjuster’s experience and expertise is very important. Can he recognize a serious case and give it the attention it deserves, or are all his cases handled on an assembly line basis with the operative word being “no.”

For that matter, do the trial courts understand the business plan of insurance companies? If the trial judges do not, then they are missing the vital story between the lines.

An adjuster does not get rewarded for giving out money. The claims department is the tail of the insurance dog. The real business acumen and financial expertise are in the underwriting department. The finance part of the company is where the real business of investing premiums and profiting from this investment activity is carried out. Profit is not earned from merely collecting the premiums.

A claims department is a necessary evil in order to have the opportunity to collect premiums invest the money and hold onto the money for as long as it can in order to maximize the return on investment.

That is why most serious cases settle at the courthouse steps. The insurance company would rather keep the money it has set aside for the particular case (underwriting) and invest the money along with the premiums It will usually consider paying out in a settlement, only after earning as much as it can from its investments in stocks and bonds.

A succinct explanation of investment decisions and practices was discussed by Warren Buffett, chairman of Berkshire Hathaway, which is one of the biggest companies in the country and owns some of the largest and most financially successful insurance companies in the world.

This is what Buffett wrote in his 2009 annual letter to shareholders:

“Insurers receive premiums up front and pay claims later. In extreme cases, such as those arising from certain workers’ compensation accidents, payments can stretch over decades. This collect now, pay later model leaves us holding large sums – money we call ‘float’ – that will eventually go to others.

“Meanwhile, we get to invest this float for Berkshire’s benefit. Though individual policies and claims come and go, the amount of float we hold remains remarkably stable in relation to premium volume. Consequently, as our business grows, so does our float.

“If premiums exceed the total of expenses and eventual losses, we register an underwriting profit that adds to the investment income produced by the float. This combination allows us to enjoy the use of free money – and better yet, get paid for holding it.”

No wonder adjusters are encouraged to just say no. The strategy is to keep the money as long as they can, invest it, and simultaneously use time and delay as a bludgeon to wear down the resolve of the plaintiff and his attorney. There is a very clever method to their madness.

Money is the only sanction that gets the attention of an insurance company. Casualty insurance companies and their claims adjusters are not encouraged to fairly, justly and reasonably settle meritorious accident claims. If they did, there would be less float to invest and less investment income to earn.

Punitive damages, comprising two times or three times a jury award, are the only effective way to deter the bad-faith behavior of insurers in personal injury cases.

Arthur F. Licata