Laws protecting injured car accident victims in Michigan from ambulance chasing personal injury lawyers should also protect people from the claims adjusters who prey on the unsophisticated after a crash; settling cases for pennies on the dollar
Readers of this Auto Law Blog know how outspoken we’ve been about the need to stop illegal car accident solicitation and ambulance chasing in cities like Detroit.
I’ve certainly been calling out these lawyers for years on this blog, along with the Michigan Attorney Grievance Commission, which has ignored this growing problem for the last 15 years and shares blame for allowing ambulance chasing and illegal attorney solicitation to spiral out of control in Metro Detroit.
But the personal injury lawyers who are doing this are not the worst offenders when it comes to ambulance chasing and taking advantage of people.
The insurance companies are.
Insurance companies have unprecedented access to car crash victims through the claims filed by their insureds.
Plus, insurers have an overwhelming, financial incentive to hound and pressure auto accident victims, because they know that a quick and early car accident settlement could save the insurer from having to pay far more later.
Insurers want to catch car accident victims before they’ve had the opportunity to hire a lawyer because the insurance companies know that victims with experienced auto accident attorneys settle claims for four times as much as victims without lawyers.
This is why many insurance companies heavily incentivize their own claims adjusters to contact car accident victims quickly after a car accident. Many bonus adjusters based on how many cases they can settle before the potential claimant can talk to a lawyer.
Insurers’ “settlement solicitation” often includes an adjuster calling up one of her company’s insureds who was just injured in a car crash and offer a cash settlement that amounts to pennies on the dollar in return for duping the insured into forever forfeiting all of his or her No Fault benefits.
On the third-party – or tort – side, a claims adjuster from the insurance company of a person who caused a car accident will approach a car crash victim, by phone, letter, or even sometimes by coming to the house and offering a quick settlement. There’s one case that has become legend of a claims adjuster for a trucking company that offered a brand new Buick to the spouse of the person who was killed by their driver in a truck accident. Imagine that – offering someone who may have a wrongful death lawsuit worth millions of dollars a new car.
This shameful practice is real and it happens far more often than most people know.
The reason it is happening is because it works. Most people have absolutely no idea how much their case may be worth. That’s why the insurance companies are so aggressive about contacting people that their own insurers have injured so quickly after a car crash.
And that is the giant gaping hole that we have in Michigan that exempts claims adjusters, even those with adverse interests to the person being contacted such as an adjuster from the at-fault driver’s insurance company.
I’m not saying that the anti-attorney-solicitation, ambulance chasing laws shouldn’t have been put in place.
They were the right thing to do. And they were long overdue. The Michigan attorneys who are still engaging in the practice of contacting car accident victims within 30 days, or the ones using runners to walk into people’s hospital rooms or knock on their doors should all lose their license to practice law.
What I’m saying, though, is that by overlooking ambulance chasing by auto insurance companies and claims adjusters, the unsuspecting public is exposed to the same dangers, but, even more so, given insurers’ access to victims and their financial motives to pay as little as possible to people who do not have full access to information about what their injuries and auto No Fault benefits are worth.
Why ambulance chasing by insurance companies must be stopped?
It should be stopped for the same reasons that prompted the enactment of the laws protecting car accident victims from ambulance chasing by lawyers.
Indeed, as I wrote in a 2011 blog post where I was criticizing the Michigan Supreme Court for backing down on a proposed rule to stop attorney solicitation of personal injury and accident victims, the “rationale for restricting attorney solicitations makes just as much sense when applied to insurance company ‘settlement solicitations.’”
To drive my point home, I substituted “insurance company” for “lawyer” in the “Comment” to the general, marginally effective, anti-solicitation rule (Rule 7.3) in the Michigan Rules of Professional Conduct:
“There is a potential for abuse inherent in direct contact by [an insurance company] with a prospective client known to need legal services. These forms of contact between [an insurance company] and a prospective client subject the layperson to the private importuning of the trained advocate in a direct interpersonal encounter. The prospective client, who may already feel overwhelmed by the circumstances giving rise to the need for legal services, may find it difficult to evaluate fully all available alternatives with reasoned judgment and appropriate self-interest in the face of the [insurance company’s] presence and insistence upon [settling the claim] immediately. The situation is fraught with the possibility of undue influence, intimidation, and overreaching.”
How can we stop ambulance chasing by car insurance companies?
The first and most simple step is to extend our current ambulance chasing laws that protect car accident victims from illegal solicitation by lawyers to cover insurance companies, too.
Under the ambulance chasing laws that were passed in December 2013 – MCL 750.410b and 257.503 – lawyers and their non-lawyer agents, including runners, cappers, chiropractors and others are prohibited during the first 30 days after a car accident from “direct solicitation” of a car accident victim’s legal business and from accessing the victim’s crash report to obtain personal information for the purpose of soliciting legal business.
Although I did – and continue to – support those laws, I continue to urge that the waiting period be extended from 30 days to 90 days.
In the event the ambulance chasing laws are ultimately and justly applied to insurance companies, I believe the 90-day waiting period is essential.
The second step toward stopping ambulance chasing by insurers is to call it what it is and treat it accordingly.
As many other states, such as Washington, have recognized, insurance company ambulance chasing of car accident victims – with its attendant “settlement solicitations” – is the “unauthorized practice of law.” Under Michigan law, a person who engages in the “unauthorized practice of law” is “guilty of contempt” which is punishable by a $7,500 fine, 93 days in jail or both. (See MCL 600.916(1); 600.1715(1))