Insurance Companies: Avoid Big Headaches and Take Control Over Your Small-Insurance Claims Management
Insurance adjusters are swamped with claims of all sizes, but not every claim is a major injury or a wrongful death. Some claims could be small, soft tissue claims with $3,000 in medical bills or a $2,000 rear-end subrogation action. These claims are usually filed in the small claims division of the courts. In Cook County and the collar counties, these small claims divisions have different names, but Illinois Rules of Civil Procedure and Illinois Supreme Court Rules still apply.
Pitfalls inherent in small-loss claims management
Claims filed for less than $50,000 normally go through the mandatory arbitration process in Cook County and the collar counties. The mandatory arbitration process has a shorter time length for written discovery. If the claim is filed for $10,000 or less, no answer to the complaint is required and no written discovery is allowed absent court permission.
The potential pitfall for adjusters juggling the large-loss claims with these smaller ones is allowing these small cases to fall through the cracks by mistake. Case procedure in small claims divisions do not have regular monthly case conferences to keep cases from getting lost in the small-insurance claims management process
If a jury demand is filed, then the cases will go to mandatory arbitration, but the arbitration date could be within six months of the filing of the jury demand. Arbitration awards are not final and could be rejected for a filing fee, but if insurance defense counsel is not assigned soon enough, these small claims awards could turn into automatic judgments.
The risks of failing to appear
Illinois Supreme Court Rule 91(a) states that the failure of a party to be present at the arbitration, either in person or by counsel, shall constitute both a waiver of the right to reject the award and consent to the entry by the court of judgment on the award. This rule states that either the individual defendant or the insurance defense attorney needs to be present at the arbitration.
When defense counsel is not assigned in time, individual defendants may not be aware that they have to attend the arbitration. Rule 91(a) uses the word “shall” instead of using the word “could” when referring to constituting a waiver of the rejection, thus giving the court no room for discretion. If no one appears at the arbitration for a party, then that party cannot reject the arbitration award and judgment will enter.
I have seen a few cases with this exact scenario. The case was assigned to defense counsel after the mandatory arbitration and the individual defendant did not show up. If defendant or defense counsel files a rejection of that award, the plaintiff or a co-defendant will move to debar that rejection pursuant to Rule 91(a). This means that a defendable subrogation suit or soft tissue suit will turn into an automatic judgment for the plaintiff simply because of the failure to have someone appear at the arbitration.
A simple solution to a big problem
The solution to this problem is to revamp small insurance claims control by assigning cases to counsel as soon as a claims adjuster realizes there is pending litigation. This would be preferable to current procedures by adding litigation defense counsel to those for monitoring pending court actions to avoid defaults in appearing.
Those responsible for claims management protocols for insurance companies can benefit from learning more about the role of insurance defense counsel in the claims process. For additional information on the topic, contact Alexander Sweis at McKenna Storer at (312) 558-3994.
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