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Clearing the Home Run Wall: Surpassing Policy Limits with Strategic Focus Groups in Pre-Litigation



For personal injury attorneys, one of the primary objectives during pre-litigation is to persuade the insurance company that the value of the case surpasses the policy limits. Successfully doing so places the insurer in a precarious position, setting them up for a potential bad faith claim if they opt not to tender the full policy before litigation. Utilizing focus groups becomes a potent tool in this endeavor, as they offer a glimpse into how potential jurors might value the case. To comprehend the full potential of focus groups in this legal strategy, it’s crucial to first understand the basic premises on which insurance claims and potential bad faith actions operate.


Background:

1. Duty to Settle:

Insurance companies have a duty to act in the best interests of their insured. This includes accepting reasonable settlement offers that fall within policy limits to protect their insured from an excess judgment. In line with this duty, the concept of 'bad faith' comes into play when discussing settlement refusals, as described below.

2. Bad Faith:

If the insurance company unreasonably refuses (this is the standard) to settle within policy limits and a verdict exceeds those limits, the insured (the defendant in the original case) might have a claim against their own insurance company for bad faith.

3. Consequences for Insurance Company:

If found liable for bad faith, the insurance company might have to pay the entire judgment amount even if it exceeds the policy limits, along with any other damages suffered by the insured due to the insurer’s conduct.

4. Procedure:

The insured, after being faced with a judgment beyond their policy limits, might sue their insurance company for bad faith. This would be a separate action from the original lawsuit. In this action, the insured would argue that the insurer’s failure to settle led to the excess judgment.

5. Factors Considered:

Courts will look at various factors to determine if the insurance company acted in bad faith, such as the clarity of liability, the potential for damages to exceed the policy limits, and the insurer’s decision-making process.

6. Assignment of Claims:

Sometimes, to resolve the excess judgment, the insured might assign their bad faith claim rights against their insurer to the injured party (plaintiff in the original case). The injured party could then pursue the bad faith claim directly against the insurance company.

7. Practical Outcome:

In many instances, fearing a bad faith claim, insurance companies might opt to settle within policy limits when liability is clear and damages could exceed those limits.


Having established the foundational concepts, let’s delve into the role of focus groups in navigating these complexities during pre-litigation.


Objective of the Focus Group in Pre-Litigation:

The primary goal is to establish, through simulated juror feedback, that the value of the injury claim exceeds the policy limit. By presenting the case and potential damages to a mock jury, attorneys can gauge how real jurors might perceive and value the injuries, pain, suffering, and future medical needs. This simulated outcome aids in demonstrating to insurance companies the potential risks of not settling at policy limits before a lawsuit is filed.


Strategies to Persuade Insurers of Exceeding Policy Limits:

1. Pre-Litigation Focus Group:

Conduct a focus group (hiring an independent company is ideal) with the explicit aim of understanding how a hypothetical jury perceives the value of the case. Use this feedback to emphasize the possibility that a real jury might award damages surpassing the policy limits.

2. Presentation of Potential Jury Awards:

Provide data and rationale to insurers about what a jury might award in similar scenarios, underscoring the risks they face by not settling at the policy limit.

3. Discussion of Future Medical Treatments:

Detail the "reasonably foreseeable" future medical needs and expenses, emphasizing that these contribute significantly to the claim’s valuation, which might exceed policy limits. While the practical aspects such as future medical treatments are essential, the intangible aspects, like pain and suffering, also play a pivotal role, as explored next.

6. Pain and Suffering:

Accentuate the intangible yet substantial pain and suffering experienced by the plaintiff, illustrating why this factor alone can push the valuation beyond policy limits.

7. Detailed Documentation:

Keep comprehensive records that encapsulate every aspect of the claim. Such documentation serves as evidence of the claim's value and the unreasonableness of an insurer's refusal to meet policy limits.

8. Effective Communication:

Present a clear, cogent, and well-documented case to the insurer, leaving no ambiguity about the risks they face by not tendering the policy limit.

9. Legal Arguments:

Craft strong arguments showcasing that there isn’t a genuine dispute about the value of the claim, urging insurers to reconsider their position.

10. Utilizing Case Law:

Refer to case law that illustrates instances where insurers faced bad faith claims due to their failure to recognize a claim’s value, pushing them to act prudently.

11. Seek Legal Expertise:

Engage with experts in personal injury and insurance bad faith to ensure that the case is presented in the most compelling manner, backed by legal precedents.

12. Litigation as a Last Resort:

If insurers remain intransigent, be prepared to litigate, emphasizing that their refusal to acknowledge the claim's value might expose them to bad faith claims.


In conclusion, mastering the utilization of focus groups, coupled with a robust pre-litigation strategy, proves indispensable for personal injury attorneys aiming to persuade insurers to open policy limits proactively, thereby serving their clients' best interests while averting lengthy court battles. If you're an attorney seeking expert assistance in applying focus groups effectively during the pre-litigation stage, don’t hesitate to reach out to our offices — we are here to guide and support you in maximizing your case’s potential for success.




Scott Seegmiller, J.D.

Big League Law, Inc., (949) 777-5611

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