Why Insurance Companies Fight High-Dollar Injury Claims

When someone suffers a catastrophic injury, the financial consequences can be enormous. A spinal cord injury may require lifelong medical care and assistance. A traumatic brain injury can affect a person’s ability to work, communicate, or live independently. Severe orthopedic injuries may require multiple surgeries and permanently limit someone’s earning capacity.

These losses can make a personal injury claim worth substantially more than the typical accident claim. They can also make the claim considerably more complicated.

Insurance companies know that a high-value injury claim can involve substantial past and future damages. As a result, insurers may closely examine the evidence supporting liability, causation, the extent of the injury, future medical needs, lost earning capacity, and other components of the claim.

That does not mean every insurer is acting improperly when it questions a claim. Insurance companies have a legitimate interest in investigating whether a claim is covered, determining what the evidence establishes, and evaluating the amount of damages. At the same time, California has regulations governing fair claims handling, including standards addressing prompt, fair, and equitable settlements.

For someone with a catastrophic injury, understanding how insurance companies respond to high-dollar claims can help explain why thorough preparation and high-quality legal representation are so important.

Why Are High-Dollar Injury Claims Examined So Closely?

A claim involving relatively limited medical treatment may be supported by straightforward evidence: an accident occurred, the person received treatment, and the medical bills document the resulting expenses.
A catastrophic injury claim can be much more complicated.

The injured person may have already incurred substantial medical expenses while also facing years or decades of future treatment. The injury may prevent the person from returning to work, change the type of work they can perform, or eliminate their ability to earn an income altogether.

California’s civil jury materials recognize categories of damages that can include past and future medical expenses, past and future lost earnings, and noneconomic losses such as physical pain and mental suffering.

Each category of damages creates questions that may affect the value of a claim. An insurer may ask whether a particular medical treatment was necessary, whether the injury is permanent, what future care will actually be required, how much that care will cost, and how the injury will affect the person’s ability to work.

Those questions can make a catastrophic injury claim substantially more difficult to resolve.

Does the Insurance Company Have a Right to Investigate the Claim?

An insurance company does not have to accept every allegation made by an injured person without investigation.

An insurer may investigate the circumstances of the accident, review medical records, evaluate liability, examine available evidence, and assess the damages being claimed.

California’s Fair Claims Settlement Practices Regulations establish standards for the handling of insurance claims. Among other provisions, the regulations address an insurer’s duties concerning communications, investigation, settlement, and documentation.

The distinction is between legitimate investigation and unreasonable claims handling.

A serious claim may require extensive documentation because the amount at stake is substantial. But an insurer’s ability to investigate does not mean it can disregard evidence, unreasonably delay a claim, or make an unsupported settlement position.

Why Do Insurers Dispute Causation?

Causation is often one of the most important issues in a catastrophic injury claim.

The insurer may accept that an accident occurred but dispute whether the accident caused all of the claimed injuries.

This can become an issue when an injured person has a preexisting medical condition, experienced symptoms before the accident, or suffered multiple injuries over time.

For example, imagine that a person with a previously asymptomatic degenerative spinal condition suffers a severe collision and subsequently requires spinal surgery. The insurer may argue that the underlying condition, rather than the collision, was responsible for some or all of the person’s symptoms.

That argument does not automatically make it correct. Medical evidence may establish that the accident aggravated a preexisting condition, caused a new injury, or accelerated a condition that previously caused little or no functional impairment.

Determining causation may require medical records from before and after the accident, diagnostic imaging, treating physician opinions, and testimony from appropriate medical experts.

Why Are Future Medical Expenses So Heavily Disputed?

One of the biggest differences between an ordinary injury claim and a catastrophic injury claim is the importance of future damages.

A person with a catastrophic injury may require medical treatment for decades. Depending on the injury, future expenses can include surgeries, rehabilitation, medications, physician visits, specialized equipment, home health care, attendant care, transportation, and modifications to the person’s home or vehicle.

Those expenses have not necessarily occurred yet, which means they must be supported by evidence concerning what the person is likely to need in the future.

An insurer may challenge the projected frequency or duration of treatment, the necessity of particular services, or the estimated cost.

A well-supported claim therefore needs more than a general statement that the injured person will require lifelong care. Medical and life-care evidence may be necessary to establish the nature and anticipated cost of that care.

Why Do Insurance Companies Challenge Future Lost Earnings?

Catastrophic injuries can permanently affect a person’s ability to work.

Someone who previously worked in a physically demanding occupation may no longer be able to perform that job. A person with a traumatic brain injury may have difficulty with concentration, memory, communication, or executive functioning. Someone with a spinal cord injury may be unable to return to any form of employment.

Calculating the resulting economic loss can be complicated.

The analysis may need to consider the person’s age, education, employment history, occupation, earnings, career trajectory, work-life expectancy, physical and cognitive limitations, and the likelihood of future wage increases or advancement.

The insurer may dispute assumptions used to calculate those losses. Vocational and economic experts may therefore play an important role in establishing the effect of a catastrophic injury on future earning capacity.

California courts identify lost wages and future problems resulting from an injury among the types of losses that may be relevant to a personal injury case.

Why Does the Severity of the Injury Matter to the Settlement?

The severity of an injury is relevant because it can affect both the damages and the evidence required to prove them.

A catastrophic injury may involve permanent disability, substantial medical treatment, reduced earning capacity, and significant changes to a person’s daily life.

But an insurer is not necessarily required to accept a dollar figure simply because the injury is described as catastrophic. The value of a claim depends on the evidence establishing liability and the resulting losses.

This is why documenting the consequences of the injury is so important.

Medical records establish diagnoses and treatment. Employment records can help establish lost income.

Expert opinions may address future medical care or earning capacity. Testimony from family members and others may help document changes in the person’s daily life.

The stronger the evidence connecting the injury to specific present and future losses, the more thoroughly those losses can be evaluated.

What Happens When an Insurance Company Says the Claim Is Worth Less?

Settlement negotiations are common in personal injury cases. An insurer may make an initial offer based on its assessment of liability and damages. That offer may be substantially different from the amount the injured person believes the claim is worth.

The difference may result from disagreements about liability, medical causation, the severity or permanence of the injury, future care, lost earning capacity, or noneconomic damages.

An initial settlement offer should therefore not necessarily be treated as the final value of a claim. A claimant and insurer may exchange additional evidence and negotiate. If the parties cannot reach an agreement, litigation may become necessary.

California’s insurance regulations contain standards concerning settlement offers and prohibit certain unfair claims settlement practices. The California Department of Insurance identifies the Fair Claims Settlement Practices Regulations as governing how insurers process claims in California.

Can an Insurance Company Use Preexisting Conditions to Reduce a Claim?

An insurer may investigate preexisting conditions when determining whether an accident caused the claimed injuries. But the existence of a preexisting condition does not necessarily mean that the accident caused no compensable harm.

A collision can aggravate an existing condition or turn a previously manageable condition into a serious disability. For example, someone may have degenerative changes visible on an MRI before an accident but remain fully employed and physically active. After a major collision, that person may develop significant pain, lose mobility, require surgery, and become unable to work.

The medical question is not whether the person had an abnormality before the accident. The question is what harm the accident caused or contributed to.

Obtaining appropriate medical evidence can be essential when an insurer attempts to attribute the person’s condition to something that existed before the accident.

Why Does an Insurance Company Care About Medical Treatment?

Treatment records can have a significant effect on how an insurer evaluates a catastrophic injury claim.

An insurer may examine whether the injured person sought prompt treatment, followed recommended treatment, continued treatment consistently, and received care that physicians considered medically appropriate.

Gaps in treatment may become a subject of dispute, particularly when an insurer argues that a gap indicates that the injury was less serious than claimed.

There can, however, be many legitimate reasons for interruptions in treatment. Insurance issues, financial difficulties, transportation problems, changing physicians, and other circumstances may affect a person’s ability to obtain care.

The important point is that medical history should be understood in its entirety rather than reduced to isolated dates or individual medical bills.

Why Do Insurance Companies Examine a Person’s Pre-Accident Life?

A catastrophic injury claim is ultimately about how the injury changed the person’s life. That makes evidence concerning the person’s condition and activities before the accident potentially important.

Employment records may establish what the person was capable of doing before the injury. Medical records can establish prior health and functional status. Statements from coworkers, friends, and family may help document the person’s physical abilities and daily activities.

Evidence after the accident can then demonstrate the change.

For example, a previously active person may now require assistance with dressing, bathing, cooking, transportation, or other daily activities. Someone who previously worked full-time may no longer be capable of maintaining employment.

This before-and-after comparison can be particularly important in cases involving permanent disability.

Can the Insurance Company Dispute Pain and Suffering?

Non-economic damages can be among the most difficult components of a personal injury claim to quantify.

Medical expenses have bills. Lost wages can often be documented through employment records. But pain, suffering, emotional distress, disfigurement, loss of enjoyment of life, and the consequences of permanent disability do not come with a predetermined price tag.

That does not mean these losses are unimportant.

California’s civil jury materials recognize past and future non-economic losses, including physical pain and mental suffering, as categories of damages in appropriate personal injury cases.

Evidence concerning the person’s limitations, treatment, symptoms, rehabilitation, daily activities, relationships, hobbies, and long-term prognosis can help establish the extent of these losses.

What Happens When Insurance Policy Limits Are Lower Than the Claim?

A catastrophic injury claim can be worth substantially more than the available liability insurance coverage.

That creates a separate issue from determining how much the injury is worth.

For example, a person may have evidence supporting extensive economic and non-economic damages, while the at-fault driver’s insurance policy provides substantially less coverage. The availability of insurance does not necessarily establish the total value of the underlying injury claim.

A serious accident may therefore require an investigation into all potentially applicable insurance policies and sources of recovery.

Depending on the circumstances, this may include the at-fault driver’s liability coverage, the injured person’s uninsured or underinsured motorist coverage, commercial policies, umbrella or excess policies, or other potentially applicable coverage.

The specific sources of coverage depend on the facts of the accident and the applicable insurance contracts.

Why Do High-Dollar Claims Require More Evidence?

The larger the potential damages, the more important it becomes to support each major component of the claim.

A catastrophic injury case may require evidence from numerous sources. These can include medical specialists, rehabilitation professionals, life-care planning professionals, vocational experts, economists, accident reconstruction experts, employers, and people who know the injured person.

California courts advise personal injury claimants to preserve evidence such as photographs, medical records, witness statements, and police reports.

For a catastrophic injury, the evidentiary record can be much broader.

The goal is not to overwhelm an insurer with documents. It is to establish a coherent, well-supported account of what happened, who was responsible, what injuries resulted, and how those injuries will affect the person’s life.

What If the Insurance Company Delays or Mishandles a Claim?

California regulates certain claims-handling practices through the Fair Claims Settlement Practices Regulations. Those regulations address matters including communication with claimants, investigation, settlement practices, and documentation.

The existence of a dispute does not by itself establish that an insurer has acted improperly. Insurers can investigate legitimate questions concerning liability, coverage, causation, and damages.

But unreasonable claims handling can create additional legal issues. The California Department of Insurance has enforcement authority concerning violations of California insurance laws and regulations and publishes information concerning market conduct examinations and alleged violations of claims-handling requirements.

When a high-value claim encounters persistent disputes or delays, it may therefore be important to examine not only the underlying injury claim but also the insurer’s conduct in handling it.

What Should You Do When an Insurance Company Is Fighting Your Claim?

A catastrophic injury can make it difficult to focus on a complicated insurance dispute while simultaneously dealing with medical treatment, rehabilitation, lost income, and major changes to everyday life.

It is important to preserve evidence, document medical treatment, keep records of financial losses, and avoid making unsupported assumptions about what the claim is worth.

An injured person should also be cautious about providing statements or signing documents without understanding how they could affect the claim. The significance of a particular request from an insurer can depend on the circumstances and the terms of the applicable policy.

Kalfayan Merjanian, LLP represents people who have suffered catastrophic injuries and can investigate the underlying accident, document the full consequences of the injury, and address disputes concerning liability, causation, insurance coverage, and damages.

A high-dollar injury claim is not simply a larger version of an ordinary personal injury claim. The injuries may require lifelong care, permanently alter a person’s ability to work, and affect virtually every aspect of daily life. Those consequences require careful documentation and a thorough understanding of the evidence supporting both present and future losses.

When an insurance company disputes a catastrophic injury claim, the focus should remain on establishing what happened, how the injury changed the person’s life, and what the evidence shows about the losses that resulted.

If you or someone you love has suffered a catastrophic injury because of someone else’s negligence, contact Kalfayan Merjanian, LLP to discuss the accident and the evidence needed to pursue the compensation available under California law.