Los Angeles personal injury attorney Barry P. Goldberg is a frequent author on Uninsured/Underinsured (“UM/UIM”) motorist topics. As such, regular advice is given out on many UM/UIM circumstances. Surprisingly, most questions from other lawyers do not involve substantive UM/UIM issues. Rather, the questions inevitably involve UM/UIM “procedure.” There is a good reason—- the UM/UIM statutes are not entirely clear on procedure and usually involve a blend of statutes, rules and common know-how. The confusion created actually flies in the face of the purpose of the UM/UIM laws, which were to provide a “prompt and inexpensive” resolution procedure outside of the regular court system.
Of the questions most regularly asked by other lawyers, they most frequently fall into the category of “My UM/UIM case has stalled” or “How do I move my UM/UIM case along?” I have identified 3 main logjam points which baffle otherwise competent counsel: 1) initiating arbitration; 2) selecting and arbitrator; and 3) setting and arbitration date. In my considerable experience, I have noticed that insurers and counsel have seized on these 3 areas to slow UM/UIM cases to a very manageable crawl.
The first area for a logjam is actually initiating an arbitration. This is usually because most personal injury law firms are adverse to litigation, especially if a case can be settled with a relatively standard demand package. Maybe the case can be settled that way or maybe not. It is not uncommon for the attorney to give the insurer time to consider the demand package, request additional information, and exchange settlement offers. After 3 months of disagreement, the insured is no closer to an arbitration than when he or she started the demand process.
To loosen the first logjam, it is my strong recommendation that an unequivocal demand for arbitration be made with the demand package as a clear alternative to settlement. So, after 30 days, if the case is not settled, the demand package sets forth a certain alternative to settlement. This option does not prevent post-demand give and take. If the case is truly close to settlement, there is no reason that the actual litigation associated with the arbitration demand cannot be abated during the time of discussion. This would also include the arbitrator selection process.
Selecting a Suitable Arbitrator
This segues neatly into the second area for a logjam—-the arbitrator selection process. Insurers and counsel love to avoid and delay this step because it could include an advance payment to an arbitrator and moves the claim one step closer to an actual arbitration. Most auto insurance policies contain a detailed paragraph on selecting and arbitrator—read it! I have seen very simple clauses that state that a single arbitrator shall be selected by mutual agreement.
There are also some policies that direct the parties to follow the American Arbitration Association rules. Most commonly, I see the complex process that if there is no agreement initially, then the parties each select a candidate for a 3 judge panel. The selected candidates then attempt to select a single neutral member. As a practical matter, the party selected candidates “bow out” and allow the single neutral to handle the arbitration.
As a practical matter, most procedures are jettisoned in favor of somehow selecting a single neutral. The AAA arbitrations are usually too cumbersome and expensive. The 3 judge selection process is similarly cumbersome and can yield weird and contentious results. Remember, the arbitration process is supposed to be prompt and inexpensive!
I regularly recommend that the insured forward a list of 3 candidates that have good reputations for being unbiased. Request the insurer to select one within 5-7 days. If none of the candidates are acceptable, ask the insurer to forward an alternative list within that time period—and so on. I have been able to confirm that many of the major insurers maintain a list of acceptable UM/UIM arbitrators. So, this process should not take too long. If you forward candidates obviously unacceptable candidates, do not be surprised if the insurer rejects your list entirely. So—be fair! You may also be surprised to find acceptable candidates on the insurers’ lists!
If the insurer fails to respond or there is no agreement on the single neutral, I recommend that the insured’s attorney immediately file a Petition to Compel Arbitration and a Motion to Select an Arbitrator in the Superior Court. There is statutory authority for this process in Code of Civil Procedure §1280, et seq. The insurers’ reaction is to immediately agree upon an arbitrator! Remember it is a first party insurance relationship and it looks very bad if the insured had to file suit in order to simply enforce the right to a prompt arbitration.
Setting an Arbitration Date
Now, once you have an arbitrator, what do you do? I have noticed that the insurers and counsel use this ambiguity for the third area for a logjam—setting the arbitration date. Repeatedly, I receive inquiries from other lawyers stating, in essence, the insurer refuses to actually set an arbitration date. The discussion usually involves something like; defense counsel said they would only agree to set the arbitration date once all discovery has been completed. However, no timeline is set for the completion of discovery. Inevitably, the case drags on with no rush to take depositions and defense medical exams. The insured’s attorney is sometimes a willing participant in the delay because the insurer’s argument seems reasonable at first and an initial arbitrator’s fee may be avoided. This is unacceptable because it flies in the face of the purpose of the UM/UIM laws.
I regularly recommend that a scheduling conference be set immediately with the arbitrator as soon as he or she is selected, usually by phone. In that call, make it clear that the arbitration must take place within 90 days. This will put the insurer’s counsel on the spot to detail why routine discovery should take any longer. Further, if the insurer’s counsel argues that if the insured delays, it is unfair to proceed with a prompt arbitration. The counter is that if the insured does anything to delay, you can have another call to the arbitrator to continue the arbitration date!
Recently, I had an insurer’s counsel refuse to participate in a scheduling conference and, instead, she stated that she would agree to talk to the arbitrator only after all the discovery was completed. Further, she stated that this was the internal guidelines of her company and that no exception would be made in my case. I immediately filed a Petition to Compel Arbitration and served her with a Motion to Set the Arbitration Date. Rather than allow the record in a first party case to show that the insurer was delaying, the insurer offered the insured 3 times its previous pre-arbitration offer in settlement. That case settled for a fair amount with no arbitration whatsoever.
It is my view that aggressively pursuing UM/UIM arbitration has the desirable effect of “guilting” the insurer into paying a fair settlement to its insured. In fact, it appears that most UM/UIM cases are never actually arbitrated. This is because a successful arbitration is many times a sufficient prerequisite for a first party insurance “bad faith” case. Insurers may prefer paying a little more in settlement rather than risk a second lawsuit; especially when the insurer made an inadequate offer, delayed selecting an arbitrator and was forced into arbitration after the insured enlisted the help of the Superior Court.