Woodland Hills car accident lawyer Barry P. Goldberg is an expert on all things “Uninsured” and “Underinsured” Motorist in California. Mr. Goldberg frequently gets calls from other personal injury attorneys seeking “the best” way to handle certain UM/UIM issues. Should you mediate your Uninsured or Uninsured Motorist case? In most cases, there is absolutely no reason to mediate an uninsured or underinsured motorist case.
The genesis of the Article is interesting. It started with a post on Social Media that based upon tracking data, we could tell that insurance companies were regular viewers of our UM/UIM articles, particularly on tricky procedural issues. In other words, they consulted my articles in order to figure out how to handle or respond to certain UM and UIM claims. The post elicited a response from a professional mediator essentially suggesting that most cases were benefited by mediation. As to UM and UIM cases, I disagreed. Here is why.
Mediation Should be Considered in Every 3rd Party Liability Case
Our firm is not “anti-mediation.” Far from it. In fact, we recommend mediation in every one of our litigated 3rd party liability cases. We begin preparing the client for that eventuality right from the beginning and we spend a disproportionate amount of time both preparing the client for mediation, explaining the process and discussing the likely ups and downs which are about to occur. Mediators compliment us for our preparation and the sophistication of clients at the mediation. Simply put, I cannot think of a reason why mediation should not be considered in every 3rd party liability case.
Mediation is Usually a Poor Option for Insureds in Uninsured and Underinsured Motorist Cases
Most people do not see a “down side” in mediation of any case. What harm could be done by sitting down with the opposing party and talking through any monetary dispute. Many experienced and well-meaning plaintiff’s attorney representing insureds do not really think it through and go with their “default” — mediation is always good. Moreover, many plaintiff’s attorneys figure some of their best results are obtained in mediation and they can avoid all the conflict and expense of further litigation.
However, mediation is rarely a wise option for insureds in a “first party” uninsured or underinsured motorist case. The Uninsured Motorist Law (Insurance Code § 11580.2) was designed to provide a prompt and inexpensive way to resolve what amounts to a contractual dispute between friendly parties regarding the value of the first party claim. Mediation is used, whether consciously or not, by insurers and its counsel to delay resolution of the claim, lower the value of the claim and remove the insureds’ advantage.
In the Time a UM/UIM Claim could be Mediated, it could be Arbitrated
No substantial difference exists in properly preparing a case for arbitration and preparing a case for mediation. For a mediation, you have to pay for the mediator’s time, and it is usually set weeks in advance. A proper mediation brief and client preparation is very close to what you would do in an arbitration in any event.
The plaintiff-insured needs to keep the pressure on by having a prompt arbitration date in order to reap the benefits of the Uninsured Motorist Law. If a plaintiff-insured sets up a mediation, it will usually delay the arbitration by weeks or months. If the purpose of the Uninsured Motorist Law is considered, the worst-case scenario for an insured is that the matter will be fully and finally decided at the arbitration. That fact should be explained to an insured at the outset. It is hard to come up with a reason why a UM/UIM case should not be arbitrated if there is a substantial difference in case valuation. There is no guarantee the case will be resolved at mediation. There is a guarantee that the case will be resolved at arbitration.
An Insured will be Pressured to Accept Less than the Claim Value at a Mediation
Every mediator has a “standard” pitch about settling disputes at mediation or risk a different result at the Arbitration. Every mediator will point out that the parties will incur additional costs at the arbitration and that those costs will come out of the plaintiff-insured’s share before attorney fees. So, why not just settle at the arbitration for a little less than you think the case is worth?
That is a convenient discussion because the mediator just doubled the “judicial” cost in the case by having a mediation. Once an insured is actually involved in the mediation, it is now true that even more substantial costs will come out of the insured’s share.
A Mediation will give the Insurer a “Free Look” at the Insured’s Case
Insurers like mediation in first party UM/UIM cases because if the case is not settled, they will get a preview of the insured’s case. Usually, they will hear every possible theory strength and weakness of the insured’s claim and will be well prepared at the arbitration. Even the mediator will suggest weaknesses in the plaintiff-insured’s case in order to increase the chances of settlement. There is simply no reason to give out a preview.
The way the arbitration rules and statutes are designed, it is very possible to present fresh and compelling evidence at the arbitration without necessarily disclosing all of that information in advance. Remember, the arbitration process is abbreviated and supposed to be inexpensive. There is not the same kind of extensive pre-arbitration disclosure and final status conferences as in a 3rd party litigated case.
Arbitration is the Insured’s Greatest Leverage in Obtaining a Premium Settlement!
The secret is out! Insurers will do everything in their power to avoid an arbitration if possible— even paying the fair value of a claim! Why is this? Well, UM/UIM is a first-party case. If the insurer offered a low amount and a higher amount is awarded at arbitration, it is practically prima facie evidence of bad faith. The insurer could be exposed to a second lawsuit.
At our office, very few cases are actually arbitrated because the insurer is willing to pay a fair amount or a slight premium to avoid an adverse arbitration award. That is why I am a very strong advocate for getting a prompt arbitration date in every uninsured and underinsured motorist case.
In some cases, mediation is appropriate in UM/UIM, particularly when apportioning settlements among multiple insured claimants. However, we believe mediation should be avoided in most uninsured and underinsured motorist cases.