A Redmond, Wash. woman filed a bad faith lawsuit against Farmers Insurance Company of Washington (Farmers) accusing the company of systematically using a computer program called “Colossus” to provide an inaccurately low evaluation of her severe injuries in order to artificially reduce its settlement offer.
According to the lawsuit, Farmers used Colossus to evaluate Barbara Martin’s insurance claims arising from a serious automobile accident. As a result, the complaint alleges, Farmers assigned an intentionally low value to Martin’s injuries and refused to pay her claim against her underinsured motorist (UIM) coverage. An arbitrator later determined the value of Martin and her family’s damages, which included debilitating back injuries, resulting depression, lost wages, and a diminished ability to interact with her husband, son and baby daughter, at $377,000.
Following the arbitration, Farmers paid the UIM policy limits. This lawsuit, filed in King County Superior Court, seeks additional damages for breach of contract and anti-consumer practices.
The complaint alleges that Farmers bases its settlement offers on figures provided by Colossus, effectively eliminating the ability of a human adjuster to evaluate a comprehensive view of an insured’s case. The program works when an insurance adjuster enters data and categorical information from medical records. Colossus then accesses a complex set of rules to decide the value of more than 600 trauma-induced injuries. However, the program doesn’t account for intangibles, such as the lost ability to care for a child, the suit states.
The lawsuit states that the nature of the program’s data-entry and computation features can result in artificially low settlement figures, allowing Farmers to effectively profit from claims rather than provide reasonable compensation to injured claimants. In addition, Farmers exacerbates the profiteering by creating compensation incentives for employees tied to the low settlement figures, according to the complaint.
According to the Web site of Computer Services Corporation, the maker of Colossus, 13 of the top 20 U.S. Property and Casualty Insurers use the software to evaluate bodily injury claims. However, insurance companies and agents do not disclose the existence of the program, the complaint states.
This is believed to be the first case brought in the United States specifically based on using Colossus for claims adjustment.
In April 1999, as Martin slowed for traffic on the I-90 bridge, a large SUV rear-ended her car, slamming the vehicle across two lanes with such force that it ripped the driver’s bucket seat from the vehicle chassis. The accident left Martin with severe injuries to her spine and neck, which cause chronic back pain and debilitating headaches that, according to doctors, will require a lifetime of care.
Following the accident, the negligent driver’s insurance company paid Martin $100,000, acknowledging that her damages were actually greater than the available coverage. Farmers saw things differently, according to the complaint. Although Martin’s UIM policy provided for $100,000 in addition to what the negligent driver covered, Farmers refused to offer anything for damages, based on an artificially low Colossus evaluation, the suit alleges.
After nearly three years of trying unsuccessfully to obtain a fair settlement from Farmers, Martin went through arbitration in February 2003.
The lawsuit names defendants Farmers Insurance Company of Washington, Farmers Group, Inc., and Farmers Insurance Exchange.
Farmers has yet to be served with the lawsuit, according to Mary Flynn, Media Relations manager, and therefore is unable to comment.
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