Insurance Companies Enter the Fray as Plaintiffs

The insurance company lobby is a familiar refrain: litigation is out of control. Liability insurance premiums are sky-high not because insurance companies want to make a bigger profit, but because lawsuits filed by money-hungry citizens and unscrupulous lawyers are driving costs up. Nowhere has this argument been more prevalent than in the field of medical malpractice.

Isn't it ironic, then, that the American Bar Association reports that in 2003, nearly 10% of legal malpractice claims were filed against personal injury defense lawyers?

That's right. Insurance companies are responsible for initiating nearly 10% of legal malpractice claims - claims that, like any other malpractice claim, must be settled or litigated by insurance companies who provide liability coverage to the attorneys, insurance companies who set premiums, in part, based on the amount of money they spend paying on (or defending against) malpractice claims.

It's telling enough that the industry that claims frivolous litigation is driving its business decisions in a negative direction is litigating the outcome of its litigation. However, some attorneys suggest that the reality is even more ominous. That's because the insurance company is, to a great extent, in the driver's seat during litigation.

While the injury lawyer handles the actual legal work, negotiations, and courtroom argument, it's the insurance company representative who calls the shots in terms of when to settle the case, how much money to spend on expert witness reports and testimony and, in the end, even how much time the attorney can invest in the case.

Cost-cutting decisions during litigation - decisions made by the insurance companies themselves-may be the ultimate cause of the negative outcomes they're protesting. The protests themselves take exactly the same form as the consumer actions these same companies so loudly condemn: they cost money to defend, whether or not the claims are valid; they clog up the court system, making it more difficult for legitimate litigants to get "their day in court"; if successful, they cost an insurance company a lot of money - a cost that, if their lobbying efforts and media campaigns are to be believed, drive up insurance costs and hurt business.

It seems that the only difference between the cases they're fighting to limit and the cases they're fighting to win is the direction in which the money flows.