Colossus: taking on giant.

Software used by insurers purports to calculate the value of a personal injury claim. This technology is intimidating, but not invincible.

The Old Testament story of David and Goliath strikes a resonant chord with most personal injury lawyers. Those who champion the cause of injury victims often have to go into battle against corporate giants like pharmaceutical companies, car manufacturers, and insurance companies. Defendants like these--who are often represented by legions of corporate lawyers --can be formidable foes in the courtroom.

Now, many plaintiff lawyers find themselves encountering a giant of a different type, usually during settlement negotiations. It is called Colossus, and, like the biblical behemoth from the first Book of Samuel, this one, too, may be felled--with the right strategy and some luck.

Colossus is the trade name for a software program licensed for use by The Continuum Co., a subsidiary of Computer Sciences Corp. It is marketed as a "knowledge-based system for assessing general damages for bodily injury claims."(1)

Typically, personal injury lawyers first confront Colossus during prelitigation negotiations when a claims adjuster tells them that the value of a case has been set at "X" dollars. Usually, the adjuster will not provide any information about how this value was determined, so the lawyer must file suit and then submit a discovery request for the basis for the claim-value determination.

This request is quickly met with a motion to intervene by Computer Sciences Corp., seeking to protect its intellectual property rights in the Colossus software. The unsuspecting lawyer is suddenly thrust deep into the unfamiliar waters of intellectual property, trade secrets, and artificial intelligence.(2) The adjuster's settlement offer, at this point, can suddenly look very attractive.

Despite the secrecy shrouding this new technology, articles, regulatory actions, and materials produced in litigation have provided some information about how Colossus works.(3)

Only actual evidence of injury, specifically including medical records and doctors' reports, are used in the assessment process. Mere allegations in a demand letter are not sufficient. Other information --including whether the claimant is represented by an attorney, whether outstanding medical liens exist, whether aggravating circumstances contributed to the accident, and whether the claimant used available safety equipment--may also be factored into the assessment. And, of course, wage statements and medical bills are considered in detail.

After weighing all this information, Colossus makes recommendations regarding settlement ranges. While most insurance companies use Colossus as a tool to estimate claim value, some companies, such as Allstate, use it as a rule to determine settlement value.

Taking aim

Personal injury lawyers should not accept these estimates without first ensuring that the information used in the calculations was correct and complete. The lawyer should provide the adjuster substantiated detailed facts of each injury, including initial, current, and expected medical treatment needed; a detailed prognosis; and the level of impairment for each part of the body injured.

The Colossus methodology requires the adjuster to make numerous entries regarding these facts, which may have been incorrect or incomplete.

Further, the attorney should ask the adjuster what settlement evaluation ranges are generated by the Colossus report. The attorney should keep detailed notes regarding these conversations. It may later turn out that the adjuster deceptively offered an amount less than these ranges.

Colossus has difficulty providing an accurate settlement range in the catastrophic injury case. Consequently, attorneys representing catastrophically injured clients should be especially suspicious of the accuracy of a Colossus assessment. The same is true for burned or scarred victims.

Even when a client's injuries are not catastrophic, a Colossus estimate may hit wide of the mark. To ensure that an offer is fair, counsel should always ask the insurer to explain:

* What injuries were used to determine the claim's value.

* What medical complaints the claim representative used to evaluate the claim and in which medical report they were found. These medical complaints represent the symptoms arising from the injuries. If the client suffers a symptom that was not documented in a medical report, it will not have been considered by Colossus. For example, Colossus will give no value for headaches unless they are documented. Under a Colossus analysis, documentation is worth more if it is made by a medical doctor rather than a chiropractor. If a complaint appears in both a doctor's and a chiropractor's report, the lawyer should make sure the settlement value reflects the amount Colossus would assign to the medical report.

* If appropriate, whether Colossus considered that normal duties of living and work can no longer be performed, and whether future medical costs and lost wages were taken into account. If they were not, the representative should give a definitive answer regarding how they will be factored in because they will have a significant effect on the evaluation.

* Whether aggravation of a preexisting injury was considered. This significantly increases Colossus evaluations. The attorney should be prepared to provide medical documentation of preexisting conditions as well as the degree of aggravation and permanency of the aggravation caused by the new injury.

* Whether referrals from medical doctors were documented. As mentioned above, Colossus does not place a great deal of value on chiropractic visits. If chiropractic treatment is indicated, the system will inquire if the injured person was referred to the chiropractor by a general practitioner or other medical specialist. If there is a medically documented referral to the chiropractor, this fact would increase the value of the claim.

* How data about treatment for spinal injury, if provided, was input. To receive maximum value, documentation for spinal treatment must detail how it is related to the injury. For severe cases, the exact number of days for hospitalization and bed rest should be factored in. Counsel should be prepared to show in the medical records the need for aids like crutches, walkers, and canes. Different values are assigned to immobilization aids such as soft collars, polyurethane collars, and neck braces. Accordingly, the attorney must ensure that the claim representative has input the proper information.

* Whether the system was given accurate information regarding the length of treatment. For example, Colossus will ask how many weeks of home traction or use of an electrical nerve stimulator were prescribed. If the treatment is prescribed on a permanent basis, that fact should also be considered.

* Whether Colossus was given correct information regarding prescribed medication. The software is sophisticated enough to distinguish between cortisone steroid injections, epidurals, and nerve blocks. Counsel should be prepared to provide documentation of each medication prescribed and how it was administered. Epidurals and nerve blocks greatly increase claim value.

* Whether the adjuster included information regarding anxiety, pain, or depression. Complaints of these must be noted in medical reports, and medications must be prescribed solely for the treatment of those complaints before they will be considered in the evaluation.

* What delays or gaps in treatment were considered. These decrease the value of a Colossus evaluation. The longer the lapse of treatment, the more the claim value will be decreased. If there is an explanation for the gaps in treatment, the attorney should include an explanation, and, if possible, be prepared to back it up with medical documentation.

* Whether information included in reports of independent medical examiners was considered. Allstate does not use information in independent medical examination reports as input data. For carriers other than Allstate, counsel should have clients examined by independent doctors, who may be able to focus on details often overlooked by busy treating practitioners.(4) Regarding evaluations of permanent impairment, some evidence suggests Colossus only recognizes the fourth edition of the American Medical Association Guidelines to Permanency (which is reproduced in its entirety in the Colossus system) and uses only ratings to the person as a whole.

* Whether loss of enjoyment of life was considered. A claim for this injury must be supported by a physician's report or notes and it must include a permanency rating or it will not be considered. Accordingly, before questioning a Colossus appraisal, the attorney must have a physician interview the client and document how his or her lifestyle will be affected by a permanent injury.

* Whether future wage loss was factored in. Again, documentation from the client's treating physician regarding the expected duration of a work-impairing injury is required.

* What mitigating liability factors--for example, whether the client was wearing a seat belt or was intoxicated while driving--were considered.

* What type of "punch list" was used to input the information. The attorney should ask to see the injury questionnaires or injury dissection sheets often used by adjusters to input information into the program. These lists prevent inaccurate or incomplete information regarding the claimant's injury.

Of course, just because the information is accurately and completely input does not mean the Colossus values properly reflect the true assessment of a personal injury case. Every case is unique. No computer program can process data to contemplate the individual aspects of every case or predict how a jury will view and respond to the evidence.

Indeed, since Colossus values are based on a database of historical settlement figures rather than verdict results, this system is inherently flawed as a means of calculating what result may ensue if the case were tried to a jury. A computer program can neither read nor understand human viewpoints, nor can it determine the credibility of witnesses or assess an individual's intangible loss.

The human factor

When faced with settlement offers from insurance companies based on Colossus evaluations that are unacceptable, the trial attorney must be fully prepared to litigate the value of the claim and be prepared to place the client's matter in the hands of a human jury.

Trial attorneys must continue to utilize their skills of persuasion to properly advance their clients' rights. In our society, the ultimate finders of fact are human beings, not computers.

Insurance companies that rely on Colossus or other computer programs as the final arbiter of personal injury claim values leave themselves vulnerable to attack under a theory of an unfair claims practice because they substitute a computer program for human intelligence and common sense in determining the value of a person's case.

Even Colossus warns its users that the program is to be used merely as a guide or tool rather than a final determination of case value. As a result, when faced with low settlement offers based on inappropriate computer-generated analysis, trial attorneys should be aware of the possibility of pursuing bad faith or unfair claims practice lawsuits and should document their files accordingly.

Fair and open

A fair and open insurance system is essential to our economy and our society. Public confidence in the insurance mechanism is crucial to the smooth flow of commerce in this country. As consumer lawyers, we are partners with insurers in keeping the system fair and accessible.

The insurance industry has unilaterally developed claims systems that are economically efficient only for insurers and that can harm both the insured public--by failing to properly compensate individuals for their injuries--and care providers --by failing to recognize the value of prior and future necessary treatments. Consumer lawyers cannot remain silent or inactive.

The process by which systems like Colossus work should be opened for scrutiny. What we have seen so far, including the Herculean efforts to protect this software from any sort of critical analysis, leads us to believe that Computer Sciences Corp. and the insurers who use this software have a lot of explaining to do. It's high time for a Colossus show-and-tell.

Accuracy

Attorneys representing catastrophically injured clients should be especially suspicious of the accuracy of a Colossus assessment.

Notes

(1.) COLOSSUS 4.30 TRAINING MANUAL (available through ATLA's Bad Faith Litigation Group).

(2.) See, e.g., Tastad v. Allstate Ins. Co., No. 40549-7-I, 1997 WL 428065 (Wash. July 28, 1997); Robertson v. Allstate Ins. Co., No. 98-4909, 1999 WL 179754 (E.D. Pa. Mar. 10, 1999).

(3.) See Mirville v. Allstate Indem. Co., 87 F. Supp. 2d 1184 (D. Kan. 2000); Affidavit of Gary Fye, Rose v. Allstate Ins. Co., No. 97-536 (D. Ariz. May 12, 1998); Tony Attrino, Software Helps Bolster Claims Assessmeat, NAT'L UNDERWRITER-PROPERTY & CASUALTY, May 4,1998, at 14.

(4.) Allstate is a frequent user of Colossus. The company's claims units are evaluated by how well they limit and lower the average amount paid per claim, and Colossus is used to help meet these objectives. Mark Ballard, Hot CLE Class: Hammering Allstate, NAT'L L.J. (Dec. 10, 1999) http://www. lawnewsnetwork.com/stories/A11239-1999Dec9.html

William F. Merlin Jr. is a partner with Gunn Merlin in Tampa, Florida. Mary E. Kestenbaum is an associate with the firm.