Auto Accident Claims: The Influence

of Colossus on Recoveries Guidance for Counsel on Insurance Adjustment Software to Maximize Settlement Offers

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THURSDAY, NOVEMBER 29, 2012

Presenting a live 90-minute webinar with interactive Q&A

Matthew J. DeGaetano, Certified Colossus Consultant, Personal Injury Institute, Lewisville, Texas

Steven M. Gursten, Attorney, Michigan Auto Law, Farmington Hills, Mich.

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THE HISTORY

OF

COLOSSUS

Computer Software Program used by Insurance Companies

The adjuster enters information about the claim into the program

The program accesses over 10,720 rules or value drivers to evaluate over 750 injuries

The program computes a settlement figure that is consistent with the severity of the patient’s injury

7

Value drivers!

There are 10,720

What are value drivers?

8

Colossus arrives at an

evaluation by assigning

points to value drivers

associated with each

injury.

9

The actual assignment of points

is determined by each individual

insurer.

They become the

baseline data by which all injury

values are arrived at.

10

Each insurer has the

ability

to manipulate this point

assignment and database

any time it wishes.

11

The points are

represented

by “value drivers” in a

mathematical equation.

12

Some of the “value

drivers” have multipliers

as well.

These multipliers

add significant points to

each “value driver”.

13

The mathematical equation

consists of the following

components, which must be

indicated in the medical records

and be specifically stated in the

demand from the attorney

14

What Caused The Cultural Change In the

Insurance Industry?

•The Insurance Industry claim handling

culture went through a major

transformation during the mid 1990’s

adopting the opinions and advice of

McKinsey Consulting.

15

THE MEDICAL COMMUNITY ENVIRONMENT

• This was accomplished by each individual insurer

in conjunction with McKinsey Consulting (Arthur

Anderson or Accenture as it is currently known,

also contributed to some insurers’ transformation)

through the creation and implementation of the

McKinsey “Business Process Improvement” (BPI)

culture. This transformation of claim culture is

evident in the McKinsey documents Allstate has

produced in other cases across the country.

16

Soft Tissue Injuries

• The current industry percentage of these claims which

would involve “soft tissue” injuries varies between 85 and

90 percent. The most common treating facility or

practitioner sought for the treatment of “soft tissue”

injuries is Chiropractic. The current industry percentage

of Chiropractic involvement in these types of claims is as

high as 95%. Most of the injured parties have either

PIP/MPC benefits available to pay for the treatment. A

very significant number of the injured parties also have

either third party claims against an insured negligent

tortfeasor or a first party claim under their UM/UIM

(Uninsured Motorist/Underinsured Motorist) coverages.

17

THE CONTINUUM COMPANY

• At about the same time, an Australia based computer

software company creates Colossus.

• Designed to evaluate claims based on:

- Injuries

- Treatment Specifics

- Symptomology

- Future need for Treatment

- Impairments and Disabilities

18

COMPUTER SCIENCE CORPORATION

• Licensed Colossus from the Australian Firm (Continuum

Company)

• CSC offered it to the insurance industry as a way of

reducing claim payouts

• McKinsey approved the venture and was retained by each

of the insurers to calibrate the values of Colossus.

• Calibration was performed by Arthur Anderson or A.K.A.

as Accenture

19

20

21

COLOSSUS IS MORE THAN JUST

A SOFTWARE PROGRAM

It is an Artificial Intelligence

Program!

22

How Can The Artificial Intelligence

Affect Your Office?

•Colossus & National Insurance Crime

Bureau (NICB)

•They use this system for all doctors

prior accidents, questionable cases,

referrals, tax ID’s, SS#, looking for

patterns

23

Colossus

• The Colossus equation is designed to

establish:

Economic Damages or Special Damages –

Medical Bills & Loss of Income

Non – Economic Damages or General

Damages – Pain & Suffering

What does this mean?

24

UNTIL THE LATE 1980’S

• Most claims were settled for 3-5 times the special damages

For example:

- $5000 in specials settled at $15000

25

Colossus

• Therefore each INJURY MUST BE IDENTIFIED BY A

QUALIFIED DOCTOR

Example: If the patient had a sternum injury at

the ER and it does treating facility does not

recognize or diagnose that injury the claims

representative is barred from imputing that

additional injury.

The result would have an impact on the final

value of the claim.

26

66% savings “The case reserve in 1990 for a soft tissue injury

liability claim was approximately $15,800.00 The

case reserve for the same type of injury in 2001

was $5,800.00. This reduction in the claim

severity was a direct result of the process and

programs such as “MIST”, Minor Impact and “No

Damage / No Injury”. This $10,000.00 savings per

claim has a direct impact on profits realized from

the claims department”.

• This is the amount of dollars set aside by the insurer in anticipating the amount to paid on

this type claim at settlement. The figure is based on a three year historical severity realized

by the insurer.

• Fowler vs. State Farm Mutual Automobile Insurance Company, Hawaii; The United States

District Court For the District of Hawaii; Civil No. CV07 00071 SPK/KSC;

27

66% savings

Considering that State Farm Claim Vice

President (Fowler vs. State Farm) recently stated

in a deposition. State Farm experiences 15,000

claims per day. It might be an eye opening

exercise to have some economist actually

extrapolate the direct and indirect economic

impact on the public over the last fifteen years.

• This is the amount of dollars set aside by the insurer in anticipating the amount to paid on

this type claim at settlement. The figure is based on a three year historical severity realized

by the insurer.

• Fowler vs. State Farm Mutual Automobile Insurance Company, Hawaii; The United States

District Court For the District of Hawaii; Civil No. CV07 00071 SPK/KSC;

28

THE ARTIFICIAL INTELLIGENCE OF

COLOSSUS

• Begins with database profiling

- Chiropractors

- Medical Doctors

- Patients

29

DOCTORS HAVE BEEN DATABASED

• If Colossus devalued most of your cases last year because:

- You look poor notes

- Failed to refer for a second opinion

- Used the wrong terminology

- Used the wrong prognosis

- Did not objectify your findings with diagnostics

- Did not monitor clinical progression with Outcomes Assessments

- Did not use active care procedures • Then…………

30

UNDERSTANDING IS THE KEY

If Attorneys, Medical Doctors, Chiropractors understand

Colossus and work within its framework, then Colossus

can be beat.

We can win the whole pot even though we are holding a

bad hand

31

The Entire Case Is Calculated

From The Treating Physicians

Records And Protocols.

Attorney Demand Packages Are

Obsolete!

32

What Are Our Clinical Tools

•Flexion / Extension Views

•Lateral Flexion Open Mouth

•Digital Motion X-Ray

•Proton Density MRI ( Upper Cervical

Studies )

•AMA Guides For Permanent

Impairment

33

Soft Tissue Injuries and the Attack by

the Insurance Companies

• Most Chiropractors treat Soft Tissue Injuries

• Our office looks at ALL ANATOMICAL STRUCTURES.

“CONNECTIVE TISSUE”

• 95 % of all Soft Tissue cases are treated by Chiropractors

34

All Injuries Must Be Identified

• Contusions all other body parts

• Sprain/Strain all other body parts

• Fracture all other body parts

• Dislocation all other body parts

• Ligament injuries – usually associated with joints

• Laceration all other body parts

• Penetrating wounds all other body parts

• Crush wounds all other body parts

• Amputation all other body parts

• Concussion

• Lastly, dental injuries

35

All Injuries Must Be Identified

• Sprain/Strain cervical, thoracic and/or lumbar

• Subluxation

• Prolapse cervical, thoracic and/or lumbar

• Bulge cervical, thoracic and/or lumbar

• Herniation cervical, thoracic and/or lumbar

• Dislocation cervical, thoracic and/or lumbar

• Fracture cervical, thoracic and/or lumbar

• Superficial Injuries all other body parts

36

Do You Know The Four IV Phases Of

Whiplash?

The s-shaped curve, with hyperextension

of the lower segments and flexion of the

upper segments. This is one of the chief

points of injury and occurs before the

head strikes the head restraint. Adapted

from Ono et al.

37

IV Phases You Should Know

38

UNDERSTANDING THE

EQUATION

• No human intuitive abilities

• Depends on the input of the claim handler alone

• Garbage In – Garbage Out

39

IN THE ABSENSE OF COMMUNICATION,

THE PATIENT IS THE VICTIM

• We need to speak the language of Colossus

- Symptoms

- Diagnosis

- Treatment

- Prognosis

- Additional Factors

- Impairment

40

Permanent Impairment

• Permanent Impairment is defined with the following

factors

• A medical condition resulting from trauma or work related

disease or illness

• A deviation from normal function of a body part or organ

system

• Something the body or body part can no longer perform

normally

41

How does permanent impairment

differ from Disability ?

• Disability is how the impairment affects and

changes the person’s ability to perform, social, or

employment demands

• Impairment is a medical assessment

• Disability is a non-medical assessment

NOTE: Colossus is not capable of establishing an impairment rating,

only a qualified medical physicians can assess impairment ratings.

42

Colossus

•Colossus is NOT capable of assessing

brain damage

•The only head injury impairments,

which may be entered into colossus

are related to sight, hearing,

equilibrium, air passage, or

mastication (TMJ)

43

Colossus

• Colossus Applies General Damage Compensation For

Impairments Based On The Following:

• The Body Part Or System Impaired

The Degree (Amount) Of The Impairment Assigned By

The Medical Examiner

Impairment Ratings Must Be Part AMA (American

Medical Association) 6th Edition For NOW…

Law Suit Pending

44

Injuries Diagnosed & Treated

•Minimum Competency To treat PI

Patients

•The Doctors Ability to

Address Each & Every

Injury

45

PROPER AND COMPLETE DIAGNOSIS

• The Initial Records Must Reflect ALL Complaints

Of The Patient

• The Examination Should Indicate All Injuries

Related To Each Complaint

• Colossus Is Structured To Recognize Only The

Diagnosed Injuries Found In The Records

46

DIAGNOSE ALL INJURIES

SEPARATELY!!!!!!

• If the shoulder is included as a separate injury

then the colossus program would allow additional

treatment for the shoulder.

• Although radiating pain increases the value of the

case, it does not increase it as much as

diagnosing the symptom as a separate injury.

47

CPT Codes

• Using forms that contains CPT codes is huge for

your case for 2 reasons. It helps the office biller

work more quickly AND helps the Colossus data

entry person work more quickly to settle the

claim.

Keeping good medical records makes the claim

adjuster and all attorneys’ jobs easier because

they have all the “facts” to know what injuries

were diagnosed.

48

Intake and Management

Forms

• Attorney Intake Form

• DUD and LOE Worksheets

• Physician Intake/Discharge Form

• Physician Request Form

• Common Injury Code Sheet

• Supplemental HCFA Form

• Body Shop Questionnaire

49

DOCUMENTATION OF ALL SYMPTOMS

• After the injuries (diagnosis) are inputted,

colossus asks a series of questions associated

with each injury.

• The corresponding input adds individual value

amounts to the claims general damage range.

50

IMPORTANT SYMPTOMS

• Loss of range of motion

• Headaches

• Spasms

• Dizziness

• Visual disturbance

• Radiating pain

• Anxiety (must be treated)

• TMJ

• Stiffness

51

SYMPTOM DURATION

• It is not necessary to acknowledge the symptom

on each date of treatment

• However, the entire duration of the symptom

should be reflected in the chart notes.

52

PRE – EXISTING CONDITIONS

• If a plaintiff has a pre-existing condition, Colossus will place a higher value on the claim

• An asymptomatic condition with no treatment in the past 24 months.

• Even a condition that was symptomatic there is a need for clinical discussion.

53

TREATMENT DELAY AND/OR

TREATMENT GAPS

• Any delay in seeking treatment or any gaps

in the treatment regimen must be

substantially explained in the records.

• Either of these situations unexplained would

result in decreasing the weight of the

treatment duration.

54

THE PROGNOSIS

NEVER MENTION THE TERM MMI FOR WHOLE BODY

ONLY EACH BODY PART AFFECTED

• Resolution Undetermined – No Value

• No Complaints, No Further Treatment -

• Complaint, No Further Treatment -

• Complaint, Further Treatment -

• Complaint, Guarded Prognosis -

55

ADDITIONAL FACTORS

• There are three additional factors which have

significant weighted affected on the general

damage portion of a claim.

- Duties Under Duress

- Loss of Enjoyment of Life

56

In summary . . .

•Firms need to be proactive

•Medical and Chiropractic institutions do not train doctors to manage personal injury clinically or case manage wise.

57

In summary . . .

Go to www.Colossusinfo.Net

For your Complimentary

Colossus Guide

&

Colossus Firm Assessment

58

Dr. Matthew J. DeGaetano Certified Colossus Consultant

Personal Injury Institute

363 West Main Street

Lewisville, TX 75057

http://www.personalinjuryinstitute.com/

Steven M. Gursten Attorney

Michigan Auto Law

30101 Northwestern Highway

Farmington Hills, MI 48334

http://www.michiganautolaw.com/