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Thursday, October 31, 2002
Insurer wants to silence 2 ex-staffers
Former adjusters say Farmers' computer devalues claims
By CANDACE
HECKMAN
SEATTLE POST-INTELLIGENCER REPORTER
Farmers Insurance has asked a state court to silence two
of its former employees who say a new computer program
being used throughout the industry places unfairly low
values on its personal-injury claims.
A Snohomish County Superior Court judge is expected
today to hear the insurance company's plea for a gag
order on Robert Dietz and Christy Klein. Both say they
quit their jobs because they were frustrated at new
cost-cutting practices at the company.
Dietz and Klein are scheduled to appear next month at
what is expected to be a well-attended seminar for the
Washington State Trial Lawyers Association. The former
adjusters were scheduled to brief lawyers on a computer
program called "Colossus," now being used throughout the
industry to remove the human element from the
claims-adjusting process.
Since leaving Farmers, the two adjusters also have
become paid expert witnesses in lawsuits for consumers
accusing their insurance companies of acting in bad
faith. The two volunteered to do the seminar for the
trial lawyers.
Dietz quit Farmers in August 2001, Klein in January
2002.
Farmers Insurance Exchange filed a lawsuit last week
against Dietz and Klein, hoping to get court approval to
gag the former adjusters and thoroughly question them on
their knowledge of the Colossus program.
In its lawsuit, Farmers says the company began
nationwide implementation of Colossus in March 2000. Two
months later, the lawsuit says, Farmers entered into an
agreement with Computer Sciences Corp. of California,
which licenses Colossus, to modify the program at
Farmers' direction.
In his response to the lawsuit, Dietz said that he was
one of 30 to 40 of the company's most experienced claims
employees who were asked to participate in a "tuning
session" specific to the Northwest during which the
adjusters agreed to benchmark values. The values were to
be used to approximate how much to pay a customer who,
for example, broke a leg versus the amount to be paid to
a customer who broke his neck.
Dietz said that he was told those values would then be
lowered to 80 percent and entered into the computer
program.
Mary Flynn, corporate spokeswoman for Farmers in Los
Angeles, declined to comment on the lawsuit because she
said she did not know enough about it. She said that
company officials typically do not comment on pending
litigation.
By sharing what they know of the Colossus software,
Dietz and Klein would breach "the duty of loyalty they
owe their former employer," Farmers' lawsuit states.
Neither of the two former adjusters signed
confidentiality agreements with Farmers.
"My vast experience in evaluating claims was replaced by
values generated by a computer," Dietz said in court
documents in response to the suit. "More often than not,
these values were not representative of what I had
experienced as fair and reasonable. As such, it became
difficult to settle claims, and it was at times
embarrassing to even make the offer that Colossus
recommended, knowing it would be rejected, and suit
would be filed."
Dietz and Klein's attorney, Karen Koehler of Bellevue,
said that requests for gag orders from the insurance
industry claiming the spread of trade secrets are
typical.
"We're always fighting them and we're always losing,"
Koehler said. "This is what we deal with. It's
intimidating for some people."
Koehler is organizing the continuing legal education
seminar for the state trial lawyers. To keep their
licenses, lawyers are required to annually attend such
professional development courses.
The course is called "The Rise of Colossus" and is open
only to lawyers.
The session is to teach lawyers about Colossus, an
artificial intelligence program introduced to companies
in the 1990s as a tool to help adjusters place values on
insurance claims. But adjusters who have left the
industry since its reported widespread use by Allstate
Insurance Co. in 1997 say that the computer consistently
delivers value ranges that are well below what human
adjusters would consider a fair settlement.
"Top of the range settlement offers were often rejected
by the claimant -- which result in an increasing number
of cases remaining open -- thus increasing my pending
case load," Klein said in her response to the lawsuit.
"It also drove more cases into litigation in an attempt
to reach a fair settlement."
Klein also worked for Allstate and used Colossus there.
About half of insurance companies that operate in the
United States, including some of the largest, such as
Aetna, Hartford Financial Services and Zurich Personal
Injury, use the Colossus program. But those companies
have done a good job suppressing information about the
program.
Colossus is not mentioned in insurance policies or
advertising brochures.
Neither is the fact that claims are being adjusted by
computer.
P-I reporter Candace Heckman can be reached at
206-448-8348 or
cndaceheckman@seattlepi.com |
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