"When you see there isn't a lot of property damage and State Farm is on the other end, you know you're going to be in litigation," Gold says. "They're the leader. Allstate and the others follow them. And State Farm isn't just tough when they're defending one of their insured. They're difficult to deal with even if they're your insurance company and you're trying to get your PIP [personal injury protection] benefits."
One out of five cars on the road is insured by State Farm, the undisputed champion in an extremely contentious business. The company has almost 40 million auto policies in force and processes up to 750,000 auto injury claims each year. But among plaintiffs' attorneys, State Farm is known as "Snake Farm" because of its reputation for underpaying claims, dragging out settlements and playing rough with accident victims who dare to take their cases to trial.
In recent years, the company has been the target of a slew of unflattering media reports and regulatory probes dealing with allegedly underhanded business practices. State Farm has been accused of altering medical reports in order to deny claims, using substandard generic parts to save money in auto repairs, and pushing profits at the expense of policyholders. Company officials have denied any wrongdoing, even as State Farm has been hammered by judges and juries across the country for its treatment of its own customers. The Utah Supreme Court recently upheld a $147 million judgment awarded to a policyholder who claimed the company failed to protect him from ruinous litigation after an accident. A few months earlier, the Arizona Supreme Court concluded that State Farm had engaged in "a deliberate practice of underpaying claims nationwide."
In Colorado, State Farm and other major insurers have lobbied hard for caps on damages and for higher thresholds for filing a lawsuit, arguing that excessive litigation drives up the costs of insurance. After more than a decade of tort-reform efforts, however, Colorado has some of the most expensive auto insurance rates in the West and ranks fourteenth in the nation; studies indicate that soaring premiums have far more to do with the rising cost of auto repairs than with personal-injury lawsuits. In fact, the number of civil cases filed in Colorado has dropped dramatically in the past decade, even as the population has surged.
According to data compiled by the Colorado Trial Lawyers Association, a group representing plaintiffs' attorneys, the state now ranks near the bottom in several multi-state surveys that compare the number of automobile lawsuits filed per capita. Attorneys who represent accident victims in this state claim they battle a system that favors the defense; at trial, no one is allowed to mention whether a defendant even has auto insurance, which leaves the jury with the impression that the victim is going after some ordinary joe rather than a multi-billion-dollar corporation. Thanks to "insurance-industry propaganda," the attorneys say, jurors also tend to regard personal-injury lawyers as greedy ambulance-chasers.
"Here's the effect of the propaganda," says Denver personal-injury attorney Steve Kaufman. "People believe that everybody who sues is looking to win the lottery and that all these frivolous lawsuits are driving their premiums up. It's ridiculous. Compared to when I first started practicing twenty years ago, you settle cases for half of what you used to. You work on a contingency basis, so why would you ever take a case that was frivolous? The costs alone could wipe you out."
Lawyers who take on a behemoth like State Farm recognize that the odds are against them. They shell out for doctors, accident investigators and expert witnesses up front, knowing they will recover their costs only if they win. They draft demand letters, knowing the other side is in no hurry to settle. If they make it to trial, their expenses balloon, and if they lose, their client is on the hook for the defense's costs -- the insurance company's attorney fees, the company's doctors and expert witnesses. And most of the time, they will lose: Sixty percent of the civil trials in Colorado last year resulted in defense verdicts.
The McClelland case has problems, Gold realizes. It is not a high-speed crash. No totaled car, no trip to the emergency room. No documented loss of consciousness. But Gold knows his client is badly hurt, especially after her own insurance company's doctor, neurologist Jonathan Woodcock, vouches for the brain injury. "That, to me, was the confirming diagnosis," Gold says.
Spitz's concurring diagnosis strengthens his resolve. The CU professor is a well-respected researcher, not someone who routinely testifies in insurance cases for one side or the other. ("I usually run in the other direction," Spitz says. "Maybe once a year an attorney calls me up with something that sounds interesting, and I say I'll look at the case.") But Gold's client will also have to undergo intensive scrutiny by doctors retained by State Farm, doctors who have a long track record of testifying that people aren't injured as badly as they claim or that their injuries are caused by something other than the accident at issue. And McClelland's rapidly unraveling life offers plenty of raw material for anyone looking to develop alternative theories about the nature of her problem.