Archive for February, 2010

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January 15, 2010


By Deborah Rothman

A recent article by Daily Journal staff writer Laura Ernde quoted Thomas J. Stipanowich, professor at Pepperdine University School of Law and academic director of the Straus Institute for Dispute Resolution as saying, “Although arbitration was set up as an alternative to the expensive and time-consuming process of going to court, lawyers have started bringing the same litigation tactics to the arbitration process, creating higher cost and delay.”

“Litigization” – a term coined by my colleague Gerry Phillips – is beginning to have an equally negative impact on the mediation process, though in the opposite way. While mediation has the potential to be a successful, cost-effective and occasionally transformative process for the participants, the dual trends toward streamlining and spinning have created unfortunate unintended consequences, including less client satisfaction and lower settlement rates.

Having been a full-time mediator and arbitrator since 1991, I have witnessed the substantial trajectory of mediation’s development from the time a handful of us presented lunchtime mediation trainings to groups of trial judges. At the time, mediation was still such a new concept that in some meetings we literally had to explain the difference between mediation and arbitration, and for years afterwards many attorneys and judges still used the terms interchangeably.

Even when the differences were firmly understood, it took years of Bar and other CLE presentations to persuade litigators that being the first to propose mediation of an expensive, disruptive lawsuit did not constitute a sign of weakness. Eventually the Legislature passed pilot legislation authorizing judges to order smaller cases into mediation, lawyers routinely recommended mediation to their clients and clients embraced mediation as a way to end the bloodshed and financial drain of litigation.

Those were, in retrospect, the halcyon days of mediation. Attorneys were pleased with the accolades they got from their clients for encouraging – perhaps contrary to their pecuniary interest – clients to engage in mediation and to compromise rather than continue to pursue litigation; the parties were delighted with their ability to participate in shaping the resolution of their costly disputes; and mediators began to think of themselves not just as “recovering litigators,” but as “peacemakers.”

With the proliferation of mediation, mediators began to specialize not just in the art of the mediation process, but in specific areas of law. At the same time, a sufficient knowledge bas existed that attorneys could call on their firms’ or their associations’ members to get invaluable feedback about the strengths and weaknesses of prospective mediators.

Perhaps unsurprisingly, the success of mediation contained the seeds of its undoing. Some litigators began to look for ways to gain a competitive edge in mediation. (That oxymoron should have been a tip-off.) Thus began the era of “spinning” the mediator. It began with innocent-sounding statements like “My client will not take less than $100,000,” which later in the mediation turned out not to be the bottom line at all, and jibes, like, “Come on, don’t let us down, you wouldn’t want to ruin your stats,” as if mediators were solely responsible for the success of the mediation. Occasionally an attorney would ask a mediator to outright lie to opposing counsel for the purpose of gaining an advantage.

Mediators were not blameless. Attorneys and judges, seeing how much satisfaction – and remuneration – mediators found in their work, began to enter the ranks of the profession in seemingly ever-increasing numbers. When the market eventually became over-saturated, some mediators’ efforts to distinguish themselves from the pack resulted in over-the-top conduct, such as publishing articles that outlined method by which an attorney could “manipulate” the other side in mediation, and boasting settlement rates that approached 100 percent.

Having participated in numerous mediations, and often having taken mediation training themselves, attorneys in mediation naturally tried to shape the process, hoping to gain an edge. They began comparing this week’s mediation to last week’s, complaining to Mediator A that he or she had not elicited an offer of money at a time in the day when at Mediator B’s mediation last week, there was an ‘x’ amount of money on the table. The message was clear: mediators’ success could be measured by so simple a yardstick as the number of dollars on the table by a certain time of day, as well as at the end of the mediation, regardless of the differences in parties, issues, cross-complaints and opposing counsel. Some mediators learned to be double agents, leading each side to believe that they were getting a slight edge over the other side.

Many attorneys tried to streamline the process, or cut to the chase, hoping to make the mediation more efficient for their clients. It is a canon of mediation practice that “the right number at the wrong time is the wrong number.” Perhaps some attorneys wee suspicious about the motives of a mediator who charged by the hour. Thus began the era of “no joint sessions.” Although the importance of joint sessions is stressed at mediation trainings, mediators suddenly scurried around to find ways to successfully mediate cases while still accommodating litigators’ demands that the mediation consist solely of caucuses.

To be fair, some attorneys’ insistence on the elimination of joint sessions was born partially out of a desire to shave time off the mediation process and thus to save the parties attorney’s fees And while other attorneys justified this request in terms of not wanting to give the other party free discovery, or not having prepared their client to speak in the presence of opposing counsel, some had more cynical motives. They had discovered over time that when joint sessions occurred and the attorneys allowed the mediator to shape the process, mediators were sometimes able to get the parties to talk about their respective feelings of betrayal, hurt and embarrassment, and occasionally to acknowledge the pain the dispute had caused to each others’ families. Although “kumbaya” was rarely sung, the catharsis that sometimes resulted from these joint sessions was powerful. Plaintiffs lost their desire for revenge when they reconnected with their litigation adversaries in a neutral and supportive environment. After reminiscing about the pre-dispute days when their families were friendly and their business relationship was mutually gratifying, defendants lost their desire to bloody their former enemies.

From some attorneys’ perspective, this was the problem with joint sessions – they undermined the preparatory work the attorneys had done with their clients to get them the best possible deal. Many a plaintiff’s lawyer told his or her client, “The mediator will tell you that the other side would like to apologize to you, but don’t fall for it – they’re just trying to get you to accept less money.” That kind of thinking reminds me of a scene in the motion picture “Invictus,” in which the captain of the rugby team rebuffs his girlfriend’s advances the night before a championship game, saying, “No, I have to be angry for the game.”

This focus solely on legal issues, the distribution of money and a maximally efficient process deprives the mediator of a host of tools by which the dispute could be resolved to the parties’ mutual satisfaction and produces unintended consequences, especially for what Riskin and Welsh refer to as “one-shot players” who, unlike attorneys and certain corporate parties who are “repeat players,” would greatly benefit from a more customized mediation process that addresses their particular interests and values. Riskin, Leonard L. and Welsh, Nancy,” Is That All There Is? ‘The Problem’ in Court-Oriented Mediation” George Mason Law Review, Vol. 15, 2008. And unlike the rugby captain in “Invictus,” one-shot players who are deprived of the closure that mediation can offer are not likely to get a second opportunity.

By trying to keep emotion out of the settlement process and depriving their own clients of an opportunity that time an again has proven more important to the disputing parties than cash, attorney are also inadvertently sabotaging the chances of settlement. In a fascinating study brought to my attention by my colleague Phyllis Pollack, the President of SCMA, Jonah Lehrer in “How We Decide,” Houghton Mifflin Harcourt 2009, shows that people actually need to experience emotion in order to make decisions, and argues that good and satisfying decisions require the use of both the rational and the emotional parts of the brain. Perhaps attorneys’ success rate at keeping the negotiation focused on the bottom line helps account for the declining rate of mediation settlements.


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MARC Press Release – CMS Delays Section 111 Electronic Reporting

MARC Coalition Applauds Agency’s Alert Regarding Delay in Data Exchange Deadline

FEB. 17, 2010 (WASHINGTON, DC) – The Medicare Advocacy Recovery Coalition (MARC) today applauds the Centers for Medicare and Medicaid Services CMS, for their decision to defer the reporting deadline for Section 111 MMSEA Mandatory Insurer Reporting.

“The industry has been working diligently to build in infrastructure to supply data to CMS, investing millions of dollars to ensure compliance with the data share regulation.” said Roy Franco, co-chairperson of MARC and director of risk management services for Safeway Inc.  “Unfortunately, there have been unforeseen difficulties and unanswered questions regarding the reporting process, and everyone’s ability to get the job done by April 1.”

The Alert posted by the Centers for Medicare and Medicaid Services allows testing to continue thru December 31, 2010, and only begins live reporting on January 1, 2011. “This expansion of an additional nine months will allow time for both the Agency and the industry to navigate system roadblocks and clarify open policy issues,” states Katie Fox, co-chairperson of MARC and MSP Compliance & Resolution Manager for MedInsights, Inc.  “MARC is committed to working with the Agency to ensure the reporting process is effective and to minimize the delay of benefit to the Medicare beneficiaries”

“The claims community will continue to exchange data with Medicare in a collaborative effort to improve the data reporting systems.” says Marcia Nigro, Assistant Vice President and Complex Claim Consultant for Sedgwick CMS.  “The certification and testing for the claim detail data exchange will continue thru 2010, which will benefit everyone involved.”  The MARC Coalition had written to CMS in January seeking changes to the April 1, 2010 reporting deadline, and had been working with CMS and a wide variety of stakeholders to ensure that reporting was not required until the appropriate systems were functional and in place, and until important policy guidance, including a new  “User Guide,” was issued.  MARC applauded the CMS announcement that CMS will issue this important new guidance the week of February 22.

The Medicare Advocacy Recovery Coalition (MARC) advocates for the improvement of the Medicare Secondary Payer program. The coalition has been collaborating and developing strategic alliances with Congressional leaders and government agencies to focus on broader Medicare Secondary Payer (MSP) reform. MARC member organizations are comprised of entities representing virtually every sector of interested stakeholders, including attorneys, brokers, insureds, insurers, insurance and trade associations, self-insureds and third-party administrators. For more information, please visit

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Mediating PI Cases-From the Adjustor’s Perspective

This presentation was given to the attorney-mediators on the Riverside Superior Court panel.

I believe the information in this article is beneficial for both defense and plaintiff counsel and for other mediators.


I am a professional mediator.  I began my practice about three years ago and specialize in elder abuse, medical malpractice, legal malpractice, personal injury and divorce.

My role here today is to share my insight of the typical mindset of the claims representative (check writer) during a court ordered settlement conference. 

It is my understanding that during your settlement conferences, you face challenges from the carrier representative such as arm folding, frowns or comments that “this is a waste of time.”  I will try to touch on a couple of potential obstacles and provide ways for you to work through them.

Briefly, about my experience.  I worked as a claim adjuster at 20th Century insurance company handling auto and homeowner claims.  From there, I went to CIGNA P&C and handled premises claims, D&O E&O, products liability, food borne illness and employment practices liability.

Eleven years ago, I started Davis Risk Services which is a third party administrator and independent adjusting company.  When I am not the mediator, I represent carriers across the country at settlement conferences.  The primary focus of business of DRS is medical malpractice and elder abuse.

I will make assumptions on challenges you might be experiencing based on my experience of representing carriers when I am not the mediator. 

Who are the two most important people at a mediation?  The decision makers:

  • The plaintiff
  • The person with the checkbook

Who are the two people most often ignored or overlooked at a mediation?:

  • The plaintiff
  • The person with the checkbook

When I am not the mediator, as a carrier representative, I have walked out on many mandatory settlement conferences and mediations for one reason and one reason only…I was ignored or not included.  The judge or attorney mediator would ask to speak to “the attorneys only.”  Do you have any idea how insulting that is?  I take a day off work, drive 80 miles in Southern California traffic and I’m not even “invited” to the settlement meetings.

A key to this first barrier is that you MUST engage the carrier representative.  If you begin the mediation process by only speaking with defense counsel, then your chances of not resolving the case has substantially increased.  The thought process of the adjuster when they are not addressed is that they are being left out from the “good ole boy’s network.” 

When I am not the mediator and attend a mediation for one of my carriers, I NEVER tell defense counsel how much money I have.  Counsel is there to do one job, defend their client.  I am there to do two jobs.  Look out for the interests of the insured and try to save the insurer as much money as I can.  This will only happen if the mediator treats me with respect.

During the mediation process, it is sometimes necessary to separate the plaintiff attorney from his/her client.  You should never do this on the defense side.  In fact, if the carrier representative hasn’t already done it, you might offer to speak directly with them without the defense attorney present.  I do this on a regular basis and you wouldn’t believe the horrific look on an attorney’s face when I meet with the mediator/judge without counsel.  Talk about feeling left out. 

The exception to this is that while you are not in the room, the carrier and counsel are trying to figure out how to use the adjustor’s anger to their advantage.  When you come back, you might be approached by the defense attorney to talk alone.  99% of the time the topic will revolve around the fact that the adjustor is annoyed they have to be there, is already offering more money than they planned and don’t want to be squeezed anymore.  Basically, they are playing…good cop/bad cop.  Don’t resist, play into the role, but never disengage the adjustor unless specifically instructed by defense counsel.

With every rule, there is an exception.  You will often have a new or quiet or quite frankly, an intimidated claims representative.  You need to try as best you can, as soon as you can, to determine what kind of personality the claim representative has.  If you see that they are always looking to their attorney, then you know they are uncomfortable being there, with the process or do not know enough about the case, don’t know how to negotiate or simply, they have specific marching orders. 

If you are able to determine this, change the way you speak in a private session with the defense team.  Have an empathetic/soothing tone in your voice.  DO NOT SOUND LIKE A SEASONED TRIAL ATTORNEY.  If you thought they were uncomfortable before, forget about it.  You just lost a party.  You want to make the claim representative comfortable, engaged and look to them as the most important person in that room…because without them, there will be no settlement.

On the flip side, if you come off as the seasoned trial attorney with a seasoned claim representative, then you’ve lost all credibility with them. 

There has been countless times, especially on multi-party mediations, when I am not the mediator and am representing a carrier where I do not include the mediator and go directly to the other co-defendants and then to the plaintiff.  During these times, I find myself switching hats from carrier representative to professional mediator.  I have settled ever single case when this has happened and all the mediator does is talk to the attorneys about golfing or how difficult I am being. 


Another obstacle in resolving limited jurisdiction cases or cases that fall under CCP 1775.5 is squeezing just a few more hundred (seldom thousand) dollars from the carrier.  There are some carriers that come to the court ordered mediations set in their ways that their first offer was their last and final and the mediation is just a waste of time. 

You can go through all the risks and economics you want, but you are always facing multi-billion dollar corporations vs. an individual plaintiff.  Believe me, they couldn’t care less about the economics of one of these cases.  Now, the plaintiff on the other hand has to be told of the economics as it directly effects them, not the carrier.

There are two ways to attack this.  First, you have to be verse enough with insurance lingo to explain to the plaintiff (again, not necessarily counsel) that unfortunately, the carrier does not look at them as an individual, rather as a number or a liability (I recommend everyone read this book [I have a dozen copies if anyone wants one-just email me].  It’s changed my perspective of the individual plaintiff – What is Life Worth? – The Unprecedented Effort to Compensate the Victims of 9/11 by Kenneth R. Feinberg).

Explain how the insurance process works.  When a claim is received, it is reviewed and a value is placed on the case.  Then one or several reserves are established based on the evaluation.  Unless there is new evidence to dramatically change the carrier’s evaluation, the reserve will not change and the value will not change.

You can typically determine these numbers as “insurance company” numbers, i.e., in increments of $500 or $2,500.  If the plaintiff is at $9,000 and the carrier is at $6,000, the case will settle at $7,500.  This is the psychological number for the carrier.  If the case is close to resolving for $25,000, say the plaintiff is at $30k and the carrier is at $22,500, the carrier does not want to break the psychological barrier of $25,000.  You need to let the plaintiff know this insight and prepare them for accepting $24,500-this will send the adjuster back to the office looking like a hero for saving $500.00.

Again, there are exceptions to the rule.  If you are working on a case that has a peculiar exposure such as lost earnings, publicity, true loss of consortium, then the carrier might hit or even break through that psychological number.  All this needs to be somehow communicated with the plaintiff and the carrier (not the attorney) needs to see that you understand their way of thinking.

If you have been able to establish the proper rapport with the claim representative and you are at an impasse (hundreds, not thousands), talk to the claim representative and ask them how else the case can be settled. 

Was there a PD claim?  Can money be paid on a different reserve?  Other reserves tend to be the key.  Some carriers set an indemnity reserve, PD reserve, MP reserve and an expense reserve.  Find out from the carrier if there are other open or available reserves to consider.  If there are multiple plaintiff’s and there is an agreed number with one and not the other, can the carrier pay a little more on one and have the plaintiffs work out the numbers?  There might be a higher reserve on one plaintiff vs. the other.

Double check outstanding medical bills and make sure MP is eliminated as a possible source of money.  Double check the PD, loss of use, rental and/or deductible and make sure all those were properly paid.  Chances are that something was overlooked and you can find the few hundred dollars needed for a resolution.


The insight of this article is the reason I believe my skills as a mediator separates me from the typical attorney/judge mediator.  I have worked with many carriers and settled thousands of cases on their behalf.  Knowing how a carrier thinks is advantageous to all parties in a mediation.

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