State Leads Nation in Filing Injury Claims for Auto Accidents : Insurance: Some analysts say California’s figure--twice that of other states--indicates fraud, but others cite more innocent factors. A separate state study shows attorneys are likely to get involved in settlements.

California substantially leads every other state in the number of bodily injury claims paid in proportion to automobiles damaged in accidents, according to a nationwide study by the industry-funded Insurance Research Council.

Another study, released Tuesday by outgoing Insurance Commissioner Roxani Gillespie, shows that a majority of Californians making injury claims in auto accidents are now hiring attorneys to represent them.

Together, the two studies portray California as a litigation-ridden state where injury claims are suspiciously high. But there is disagreement in the industry over whether the figures represent fraud or a more innocent “buildup,” or exaggeration, of claims.

The Insurance Research Council study shows that in 1989, insurers paid 55.7 injury claims in California for every 100 auto property damage claims, more than twice the ratio of most other states. The number of injury claims paid per 100 cars damaged in the Golden State has mounted steadily, from 31.1 in 1980, to 39.5 in 1985, to 46.8 in 1987, to the high in 1989.

“I don’t think fraud is too strong a word to use in association with these figures,” said Bob Mecherle, claims vice president for State Farm, the largest auto insurance seller in California and one of the companies sponsoring the study.

“I just don’t believe the people of California are the most fragile, delicate people in the entire country,” Mecherle said.

Other insurers interviewed said they believe the comparative numbers between California and other states--and between the California of 1989 and 1980--demonstrate at the very least that Californians and their attorneys and doctors either are exaggerating the injuries or making claims for injuries that do not exist.

John Conners, executive vice president of Liberty Mutual, another study sponsor, said, “In states where auto insurance is reasonably affordable, the ratio of injury to property damage claims is in the 20 to 25 range. Then you look at California and see it’s near 56 and up from 31, so someone’s attitude toward claiming injuries has changed.”

Conners said the figures indicate that California “is in a syndrome where if you have an accident, you say that your rates are so high that ‘I’m a damn fool if I don’t make a claim.’ ” Then, he said, the insurers must raise premiums to pay all these claims and the cycle goes on.

Release of the Insurance Research Council study preceded by a few days the release of the Gillespie study showing that statewide, 57% of those making bodily injury claims in auto accidents last year were represented by an attorney.

Los Angeles County had the greatest percentage of cases--75%--handled by attorneys, while in Orange County attorneys represented 61% of claimants and in San Diego County, 59%.

Gillespie’s study also shows that the frequency of injury claims varies widely from county to county, with Los Angeles County 41% higher than the statewide average, despite the fact that the frequency of property damage claims in Los Angeles County is only 7% higher.

The Research Council study showed that injury claims in California and urban areas of other states were much more likely to involve soft-tissue injuries that could not be reliably confirmed, such as back and neck sprains, than injury claims in other states. And there are many fewer actual hospital stays, the study noted.

Such disparities indicate “strange patterns of conduct,” said Donald W. Seagraves, director of the Insurance Research Council.

But he said that he hesitates to say it is fraud.

“Fraud is in the eye of the beholder,” Seagraves said. “If you go to an attorney, and he asks for a bunch of medical tests, and costs run up, and he uses those higher costs to pump up the settlement, is that fraud?

“We’re usually talking about the buildup of claims rather than anything that is criminal activity,” he said. “That’s not a crime under the penal code of the United States or the state of California, so I think you have to be careful about throwing around terms like fraud.”

But, Seagraves added, Californians retain attorneys to represent them in auto accident cases about 50% more often than drivers in the rest of the country, a practice that leads to higher claims costs.

The Insurance Research Council and Gillespie studies drew criticism from an official of the California Trial Lawyers Assn., who suggested they were timed to boost proposals for no-fault insurance in the forthcoming legislative sessions around the country.

“We think that given the industry’s long history of manipulating numbers, including rate-setting, the reports’ conclusions shouldn’t prove too difficult to debunk once unbiased research delves into them,” said Leonard Esquina, executive director of the trial lawyers group.

Gillespie has repeatedly endorsed no-fault insurance, in which an accident victim’s claims are paid by his or her own insurer no matter who is at fault in the accident. The Insurance Research Council study indicated that injury claims are lower in no-fault states.

However, some of the insurers interviewed cautioned that the study gave no direct comparisons between states like California, which has a tort liability system--in which the insurers of those at fault in accidents are supposed to pay--and the no-fault states.

They pointed out the no-fault states only count injury claims paid above certain dollar thresholds, while California and other liability states count all such claims paid, no matter how small.

Nonetheless, a spokesman for United Services Automobile Assn. said Tuesday that in his company’s view the studies “underscore the need for an effective no-fault law in California.”

“Such a law would eliminate needless lawsuits, return more of the premium dollar to accident victims and root out most of the fraud that has crept into the California system,” said association spokesman George Tye.

He said his company believes that Californians are frequently suing for three or four times already inflated medical bills, “creating a lot of needless litigation and driving up insurance costs.”

BODILY INJURY INSURANCE CLAIMS

Listed below are the number of bodily injury claims paid for every 100 auto accident property damage claims for each tort state in 1989. In tort states, the innocent party in an accident collects from the guilty party’s insurer. No-fault states such as New York, Florida and New Jersey have different accounting systems for bodily injury claims which prevent them from being directly compared with the tort states.

State: Claim rate California: 55.7 Arizona: 42.9 Louisiana: 42.7 South Carolina: 41.4 Nevada: 35.4 Oregon: 33.5 North Carolina: 32.5 Maryland: 32.0 New Mexico: 31.8 Mississippi: 31.0 Oklahoma: 30.9 Rhode Island: 30.9 Washington: 30.7 Dist. of Columbia: 28.8 Illinois: 27.7 Virginia: 26.8 Arkansas: 26.6 Wisconsin: 25.6 Texas: 25.4 Ohio: 25.2 Missouri: 25.1 Tennessee: 24.4 New Hampshire: 24.0 Idaho: 23.2 Delaware: 23.0 Indiana: 21.5 Alabama: 21.5 West Virginia: 21.1 Pennsylvania: 20.5 Alaska: 20.3 Maine: 20.2 Montana: 19.9 Nebraska: 19.4 Iowa: 18.1 Vermont: 16.2 Wyoming: 15.8 South Dakota: 15.7 AVERAGE: 30.5 Source: Insurance Research Council

ATTORNEY REPRESENTATION

Los Angeles County leads the state in the percentage of auto bodily injury claimants represented by attorneys. However, San Francisco County has the greatest percentage of claimants who eventually file suits. Here is a comparison of some of the major counties in the state for 1989.

Los Angeles Attorney representation: 75% Suit served: 17%

Orange Attorney representation: 61% Suit served: 12%

San Diego Attorney representation: 59% Suit served: 16%

Sacramento Attorney representation: 49% Suit served: 19%

San Francisco Attorney representation: 59% Suit served: 23%

Santa Clara Attorney representation: 48% Suit served: 13%

Rural Attorney representation: 50% Suit served: 11%

Statewide Attorney representation: 57% Suit served: 17% Source: California Dept. of Insurance