October 31, 2002 - Insurer wants to silence 2 ex-staffers Former adjusters say Farmers' computer devalues claims

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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 was 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.

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. armers 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 agency's practices.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.

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."

"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."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.