The ability to file these second suits is very important for the personal injury lawyers who wrote SB 1237 and would take a large percentage of the bigger win in their contingency fee. They benefit big from squeezing insurers between trying to investigate fully in order to make a fair settlement on behalf of their insured and paying an inflated settlement to get rid of a case to avoid a runaway jury's awarding millions of dollars against them in a second lawsuit. Such second suits were permitted for nearly 10 years following the California Supreme Court's 1979 Royal Globe decision. During that period, injury claims and court caseloads soared. The court reconsidered its ruling.
Studies show the stakes are higher now.
The Glendora-headquartered National Insurance Crime Bureau, which maintains a fraud database for its member insurance companies, reports that one in four of all the suspicious injury claims reported to it nationwide come from Southern California. California is the last state that should enact a law that makes it more costly to challenge insurance fraud. The potential costs of SB 1237 should be an issue as well to those who would like to see lower cost auto insurance available for drivers who can't afford it now. If a low cost policy pays its own way, increased auto fraud means either a higher price or less coverage. If a low cost policy is subsidized, then current law-abiding policy holders will see an even higher jump in their premiums.