A file review that grew teeth once the claim doubled

The situation

Sarah had known James for eleven years by the time the lawsuit landed. He had hired her at the insurer's Peterborough branch office straight out of her adjusting certification, mentored her through her first contested claims, and eventually became the branch manager she reported to. When a personal-injury file involving a welder named Tesfay crossed her desk four years earlier — a contractor hurt on a job site her insured business was responsible for, and not a claim that ran through the workplace-insurance board, since Tesfay had been engaged as an independent contractor outside that coverage — James had reviewed her recommendation and signed off on it himself. She had trusted his sign-off the way she trusted most of what he told her: without checking it twice.

Tesfay had been injured lifting steel plate at a fabrication shop, and the initial claim Sarah adjusted, paid out under the shop's commercial liability policy rather than any statutory workers'-compensation scheme, covered a modest period of wage-loss benefits and a course of physiotherapy. She closed the file believing his recovery was complete and his return to work was on schedule. It was not. Tesfay's shoulder never fully recovered, he lost his welding certification's physical-capacity requirement two years later, and by the time he retained a lawyer, the value of what he said he was owed had roughly doubled from the figure attached to Sarah's original file.

The new lawsuit named the insurer and, unusually, named Sarah personally, alleging she had closed the file prematurely and in bad faith despite medical evidence suggesting his recovery was incomplete. James, still her manager, told her not to worry, that the company would handle it and that his own sign-off protected her. She wanted to believe him. But when she pulled her own adjuster notes to prepare her account of what happened, they told a different story than the one she and James had been telling each other for years.

Her notes showed a follow-up medical report had arrived nine days before she closed the file, a report she had no record of reading. There was no annotation, no summary, nothing indicating she had opened it before recommending closure. She had believed, and told James, that she reviewed every document before signing off. Her own file said otherwise, and once the lawsuit's expanded claim came in, that gap between memory and record stopped being a minor housekeeping problem.

Sarah's first instinct was to explain the gap away in conversation with James rather than treat it as something a court might eventually see. Adjusters carry heavy file loads, and a document arriving nine days before a closure recommendation, in the ordinary rhythm of a busy branch, is not unusual to miss. What worried her once the lawsuit's amended figures arrived was not the explanation itself but whether anyone would believe it once the claim had grown large enough to attract a bad-faith allegation, which changes the burden entirely from an honest oversight to a deliberate one.

What was actually at stake

The original claim, as filed, sought damages in the range of a hundred thousand dollars, consistent with the wage-loss and treatment figures in Sarah's file. By the time it reached us, amended pleadings had roughly doubled that figure, closer to two hundred thousand, once Tesfay's lawyer added claims for lost future earning capacity tied to his revoked welding certification and for the insurer's alleged bad faith in handling the file. That second category mattered enormously to Sarah personally, because bad-faith allegations against an individual adjuster can expose that person to damages beyond what an employer's indemnity might automatically cover.

James's assurance that the company would handle it rested on an assumption that had never been tested: that the insurer's standard indemnity for employees acting within the scope of their duties would extend to allegations of bad faith, not just ordinary negligence. Those are different things. An employer typically stands behind an employee's honest mistakes made in the ordinary course of work. Whether it stands behind an employee accused of deliberately overlooking evidence is a separate question, and until it was answered, Sarah could not assume the company's lawyers were fully representing her personal interests alongside the company's.

The relationship between Sarah and James also became part of the dispute in a way neither had anticipated. Because James had reviewed and approved the original closure, his own conduct was now relevant to how the file had been handled, and his recollection of that review became evidence too. If his account of what he checked differed from what Sarah's notes showed, the two of them risked giving inconsistent testimony about the same four-year-old file review, which would look far worse to a court than either of them simply saying the record was incomplete.

Underneath all of it was the discovery plan itself, the formal agreement between the parties about what documents would be exchanged and how examinations would proceed. The plan that had been drafted for the original, smaller claim was built around a narrower set of medical records and a shorter examination timeline. Once the claim doubled and added a bad-faith component, that plan no longer matched the case being litigated, and using it unchanged risked either missing relevant records or, worse, opening the door to a much broader and more invasive document search than the case actually called for.

What we did

1. Reviewed Sarah's complete adjuster file against her own recollection. We went through every note, timestamp and document log in the original file line by line with her, identifying the nine-day gap around the unread medical report before opposing counsel could raise it first. Knowing the weak point in advance let us prepare an honest, defensible explanation rather than being caught by it in an examination, and let Sarah stop rehearsing a version of events her own file could not support.
2. Assessed whether the employer's indemnity covered the bad-faith allegation. We requested written confirmation from the insurer's own counsel about the scope of coverage for Sarah personally, distinguishing ordinary claims-handling negligence from the bad-faith allegation, and flagged the gap so she understood exactly where her personal exposure began and could plan accordingly rather than relying on James's informal reassurance.
3. Rewrote the discovery plan to match the amended claim. The original plan's document categories and examination scope were built for a hundred-thousand-dollar wage-loss file, not a claim with a bad-faith component attached. We proposed a revised plan covering the additional medical and employment records the expanded claim required, while pushing back on requests that reached beyond what the amendment actually justified, keeping the exchange proportionate to the case actually being litigated.
4. Negotiated boundaries around James's involvement in the file review. Because his sign-off was now part of the narrative, we coordinated with the employer's counsel to keep his evidence and Sarah's evidence consistent with the documented record rather than with either person's independent memory, reducing the risk of two witnesses from the same office giving contradictory accounts of the same closure.
5. Prepared Sarah for her examination for discovery with the actual file in front of her. Rather than have her testify from memory about a four-year-old claim, we built her preparation entirely around the documented record, so her answers matched what the file could support rather than what she assumed had happened, reducing the risk of a slip that could later look like an inconsistency.
6. Pushed for early resolution once the file gap was disclosed voluntarily. Rather than let opposing counsel discover the unread-report gap through the document exchange, we disclosed it proactively alongside context about workload and file volume at the time, which took some of the edge off an allegation of deliberate bad faith and signalled the file was being handled candidly rather than defensively.
7. Negotiated a settlement contribution tied to the ordinary-negligence portion only. With the bad-faith allegation weakened by early, controlled disclosure, we focused the settlement discussion on the wage-loss and treatment figures the original file supported, arguing the future-earning-capacity projection was too speculative to value reliably, and kept both that amount and the bad-faith component out of the final negotiated number entirely.
8. Reviewed the settlement's coverage structure before Sarah signed. We confirmed in writing, before she agreed to anything, that the final figure would be paid entirely under the employer's indemnity, with no clawback or contribution clause reaching back to Sarah personally, so she understood exactly what she was and was not exposed to at the moment the file finally closed.

The outcome

The claim settled for a contribution in the range of a hundred and thirty thousand dollars, well below the roughly two hundred thousand the amended claim had sought, and structured so the amount was covered by the employer's standard indemnity rather than exposing Sarah to a personal payment. The bad-faith allegation was withdrawn as part of the settlement, which mattered to Sarah more than the dollar figure did, since it removed the finding that could have followed her professionally into any future adjusting role. Tesfay's counsel accepted the figure once it became clear the future-earning-capacity component rested on projections neither side could prove cleanly, and both sides preferred a negotiated number to the cost and uncertainty of a trial over a four-year-old file.

It was not a clean outcome. Sarah's file did contain a genuine gap, and the settlement reflected that reality rather than erasing it; the insurer's indemnity covered the payment, but internally the branch conducted a review of her file-closure practices that added a formal note to her employment record, short of discipline but not nothing, and she now carries a slightly heavier documentation requirement on every file she closes than colleagues who have not been through a lawsuit.

Her relationship with James changed permanently. The examination process made clear that his sign-off had been closer to a formality than the thorough second check she had believed it to be for over a decade, and the two of them now work through file reviews with a documented checklist rather than the informal trust that had defined their working relationship before. Sarah says the hardest part was not the lawsuit itself but realizing, partway through preparing for her examination, that a decade of assuming someone else had checked her work had left her without a habit of checking it herself.

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