Insurance Claims Complaints: A Private Appeals Procedure

Two of the major insights of the sociology of law are that legal rights in contemporary society are most often determined by bureaucratic actors and that the results differ systematically from those predictable on the basis of formal law alone (Mayhew, 1966; Ross, 1970; Skolnick, 1966; Whitford, 1968). The decision-maker who determines in practice the extent of legal rights and duties is most often a low-level employee of a bureaucracy—a patrolman, a tax auditor, a building inspector, or an insurance adjuster. He is usually untutored in academic law and possesses discretion because of his isolation from supervision, rather than by design. The decisions in theory may be removed from the bureaucracy and tried in a court of law. Critical attention, however, has recently focused on the fact that most claims based on legal rights are too small to warrant the cost and inconvenience of a formal trial. There has been less attention paid to the fact that bureaucracies typically offer internal means of appealing the decisions of low-level employees. These appeals procedures permit review and modification of initial decisions by higher-level employees, and furnish the claimant with a less expensive and more convenient alternative to the removal of his claim to the courts. Where the claim is small the internal procedure is usually the only avenue of appeal from an adverse decision that is realistically available to the claimant. In these cases, the internal procedure is in fact the ultimate means by which legal rights and duties are determined. This paper reports a study of the functioning and outcomes of one such procedure, the handling of complaints about claims by a typical insurance company, hereafter called Acme.