Logistics Management, August 10, 2020
By John D. Schulz
Settle, if possible. Don’t take shortcuts on safety. Obviously, avoid truck accidents involving children by any means. And hope that somehow, some way, sensible tort reform is on its way into American courtrooms.
Those are some of the suggestions from the American Transportation Research Institute’s (ATRI) new research that confirms that large verdicts against trucking fleets—so-called “nuclear verdicts”—are increasing dramatically, both in number and in size of awards.
These verdicts can be in excess of $20 million in jury awards for wrongful death lawsuits involving heavy trucks. The report details a wild, wild West environment where aggressive plaintiff attorneys can choose favorable “home court” jurisdictions, use questionable medical claims and high pressure tactics to persuade juries into astronomical wrongful death awards that can bankrupt even the largest motor carriers.
In one noteworthy case in 2011, one of the largest truck-involved verdicts was based on two motorist fatalities, and the payout was $40 million because a truck driver failed to yield for a stop sign. In 2012, a truck-involved case involving a single fatality generated the largest ever truck-involved award—$281 million, although it was later reduced to $105 million.
Not surprisingly, insurance rates have increased at similar rates as litigation awards. Over the last two-to-five years, commercial truck insurance premiums have increased annually between 35 and 40 percent for low- to average-risk carriers, according to the expert surveys.
Recent carrier bankruptcies, including that of New England Motor Freight (once the 17th-largest LTL company) last year, cited the rise in insurance costs among other reasons for their cessations.
The report, done by the research arm of the American Trucking Associations, is partially based on a newly created trucking litigation database that provides detailed information on 600 cases between 2006 and 2019. In the first five years of data, there were 26 cases over $1 million. In the last five years of data, there were nearly 300 cases.
In response to arguments that nuclear verdicts reflect real-world cost increases, the research documents that from 2010 to 2018, the size of verdict awards grew 51.7 percent annually at the same time that standard inflation grew 1.7 percent and healthcare costs grew 2.9 percent.
Some believe the root of the increase stems from the 1977 U.S. Supreme Court case that re-allowed litigation advertising, and the report concludes “there is much merit to that assumption.” The median dollar value of trucking litigation awards from 1985 to 1989 was slightly more than $100,000. In the next five years, the average award increased by 90% top $190,000.
Any truck fatality involving spinal cord injuries more than doubled average jury awards, raising them to slightly less than $3.5 million, the report said. When traumatic brain injuries are involved, jury awards are raised by more than $800,000 per case.
Crashes involving “spins and rolls” were by far the most expensive crash type –average awards of nearly $15 million. When rear-end crashes occur (primarily the truck driver rear-ending the plaintiff), the plaintiffs won 89% of cases. Rear-end crashes that occur in work zones generate the highest award among rear-end crashes, with an average award of $7.25 million.
The research also identified the most- and least-favorable states for plaintiff attorneys. Florida, Texas, New York and California were regarded as attractive because of past court decisions and legislative action. States cited as the least favorable states for litigation finance included Georgia, Alabama, Colorado, Kentucky and Pennsylvania.
The report says the federal government has ceded “most” of the responsibility for regulating medical malpractice suits to individual state governments. Some states have regulated specific aspects of medical malpractice suits. These efforts include:
Shortening the statute of limitations and ending joint liability. That liability can place an “unfair amount of burden” on the company, the report said, because a plaintiff has incentive to sue the wealthiest defendants.
A few states have limited damages that can be awarded by issuing “damage ceilings” that limit lawsuits to certain financial levels. One approach truckers favor for limiting the number of medical malpractice lawsuits is by decreasing the statute of limitations for malpractice cases–most states have a statute of limitations of two to six years.
The research also surveyed and interviewed dozens of defense and plaintiff attorneys as well as insurance and motor carrier experts. It generated a qualitative analysis for why the litigation landscape has changed, recommendations for modifying pre-trial preparations, litigation strategies and mediation approaches, and how large verdict awards impact both safety and insurance.
“This issue has had a stifling impact on motor carriers and industry stakeholders – well beyond those involved in a truck crash,” Rob Moseley, founding partner with Mosely Marcinak Law Group, said in a statement.
“ATRI’s research on litigation provides important guidance on leveling the playing field between truckers and trial lawyers, both in and outside of the court room,” Moseley added.
Relative to a decade ago, the report concluded jury awards are large and cases are increasing:
- In 2010, the average dollar amount of awards was $3.16 million, with a large standard deviation of $7.19 million.
- The average size of verdicts increased 483 percent from 2017 to 2018.
- From 2010 on, the size of verdicts has far exceeded both standard inflation as well as health care cost increases.
“Runaway verdicts are increasing in both size and numbers,” Clay Porter, law partner at Porter Rennie Woodard and Kendall, said in a statement released by ATRI.
The data analysis confirmed that the type of injury, number and type of parties involved, and even vehicle types have a statistically significant impact on verdicts. When children were involved in the crash, verdict sizes increased more than 1,600 percent, regardless of fault.
“This study documents a frequency in excessive awards that, while not surprising, tells us that the trial system has gotten completely off track,” Porter added. “Foundational changes are needed in the way we determine non-economic and punitive damages.”
The report concluded that settling cases out of court and through mediation is less costly for carriers. It suggested mediation should be “candidly weighed” against the alternative.
If mediation and settlements are pursued, initial offers should be “realistic and equitable,” the report suggested. It offered numerous examples of frustrated plaintiff attorneys describing the consequences of initial “low-ball” offers resulting in higher awards than would have been realistically expected.
Litigation financing has become “one of the fastest growing trends” in trucking litigation, the report said. State regulations view it somewhere akin to both “marketplace investing and gambling.”
ATRI’s research on litigation financing documents an investment model that is “highly speculative and relatively unregulated.” Worldwide, litigation financing is estimated to be a $400 billion industry, although it is just in its infancy in the U.S. That said, litigation financing in the U.S. has grown more than 745 percent between 2015 and 2019, the report concluded.
The report – Understanding the Impact of Nuclear Verdicts on the Trucking Industry – is available for download on ATRI’s website, https://truckingresearch.org.