How ‘nuclear verdicts’ against motor carriers directly affect your business

To the court, it did not matter that the carrier owned only the trailer involved in the crash and had brokered the load to another trucking company. No matter that the insurer of the truck driver, who died in the crash, also paid a million-dollar verdict in the incident. And because of a rapidly increasing number of large verdicts like these, you can pay more for your insurance no matter your safety record.

Motor carriers today face more than one epidemic. The number and size of large verdicts against carriers have skyrocketed in the last five years, with no cure in sight. The sheer weight of these massive verdicts forces insurance companies to increase rates to all sizes of carrier industry-wide and may even have a negative impact on safety. Many carriers on the wrong side of these lawsuits go out of business, particularly owner-operators and small-to-mid-sized fleets unable to absorb the rate hikes. 

Research released early in July by the American Transportation Research Institute (ATRI) shows that the number of verdicts larger than $1 million grew 1,750% between 2006 and 2013. There were 4 such verdicts in 2006 and 70 in 2013!

“Understanding the Impact of Nuclear Verdicts on the Trucking Industry” reveals that, in just the last five years, juries have awarded seven-figure verdicts 300 times. The size of verdicts against trucking companies has grown at an alarming rate as well. ATRI research found a 51.7% average annual increase in mean verdict awards every year between 2010 and 2018. 

While multi-million-dollar verdicts cause significant issues for carriers who lose those lawsuits, they may not immediately force them out of business. However, a “trickle-down” effect begins with the insurance industry reaction to large jury awards. As the trucking and insurance industries absorb nuclear verdicts, insurance premiums necessarily increase to offset the payment of the claims. Transportation costs then rise as carriers raise their rates to cover higher insurance premiums. 

In addition, insurers have had to become more selective in who they insure and, in some instances, stop operating in the motor carrier sector altogether.” Tightening in the insurance market generally leads to more stringent underwriting requirements and higher rates. 

So how can small-and-medium-sized fleets and owner-operators protect themselves?

“Crash prevention is the best way to avoid a nuclear verdict and that starts with a thorough review and assessment of your safety training and practice,” said Rebecca Brewster, president and COO of ATRI. The danger lies in cutting costs to cover increased insurance rates. 

“A focus on cost minimization in your operations [is a common misstep for carriers] if it means you take shortcuts on safety training” Brewster said.” As mentioned earlier, nuclear verdicts can negatively impact safety on the highways by pressuring carriers to cut corners in safety practices. 

Fear of a big verdict in a lawsuit can also lead carriers to cut litigation costs, such as not paying for an expert defense witness. The results can be disastrous.

Brewster says, “[having] an expert witness for the defense reduced the average verdict by over $800,000. Even when there was also an expert witness for the plaintiff, the use of one by the defense still led to an average reduction in the verdict of over $300,000.” 

While the study did not try to measure the reasons for the increase in the number and size of awards, ATRI researchers did interview carriers and attorneys involved in truck accident litigation. The results are alarming if not surprising. 

Lawyers said that "ambulance chasing and excessive billboard advertising [with] problematic messaging” increases plaintiffs’ interest in pursuing damages. The focus of these billboards (and TV ads) infer that simply “being in a truck-involved crash entitles someone to a large sum of money independent of fault or negligence.” However, attorneys who aggressively seek out crashes to increase their client base (the so-called “ambulance chasers”), added more to the sheer volume of lawsuits than to the size of verdicts, focusing instead on taking a high number of smaller cases. 

Carriers deleting video footage, electronic log data and other evidence of a crash also contributed to the increase in monetary awards, according to the report. The practice, called spoliation, contributes to nuclear verdicts because it undermines the integrity of carriers’ defense, and leads juries to doubt anything else the company may say in its defense. If the plaintiff’s attorney finds out about the destruction of evidence, the resulting hearings add significantly to the length of the trial, driving up costs. Overall trucking industry reputation also suffers as a result. 

The report also indicates that data about a crash influences juries and how much they award the plaintiff. 

• Awards increase more than 1,600% when a child was involved in the crash, no matter who is at fault 
• The data seems to show that a crash resulting in a spinal cord injury to a plaintiff more than doubles the award. In cases involving a traumatic brain injury (TBI), awards increase by an average of over $800,000 
• The highest jury awards resulted from “spin and roll” crashes, averaging almost $15 million 
• Plaintiffs win 89% of rear-end crashes when a truck hits the plaintiff’s vehicle from behind. If the crash happened in a work zone, the average award was $7.25 million 
• The more people who are involved in the crash, the larger the award will be 

Medical fraud in truck-involved accidents also drives up the amount awarded to plaintiffs. As noted in the study, the issue goes beyond a person claiming false injuries to medical professionals also engaging in billing fraud and “excessive or exaggerated medical treatments.” 

Preventing a crash from happening in the first place remains the best defense against a nuclear verdict. Carriers interviewed for the study told ATRI researchers that “the more safety activities motor carriers engaged in to prevent crashes the lower the likelihood that a nuclear verdict would result,” but they also said most trucking companies “do not allocate enough resources toward safety and crash prevention.” 

Perhaps now is a good time for you to conduct a review of your safety programs and data practices before an unfortunate crash puts you on the defense in a courtroom. Call 866.401.2370 for more information.

(Thanks to PrePass Safety Alliance for allowing us to reprint their blog. You can request a copy of the full report at www.truckingresearch.org.)