How can the insurance coverage business assist curb trucking lawsuits?

US trucking corporations face a worsening litigation panorama, as jury awards and settlement quantities for trucking litigation have exploded over the past decade.

In a brand new research inspecting the long-term pattern, the US Chamber Institute for Legal Reform (ILR) known as for a “multi-pronged” strategy, involving varied stakeholders, to deal with rising litigation dangers for the trucking business.

The insurance coverage business, which should take in the mounting prices of claims from these lawsuits, may play a job, the authorized reform group stated.

“Trucking litigation is evolving in an unhealthy way,” stated Nathan Morris (pictured beneath), senior vice chairman, authorized reform advocacy at ILR. “The number of claims and the cost of resolving those claims are both increasing steadily over time.”

ILR’s research reveals that the typical dimension of verdicts in opposition to trucking corporations surged 867% between 2010 and 2018. Between June 2020 and April 2023, the typical award in trucking lawsuits was $27.5 million, whereas the typical settlement was $10 million.

A overwhelming majority of the US trucking business is comprised of small companies, which usually tend to be crippled by the bills stemming from litigation. About 96% of all carriers function 10 or fewer vehicles, in response to information from the American Trucking Associations.

“There’s a way to address it that’s reasonable and fair that will curb abuses and excesses and bring costs back down, which is good not only for carriers but also consumers, because trucking verdicts are passed on to everyone,” Morris stated.

Nuclear verdicts – a vicious cycle?

ILR’s evaluation discovered that auto accidents made up almost 1 / 4 (22.8%) of non-public harm and wrongful demise instances with nuclear verdicts – awards of $10 million or extra – between 2010 and 2019. Within that class, about one in 4 instances concerned a trucking firm.

Additionally, the variety of instances with verdicts over $1 million surged 235% from 2012-2019, in comparison with 2005-2011.

The worst states to function or drive a truck on the subject of litigation threat had been Florida, California, Pennsylvania, New Jersey, Texas, and Georgia, ILR discovered.

Morris pointed to the “troubling trend” of disproportionate verdict quantities being fueled by earlier profitable instances.

“When you look at how trial lawyers operate, they have a view that success begets success. It’s common to see more money go into advertising and more cases be filed after large verdicts [are awarded],” he stated.

“Trucking litigation, in some ways, is a vicious cycle because where larger numbers [of cases] being reported draws more attention and draws more cases.”

Legal techniques in trucking instances driving up verdicts

ILR additionally recognized a number of authorized techniques which might be serving to plaintiffs pull in larger verdicts:

• Medical referral networks and inflated billing practices
• “Reptile” courtroom techniques by plaintiff’s legal professionals
• A widening circle of defendants to achieve deeper pockets
• An ambiguous and exploitable commonplace of take care of trucking operations

“The single factor that’s causing the increase in verdict sizes is the tactics,” stated Morris. “There is an issue with how medical damages are being presented to juries, and with how trial lawyers are arguing their cases to juries to trigger safety responses, called ‘reptile’ theory.”

The “reptile theory” is a psychological tactic that instills concern in jurors to make them imagine the one method they’ll maintain their family members and communities protected is to award large damages to the plaintiff. The time period, described in a 2009 guide by David Ball and Don Keenan, has been blamed for the rise in nuclear verdicts throughout totally different sectors.

Morris additionally pointed to aggressive adjustments in litigation patterns, together with turning to bigger freight brokers and shippers as a supply of restoration.

“There’s a lot more action now, if freight brokers and shippers are being sued in addition to the actual motor carrier,” Morris continued. “Outside litigation, there’s the difficulty of promoting. What type of claims are represented to the general public?

“There’s a relatively new and rapidly growing industry of third-party litigation funders who are investing their money in lawsuits, including trucking lawsuits. Having that outside investment has changed the dynamic of litigation in unhealthy ways.”

What is the insurance coverage business’s function in curbing trucking litigations?

Inflated verdicts and settlements have had an adversarial influence on the insurance coverage market, driving larger charges for trucking legal responsibility insurance coverage and reducing the supply of choices for protection.

Insurers are within the frontlines of the authorized battles and may undertake a number of methods to assist curb verdicts, Morris defined.

“Insurers are defending a lot of these cases. In that role, insurers have a chance to make a difference in how the cases play out,” he stated.

“For example, they could be aggressively requesting information on the financing of lawsuits to figure out whether there is a funder involved and whether that’s changing the way the case is being prosecuted.”

Insurers may encourage their protection counsel to be looking out for “reptile” techniques and different litigation instruments within the courtroom.

“I think many carriers are working these cases very aggressively and attempting to provide maximum defense to their insureds,” Morris stated. “But these are trends they must keep an eye on.”

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