As nuclear verdicts become more prevalent in North America, transportation companies are experiencing skyrocketing insurance premiums for excess coverage and a dark looming cloud of the one event that can bankrupt your company. Even if you’re not responsible for the accident, motor carriers are still vulnerable to financial liabilities.
So what is a nuclear verdict? And how can it be avoided? What are some best practices to maintain?
AvatarFleet gathered a panel of experts in the U.S. transportation, legal, and risk management industries to address these questions and more in a webinar about How You Can Prevent a Nuclear Verdict on Thursday, March 25. Listen to what the panelists had to say.
- Scott Rea, President, AvatarFleet (Master of Ceremonies)
- Marc Blubaugh, Partner, Benesch, Friedlander, Coplan & Aronoff LLP
- Timothy Brewster, Director, Loss Prevention & Recovery Unit, National Interstate Insurance Company
- Clay Merches, President, Leading Edge Consulting
- Irwin Shires, Vice-President of Education and Engagement, Ohio Trucking Association
- Justin Reed, Strategic Alliances, HireRight
- John Liberatore, President, Primacy Risk Services
What Is A Nuclear Verdict?
"While the threshold of what constitutes a nuclear verdict is disputed and is a subject of controversy, a nuclear verdict is generally a large verdict in excess of $10 million," said Marc Blaubaugh, Partner at Benesch, Friedlander, Coplan & Aronoff LLP.
Why Are They Increasing in Number?
"There are a number of different reasons that [nuclear verdicts] have increased over recent years. Some of the common factors include, number one - the plaintiff's personal injury bar has really focused on the transportation and logistics industry. They have done a very effective job in collaborating with one another, sharing information and experts that they rely upon, and educating each other on how to make the most out of these cases. They've become increasingly sophisticated. They understand the business practices, documentation to ask for, and what questions to pursue," said Marc.
Marc also said other factors for the rise of nuclear verdict include: the public has become immune and desensitized to the significance of a large verdict, the expansion of litigation financing, and the deployment by the plaintiffs' attorneys of specific tactics, including reptile theory.
What Is Reptile Theory?
Reptile theory is a tactic that originated from a book called, Reptile: The Manual of the Plaintiff's Revolution.
"The gist of it is, it is all based on quasi-science that focuses on Triune Brain Theory - the notion that everyone has a human part of their brain that reasons and rationalizes; then we have a mammal part of our brain that has emotions, and then you have the lizard brain - which is a fight or flight type mechanism that they're trying to trigger. It creates an autopilot reaction on the part of people," said Marc.
"The goal of Reptile Theory as used by the plaintiff's bar is to awaken the reptile brain. They want to drive large dollar verdicts by triggering a reptilian reaction from the jury. It tries to appeal to jurors' emotions rather than reason...It focuses oftentimes on what could have happened, rather than what necessarily happened in a circumstance," said Marc.
How Do Plaintiff Attorneys Use Reptile Theory?
According to Marc, there are 3 elements that always come into play when reptile theory is applied:
1. They want to get an admission usually from a safety director that a safety rule exists to protect the plaintiff or by extension - the jurors.
2. They want an admission from the safety director that a driver or the company violated the rule. They want to show there was some violation of the given safety rule that put the plaintiff in this case in danger - and by extension the jurors.
3. They want to get an admission that the people and the companies should be responsible for their actions.
How Can You Avoid a Nuclear Verdict in the First Place?
"Many times we make it too easy for plaintiff attorneys. We are less cohesive on how we respond." said John Liberatore, President at Primacy Risk Services.
"My experience is that we need to get better at cohesively responding immediately to every single event, if there is a human being involved. Know every case and work to prevent the lawsuit by collecting information, knowing the case, and going on the offensive," said John.
"That first point of contact is critical, and it needs to be made within hours after the crash when it involves another person. That's where you really figure out the mindset of the third party and other individuals; see if there are prospects of injury and see if we need to get defense involved," said Clay Merches, President of Leading Edge Consulting.
What Are the Affects That Nuclear Verdicts Are Having on the Insurance Market, Specifically in Regards to Excess Coverage?
"The probability of a crash and a fatality are there. We have to look at it from the size of our fleet and the size of our organization. Can we effectively take care of someone if the bad crash occurs, whether it is through insurance limits or through cash in the bank? Can we set up a fund to manage that? If we can't set up a fund then we need to insure ourselves to ensure our business is still in operations five years down the line...Then, when we talk to the president and owner of a company, we figure out what is adequate insurance to be able to cover ourselves if that crash occurs. Can we afford that after we determine that number? Can we afford that through the premiums?" said Clay.
"If we're naturally seeing more losses pierce that $750,000 layer, that means the excess market is going to become more challenging due to these multimillion dollar cases," said Timothy Brewster, Director, Loss Prevention & Recovery Unit at National Interstate Insurance Company.
What Are Best Practices for Hiring Policies and Procedures?
"Exceeding the regulations can be considered a best practice...You should pull the motor vehicle record report before they are operating under your authority and investigating their safety history before they are operating under your authority. Go above and beyond what the DOT requires," said Timothy.
"You should work with groups like HireRight to get basic information back quickly before orientation," said Clay.
"You should have formal, strong hiring criteria in place so you'll get the cream of the crop. Lowering your standards will result in less defensibility," said Timothy.
"From a management standpoint, you'll get push back [for having strong hiring criteria] and you need to be prepared to defend that reasoning," said Irwin Shires, Vice President of Education and Engagement at Ohio Trucking Association.
"Outside of the rules is the concept of the standard of care. What is the industry doing that is not codified in rules, but is a really good practice? Once we get to the point where more than half of the industry is doing something, you've created a de facto rule, and that's where we're at with criminal investigations and MVR monitoring, which is gaining tremendous traction right now," said Justin Reed, Strategic Alliances at HireRight.
How Can You Ensure Best Practices Are Implemented and Followed Through Every Time?
"Instill a culture of accountability. If it's in writing, follow it. If you're not following it, change what was historically in writing. Set your organization up for success. Have something as simple as a checklist that goes into that driver qualification file that will help drive consistency in your hiring standards," said Timothy.
"The key thing is to work with an organization that helps keep you on target. One thing that I think is critical that if you're engaged in things like driver monitoring, do you have the capacity to understand what you're actually doing and can articulate what you've done?" said Justin.
What Is the Difference Between Compliance and Safety? What Does a Good Safety Culture Look Like?
"Compliance is the bare minimum to enter the market. You have to do it. Just because your compliant doesn't mean you're safe. You could hire unsafe drivers, but be compliant," said Timothy.
"To me, compliance means checking a box. Safety is a mindset. It's what the organization has a perception of what is safe, and what isn't. We're not freedom from risk, but again what is that risk tolerance?" said Clay.
"Compliance is what we have to do, and any carrier will tell you that there are more than enough rules that we have to follow.
If your compliance is on track, you're on the way to having a good safety culture. But having a true safety culture means having buy in from everyone at your firm," said Irwin.
"Safety should be the number one topic in every meeting at an organization, otherwise the financial impact will happen," said John.
What Are Best Practices for the Deposition Chair?
"The first thing you want to do is be prepared. Safety is always the first thing we talk about in executive meetings. It's our highest priority. And you should talk about that during the deposition. When you share those examples and explain how important [safety] is to the plaintiff's attorney during depo, it helps make the company human," said Clay.
"Couple of rules that I try to tell my clients if I have a safety manager that is going to be deposed, number one: preparation. You'll want to choose a great corporate representative. You'll want to also devote at least one full day to the deposition. Not just a couple of hours. You'll want to devote significant time role playing and going over questions about general safety, CDLs, training, and the like. Number two, unlike a typical deposition, when you have a high value case, never say 'yes' if you can avoid it. You'll want to provide some more nuanced answers. Finally, always enforce that your conduct was reasonable at the end of the day," said Marc.