Nuclear Verdicts in Trucking & Minimizing Risk

What is a Nuclear Verdict?

A good way to summarize a nuclear verdict is an award that is significantly higher than would be expected given the injuries in the case.  Generally, they are jury judgments that award penalties over $10 million.  Nuclear verdicts have been a consistently increasing theme in trucking over the past several years and the heat and pressure on carriers from rising insurance premiums appears to have no end in sight. This is despite the fact that the number of deaths and injuries from accidents involving large trucks have been declining.  Rising insurance premiums and nuclear verdicts are often cited in carrier bankruptcies as the primary causes for shutting down.

One challenge of analyzing and predicting nuclear verdicts is their intangible nature. They are often so disconnected from reality in terms of the award amounts compared to actual economic damages that there are no computers or algorithms that can be effectively employed for forecasting or managing risk.  A handful of nuclear verdicts is enough to drive double digit annual insurance inflation for the entire trucking industry. It is not unusual for premiums for a smaller fleet to rise 50 to 100% or more in any given year.

Why are Nuclear Verdicts Increasing in Number and Size of Awards?

The proliferation of nuclear verdicts in trucking has really gained steam over the last decade or so.  The American Transportation Research Institute (ATRI) released comprehensive research (the report is available on ATRI’s website) –https://truckingresearch.org/2020/06/29/understanding-the-impact-of-nuclear-verdicts-on-the-trucking-industry/ that confirms that large verdicts against trucking fleets are increasing dramatically, both in number and in size of awards.  ATRI’s research 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 the data, there were 26 cases over $1 million, and in the last five years of the 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.

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.   Also, most insurance companies are directly factoring CSA scores into their insurance rating system. So, if a motor carrier score is not right, their insurance rates are likely to increase.  In terrible scores, insurance companies might not even consider providing coverage.

Plaintiff’s lawyers are increasingly moving away from blaming individual drivers to blaming a lack of systemic corporate oversight and adequate safety procedures and regulations.  It is paramount that carriers, brokers and shippers have the proper procedures and training in place that will help protect them to the greatest degree possible.

Perhaps more telling is the map showing the plaintiff win rate by state:

Look at how many states have a plaintiff win rate of more than 90%. Are truckers responsible for 90% of all truck-involved fatal crashes in those states?  It appears that the trucking industry is losing cases that it should be winning.

What is the “Dirty Five”?

The “Dirty Five” generally refers to the following:

  1. Fatigue
  2. Distracted driving
  3. Driving under the influence of drugs and/or alcohol
  4. Lack of equipment maintenance
  5. Inexperienced/improperly trained driver

If a plaintiff attorney can effectively prove or demonstrate any of the above took place, the potential for a nuclear verdict grows significantly.  It makes perfect sense that mitigating these risks is the best place to start when improving truck fleet and vehicle safety.

With the advent of technologies including sensors and cameras, fleets can now record incidents and reduce their legal risk.  For fleets that don’t have sufficient video evidence, fighting a legal battle could be financially debilitating. As fleets cannot be certain what will happen, the only way to mitigate risk is to enforce training programs for employees and continuously look to reinforce best practices. Safety can often be overlooked, which eventually ends up badly for the trucking fleet.

How Can Fleets Minimize the Risks and Improve Safety?

There are ways to minimize the risks, improve the safety of your trucks and drivers, and to protect your operations. Improving safety and avoiding accidents must be the main priority of trucking firms. Also, implementing programs and technology to maintain evidence that your fleet meets or exceeds industry standards and safety practices is a must. There is a combination of factors that need to be considered to do this successfully: how you run your fleet, how you recruit, train and manage your drivers, and truck safety technology.

How You Run Your Fleet

Making safety a part of the corporate culture begins with excellent communication.  Repetition of the safety message serves to increase daily awareness.  Consequences for violations of the company safety policy must be clearly laid out and enforced.  Also, take time to review company safety policies and look at what is working well along with what is not.  Be flexible and adjust your safety policies and practices as needed.

Compliance with internal policies and procedures is a crucial factor. The FMCSRs provide some guidance on what policies a trucking company needs to have, but the trucking company must create its policies or hire a consultant to create them. Once the policies are in place, the trucking company must distribute and ensure compliance with its policies.  Make sure that you are doing more than the minimum, with respect to safety and compliance.  In addition, create and implement a catastrophic action plan so you have some steps in place should anything happen.

How You Recruit, Train & Manage Your Drivers

Make sure that you are adhering to all regulations, whether it relates to hiring, training or qualifying your drivers.  Driver recruitment and training are important; both initial and ongoing training and supervision.When recruiting safe drivers, make sure to look at the history of alcohol/drug-related violations, DOT crashes, violations related to speeding, prior driving experience, and background checks.  Also, make sure that your system of organizing all records is absolutely perfect.

When a new driver is hired, it is necessary to train them on all the information the driver will need to perform the job.  Existing drivers should also be trained regularly.  All drivers should have access to information on safe driving strategies and techniques, including instruction in defensive and distracted driving.  While driver training is not required under the FMCSRs after a driver already has his CDL, many motor carriers have some on-going training available to or required for drivers. Making sure that training is documented is essential to successfully stave off an attack.

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.  ATRI researchers found 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.”

How You Integrate Truck Safety Technology

Technology is crucial to the future of trucking – for everyone’s safety.  There are a variety of safety technologies that you can invest in and implement.  In any crash, a carrier must be able to reliably demonstrate what happened – and where the fault lies. And more importantly, where it doesn’t lie. A high-quality connected camera system is fundamental and should be the bare minimum protecting a truck. An inward-facing camera shows exactly what the driver was doing at any point in time. These systems protect the driver and the carrier and provide powerful, incontrovertible evidence in the event of an accident.

Plaintiffs will look not only at the context of the crash and the immediate journey leading to it but also at the history of the driver and the operator. So not only is training, record keeping, compliance, and maintenance of vehicles fundamentally important, but truck technology that captures incidents and alerts fleet managers to potential issues could make all the difference.

With nuclear verdicts not going away any time soon, carriers can protect themselves, their drivers – and all road users by following the steps laid out above.

Sources:

“Are Nuclear Verdicts Out of Control?”, Seth Holm, FreightWaves, Jan. 13, 2020.

“New Research Documents the Scale of Nuclear Verdicts in Trucking”, ATRI, June 23, 2020.

“How Can the Trucking Industry Avoid Nuclear Verdicts?”, Land Line, June 26, 2020.

“How to Improve Truck Safety and Avoid Nuclear Verdicts”, CameraMatics.

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