What is a Nuclear Verdict?
To say that nuclear verdicts are a hot-button issue right now would be an understatement. What was once a problem unique to the trucking world has eclipsed transportation and is now posing a serious threat to claims leaders in all insurance verticals. Recognizing this trend and wanting to shine a light on its importance, The Claims and Litigation Management Alliance (The CLM) recently established a Nuclear Verdict Task Force.
In this article, we’ll define what a nuclear verdict is, illustrate a few examples of real-life nuclear verdicts and discuss ways claims professionals can help their organizations by mitigating the risk of a nuclear verdict.
Definition of a Nuclear Verdict
A nuclear verdict is defined as an exceptionally high jury award that surpasses what should be a reasonable or rational amount. Some define a nuclear verdict award as being any penalty that exceeds $10 million, while others would put the threshold of a nuclear verdict at a much higher and more disproportionate number, though it does vary by case.
There are many different influences contributing to the rise in nuclear verdicts, including the work of plaintiff attorneys, who use a strategy known as reptile theory to illicit anger out of the jurors. In many cases, jurors will look at the insurer as a large, faceless corporation attempting to prey on “the little guy” or someone who looks, thinks and acts just like they do. Some have speculated that this anti-corporate stance and form of “social justice” dates back to the 2008 financial crisis when the public’s distrust in big business intensified.
Achieving a nuclear verdict has become the norm for plaintiff attorneys who are financially incentivized to take advantage of a system that has reduced or removed some of the caps that prohibit them from doing so. And the broadcasting of these high-profile cases, chronicled through news stories, podcasts, made-for-tv movies and other forms of entertainment, has only made the spotlight on nuclear verdicts brighter.
Why is it Important to Talk About Nuclear Verdicts?
Why it is important? Simple: The future of your business could depend on it. In fact, reports show that nuclear verdict cases in the trucking industry are up 300%. In addition, the average jury verdict against trucking firms soared from $2.6 million in 2012 to $17 million in 2019.
The research and evidence we uncovered on nuclear verdicts—both in and out of trucking—should be enough to make the insurance industry as a whole take notice and make changes before it’s too late.
Here’s a snapshot of some nuclear verdict examples from
recent years:
- What was described as a minor fender bender between a pickup truck and a tractor-trailer in East Texas in 2013 resulted in a $101 million jury award against FTS International Services (of note, that award was later reduced to $32 million, still a nuclear outcome).
- During a 2014 winter storm, the driver of a pickup truck lost control, crossed the median and crashed head-first into a Werner Enterprises tractor-trailer. Because of the accident, a 7-year-old child in the pickup was killed, and three others were injured. The family sued Werner and was awarded $90 million in damages, even though the pickup’s driver was considered at fault.
- A worker in Texas was killed in 2016 when a heavy pipe fell on him from overhead at the Beaumont Exxon refinery, where the man was working. The jury determined negligence and awarded the man’s family some $44 million (which was reduced to around $21 million following the trial).
- When a 14-year-old girl at an apartment complex party was attacked and assaulted by the complex’s security guard, litigation was brought against the security guard’s employer. Citing an assertion that the firm was aware of the guard’s former behavior against guests and still hired him, the court ruled the company was responsible by ignoring circumstances that led to the injury. The result was a $1 billion award.
- A motorcyclist in Florida involved in a massive interstate pileup that left him with life-threatening injuries—including breaking both sides of his pelvis away from his spine, permanent incontinence and loss of sexual function—was awarded a whopping $411 million in damages in 2020.
Tips for Avoiding a Nuclear Verdict
Given that plaintiff attorneys continue to push for exceedingly higher awards, there are a few risk mitigation tactics that can lower the chance of a nuclear verdict.
The first is better communication and a collaborative dialogue between the claims team and defense counsel. The worst thing that can happen is for a claims leader to be told late in the process that a case that could (and should) have been settled earlier is now headed to court.
We’ve reviewed many cases in which claims leaders and defense counsel either never created a case strategy or didn’t abide by the plan they developed. These cases simply “got away” because of a lack of communication. Litigation management software raises organizational awareness, creating mechanisms that prompt communication checkpoints while alerting stakeholders when the case is off track.
Another step that can mitigate the risk of a nuclear verdict is in the selection of defense counsel. Using data from past cases can help claims leaders match the most capable attorney with the right type of cases as they enter litigation. The most effective way to ensure that takes place is by collecting historical case information in a structured data format so that it can be archived and reportable.
And the same can be said for using data to give the claims team a leg up on plaintiff attorneys. In organizations that aren’t collecting data, only the claims adjuster that previously had a case with that specific plaintiff attorney will have knowledge of what happened—and that’s only if the adjuster remembers the specifics of that particular case.
A quality litigation management platform enables claims teams to efficiently utilize structured data in a way that both helps them select a suitable trial partner and prepare for whoever they’re set to face. The caveat to all of this is that the software is only as good as the data. In other words, put good in, get good out.
Final Thoughts on Nuclear Verdicts
At CaseGlide, we support the efforts being taken by The CLM to inform and help claims leaders mitigate the risk of nuclear verdicts. We also feel strongly that clear insight and access to the right kind of information about an outstanding claim can play a significant part in minimizing the threat of a nuclear verdict. Case resolution opportunities are often presented at different times in the litigation process, and it’s our belief that a robust claims litigation management software platform like CaseGlide can help claims leaders maximize those chances.