Eric Van Egeren | FleetOwner
671bcfc5262dd67c140c2879 Webimages 24102 Nuclear

What are you doing to mitigate 'nuclear' risks to your fleet?

Oct. 30, 2024
As concerns about 'nuclear' verdicts rise, fleets must be vigilant as plaintiffs use the 'reptile theory' as a way to shift blame and destroy carriers and trucking industry reputations to inflame juries.

Motor carriers' insurance costs are increasing. According to data from the American Transportation Research Institute, per-mile insurance expenses jumped 12.5% last year after remaining steady for three years. Litigation and, more specifically, the potential for nuclear judgments against trucking companies likely contribute to these increases. According to ATRI, in the last 15 years, significant judgments skyrocketed 967%—amounts often large enough to push a trucking company into financial ruin.

There is a ripple effect as well. Nuclear verdicts not only raise insurance rates but also the prices of motor carriers to offset higher costs, and higher transportation costs increase consumer prices.

Among the factors driving litigation and the potential for nuclear verdicts are what some parties call legal system abuse.

Attorney interest in trucking accidents continues tospike,noted Nick Saeger, AVP of transportation products and pricing at Sentry Insurance, which covers about 7,000 trucking companies and 48,000 units nationwide

“There’s more advertising by attorneys, for example,” Saeger said. Just think of the billboards focused on trucking accidents, which get attorneys involved earlier in the process.

“Another large issue is third-party-litigation funding from investment firms because the size of verdicts has drawn interest,” he continued. “Funds are going to law firms to encourage them to take more trucking cases to trial.

Dan Clements, senior director of transportation sales, underwriting, and market development at Sentry Insurance, related that third-party litigation financing is a $13 billion industry and is expected to grow. “It’s become a global asset class that’s attracting a lot of actors,” he said. “Litigation financing is underwriting claims.”

Additionally, there is growing concern that some funding is coming from foreign investors. In some cases, these sources dictate the settlement terms in what amounts to potential abuse of the U.S. legal system.

“If there are third-party funds involved, who has a vested interest?” asked Tony Trenzeluk, director of government and regulatory affairs at Sentry Insurance. “Congress needs to address this issue and bring more transparency to the system.”

Industry stakeholders are also working at the state level to enact regulations requiring disclosing the parties involved in lawsuits. There have been tort reform successes in Florida last year and Georgia this year, which could serve as a playbook for other states.

Efforts are also underway to create more balanced and fair legal playing fields. “We have a good idea which states have justice systems that are more likely to be favorable to the plaintiff,” Trenzeluk said.

In addition, state trucking associations are working on legislation to limit award amounts, and the Trucking Association Executive Council is also involved.

Paul Enos, CEO of the Nevada Trucking Association, supports an initiative to cap attorney fees at 20% of the judgment amount. There are, however, several legislative and legal hurdles to overcome, he noted, and ultimately, the state legislature will need to act.

For now, nuclear verdicts continue to be a concern, so companies must be vigilant to combat these outcomes. One thing they need to be aware of is the so-called “reptile theory.” 

Simply put, the reptile theory uses the strategy of misdirection to shift the blame. It works because while a representative of a trucking company thinks they are being deposed or going to trial to defend against a single crash, the plaintiff's lawyers don't care about the crash at all.

Instead, their goal is to destroy the reputation of the motor carrier and the industry at large by uncovering systemic failures in safety to inflame the jury.  

With the reptile theory, a plaintiff's attorney uses emotion and fear to convince a jury that a company operates in a manner that is so unsafe that their safety, as well as the safety of their family, friends, and community, is at risk, and that the company should be punished by levying a punitive monetary award.

“Many times, plaintiff attorneys use tactics like the reptile theory to scare jurors into wanting to punish the defendants, rather than awarding a reasonable amount based on the actual damages incurred,” said Mike Precia, president and CSO of Fleetworthy, the provider of CPSuite software for managing driver and vehicle compliance and safety-related tasks.

For instance, a driver failing to sign post-trip driver vehicle inspection reports doesn’t have a causal effect on an accident that occurs weeks later,Precia explained further. “But that information can be used to portray the carrier as a company that doesn’t care about regulations and drive the settlement up to unreasonable levels regardless of the actual facts of the case.

There is a counter approach to the reptile theory, noted Paul Enos. Called The Mongoose Method, it aims to counter aggressive plaintiff tactics and crush reptile attacks.

“The idea for The Mongoose Method started at an ATA legal forum in 2021 when a behavioral scientist presented an approach for effectively preparing witnesses for depositions and trials,” Enos explained. “It focuses on education about reptile theory traps. It trains you to proactively recognize the tactics a plaintiff’s attorney might use so you’re not caught off guard.

The Mongoose Method aims to rebalance the scales of justice through tactical training in litigation defense,” Enos added.

What else can trucking companies do? For starters, information is knowledge.

The Bluewire business intelligence platform, for example, can be used to identify vulnerabilities that fuel risk and exposure. A Bluewire GAP Score is composed of the following nine severity categories, which provide insight into severity risk 

  • Crash Gap: Your crash rate compared to your peers
  • Violations Gap: Violation groups that impact severity
  • CSA BASICs Gap: CSA defects that make you vulnerable to high severity claims
  • Driver OOS Gap: Driver out-of-service rates compared to your peers
  • Critical Acute Violations Gap: The presence of critical and acute violations discovered during compliance reviews
  • New Entrant Gap: Heightened scrutiny during the 18-month entrant period
  • MCS-150 Gap: Your MCS-150 score based on timeliness and accuracy of your MCS-150 filing
  • Judicial Hellhole Gap: Operating in a plaintiff-friendly jurisdiction that exposes you to increased vulnerability and to high-value claims and excessive settlements
  • Safety Rating Gap: Unsatisfactory and conditionally rated carriers that expose you to greater severity risk

The Bluewire Severity Report and Severity GAP Drill Downs can provide an even deeper understanding of the underlying causes of high-dollar settlements and court verdicts. Advanced filters allow users to get granular visibility into the critical vulnerabilities contributing to increased severity risk.

Technology can significantly reduce safety risks from the outset, noted Joe Thell, SVP, head of sales and business development at E-SMART, a provider of Dynamic Speed Management technology. "Fleets agree that controlling or eliminating speeding can remove a critical factor from litigation,” he said. “In nuclear verdicts, there are often multiple contributing factors, and speeding is the number one driver-related factor in fatality crashes. By controlling speed, fleets can limit the risk of speeding being one of those contributing factors when an accident occurs.”

See also: A half-billion-dollar nuclear verdict hits underrides: What's next?

Thell went on to provide examples of how data on speeding can be used to identify when drivers are increasing their risk and their company’s exposure. “We used technology to analyze the time fleet drivers spent in a 55 mph zone in one month,” he related. “In one analysis, drivers were speeding 55% of the time. In another, the fleet’s drivers were speeding 64% of the time.”

Practical driver training is also a means of avoiding risk. “Step one, avoiding the incident altogether, includes putting thoroughly trained drivers on the road, then monitoring and managing those drivers to continually improve their knowledge, skills, and performance,” Mark Murrell, president of driver training provider CarriersEdge, explained. 

Every fleet will say that safety comes first, but they can easily do things that undermine that message – only train some of the drivers instead of everyone, rely exclusively on online training to deliver content, fail to review training results to see where knowledge gaps remain, or skimp on offerings to save a few dollars,” Murrell added

“Those things can be deadly when a plaintiff’s attorney is trying to create a profits over safety narrative about the fleet,” he continued. “It comes down to whether the company is cutting corners or taking shortcuts. All the lawyers we’ve talked to have ended up having very similar advice: Have policies that reflect best practices in safety management, make sure those policies are applied consistently across the organization, and document everything that happens.

Implement a robust training program, including retraining when necessary, and if staffing does not allow managers adequate time to perform required activities, consider outsourcing to free up time for coaching and training, agreed Mike Precia

“And hold everyone accountable, including supervisors and drivers,” Precia emphasized. “It’s also important to create solid policies and procedures that can be followed and to maintain documentation to demonstrate compliance. If documentation doesn’t exist, it never happened.

Companies can mitigate risk by being proactive about safety, noted Attorney Brad Klepper, president of Drivers Legal Plan, who also serves on the boards of the Arkansas Trucking Association and the Truckload Carriers Association.

“It’s not rocket science,” Klepper said. “You can help avoid harsh judgments and nuclear verdicts by having good policies and enforcing them without exception. If you don’t adhere to and enforce a policy, you don’t have a policy.”

While fleets can’t wholly avoid litigation, they can make it harder for plaintiffs by demonstrating that they take safety seriously. 

“It is clear that trucking companies continue to face a threat from abusive lawsuits and nuclear verdicts, something the industry can no longer sustain,” Paul Enos said. It’s not about trying to avoid accountability. Trucking companies should want to take responsibility if they are at fault. But we also want to make sure the verdict is fair and not the result of a jackpot justice system that has negative ramifications on trucking, the economy, and society. 

About the Author

Seth Skydel

Seth Skydel, a veteran industry editor, has more than 36 years of experience at fleet management, trucking, and transportation and logistics publications. Today, in editorial and marketing roles, he writes about fleet, service and transportation management, vehicle and information technology, and industry trends and issues. 

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