Truck Accident Claims and Litigation - Are You Prepared for What's Coming Down the Road?

Transcription

1 CLM 2017 Annual Conference March 29-31, 2017 Nashville, TN Truck Accident Claims and Litigation - Are You Prepared for What's Coming Down the Road? I. Evidence preservation Evidence preservation is an important issue in potential and pending litigation. The failure to preserve evidence spoliation can be a game-changer. A. The company's duty All parties have a duty to preserve evidence in their control when it is relevant to contemplated or pending litigation. This principle applies to actual and potential plaintiffs and defendants. For a defendant, something obvious, like a demand letter, will trigger the duty to preserve evidence, but the duty also may exist where circumstances make litigation foreseeable. Because a finding of spoliation can result in sanctions up to and including the court striking the defendant's answer, leaving the defendant with no liability defense, it is vital to identify relevant evidence at the earliest point in time and preserve it until final conclusion of the claim. B. The insurer's duty Does the insurer have a duty? A duty to preserve can extend to third-parties who have custody or control of relevant evidence; in direct-action states (e.g., Georgia), the insurer may be a party to the litigation. An easy example of a situation where the insurer will likely have a duty is where it pays a total loss on its insured's vehicle in exchange for the title and possession of the vehicle. Where the vehicle is relevant evidence, the insurer now has a duty to preserve it. A tougher example is where the insurer does not inform its insured of a duty to preserve relevant evidence. Where the insured lacks experience or sophistication in litigation, fails to preserve relevant evidence, and suffers the consequences of an adverse ruling on a spoliation Page 1 of 7

2 motion, the insured may turn to its insurer which is experienced and sophisticated in litigation and ask why the insurer failed to guide the insured on the issue. To avoid this situation, the insurer should consider informing the insured, at the outset of a claim, about the duty to preserve relevant evidence. C. Counsel's role As soon as counsel is engaged, she should inform the insured about the duty to preserve relevant evidence. Spoliation issues are oftentimes avoided when counsel is engaged shortly after the incident giving rise to the claim and can guide the insured about the duty to preserve relevant evidence. All too often, however, counsel is not engaged until a lawsuit is filed and relevant evidence may be long gone; when asked, the insured often explains, "I didn't know I had to keep the records beyond what's required in the Federal Motor Carrier Safety Regulations (FMCSRs)." Unfortunately, that explanation may not withstand a spoliation challenge. II. Offensive and defensive use of spoliation claims Spoliation is the failure to preserve evidence in one's control where that evidence is relevant to contemplated or pending litigation. Where successful, a claim of spoliation resulting in sanctions against the party who failed to preserve (or destroyed) evidence confers a significant tactical advantage on the party seeking sanctions. In a typical scenario, where the plaintiff seeks sanctions for spoliation and the court makes a finding that spoliation occurred, the court has a range of sanctions from which to choose. At one extreme, the court may strike the defendant's answer, leaving the defendant with no liability defense. More commonly, however, where there is no finding the defendant acted in bad faith, the court will exclude evidence or experts or instruct the jurors they may presume the defendant failed to preserve (or destroyed) the evidence because it was harmful to the defendant's position. While the defendant may rebut that presumption, it's an uphill battle. A. Responding to the claimant's preservation letter Receipt of a preservation letter from plaintiff's counsel is commonplace in motor carrier litigation. Sharp plaintiff lawyers send them early and include a comprehensive list of items and information they want preserved. Oftentimes, the preservation letters are very broad, both in terms of the timeframe and the scope of items and information sought. While a motor carrier may have no obligation to respond to a pre-suit preservation letter, best practices generally militate toward sending a response. A thorough response will address each requested item, a statement of whether the item exists, and a short statement of any legal and practical objections. For example, objecting to preserving logbooks for periods earlier than one week before the subject incident on the ground they are neither relevant nor reasonably calculated to lead to the discovery of admissible evidence (of course, a court may disagree, so logbooks for the requested period should be preserved if they exist); objecting to preserving records or information submitted to the DOT in response to a request following a recordable Page 2 of 7

3 accident on the ground they are inadmissible in a civil action for damages under 49 USC 504; or objecting to keeping the tractor and trailer out of service indefinitely on the ground that it is an undue hardship (you may offer a reasonable period for inspection before the equipment is repaired, put back in service, or salvaged; or you may offer to make it available if it is already back in service). Of course, it (almost) goes without saying, all of the requested items should be preserved in a secure manner until the matter is concluded, an agreement for their disposition has been reached, or a court determines they need not be preserved. If the items are moved, a chain-ofcustody procedure should be established and documented. B. Whether and when to send a preservation letter to the claimant Defense counsel is often asked, "Should we send a pre-suit preservation letter to the claimant or claimant's insurer?" There is no cookie-cutter answer. The facts and circumstances of each situation have to be weighed to decide if and when to send a pre-suit preservation letter given that a letter may ensure relevant evidence (e.g., vehicle, cell phone, social media) is available for purposes of determining its impact, if any, on liability and damages; or, if evidence is not preserved, for purposes of seeking sanctions against the claimant. For example, in most instances, there would be little, if any, downside to sending a preservation letter where the claimant is already represented by counsel. Likewise, where the claimant is not represented by counsel but a claim appears likely, the upside of sending a letter would seem to outweigh the downside of not sending one. On the other hand, where the claimant is not represented by counsel, is engaged in ongoing settlement talks, and settlement appears imminent, waiting to send a preservation letter may be the right path. III. Time-limited settlement demands A. How they are used to set-up the insurer for a bad faith claim following an excess verdict In an effort to get around the problem of a defendant with inadequate insurance limits, plaintiff's counsel frequently send a policy-limits-settlement-demand with a relatively short response time, hoping the insurer will fail to timely accept and pay the demand and plaintiff will thereafter get an excess verdict at trial. When that scenario unfolds, it can have grave consequences: a bad faith claim against the insurer for the excess liability. Many states have a statute or precedent-setting case that lays out the criteria for when an insurer may be found to have acted in bad faith for failing to accept a time-limited settlement demand. For example, in Southern Gen. Ins. Co. v. Holt, 262 Ga. 267 (1992), the Supreme Court of Georgia found the insurer had acted in bad faith where it rejected a time-limited settlement demand for policy limits when liability was uncontroverted, the plaintiff's special damages exceeded the policy limits, and the plaintiff's counsel had provided all records the insurer needed to evaluate the claim. While evolving case law in Georgia restricted an insurer's ability to ask for Page 3 of 7

4 clarification or propose different settlement terms because doing so could be considered a rejection and counter-offer, statutory law has since cured that issue for pre-suit settlement demands. B. Suggested strategies for responding Whether the state in which you practice has the same or different criteria for establishing when an insurer may be found to have acted in bad faith for rejecting, or failing to accept, a timelimited demand, the key is to understand the criteria and determine if the plaintiff has met them. Where the plaintiff has not met the criteria, you may consider sending a letter to counsel describing the (missing) information needed to evaluate plaintiff's claims and settlement demand in order to make an informed decision. Where appropriate, you may consider asking counsel to assist in securing the needed information. You should clearly state that the insurer intends to promptly complete its evaluation and respond to plaintiff's settlement demand upon receipt of the needed information; and, where appropriate, you should make it clear that any potential dispute about liability does not mean the insurer will not make a compromise offer. IV. Anticipating and preparing for the traumatic brain injury claim Brain injury claims are becoming more prevalent in injury litigation because they have the potential to drive bigger damage awards. It is, therefore, important to anticipate such a claim and start, as early as possible, marshaling the evidence needed to evaluate and defend the claim. A. Identifying a potential claim You may be able to anticipate a brain injury claim even before you receive a letter of representation from the claimant's counsel by asking your insured driver about the claimant's condition at the accident scene if the claimant lost consciousness or had an obvious (visible) head injury. In addition, the crash report may identify the nature and extent of the claimant's injuries. When you get a letter of representation, ask counsel to describe all of the claimant's injuries and provide all supporting records; follow-up, as necessary, to get the records. A pre-suit settlement demand will typically include a description of a claimed brain injury and should include supporting records; if not, ask for the supporting records. Where a lawsuit is your first notice, you will need to get details about the nature and extent of the claimed brain injury and all supporting records in discovery. B. Timing and scope of records to collect Once you know, or suspect, the claimant/plaintiff is making a brain injury claim, you must begin collecting the evidence you will need to evaluate and defend the claim. Obviously, you will seek all of the claimant's past and current medical and psychological records, including the raw data for all neurological and neuropsychological testing. In most instances, you will also seek the claimant/plaintiff's scholastic and employment records, as well as any military records. Where the claimant/plaintiff is a child or young adult, scholastic records are a must and you may want to Page 4 of 7

5 consider seeking records starting as early as the mother's OB/GYN records, as well as birth and pediatric records. C. Use of experts Once you know, or suspect, the claimant/plaintiff is making a brain injury claim, you will want to engage a neuropsychologist to review the records and guide strategy in terms of additional records and sources of information, the need for an IME/additional testing, and crossexamination of the plaintiff's treating doctors. V. Deflating bloated economic damages A. Medical expenses Incurred v. Paid There is a split among the states as to whether parties can use evidence of the amount charged by the plaintiff's medical providers or the amount paid to the plaintiff's medical providers. In states limiting evidence to the amount charged, the plaintiff has a significant advantage in that she can "board" higher medical expenses in support of her argument that the jury should award higher damages; and the defendant has a corresponding disadvantage in that the collateral source rule usually precludes him from offering evidence of the amount paid. Those advantages and disadvantages are exacerbated in cases involving catastrophic injury and cases where a life care plan is used to address future medical expenses. B. Use of experts In states limiting evidence to the amount charged, the defendant may consider using a medical billing expert to review the bills and offer opinion testimony about the usual, customary, and reasonable charges for the same services. C. Trending strategies In jurisdictions that do not prohibit it, and for as long as the Affordable Care Act (ACA) continues to exist under the Trump Administration and Republican Congress, defense counsel may consider developing evidence to support an argument that anticipated future medical needs should be limited to the cost of obtaining health insurance under the ACA. VI. Nuclear verdicts across the nation It seems a week does not go by without a jury somewhere returning a nuclear verdict, i.e., a verdict of $10 Million or more. As 8-figure verdicts against trucking companies are on the rise, what can we learn about the underlying causes, the effects, and how to curtail them? A. Publicity Page 5 of 7

6 Numerous highly publicized accidents have kept the trucking industry in the news for all the wrong reasons. For example, Tracy Morgan's accident with a Walmart truck has been in the news off and on for the past two years. Plaintiff lawyers are targeting trucking claims through television, radio, billboard, and internet advertising. Just Google "truck accident" and see how many law firms come up in the response. Plaintiff lawyers discuss and teach each other about successful tactics for suing trucking companies and maximizing settlements and verdicts. They are succeeding in getting juries to award huge damages "to improve motor carrier safety." In post-verdict questioning, jurors have reported they want their verdicts to serve as a wake-up call for motor carriers to take notice and improve safety programs, to go beyond the FMCSRs and utilize safer programs and drivers. B. Changing the target from the individual truck driver to the corporation Plaintiff lawyers are focusing on safety violations that pervade the company. While an individual driver can appear sympathetic, corporations have a more difficult time being sympathetic or likeable. Plaintiff lawyers are successfully employing the Reptile Theory because of the complexity of the regulations, the type of work conducted, and the size discrepancy between the vehicles. Without proper preparation, truck drivers and company representatives can easily fall prey to this line of questioning and damage the motor carrier's defense. Compliance with internal policies and procedures is a key factor. The FMCSRs provide some guidance on what policies a trucking company needs to have, but the trucking company must create its own 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. Oftentimes, one of the biggest challenges for a company is something simple, like having and enforcing a policy that all drivers must wear seatbelts. More complex issues abound, like having and enforcing a policy on compliance with sleep apnea treatment. Equipment maintenance issues can be fertile ground. Ensuring that all company equipment has all of its maintenance requires lots of administrative time, in addition to the time spent doing the actual work; owner-operator equipment and intermodal equipment present separate issues and challenges. Plaintiff lawyers often cite the mantra, "if it's not written down, it didn't happen." Plaintiff lawyers often use regulatory violations to paint a picture that a carrier is unsafe. 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 important to successfully stave off an attack. C. Insurance carriers jumping out of the market Several big insurers are getting out of the trucking market. Zurich and AIG/Lexington recently announced their exit. Why? Concerns over profitability, an increase in litigation, sophistication of the plaintiff's bar, and nuclear verdicts. Large motor carriers have significant self-insured retentions and purchase excess coverage beyond the self-insured primary coverage. Page 6 of 7

7 Zurich and AIG/Lexington were major providers of this coverage. With fewer insurance carriers writing this coverage, rates have increased 10-30%, if the coverage can be purchased. The premium increase will cause some smaller motor carriers to go out of business. Some motor carriers with poor safety histories will not be able to purchase coverage and becoming self-insured will not be practical for many motor carriers. D. Prevention of the Nuclear Verdict Early evaluation and decision-making about which cases to resolve and which cases to try is key. If the case has nuclear potential, early resolution is critical. Going to mediation with adequate authority to resolve the claim is a must. Lowball offers may only serve to incite the plaintiff. Testing your assumptions, defenses, and fears is helpful. Use of focus groups and mock trials are valuable tools to test the parts of your theory that cause anxiety and allow you to try different approaches to see what tends to work the best. If you can get comfortable with the potential verdict from different approaches to your strategy, you can negotiate intelligently at mediation and be confident about holding firm or making increased offers to settle claims. Preparing for mediation by filing key motions beforehand having an argument that the Judge could rule a certain way can benefit you during negotiations. E. Nuclear verdicts have changed trucking Nuclear verdicts have caused insurance premiums and claims payment costs to become a major expense for trucking companies. Insurers going out of business or exiting the trucking sector have caused the market to tighten and premiums to increase. Some trucking companies will not be able to get insurance and will go out of business. On the other hand, these verdicts have also had a positive effect in causing trucking companies to create or enhance safety programs. Trucking companies need to create their own safety programs or subscribe to a program to show that they are a safe company. Truck drivers should be provided training to comply with the trucking companies' safety programs. The motoring public is benefiting from the training since 2014 there has been a 20% decrease of motor carrier involved fatality accidents. Image management is also a priority. Trucking companies, individually and as a group, need to have a plan for when they are involved in a serious accident or may be involved in a trial that results in a nuclear verdict. Trucking companies need to show the good things they do for communities and individuals. Page 7 of 7