One reason for rising policy costs is increasingly large jury verdict awards. Keeping insurance rates low and reducing risk requires understanding why there are nuclear and even thermonuclear verdicts and what can be done about it. Companies are expected to consistently conduct their business in a manner that shows superior, or at least good corporate citizenship. If so, this will severely diminish, if not eliminate, the ability to use the “Reptile Theory” in court to arouse fear and anger in jurors that result in nuclear verdicts. Reptile tactics are not a threat to a business if safety is first in practice, not just in words. Companies must understand and evaluate the risks, put proper loss control and communications in place, and advocate and provide oversight in claims to mitigate the likelihood of large verdicts and the severe effects on insurance rates and the financial health of businesses.
Excessive jury awards have increased dramatically in recent years, especially in personal injury auto and truck accidents. These large verdicts have been coined "nuclear verdicts" when damage awards exceed $10 million. Now, there are “thermonuclear verdicts” when jury awards exceed $100 million because the term “nuclear” does not evoke the depth of these explosive jury awards. One example is a recent jury verdict in April of 2023. A Texas civil court jury awarded more than $860 million to the family of one of the victims of a 2019 tower crane collapse. Texas Defense attorney Ben Westcott of the firm of Andrews Myers pointed out: “Smith vs. Greystar - a Dallas crane collapse case - is a recent example of how juries can be compelled to issue a nuclear verdict. The jury awarded $160 million more than the family requested based on lax safety enforcement,excess work hours, past due inspection certificates, and OSHA violations.”
Large verdicts make it difficult for insurers to assess risk and thus drive premium increases. By the numbers, the trucking industry has been hit hard. Thermonuclear verdicts or large settlements are increasing in bodily injury automobile accidents, premises liability claims, security and alarm services, insurance, and intellectual property cases, especially patent litigation. There is also an increase in settlements and jury verdicts for injuries believed to be due at least in part to construction site safety violations and due to a lack of security in place at apartment complexes and retail spaces.
A critical factor in large awards is jurors becoming angered by a seeming lack of reasonable or industry standard safety measures practiced or enforced by companies whose employee/s action or inaction resulted in physical losses to a third party. To trigger this anger and the need to punish defendants, the plaintiff’s attorneys use what is referred to as the “Reptile Theory.” This tactic attempts to arouse the reptilian part of jurors' minds, which is the need to be safe, and thus enrage them to want to send a strong message by punishing defendants who conduct business in a seemingly unsafe manner. Jurors are asked to send a message to the industry that unsafe practices will not be tolerated.
"In today’s climate of corporate distrust and stricter expectations of corporate safety standards, companies must have the resources to understand and evaluate the risks, and ensure proper loss control and communications"
Distrust of corporations and stirring up the emotions of jurors, asking them to question, ‘What if this were me?’ adds to the reptilian brain’s basic need to feel safe. The message appeals to the jurors, fight or flight: “Do we keep our loved ones off the roads? Or do we send a message to this company and the industry that safety must come first?” These plaintiff’s attorneys argue that we are not safe unless the message is heard loud and clear by hitting defendants with a large enough dollar amount to make an impact.
The focus on reducing the risk of nuclear verdicts starts with managing casualty risks through prevention. First and foremost, companies must be excellent corporate citizens to ensure they are not playing into the reptile theory by having a poor safety culture and lack of consistent compliance. Safety Consultants, inhouse or through top-notch insurance agencies, can advise on best practices. Businesses need to focus on the following:
• Preventive fleet and equipment maintenance, for owned and leased, with pre-trip/pre-use checklists. • Stringent onboard vetting of drivers and personnel, thorough background checks, etc. Avoid Vicarious Liability and Negligent Entrustment by never entrusting vehicles, equipment, or premises with unqualified workers.
• Always train and re-train and thoroughly document the same. For example, with drivers, make sure they meet or exceed CDL requirements.
• Have thorough written fleet/driver safety policies, train and ensure compliance with, for example, defensive driving, cell phone policy, distracted driving, fatigue management, drug and alcohol education, etc.
• Ensure compliance with fleet safety and safe drivers’ policies. For example, have vehicle dashboard cameras to ensure compliance, including cell phone use, and then write up and re-train those not compliant. Dashboard cameras are also a great tool to help with accident reconstruction.
• Have thorough premise and job site security and related safety manuals and checklists for consistent and regular compliance assessments.
Another critical focus on reducing the threat of nuclear verdicts is aggressively managing claims. Companies and their risk partners must maintain a close eye on the adjuster and assigned defense counsel so that all facts and defendable grounds and strategies are considered in defending the business, its policies and procedures, and the actions or inactions of employees in the course of their employment. Businesses must identify, assess, and strategize to produce the best possible outcomes for overall claims management and in individual complex claims situations. As losses occur, companies must advocate and partner with their broker claims’ experts or other vendors throughout the life of a claim to ensure oversight as to claim mitigation to aid in reducing the likelihood of facing a large jury verdict, including:
• Managing claims issues promptly, ensuring carrier commitments are honored, and coverage disputes are resolved in the company’s favor whenever possible.
• Working to develop strategic action plans to reach desired outcomes and focus on potential large settlements.
• Finding suitable vendor partners, such as TPAs, nurse triage, and defense counsel.
• Evaluating claim reserves and pushing for reductions where appropriate.
• Have a broker or outside vendor provide guidance and trainings to ensure the company’s essential role in managing claims to resolution.
In today’s climate of corporate distrust and stricter expectations of corporate safety standards, companies must have the resources to understand and evaluate the risks, ensure proper loss control and communications are in place, advocate, and have oversight in the claims process to mitigate the likelihood of large verdicts impacting insurance rates and the financial health of businesses. Companies need a robust network of resources designed to serve an organization’s specific needs, focusing on risk management solutions with an insider’s appreciation of the difficulties facing a company in particular while standing in the front lines to help shield them from nuclear and even thermonuclear threats.
