The record number of motor carrier bankruptcies last year was due, in no small part, to higher insurance premiums from rising accident claims and jury-awarded verdicts, said a trial defense attorney, Feb. 17, at the 2020 Omnitracs Outlook user conference in Las Vegas.
According to data compiled by CaseMetrix, the average verdict this year for trucking cases in the Southeast, for example, is approximately $17.5 million. This is up significantly from last year’s average of $16.9 million.
Insurance companies have become “horrified of trucking accident claims,” said Steve Setliff, managing partner of Setliff Law. They are paying inflated claims, he believes, to avoid protracted legal battles but in the process are creating a “death spiral” for insurance costs in the transportation industry.
The Reptile strategy
Setliff shared advice for motor carriers to protect themselves from plaintiff attorneys and escalating insurance costs. The main strategy that attorneys use when going after trucking companies is found in the book “Reptile” published in 2009 by David Ball and Don Keenan, he said.
Plaintiff attorneys seek maximum punitive damages by depicting motor carriers as bad actors who don’t care about people. During trial, “they’ll summon up that inner fear that everybody has when they get close to or anywhere in proximity to a big truck — it’s frightening,” he said. “They take that inner fear and then they start to track and trade information to demonstrate that your company is a bad actor.”
Setliff recommended that motor carriers list all of their safety achievements and showcase their safety culture on social media and on their company websites.
“If I Googled your company right now, what would I see?” he asked. Judges tell jurors not to talk to anyone about the cases they are involved in, but “it lasts until the jurors hit they jury room and then they’re Googling.”
The social media presence of a fleet’s safety director and other people in positions of responsibility also matter. “Is it a bunch of pictures of them hanging out at the Daytona 500 passed out on the hood of a truck and everybody with Bud Light cans?” he asked.
Having a solid policy for driver hiring, retention and training policies is also critical. Those who are in charge must be able to articulate in one sentence what standards they use for each of these processes and have documentation, he said.
“I don’t care if (drivers) learn anything during their training. What I care about is (management’s) ability to stand up in the middle of a court room and say, ‘We train them,’” Setliff said. “I have got to be able to go to court and summon up all the Baptist preacher that I can summon up and say ‘this is a good company. We do it the right way.’”
Problems with CSA
Chris Haney, director of safety and human resources at Payne Trucking, a bulk hauler with headquarters in Fredericksburg, Va., co-presented with Setliff. He focused on proactively resolving data issues that may otherwise create additional legal risks.
Haney reviewed each of the seven BASIC categories in the Compliance, Safety, Accountabilty (CSA) program from the Federal Motor Carrier Safety Administration. He noted how CSA data is often misrepresented and misinterpreted by plaintiff attorneys and other parties, such as shippers and insurance companies, for assessing carrier safety risks.
The CSA program has unintended consequences “that we as an industry are left to deal with,” he said.
Below are some of the points he made about the risk indicators used by CSA, called BASICs:
- The Crash Indicator is a record of a carrier’s reportable accidents on the nation’s highways, but it “has caused a great deal of controversy over the last decade,” he said. The Crash Indicator score is not public but all of a motor carrier’s reportable accident data is for the past 24 months. The data shows fatalities, injuries and if the truck driver was given a citation, but the data “will not tell who was at fault.”
- Hazardous Materials compliance scores are not public but “everything else is free game for whoever is willing to click on the button.”
- Driver Fitness does not show drivers the FMCSA disqualified who may be working for a motor carrier. The carrier has no way of knowing this, but during an audit it can be held responsible for a disqualified driver operating a vehicle on commercial roadways. This oversight is difficult and expensive for carriers to defend, he said.
“We have no access to this information yet we as an industry are held accountable for it, and pay greatly as a result of it,” Haney said.
To help ensure that CSA data is accurate, Haney gave motor carriers advice on how to use FMCSA DataQs to correct erroneous information, such as when a driver is cited for an accident when dash cam footage proves otherwise.
Pay attention to “every single detail of every single event that takes place within your company. Data is your friend in these cases,” he said.