“Intelligence is the ability to adapt to change.”- Stephen Hawking
Change has come. Exorbitant jury verdicts are increasing in both severity and frequency. The defense industry needs to adapt to this environment and change the way we handle claims from inception through trial.
Recently, in venues once thought to be defense leaning, we are seeing juries award Nuclear and even thermonuclear verdicts. As an example, juries in suburban Westchester County, New York awarded plaintiffs verdicts of $120 million and $23 million in malpractice actions within a six-month period.
These grossly excessive verdicts have far-reaching adverse consequences throughout society. They contribute to inflation, raising the cost of everyday items, such as health care, food and housing. Entities can become uninsurable, driving them out of business, decreasing economic output and inhibiting job growth.
There are several contributing factors to this trend, including social inflation, corporate mistrust, and erosion of tort reform. The public is also desensitized to large-dollar figures; in a world where a professional athlete can secure a $700 million contract, juries no longer see a $100 million award as a shock to the senses.
Nuclear Verdicts are a daily feature of social media and trade headlines. Potential jurors are besieged with dizzyingly large verdicts everywhere they turn. Facebook, YouTube, Podcasts, and TikTok all alert potential jurors of unsustainably high verdicts. The Netflix series, “Take Care of Maya,” was watched almost 14 million times prior to a verdict of $261 million against Johns Hopkins All Children’s Hospital. Millions of jurors learned of the salacious details regarding this verdict in a blatantly partisan manner; only a fraction of the jurors later learned that the damages were reduced by almost $50 million. The inevitable impression is that verdicts like this should be normalized, and the jurors who “exact justice” should be celebrated as social justice heroes.
The plaintiff’s bar has taken advantage. They are disciplined and organized, pooling resources to win legislative battles and sharing courtroom tactics, like the “reptile theory” that inflame jurors. While the concern has risen in our industry, there is a dearth of genuine strategies to reduce the likelihood of being nuked.
Countering the Trends
It is time to adapt and offer genuine change to our defense strategy. The defense industry must unite and work collaboratively to balance the scales of justice. The New York defense bar provided a blueprint for a path forward in the management of COVID-19 litigation. It soon became plainly evident that there would be a landslide of litigation in the wake of the COVID-19 pandemic. The insurance carriers, third-party administrators, hospital systems, trade groups and the defense bar united to share ideas, legal memorandum and mount a coordinated effort to enforce the state’s immunity provisions. The defense realized that a win for a “competitor firm or insurer” was tantamount to a win for all. As a result, good law was made and COVID-19 claims have been met with positive appellate law and trial court dismissals. The same level of coordination would go far in pushing back against social inflation and Nuclear Verdicts.
Just as crucially, the defense must quickly identify fact patterns with the potential to go nuclear. The sluggishness by which these claims are identified is a large driver in median nuclear verdicts increasing two-fold year-over-year. Earlier identification and workup is often the key to reaching a reasonable settlement years before the case becomes radioactive.
Much like a nuclear bomb requires enriched uranium, a nuclear verdict needs an inflamed jury. They become angered when defense witnesses are untruthful, uncaring or refuse to accept responsibility for their own actions, blaming others for the poor outcome. When you mix in social inequities and a highly sympathetic plaintiff, you have a recipe for a nuclear verdict. Jurors will ignore the logic of the defense and act upon their anger.
We must conduct early investigation to determine which cases have these factors. Knowledge is power, and the defense often has access to the lion’s share of information required to analyze departure. A methodical investigation replete with deadlines to be revisited every 30-days until complete is key. Most of the investigation should be done within 6-months of the claim being reported, allowing a commanding understanding of the exposure and damages. At this point, the question of early settlement vs. defend can be assessed. Claims expenses will be known and factored into the decision. At this point, the defense will have an informational advantage.
The next step is to make an offer. This can stun plaintiff into reasonableness and reduce the chances of plaintiff focusing on what is normally an aspirational initial demand. The days of waiting for a demand are over. Making a real offer can wrestle away control of the narrative. Do not make a lowball offer. This may inflame the plaintiff’s attorney and entrench their client’s position. The more realistic the initial offer, the higher the chance of disarming the potential bomb later as positions harden. If the plaintiff beats you to the table and the offer is as expected, “outrageous,” do not take it personally and remember who carries the checkbook. Again, do not respond in kind, put a real offer on the table with the appropriate messaging to the plaintiffs.
In negotiating the case, plaintiff’s counsel should be reminded of the fact that the defense prevails 80% at trial. Moreover, in the wake of COVID-19, the path to a verdict at trial may take the better part of a decade. A lot can happen in that time, making their case worth dramatically less.
We must be realistic: These strategies will not eradicate all nuclear verdicts to come. However, these steps can serve to reduce the awards and make them less frequent.