All of America Is Now a Judicial Hellhole for Liability Insurers

The American Tort Reform Foundation identified a total of 15 jurisdictions where plaintiffs win big in liability lawsuits.
By: | October 30, 2018 • 4 min read

In 2002, the American Tort Reform Foundation (ATRF) began tracking what it calls “judicial hellholes,” or districts where judges and juries frequently rule against defendants in civil liability lawsuits and where legislative and regulatory actions have expanded the definition of liability. They’ve become popular destinations for litigation tourism, wherein plaintiff’s attorneys file suits in favorable jurisdictions even if it is not the location of the injury in question or the plaintiff’s place of residence.

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Many of these cases have historically involved asbestos-related illness or injury. The business advisory firm KCIC published an asbestos litigation report in 2017 showing that out of 3,000 asbestos-related claims filed in 125 jurisdictions across the country, 50 percent were filed in just four jurisdictions, and 60 percent were filed by out-of-state claimants.

According to the ATRF’s “2017-2018 Judicial Hellholes” report, eight jurisdictions earn the designation. They are Florida; California; St. Louis, Missouri; New York City (asbestos litigation, specifically); Philadelphia, Pennsylvania; New Jersey; Madison And Cook Counties, Illinois; and Louisiana.

Seven additional jurisdictions are on the organization’s “Watch List.” These include: Baltimore, Maryland; Georgia; Newport News, Virginia; Oregon Supreme Court; Pennsylvania Supreme Court; U.S. Ninth Circuit; Court of Appeals; and West Virginia.

In many cases, judges and juries express clear distrust of businesses and their perceived deep pockets, while expressing sympathy for the injured claimant regardless of the evidence presented to substantiate their claims.

The ATRF outlined a few common characteristics of judicial hellholes. First and foremost is the allowance of “forum shopping” so plaintiffs can choose a favorable place to file suit even if the claim is completely unrelated to that jurisdiction. Another prominent factor is the expansion of damage caps, allowing compensation for emotional harm, pain and suffering, or punitive damages that exceed levels previously established by case law. Expansion of damage caps is one reason verdicts and settlements continue to increase and drive up legal costs.

A third characteristic is demonstrated bias against corporations in favor of individual plaintiffs. In many cases, judges and juries express clear distrust of businesses and their perceived deep pockets, while expressing sympathy for the injured claimant regardless of the evidence presented to substantiate their claims.

Types of Liability Claims Filed in Judicial Hellholes

Asbestos litigation remains active in the judicial hellholes, but a few other types of liability claims emerged as common threads among these forums as well. Opioid litigation, for example, has already targeted some large pharmaceutical companies, but appears likely to extend beyond manufacturers to include health systems, hospitals, pharmacies, individual prescribers, and any other link in the opioid supply chain.

Minor violations of The Americans with Disabilities Act have also become targets for opportunistic plaintiff’s attorneys. The ATRF described these suits as “fly-by” cases, wherein attorneys file claims for small infractions such as a slightly-too-steep wheelchair ramp or faded paint on a sign for handicapped parking. Suits for non-ADA-compliant websites that are not accessible to the deaf or blind are also gaining traction.

After a disaster-heavy 2017, some law firms are also seeking liability for natural catastrophes. After wildfires in Northern California destroyed thousands of properties and threatened many more lives, “plaintiffs’ lawyers from California and across the country began soliciting potential clients for lawsuits targeting the deep-pockets of Pacific Gas & Electric, the company they’re already blaming for the deadly fires that ravaged public and private property to the tune of billions of dollars in the Santa Rosa and Cloverdale areas north of San Francisco.”

The picture is beginning to look similar for medical malpractice and personal injury liability cases as well, which have grown more costly to litigate across all jurisdictions even outside of the traditional judicial hellholes.

Rising Legal Costs

According to the “2018 Medical Malpractice Annual Report” compiled by Mike Kreidler, Washington State’s Insurance Commissioner, insurers in the state paid $31 million for plaintiff verdicts or judgments. Out of the 24 plaintiff verdicts or judgments, 22 had a payment averaging $1.4 million. In 2017, defense costs alone accounted for 24.4 percent of premium.

“On average, the attorney fees were 35.6 percent of the total compensation paid to the claimant.” – “2018 Medical Malpractice Annual Report,” Office of the Insurance Commissioner of Washington State

Liability insurers suffer even when their clients win in court. “Defending lawsuits is costly to insurers and self-insurers. Both groups spent $70.6 million defending lawsuits in which they ultimately prevailed—2.3 times the total indemnity payments for plaintiff judgments or verdicts,” the report said. “On average, the attorney fees were 35.6 percent of the total compensation paid to the claimant.”

According to a liability claims trends report by Allianz Global Corporate & Specialty, bodily injury liability claims represented only 8 percent of total claim volume between 2009 and 2013, but accounted for 44 percent of total claim value.

Supreme Court Decisions Will Hinder Hellholes

Since 2012, the U.S. Supreme Court has heard five cases pertaining to the issue of personal jurisdiction, and each decision has successively limited the ability of plaintiffs to shop around for the most favorable jurisdiction. The most recent of these decisions was in 2017 in the case of Bristol-Myers Squibb Co. v. Superior Court of California.

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A group of plaintiffs sued the pharmaceutical company in California, alleging that their drug Plavix had caused them harm. However, few of the plaintiffs lived in California, and Bristol-Myers had no manufacturing, administrative, or marketing presence in the state. The plaintiffs had also not obtained the drug in California or sustained their injuries there.

Though the California Superior Court claimed it had general jurisdiction in the case, the Supreme Court thought otherwise. It ruled that a defendant can be sued in a jurisdiction where it is headquartered, or where the claimant sustained their injuries. Filing in any other state is considered a violation of due cause.

Though it remains to be seen how lower courts will respond to this decision, it could help to curb the forum shopping that keeps judicial hellholes alive.

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]