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]

Risk Matrix: Presented by Liberty Mutual Insurance

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The R&I Editorial Team can be reached at [email protected]