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Let’s talk insurance: Trucking to the US? Beware of judicial hellholes

Canadian carriers already know about the unique set of risks they face when hauling into the US. These risks were highlighted by a recently released FMCSA study analyzing the costs of US highway crash...

Silvy Wright

Silvy Wright

Canadian carriers already know about the unique set of risks they face when hauling into the US. These risks were highlighted by a recently released FMCSA study analyzing the costs of US highway crashes in 2005 involving medium- and heavy-duty trucks. The study found crashes involving non-fatal injuries averaged almost US$200,000 and crashes involving fatal injuries averaged over US$3.6 million.

Such awards for bodily injury crashes are unusual in Canada. So why do crashes in the US, especially those involving bodily injuries, cost so much? And how can these costs be mitigated?

The answer to the first question lies in a report published by the American Tort Reform Foundation titled Judicial Hellholes, which publishes an annual ranking of the most unfair US jurisdictions in which to be sued. The ATRF’s aim is to try to bring some sanity back into the legal carnival south of the border.

But the report’s findings, which do show some improvement, offer small comfort to carriers, who are still considered by many lawyers to be cash cows.

The report explains that, where claims are litigated, the jurisdiction has a lot to do with the final outcome due to litigation abuse prevalent in some states. Last year’s top judicial hellholes include West Virginia, South Florida, Rio Grande Valley and Gulf Coast, Texas, Cook County, Madison County, and St. Clair County.

In these jurisdictions especially, US trials by jury can increase costs dramatically, especially when jurors are local residents who may know the victim and when the judge is elected – and wishes to be re-elected – by the citizens of that jurisdiction. Findings in favour of a big bad trucking company, especially a foreign company, can be an unpopular decision for the judge to make. And judges in jurisdictions with depressed economies and higher unemployment rates may be more likely to award higher damages. Canada does not hold jury trials for traffic-related cases.

To add to the report’s findings, there are some other basic legal differences between the US and Canada when it comes to the definition of financial dependence. When a child is fatally injured in the US, courts may award the future lost earnings of that child to his or her parents. In Canadian courts, parents are not considered dependents of their children and there is therefore no basis for a claim.

Compounding the problem for Canadian carriers is the fact that personal injury damages are not capped in the US as they are in Canada. In Canada, some awards for damages are capped. The highest cap for pain and suffering is $310,000 (Canadian). The largest factor for higher priced bodily injury awards in the US is the value courts placed on pain and suffering, as well as future wages and health care costs. So how does a Canadian carrier reduce the risk of costly US litigation after a crash?

Train your drivers and staff to respond promptly and properly after a crash: Have a well planned protocol in place at all times, which includes instructions on immediate and direct reporting. Train your staff to report to your insurance company immediately so your insurer can get a trained crash scene investigator to the site as soon as possible. Evidence can then be documented properly. Also, train your drivers to avoid making the kind of statements that could be used against them in a court of law.

Make sure your drivers have clean driving records: A North Carolina claim was recently settled out of court for US$5.6 million in compensatory damages. The Canadian carrier could have faced millions more in punitive damages had his lawyer not succeeded in having the judge throw out evidence pointing to negligence in the carrier’s hiring and retention practices. According to the lawyer, the truck driver tested positive for cocaine use after a crash that killed the mother of a young girl. According to the prosecution, the carrier had evidence of the truck driver’s previous cocaine use.

Your HR department should conduct a thorough background check of all drivers you send into the US. A background check that indicates former drug use or bad driving habits could add millions of dollars to a punitive damages claim.

Work with your insurer: Working with your insurer prior to running loads to the US is an excellent way to reduce your risk of costly litigation. Your insurer should be able to provide you with detailed information on how to manage your exposure in the US, based on the information you give about what and where. Your insurer can even help you plan routes to lower your risk. Your insurer’s knowledge of expert lawyers in the jurisdiction where the incident occurred and their understanding of the rules of the game are also valuable inputs.

The bottom line is, trucking into the US is risky business. But you can manage that risk with thorough preparation, well-screened and well-trained drivers, and a knowledgeable insurance partner.

– Please send your questions, feedback and comments about this column to Markel is the country’s largest trucking insurer providing more than 50 years of continuous service to the transportation industry.

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