Today, it is an unfortunate reality that no business is immune from high-dollar verdicts. To avoid the devastating financial impacts of lawsuits, businesses operating in the waste and recycling industry should implement best practices aimed at effectively reducing their risk exposure.
By Nathan Brainard

While nuclear verdicts have proliferated for more than a decade, over the last several years there has been a surge in these legal outcomes. The increasing number of high dollar settlements and verdicts is impacting businesses across sectors, especially those enterprises like waste and recycling companies that own fleets of commercial vehicles.

To mitigate risk and avoid being on the receiving end of a nuclear verdict, waste and recycling companies should understand more about these verdicts, their impact on the industry, and best practices for avoiding financial damages.

What are Nuclear Verdicts?
Nuclear verdict is a term coined to describe a court award or settlement that is higher than expected, often in excess of $10 million. According to a study by the U.S. Chamber of Commerce Institute for Legal Reform, the prevalence of nuclear verdicts increased by 27.5 percent from 2010 to 2019. The study also revealed that nuclear verdicts were most frequent in product liability (23.6 percent of the total), auto accident (22.8 percent), and medical liability (20.6 percent) cases.

The study noted that “noneconomic damages are typically the largest component of a nuclear verdict—in fact, in six out of 10 years in the study period, the total amount of noneconomic damages in nuclear verdicts exceeded total economic and punitive damages combined.”

In the last decade, 63 percent of the nuclear verdicts have been reported in just six states including California, Florida, New York, Texas, Pennsylvania, and Illinois.

Several factors are fueling the increase in nuclear verdicts. Changing societal attitudes toward corporations is one of these factors. Jurors today often have more empathy toward plaintiffs and less for perceived deep pocket corporations, and this often results in substantial damage awards to plaintiffs. Social inflation, which refers to insured claims costs rising above general economic inflation, is another key driver of nuclear verdicts. One report estimated that social inflation increased commercial auto liability estimates by more than $30 billion between 2012 and 2021.

Impact of Nuclear Verdicts on the Waste and Recycling Industry
No industry is immune from the risk of nuclear verdicts. Industries with commercial fleets are particularly exposed and a challenging risk class to insure in light of the increased frequency and severity of nuclear verdicts.

Waste and recycling businesses are experiencing the negative impact of these verdicts in the form of premium increases, which eat into profits and may even make them unaffordable for smaller operators. Multimillion-dollar lawsuit payouts also are limiting coverage availability. Limited capacity like this can create a situation where waste and recycling companies must turn to multiple providers to secure the coverage they need.

In some cases, damage awards can exceed the limits of the insurance policy, leaving the insured responsible for paying the remainder of the damages out of pocket. That can result in bankruptcy for some smaller companies lacking the financial resources to cover this cost.

Nuclear verdicts can damage waste and recycling companies by inhibiting job growth and preventing companies from investing in their businesses. They also increase the cost of doing business, which drives up costs for consumers.

Best Practices for Mitigating Risk
Waste and recycling companies with fleet vehicles should take proactive steps to mitigate the risk of nuclear verdicts. Best practices companies can implement to avoid the accidents that can result in these unexpected and potentially crippling decisions include the following.

Tightening Up Safety Standards with Technology
Waste and recycling companies should use driver safety technologies like dashcams to decrease risk exposures from human error. These in-cab devices can identify distracted driving behaviors, which continue to be a major factor behind crashes nationwide. Using dashcam data, companies can identify areas where drivers need more training and coaching and shape training programs to improve safety performance. Newer cameras with integrated artificial intelligence can process significant amounts of data in real time, reducing accident risk by detecting unsafe behaviors and notifying drivers on the spot. Data from inward- and outward-facing in-cab cameras can help avoid nuclear verdicts by providing incontrovertible evidence that eliminates a driver from fault.

Companies also should leverage technology to digitalize their paper-based workflows for more thorough vehicle inspections. This can help streamline maintenance processes and bring to light any issues that may impact road safety.

Monitoring CAB Reports
The Central Analysis Bureau (CAB) compiles data points on carriers to calculate a rating that reflects risk. This report contains data on out-of-service violations, overweight violations, tire violations, false logs, and maintenance issues as well as accident history and injury reports. All this data is compiled together to calculate a rating that reflects risk.

Waste and recycling companies should pay attention to the CAB report and work with their insurance agent to monitor this report. Doing so will help surface areas that need improvement and help keep vehicles in good working order, so they score well on roadside and other inspections.

Hiring Quality People
Hiring qualified drivers is critical for avoiding accidents that can lead to nuclear verdicts. While it is difficult finding qualified, experienced drivers during a nationwide driver shortage, waste and recycling companies should avoid the temptation to lower their requirements to fill positions. Hiring an unqualified driver or someone who barely meets standards is something that can be used against a company in court in the event of a collision or accident.

It is critical for waste and recycling companies to thoroughly vet driver candidates to mitigate risk and safeguard the financial health of their businesses. That screening process should include looking at each candidate’s past experience and prioritizing those drivers with clean records and more years of incident-free time on the roads.

Checking a motor vehicle records (MVR) report is an essential part of the screening process. Obtained from a state’s department or bureau of motor vehicles, this report is an official record of a person’s driving history. It provides driver’s license information including driver name, license number, date of birth, and license status (active/suspended/revoked) as well as information on any traffic tickets, accidents, or moving violations. For all drivers, companies should request and review MVRs once a year to ensure they continue to meet requirements for safe driving.

By conducting this due diligence, waste and recycling companies can hire the most qualified drivers with clean driving records and safe driving habits. This allows them to better protect their businesses, their employees, and the people sharing the roadways with their drivers.

Providing Ongoing Training
Ongoing driver training is an important part of reducing the risk of insurance claims, lawsuits, and nuclear verdicts. Waste and recycling companies should provide their drivers with continued education and training on safety best practices. This training should include information on defensive driving strategies and distracted driving policies. Building safety skills through training will lessen the likelihood that drivers will be involved in accidents.

Getting an Insurance Agent Involved
Insurance agents can help waste and recycling companies identify and address potential risks before they result in a claim. Agents with expertise in the industry can help clients understand coverage, provide insight on how to meet underwriter requirements, develop tailored risk management strategies, recommend technology to improve safety, and monitor CAB reports—all of which can help clients keep their insurance premiums and claims low and protect their bottom line.

If an accident results in a lawsuit, agents may serve as advisors for their waste and recycling clients no matter their course of action, whether they choose to abstain from a defense or defensive actions, informing them of the consequences of a nuclear verdict should the matter go to court.

Nuclear Verdicts Outlook
The continued rise of nuclear verdicts has coined a new term to describe these awards and settlements—thermonuclear verdicts. Last year, a Georgia court awarded more than $16 million to a man who sustained physical injuries in a collision with a truck.

While high-dollar awards and settlements are expected to continue to rise across different industries, including waste and recycling, some states are taking action, enacting lawsuit abuse reforms to help combat nuclear verdicts.

Last year, the State of Florida introduced a law aimed at lawsuit abuse reform and decreasing frivolous lawsuits. The law prevents predatory practices of trial attorneys, expands immunity for property owners defending against a criminal who is injured on their property, provides uniform standards for juries in calculating medical damages, and reduces the statute of limitations for general negligence cases from four years to two years.

More recently, the Wisconsin Senate voted 21-11 in February to advance Senate Bill 613, which would limit the total amount of noneconomic damages, such as pain and suffering, that a person may recover from a commercial motor vehicle carrier. A $1 million cap on noneconomic damages would apply to incidents with a truck that result in injury, death, or other loss.

Other states including Iowa, Louisiana, Missouri, Montana, Texas, West Virginia, and Illinois also have all taken action to address the issue of nuclear verdicts.

Wrapping Up
Nuclear verdicts are on the rise in all industries including the waste and recycling industry. Today, it is an unfortunate reality that no business is immune from these high-dollar verdicts. To avoid the devastating financial impacts of lawsuits, businesses operating in the waste and recycling industry should implement best practices aimed at effectively reducing their risk exposure. By tightening up safety standards, monitoring CAB reports, hiring quality people, providing ongoing driver training, and working with a trusted insurance agent, these companies can avoid the risks that lead to nuclear verdicts as well as reduce insurance premiums and protect their bottom line. | WA

Nathan Brainard, AAI, is a Regional President and head of the Environmental Division at Insurance Office of America (IOA) (Longwood, FL) and a member of the NWRA Safety Committee. Nathan has been with IOA for 19 years and specializes in Environmental Insurance with an emphasis on insurance for the Waste, Recycling, Remediation and Demolition industries. He can be reached at (407) 998-5287 or via e-mail at [email protected].