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The trucking industry has become increasingly concerned about lawsuit abuse.

For the past 21 years, the American Transportation Research Institute (ATRI) has conducted an annual survey of the trucking industry to identify the year’s top ten industry concerns. In this year’s survey,[i] lawsuit abuse reform came in at number two, second only to the economy. This is the highest that lawsuit abuse reform has ever ranked on the list of trucking industry issues during the survey’s 21-year history. (Insurance cost/availability ranked third, which, as the report notes, is closely tied to lawsuit abuse reform.)

Two Factors Driving the Concerns

Nuclear Verdicts. The industry is clearly concerned about the increase in nuclear verdicts against trucking industry defendants—and for good reason. As the report notes, in recent years, some verdicts against trucking industry defendants have exceeded $100 million. And “thermonuclear” verdicts (exceeding $100 million) against corporate defendants are on the rise.[ii]

Third-Party Litigation Funding. Another factor driving the need for lawsuit abuse reform is the increase in third-party litigation funding (TPLF). This form of financing allows plaintiffs to cover litigation costs through a third party in exchange for a right to recover part of the lawsuit’s proceeds. These funding relationships—which are not currently required to be disclosed in most jurisdictions—encourage litigation abuse by enabling speculative claims that would otherwise not be pursued and by creating artificial, purely profit-driven constraints on litigation dynamics and settlement negotiations, often without the defendants’ knowledge.

Three Strategies to Rein in the Abuse

In response to the ATRI survey, the trucking industry identified three top strategies to address lawsuit abuse: (1) legislative damage caps on non-economic damages, (2) elimination of “phantom damages” (the gap between medical bills and actual costs paid), and (3) advocating for disclosure of third-party litigation funding.  

Damages Caps on Non-Economic Damages. In many states, including some known for the largest recent nuclear verdicts, these strategies have a long way to go.  Few damages caps exist for any form of compensatory damages in personal injury, including trucking accidents. In fact, Missouri and Illinois courts have struck down many forms of damages caps as unconstitutional, although the Missouri Supreme Court has allowed a cap in the medical malpractice context.

Phantom Damages. Missouri recently passed a statute that purportedly eliminated the collateral source rule. However, the law’s benefit for defendants has been effectively gutted because plaintiffs’ lawyers have stopped putting on evidence of medical bills, and Missouri courts have ruled that defendants are then not allowed to put on evidence of the actual cost, either. Illinois still follows the collateral source rule, forbidding defendants from introducing evidence of the actual cost of medical bills paid by a plaintiff, and there’s no sign this will be changing soon. Indiana still follows a modified form of the collateral source rule (Ind. Code Ann. § 34-44-1-2), which allows evidence of payments by third parties but does not allow evidence of insurance payments under a policy purchased by the plaintiff or the plaintiff’s family.  

Litigation Funding. Reform for litigation funding shows more promise. For example, Indiana recently enacted HB 1160, which requires disclosure of TPLF agreements during litigation and prevents funders from controlling lawsuits. Missouri and Illinois have passed their own Consumer Legal Funding Acts (§ 436.556 RSMo and 815 ILCS 121, respectively), which provide greater state regulatory oversight of litigation funders and prohibit them from controlling litigation or settlement, although they stop short of requiring disclosure of TPLF during litigation. Notably, the Advisory Committee for the Federal Rules of Civil Procedure has also received suggestions for rule changes[iii] to require uniform disclosure of third-party litigation funding during federal litigation. This could be the first step toward a federal rule change requiring this disclosure, which could then lead to similar changes in state rules, as has occurred in other areas of civil procedure.

Conclusion

Overall, the trucking industry is justified in seeing lawsuit abuse reform as a priority: the legal landscape remains a challenging one for trucking companies, especially in Illinois, Missouri, and Indiana.

There is no substitute for local expertise in navigating the serious risks and challenges posed by today's litigation landscape. HeplerBroom has offices in Illinois, Missouri, and Indiana, and our Trucking and Transportation team is ready to help.  

^[i] Critical Issues in the Trucking Industry

[ii] ‘Thermonuclear’ Verdicts on the Rise, Report Finds

[iii] Rules Suggestion to the Advisory Committee on Civil Rules and its TPLF Subcommittee