Managing risk starts at driver hiring but should never stop as long as the driver is employed. Trucking carriers face increased risk of nuclear verdicts, but managing those risks is not insurmountable, if done right and from the start.
In February 2017, Kathryn Armijo was struck and killed following a head-on collision involving a tractor-trailer on Interstate 10 just outside Las Cruces, New Mexico.
A two-week jury trial in 2019 ended with a $40.5 million award against the mega-carrier, which trained the driver through its affiliated driver-training school. The driver had been on the job for just eight days when, the court documents detail, he crossed four lanes of traffic and a concrete median before striking Armijo’s car.
The Armijo family’s attorneys submitted evidence at trial that showed the carrier “through its own inadequate operations and training programs for its student drivers … had a systematic disregard for basic safety policies and training of new drivers.”
The jury decision is just one of hundreds of “nuclear verdicts” that have been piling up against trucking carriers in recent years. An American Transportation Research Institute (ATRI) study of verdicts over $1 million showed a marked increase in recent years.
The study, Understanding the Impact of Nuclear Verdicts on the Trucking Industry, is based partially on a trucking litigation database with information on 600 cases between 2006 and 2019. The first five years of the data showed 26 cases over $1 million but nearly 300 such cases over the last five years of the time period.
A 2019 white paper published by FreightWaves detailed the cost of nuclear verdicts.
“For an industry with profit margins that average just 5%, insurance as a cost line item (now averaging 3 to 4% of revenue) doubling every few years is an enormous problem and represents a systemic risk,” the paper stated. “With the end of 2019, estimates are that trucking bankruptcies nearly quadrupled compared to 2018. Even worse, this trend is growing ad infinitum, with nuclear verdicts continuing to grow in both prominence of occurrence and absolute dollar amounts. If trucking insurance rates continue to inflate at recent levels, a significant portion of the industry may no longer be ‘going concerns’ and be at risk of going out of business. The potential negative impact of nuclear verdict risk is that dramatic.”
Mark Schedler, senior editor for compliance specialists J. J. Keller & Associates, said the ATRI study found that precrash actions by carriers are critical to avoiding litigation that results in a nuclear verdict. But it is not just nuclear verdicts that are putting carriers at risk. Schedler cited a November 2021 ATRI study, The Impact of Small Verdicts and Settlements on the Trucking Industry, which found that settlements under $1 million are also on the rise and leading to higher insurance rates. Among some of the average settlement amounts for infractions are:
- Poor driver history $680,733
- Phone use $629,375
- HOS violation $584,531
- Inadequate training $388,464
- Hiring mispractice $341,205
While it may be impossible to avoid a nuclear verdict when there is an incident that results in catastrophic injury or death, carriers can take steps to mitigate the risks. It starts with crash avoidance (both technologies and training programs) but also includes strict adherence to safety and operational practices and exceeding FMCSA minimum standards, Schedler advised.
Don’t be a litigation target
Schedler said carriers will be held responsible for what they should have known and what they should have done. This means plaintiff attorneys will try to prove:
- Negligent hiring. Did the carrier properly vet the driver’s background and qualifications? Did the carrier catch false information or was an exception made to hire a driver who did not meet the standards?
- Negligent supervision. Does the carrier regularly train, coach or discipline drivers? If it doesn’t, that can lead to unsafe practices or other issues that an attorney will try to exploit at trial.
- Negligent retention. Did the carrier keep a driver on the road after he or she should have been terminated due to being disqualified or no longer meeting carrier standards?
Schedler said carriers must consistently follow FMCSA regulations as well as company hiring standards. Progressive discipline standards should be in place and followed, and ongoing training and tracking of drivers and driver performance should occur.
Importantly, unqualified or improperly supervised drivers should not be on the road. Accidents happen, despite the best training and precautions, but allowing drivers on the road when they shouldn’t be can turn litigation nuclear.
Avoiding nuclear verdicts starts long before an incident happens. It starts during the driver hiring process. FMCSA has specific hiring requirements that must be followed. Third-party compliance specialists provide expertise in this area, especially important when even the smallest misstep in the hiring process — a missed signature or misfiled compliance requirement — will be highlighted by the plaintiff’s attorney as an example of lax policies on the carrier’s part.
Schedler said some common problems that occur in the driver hiring process include:
- Inaccurate, incomplete or falsified DOT application with employment gaps.
- Missing a driver signature.
- Incorrect license, endorsements or restrictions for vehicles operated.
- A motor vehicle record (MVR) was not run at time of hire or not reviewed by a person knowledgeable in interpreting MVRs.
- A safety performance history was not done or is incomplete. If no response from a prior employer was obtained, documentation of good-faith efforts to obtain it are not kept on file.
- Road test errors noted, but there is no documented corrective action or training.
- Missed preemployment test or query.
FMCSA has specific requirements for driver hiring. These include:
- Completed DOT application compliant with 391.21.
- Background checks, also known as the safety performance history (391.23). This includes review for unsafe driving history (391.23(a)(1)), proper licensing (391.11(b)(5)), and prior employers 391.23(a)(2).
- Road test 391.31.
- Medical certification 391.51(b)(6) proof in the driver qualification file before operating a CMV. Medical card or CDLIS MVR on file within 15 days of medical exam of CDL driver.
- Driver qualification (DQ) file documents current and retained as required. The DQ file must be kept for length of employment plus three years (391.51).
- CDL drivers must have a negative drug test result and a full Drug and Alcohol Clearinghouse query result to show the driver was not prohibited from driving due to a prior drug or alcohol violation.
Schedler advised carriers to conduct a preemployment screening or PSP report for three years of violations and five years of DOT-reportable crashes. Also, verify 10 years of regulated driving for CDL drivers, not just the three prior three years required, and review road tests for any corrective action prior to first dispatch of the driver. He also suggested carriers investigate employment gaps of greater than 30 days and conduct in-person or video calls with the driver.
All of this is best managed by using a driver management system or contracting with a third-party provider to ensure no detail is missed, Schedler said.
Ongoing driver supervision
One area that plaintiff’s attorneys exploit in trial is if drivers are “on their own” on the road. In other words, did the carrier do the initial work to get the driver on the road and then abandon ongoing driver training or supervision?
Schedler said common problems with driver supervision include DQ file documents expiring such as medical qualification lapses prior to recertification, invalid licensing that was detected between annual MVR checks, and annual reviews that are not completed or are insufficient. Additionally, improperly run (or not in place) drug and alcohol testing programs and failing to act on unsafe driving behavior when data of such is available, either through vehicle electronic control module, dashcam or electronic logging device.
A good driver supervision program includes:
- License checks to ensure it is valid with the proper endorsements (391.11).
- Annual review and annual MVR pulled (391.25).
- Medical qualification (391.41) with proof in the DQ file.
- Current and valid DQ file documents (391.51).
- Elimination of unsafe behaviors that a carrier should have known about due to vehicle or dashcam telematic and video data or ELD hours of service data. All ELD records must be retained for at least six months.
- Checking for falsified logs including misuse of personal conveyance, mileage gaps due to unplugging the ELD, improper edits of on-duty time to off-duty time, and other easily detectable intentional falsification.
- Proper and timely vehicle inspections and reporting, including pretrip inspections (392.7, 396.13), post-trip inspections and document defects on driver vehicle inspection reports or DVIRs (396.11).
Best practices for driver supervision
Schedler said best practices for fleets include the use of dashcams — both forward and driver-facing — to detect and correct unsafe driving behaviors and use of coaching along with online learning management systems that can offer corrective and refresher courses on safety procedures.
Carriers should conduct annual reviews that are meaningful and not just a checking of the boxes. Those reviews could be more frequent if necessary to ensure the driver is properly coached, trained and/or disciplined according to company policies and procedures.
Also consider implementing electronic DVIRs, which can help ensure steps are not missed in the vehicle inspection process.
“To minimize potential liability and stay defendable, cultivate a safety culture that treats compliance and proactive behavior management as nonnegotiable,” Schedler said. “There is almost too much data and too many compliance items to track these days, so consider utilizing a system or a third-party service to help protect your business.”
Finally, document all training and corrective actions, Schedler said, and conduct mock audits to detect irregularities in compliance and safety management controls. A third-party audit is recommended at least every other year to ensure an outside expert concurs that internal processes meet and/or exceed standards and best practices.
Taking these steps won’t guarantee a carrier won’t face a nuclear verdict, but they will go a long way to helping document for a jury that a carrier is doing everything it can to minimize risk.