- Posted by Admin on December 22, 2009
Liability insurance is a major element of both private passenger auto and homeowners insurance. Therefore, it is relevant to devote a blog article to the annual report of “judicial hellholes” published by the American Tort Reform Association. After all, while there is a tendency to laugh at the ridiculous claims that are filed, and even at those that occasionally are won (spilled McDonald’s coffee, anyone?), the fact is that the dollars involved to defend and to all-too-often settle and/or pay these claims are very real and are no laughing matter. We all end up paying for them in the end, whether directly through higher insurance premiums or indirectly through higher costs of goods and services (to cover their higher insurance premiums).
The ATRA opens their annual Judicial Hellhole reports with actual quotes from judges or attorneys to highlight the bias in select jurisdictions. These are not made up – they are actual quotes, generally from those prominent either in creating or benefiting from the climate in those jurisdictions. Here is a sampling taken directly from the 2006-2009 Judicial Hellhole reports:
“What I call the ‘magic jurisdiction,’ [is] where the judiciary is elected with verdict money. The trial lawyers have established relationships with the judges that are elected; they’re State Court judges; they’re popul[ists]. They’ve got large populations of voters who are in on the deal, they’re getting their [piece] in many cases. And so, it’s a political force in their jurisdiction, and it’s almost impossible to get a fair trial if you’re a defendant in some of these places. The plaintiff lawyer walks in there and writes the number on the blackboard, and the first juror meets the last one coming out the door with that amount of money. . . . These cases are not won in the courtroom. They’re won on the back roads long before the case goes to trial. Any lawyer fresh out of law school can walk in there and win the case, so it doesn’t matter what the evidence or law is.”
— Richard “Dickie” Scruggs, legendary Mississippi trial lawyer who built an empire of influence suing tobacco companies, HMOs and asbestos-related companies, but who has since been disbarred and sentenced to federal prison after pleading guilty to conspiracy in an attempt to bribe a judge.
“As long as I am allowed to redistribute wealth from out-of-state companies to in-state plaintiffs, I shall continue to do so.”
— Hon. Richard Neely, who served as a West Virginia Supreme Court of Appeals Justice, including several terms as Chief Justice, for over 22 years until 1995, is now in private practice at a firm primarily handling personal injury cases.
“West Virginia was a ‘field of dreams’ for plaintiffs’ lawyers. We built it and they came.”
—West Virginia Judge Arthur Recht
“You may not like it . . . but we’ll find a judge. And then we’ll find a jury” that will find restaurants liable for their customers’ overeating.
— John Banzhaf, George Washington University Law School professor and personal injury lawyer
“That venue probably adds about 75% to the value of the case…. [W]hen you’re in Starr County, traditionally you need to just show that the guy was working, and he was hurt. And that’s the hurdle….”
— Tony Buzbee, West Texas trial lawyer, on filing lawsuits in Starr County, a jurisdiction in Texas’s Rio Grande Valley
Admittedly, the last two quotes specifically pertain to commercial coverages, but the bias and attitude they convey are equal-opportunity. The first is from an actual law school professor from whom at least some of the next generation of trial attorneys are taking notes. The second has definitely impacted personal lines similarly, but maybe not to such an extreme extent – ask any insurer who has written in the Rio Grande Valley how comfortable they are with the legal climate there.
An insurer’s contractual defense of a claim translates to large expense dollars regardless of the merits of the case. Clearly, the more frequent occurrences in these jurisdictions, along with their generally higher awards or propensity to settle and the expense costs associated with such claims combine to add costs to “the system”. This means higher insurance premiums for all.
Quotes such as those above tend to suggest this is not a “justice for all” equity-based system, but rather a rigged game designed to enrich those who play in that arena. The ATRA has had some success in highlighting this fact to residents of some past Judicial Hellholes, who have defeated through election those most responsible for the judicial environments in those areas. As the ATRA notes, judges create these situations, so their removal is necessary to fix them. Not surprisingly, costs and insurance rates have subsequently dropped when this has occurred.
My point in bringing this up in this blog is simply to highlight awareness. Quadrant’s clients are involved in the personal lines insurance market – these situations affect their business. We can program any rates that have to be charged, but that doesn’t mean we have to be oblivious to the issues in the various jurisdictions that affect those rates. We need to maintain an awareness of the laws and regulations of the various states, similarly to the companies that write there, but an awareness of the environment also helps. This helps us anticipate upcoming changes that you, our clients, may be getting ready to make in your rates or rating structures.
For those of you who are curious, the 2009-2010 list of Judicial Hellholes, in order of severity (i.e., dishonor) is as follows:
1. South Florida (specifically Miami-Dade County)
2. West Virginia (entire state)
3. Cook County, Illinois
4. Atlantic County, NJ
5. New Mexico Appellate Courts
6. New York City
There is also an annual watch list of jurisdictions that show promise of deteriorating into Judicial Hellholes if remedial action is not taken. The New Mexico Appellate Courts were promoted (demoted?) from this list this year, for example. This year’s watch list is as follows:
1. California (entire state)
2. Alabama (entire state)
3. Madison County, IL (former #1 Judicial Hellhole)
4. Jefferson County, MS
5. Gulf Coast and Rio Grande Valley, TX
Other areas are mentioned for different reasons, either for consideration for the watch list, for suspicious individual verdicts, or for positive developments. For those interested, the report, along with those for the last few years, can be found at ATRA :: Judicial Hellholes 2009.