Key Insights on Social Inflation in Workers' Comp
Delve into the realm of social inflation within the workers' compensation landscape. Uncover the causes, impact, and evolving dynamics of this phenomenon, shedding light on the challenges faced by stakeholders in the industry. Explore the implications of societal trends, legal tactics, and the sophistication of claim elements in driving the surge of insurance losses beyond general economic inflation.
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LEGAL CHALLENGES IN WORKERS COMP September 1,2022 JONATHAN L. BERRYHILL BERRYHILL & MITCHELL, PC jlb@law-bam.com www.law-bam.com
SOCIAL INFLATION Buzzword frequently cited within insurance industry press & now regular press Defined: general increase in insurance losses over and above general economic inflation All ways losses increase greater than regular inflation claim costs overall; defense, settlement/judgment amts superimposed inflation per actuaries Generally thought caused by societal trends
CAUSES OF SOCIAL INFLATION? General anti-corporation sentiment (strongest origins in 2008 financial crisis) Erosion of tort reform Changing dynamics of the jury pool Changing dynamics of the judiciary
CAUSES OF SOCIAL INFLATION? Evolving tactics of Plaintiff attorneys Litigation funding alternatives Litigation funding amounts
CAUSES OF SOCIAL INFLATION? Perceived social injustices/social inequality Growing sophistications of claim cost drivers Medical trends/developments Legal tactics/sophistication Active Media Presence of Pltf Attys Increased awareness of verdicts/settlements
LITIGATION FUNDING War Chests Built by prior Verdicts/Atty Fees Class Action Cost Sharing among Attys Traditional Bank Financing thru Loans 3rd party litigation financing (TPLF) Pravati Capital (pravaticapital.com) Class Action spending increased 4 consec yrs 2018 - $2.46 bn 11.1% of all litigation spending Avg return on investment????? Success Rate???? U.S. - Litigation Funding Transparency Act of 2021 (and 2018) S. 840 Introduced, read twice, referred to Comm on Judiciary https://www.congress.gov/bill/117th-congress/senate-bill/840/text 400% 96-98%
IS SOCIAL INFLATION REAL? 2019 Verdicts $8bn Janssen Pharm (mkting of antipsych Risperdal) $2.055bn Monsanto (RoundUp) $151m Ford Motor Co. (prod liab) 2018 Verdicts $4.69 bn Johnson & Johnson (talcum powder) $289 m Monsanto (RoundUp) $117 m Johnson & Johnson (talcum powder) $68 m C.R. Bard (pelvic mesh)
IS SOCIAL INFLATION REAL? Settlements 1998 2016 2013 2016 2020 2001 1999 2021 $206 bn Tobacco Master Settlement $20 bn BP (Gulf oil spill) $16 bn Bank of America (housing mkt crash) $14.7 bn VW (diesel emissions cheating) $8.0 bn Purdue Pharma (oxycontin mktg) $7.2 bn ENRON (accting fraud) $3.76 bn Amer. Home Products (fen-phen) $2.7 bn Boy Scouts of America (sex abuse)
IS SOCIAL INFLATION REAL? Class Actions Gathering now https://topclassactions.com/category/lawsuit- settlements/investigations/ JUUL vaping lung damage and heart problems Hernia mesh defect Car dealership text spam (unwanted cell calls/texts) Paraquat (weed killer linked to Parkinson s) Firefighter foam (AFFF aqueous film-forming foam) Church Sex Abuse (Catholic, Mormon, etc.) Autism from Tylenol during pregnancy (acetaminophen) Samsung, LG, Whirlpool refrigerator defects 3M Ear plugs
IS SOCIAL INFLATION REAL? Roundup(Glyphosate) alleged to cause non-Hodgkins Lymphoma 2018 California verdict $289m 2019 California verdict #1 - $2b punitive damages 2019 California verdict #2 - $80m (reduced by $55m) 2021 California verdict #1 defense verdict (Burkitt s syndrome) 2021 California verdict #2 defense verdict (non-Hodgkin s lymphoma) 2022 - Status Tens of thousands of lawsuits filed Monsanto no longer exists (sold to Bayer AG for $63b in 2018) Monsanto/Bayer collectively paid approx. $11b to settle 100k lawsuits nationally Avg settlement - $5k to $200k Medical Causation Due to conflicting studies, no definitive answer can be given as to whether or not Roundup causes cancer. The World Health Organization s (WHO) International Agency for Research on Cancer (IARC) concluded in 2015 that glyphosate is probably cancinogenic. In contrast, the U.S. Environmental Protection Agency reported that glyphosate is most likely not carcinogenic four years later .[t]here is no conclusive answer to whether or not glyphosate causes cancer..
SOCIAL JUSTICE ORGS Civil Rts Legal Defense Immigration Rts Criminal Justice Capital Punishment Community Orgs Disability Rts Elder Advocacy Children Advocacy Feminist/Women Advocacy LGTBQ Family Planning Environmental
SOCIAL JUSTICE ORGS Old Stalwarts ACLU Southern Poverty Law Center NOW (Nat l Organ of Women) NAACP Rainbow/PUSH GLAD Newcomers (too numerous to list) BLM (Black Lives Matter) Equal Justice Initiative The Bail Project Fair Fight Color of Change
AL Workers Comp Stacked Deck Against Employers Alabama s WC Act is to be liberally construed to accomplish the beneficent purposes of the Act All reasonable doubts MUST be resolved in favor of the Employee
AL Workers Comp Pendulum swing on the bench across the state Trial judges are coming from: Plaintiff Attorneys District Atty/Prosecutor Offices Rarely Defense Attorneys Never Traditional Business Owners Appellate Review Standard Will NOT look to the weight of the evidence Will see if there is any evidence to support the findings of the trial court
COMBATING THE STACKED DECK SAFETY Training Enforcement EFFECTIVE CLAIM MANAGEMENT Attention to Detail Anticipating/Planning; Not Reactive SMART DEFENSE OF LITIGATION Sound Economic Decisions Choosing Battles Wisely Venue
