Virginia Lawyers Weekly VA Lawyers Weekly
Ever wonder what happens after the headlines trumpeting the latest huge jury verdict are gone?
Do the plaintiffs actually collect the amount the jury awarded? How often and how much?
Rick Friedman, a Seattle attorney who lectures to trial lawyers on jury trials, estimates that 10 percent or less of personal injury verdicts are fully collected.
He reached that number by extrapolating from a 2009 Department of Justice study, which found that while plaintiffs win about half of personal injury trials, a “win” includes as little as $1 in compensation.
The study also revealed a surprisingly anemic median jury award in tort cases of $24,000.
“That means half of personal injury [jury] verdicts are under $24,000,” said Friedman.
Whether a verdict is reduced by the trial judge, overturned or reduced on appeal by a higher court, or settled for less than the jury awarded, collecting a verdict is a high hurdle for plaintiffs’ attorneys.
“It’s like gambling against the house in Las Vegas. The defendant has every advantage,” said Friedman.
‘Luck of the draw’
Even before filing a case, plaintiffs’ lawyers are looking for the deep pockets and considering the collectability question.
“Your client may have catastrophic injuries and the case may look wonderful on paper, but if there isn’t a large insurance policy to fund a verdict, it’s important to tell your clients that right from the get-go,” said Chicago lawyer Philip Corboy Jr.
That conversation can be commonplace in auto accident cases where plaintiffs’ lawyers complain that drivers are chronically underinsured, or the insurer is insolvent.
“It’s crazy, but that’s the way it works. It’s the luck of the draw and all depends on how much insurance whoever hits you has or how big the company is,” said Robert Eglet, a plaintiffs’ attorney who recently won two huge verdicts against Teva Pharmaceuticals, the largest generic drug maker in the world.
Eglet did not have to worry about Teva’s ability to pay his two jury verdicts totaling $688 million because the company posted a bond. But in the middle of his third trial, Teva settled all of its estimated 80 cases for roughly $285 million.
“There are always motions for remittitur, and punitives are reduced quite often,” said Eglet, whose two verdicts against Teva comprised mostly punitive damages.
The pressures to settle for less than the full verdict are many: your client can’t afford to wait through a long appeals process, the verdict is likely to be reduced or there are legitimate appellate issues.
Paula Sweeney, a plaintiffs’ med-mal attorney in Dallas, estimates that 100 percent of cases settle after verdict in Texas, a state with a healthy menu of tort reform restrictions including damage caps, a bar on collecting if the plaintiff’s contributory negligence exceeds 50 percent, and a new rule that allows future medical bills to be paid on a periodic payment plan, where the unpaid amounts go back to the defendant if the plaintiff dies.
“In malpractice cases virtually 100 percent of the time you are going to settle for less of a verdict than you are entitled to, because the other side knows that when they go to the state supreme court there’s an overwhelming likelihood of turning your verdict around. They’ll reverse, reverse and write zero in the blank,” said Sweeney.
“My leverage is if you take 10 to 20 percent off [the verdict], let’s settle it now and cash it out before we ever get to a hearing on the judgment, because everybody’s going to move for judgment,” she said.
Eglet added that there is pressure on both sides to settle, noting that his verdicts were against Teva, a publicly traded company.
“Look how much in bonds Teva had to buy to cover these judgments. There’s shareholder pressure that they need to settle these cases that are affecting the stock price,” said Eglet.
‘Taking the lid off’
Nicholas Rowley, a San Diego plaintiffs’ med-mal attorney who has won some large verdicts recently, said winning at trial is “just one battle in the war.”
His strategy for collecting a verdict is to drive a wedge between the defendant and the insurer’s defense counsel.
Rowley, who began his career working for a med-mal insurance firm, said many plaintiffs’ attorneys don’t recognize that those interests are often at odds.
“There are competing interests. The defense lawyer wants to litigate and is giving the insurance company a skewed view of the case. The actual insured defendant wants this thing to just go away,” said Rowley.
In a case such as his most recent verdict, which yielded $78 million against a doctor whose malpractice insurance policy limit was $2 million, Rowley typically sends a letter outlining to the doctor “all the things the defense lawyer has done contrary to the interest of the insured,” such as not passing on demand offers and rolling the dice at trial, thereby exposing the insured to a much greater judgment.
Rowley said his post-verdict letters invite the insured to “get on the same team” as the plaintiff to sue the insurance company for the excess verdict.
This strategy is what some lawyers call “taking the lid off the policy,” especially in states like California that have bad faith insurance laws with teeth, according to Friedman.
Rowley said in 90 percent of his cases he makes a claim of negligence or bad faith by the insured against the insurance company.
“Then the verdict gets paid,” he said.
But Friedman said that on a national level, bad faith claims are not available in every case and will depend on the insurance carrier and state law.
Even when this strategy is viable, implementing it can be as long a haul as an appeal would be for an injured, cash-strapped client.
Friedman noted that he has a case in Colorado in which an insurer refused to pay the policy limit of $100,000. He then won a jury verdict of $3.1 million and now is suing the insurer for bad faith.
“Ever since the verdict – for the past two-and-a-half years – it’s been in litigation on the bad faith case,” he said.
