CATASTROPHIC EVENTS CAN BE MANAGED
| Risk Retention Insurance Services has, over the years, branched into areas beyond products liability. It has found that there are some issues, however, that all types of business should prepare for (and then hope they never occur). |
A catastrophic event is one such area. For our purposes, a catastrophic event is an event that may result in numerous injuries or illnesses from a single cause. For example, in the food service business this could be an outbreak of salmonella originating at your place of business. In the manufacturing arena, there may be a defective batch of products, all in the market, and without a means of tracking the products for a recall.
In any of these cases, the most effective way of minimizing damages is to get out in front of the curve, and locate as many potential claimants as possible. Paying medical expenses (often there is no liability defense for a catastrophic event), is one way to satisfy many of the claimants, and may help minimize the potential for a large verdict against you down the road.
First, by aggressively locating and arranging to pay medical expenses, you are showing the victims that you care, are contrite, and are trying to make things right. People who are hurt and angry are often called … plaintiffs. Whereas, people who are hurt, but not angry, are called … return customers. Certainly some of these people may still sue, but it will be limited to the money-grubbers.
Second, by taking care of the claimants at the outset, you show the juries in the money-grubbing case that you are good caring folks that tried to do the right thing. That way, they will see the plaintiff for the money-grubbing pigs they are, as opposed to the poor innocent victims. (Apologies to the pigs, who are no doubt offended by the analogy of the money grubbing plaintiff to intelligent swine).
Third, by locating as many victims as possible, as quickly as possible, you minimize the “false” claims. Train & bus operators in Chicago are instructed their first duty is to lock the doors in the event of an accident. This prevents people that had no involvement in the incident from making a claim. Similarly, when you identify as many actual victims as possible at the outset, the fake claimants are easier to weed out.
In this regard, it is very important that as you locate the victims, you withhold certain key information. Claimants who were actually present will know the information and those that are trying to jump on the bandwagon will not. Meritless claims, of course, should be denied and well- documented.
We had an occasion to work on a chemical spill at a water park. There were dozens of people exposed, a number of whom went by ambulance to a local hospital. The medical expenses were immediately paid, and certain key information was withheld in fielding calls. The owner of the water park personally went to the hospital to express his concern, and ensured that the ambulance bills were sent directly to his attention for payment. The victims were told where to send their medical bills for reimbursement.
Fortunately, none of the injured needed any more than emergency care (due, in large part to the swift, effective handling at the scene). Some were very upset at the time, but quickly calmed down. To date, not a single such victim has retained a lawyer or filed suit, and a number of “fake claims” were rooted out and denied.
Finally, for many businesses, “catastrophic event” coverage can be obtained for a very small additional charge. This insurance pays for the medical expenses of the victims of a catastrophic event – and it does not count as a claim for liability purposes. Thus, while an insurer pays for the catastrophic medical payments, without a specific claimant pursuing a claim for additional damages, there are no claims reported or reportable to the insurer for liability purposes. This can be very important at renewal time.
Talk to your agent/broker about the availability of catastrophic event insurance, and talk to Risk Retention Services about developing a plan for a catastrophic event. By being prepared for the event, your risk drops precipitously.
ELECTRONIC DISCOVERY HAS ARRIVED
In today’s world, fewer documents are being retained on paper, and more documents are being stored on computer network drives, personal computers, and even “Smart Phones.”
In the good old days, when men were men and women wore skirts, plaintiffs sought documents from corporations and, if they did not exist on paper that was the end of the inquiry. After all, if the documents do not exist, they do not exist. Then entered the computer, where nothing is ever, really deleted. Even if you think you have thrown a document away, it is still may be hidden somewhere on the computer, and can be retrieved by an ingenious hacker or a nosy plaintiff’s attorney.
Our sister company, Risk Retention Services has handled hundreds of lawsuits over the years, and in the past year have noticed more requests for electronic discovery than in the previous twenty years combined.
The risk of having your computer files searched increases with the absence of paper documents that a plaintiff’s attorney believes “must” exist. Surely, they think, you “must” have all of the incident reports for every incident over the past 20 years. You “must” have design documents for a product that was put into service 20 years ago. You “must” have documents showing “why” changes to policies or procedures were put into effect.
Under any of these circumstances, plaintiffs can (and do) seek authorization from courts to get into your computer. This causes a myriad of privacy and other problems. Not surprisingly, the courts have developed rules to address this new form of e-discovery.
First, the court needs to approve a word search that can be performed to identify those files that “might” be relevant. Of course, the same word for a product, event, or circumstance, could also bring up documents relating to accounting, billing, pricing, and other irrelevant or in some situations sensitive and private materials.
This requires an expert in language, as well as computers, to design the inquiry to generate the documents that are relevant, while protecting confidential information and weeding out irrelevant materials. The cost for this sort of inquiry, including the review of hundreds, thousands, tens of thousands or even more documents, can exceed the total attorney fees for the entire case.
This becomes particularly troublesome for the defendant who has produced literally all documents requested, and simply is not believed.
Courts have tremendous discretion in ordering who pays for such a computer inquiry. A growing nationwide trend is for courts to order the defendant company to pay for all costs and fees if the inquiry results in the production of documents and files that the defendant stated did not exist. On the other hand, most such courts have ordered that the plaintiff pay for the entire inquiry if no such documents are found.
These inquiries, of course, are in addition to requests for electronic files that are complied with. For example, instead of producing a paper incident report, it is appropriate to produce the electronic version of the report. But, how is anyone to know if you really produced everything? Establishing credibility with the court early in a case is critical to keeping the situation under control.
The overall discovery rules are unchanged. You must either produce or object to documents requested in discovery. You cannot hide electronic or paper documents pretending they do not exist to avoid the effort of looking for the document.
If everything has been turned over, the plaintiff and his computer guru will not find anything new. Realize that if the computer guru finds documents that you were intending to hide, they will not only get the documents, but you will likely pay for their efforts.
UPDATE FROM THE CRYPT
We talked in the last newsletter about how much more expensive, and less effective, a case can be prepared when proper controls are absent.
Since then we had two cases arise which illustrate the point perfectly. Both are in rural communities in the northwest and both involve similar products liability claims. One is a claim controlled by RRS and the other by an attorney the insurer hired. Damages are similar, theories of liability are similar and the numbers and types of witnesses are similar.
The RRS attorney has estimated that the case can be tried for a budget of $35,000. The insurer appointed attorney needs a $160,000 budget. Additionally, the RRS attorney has successfully tried several cases involving similar products and the other has not. And so it continues.
