Can predictive analytics tame runaway verdicts?

When it comes to nuclear verdicts, Alexia Cruz, the senior vice president and claim general counsel at Travelers, says that insurers need to help their clients pick the right cases to settle and the right ones to take to trial.

“Every bad verdict arguably drives up the cost of future cases,” said Cruz, who has been with the insurer for 18 years. “So it’s imperative that we try and win these cases.”

Cruz, who leads more 1,300 legal professionals dealing with claims issues at the insurer, spoke on the topic of social inflation yesterday with Joan Woodward, the head of the Travelers Institute, the educational and public policy arm of The Travelers Companies, and Harold Kim, the chief legal officer and executive vice president for the U.S. Chamber of Commerce and president of the Institute for Legal Reform.

While Kim walked through some of the familiar Chamber talking points about attorney advertising shaping potential jury pools and the growing presence of third-party funders putting additional pressure on business, Cruz offered some unique insights into how insurers are approaching questions surrounding jury verdicts of $10 million or more.

The conversation started with Woodward citing data from our colleagues at the National Law Journal. From 2015 until 2019, the average verdict in the NLJ’s top 100 verdicts more than tripled from $64 million to $214 million. Cruz said that the rise in runaway verdicts is something she and her colleagues are watching closely.

“What comes to mind first is we really need to be picking the right cases to settle and pick the right cases to take the trial,” Cruz said in her opening remarks. Runaway verdicts are often rooted in large awards of punitive and other noneconomic damages, and such awards are often tied to bad facts or bad testimony.

“A bad witness or bad testimony from your client or insured can inflame the jury and push them to award astronomical amounts as punishment,” Cruz said. “So you really no need to know early on in your case how the witness testimony or the bad fact is going to be received so you can understand if it’s a case to try or to settle.”

Reptile theory

Cruz also said that defendants need to identify cases where plaintiffs attorneys might employ the so-called “reptile theory,” an approach that tries to engender a fear or anger response from jurors to get them to think of the verdict in terms of punishing the defendants. Cruz said that in safety, negligence or security cases where the reptile theory might be at play, insurers and their clients need to make sure depositions don’t veer into hypothetical questions about what could have been done rather than focusing on what was done and whether it met the required legal standards.

“Because you’ll see those same questions at trial. That’s how they build the case,” Cruz said. “So it’s better not to provide the testimony at all.”

Cruz was also open in calling for audience members to support members of the defense bar seeking seats on the bench, especially in venues where judges are elected. “We need better state judges,” she said. “The plaintiffs bar continues to pour money into these local state races and has been very successful in getting plaintiff-orientated judges on the bench.”

Cruz also said insurers and their clients need to continue to learn about opposing counsel through data and analytics so they can counter their tactics before trial. She said motions in limine can be a great tool to keep out certain statements and testimony that plaintiffs plan to bring into a case. For instance, she suggested if there’s thought that opposing counsel plans to mention numbers early in voir dire to try to anchor a number with potential jurors, defense lawyers could file a motion to try to prevent the plaintiff’s counsel from mentioning the numbers at all.

Cruz also said defendants should use the growing volume of publicly available case data, and the analytics being developed to parse it. “This data will enable you to understand a certain judge’s propensity to grant a certain type of motion, how a certain attorney matches up with a certain judge, the history, the outcomes,” Cruz said. “We know the plaintiff attorneys keep data files on carriers like ourselves, and defense counsel. So it’s really critical that we are proactively looking at ways we can use available data to understand our opponents as well.” Cruz predicted that analytics eventually could be “instrumental” in helping defendants identify cases that could yield runaway verdicts much sooner so they and their insurers can put the right amount of resources towards those cases upfront.

Cruz added that plaintiffs lawyers currently are “really focused” on making policy limit demands that pit the insured against the carrier and even excess carrier against excess carrier. But when asked if carrying lower policy limits could make a company less of a target, Cruz said that plaintiffs are typically targeting deep pockets. “I wouldn’t recommend having lower limits and taking your chances because then there could be the attempt to go after assets of the corporation or company,” Cruz said.

And Cruz says some venues are more likely than others to yield large verdicts than others. She and her team saw initial verdicts in Los Angeles County, but there have been pockets throughout the state of California. She said the same goes for traditional plaintiff strongholds in Texas, Florida, New York and Illinois, with the larger verdicts there recently spreading beyond Cook County. Of late, Georgia has yielded some large verdicts, she said, and Philadelphia remains a “challenging city.”

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• Drivers of social inflation for the insurance industry
• The effects of rising claim payouts after recent hurricanes