Brent – 00:00:01:
Welcome to Freight Nation: A Trucking Podcast, where we explore the fascinating world of trucking and freight management. We dive deep into the freight industry and uncover why the trucking industry is more crucial to our country now than ever before. Stay tuned to uncover the driving forces behind successful trucking businesses and hear from the hardworking truckers and leaders who keep the world moving. Let’s hit the road.
Brent – 00:00:28:
All right, welcome back, Freight Nation. As I like to say, thank you so much for giving us your time and attention. You get a lot of places you can put it, and we at Truckstop are so thankful that you would give us your time to listen to something. I hope today is going to be really eye-opening to you and educational. There’s many times, and you guys know this at Freight Nation, I love someone’s story because that’s what motivates them to go make change in a marketplace. But this today is a little bit, we’re focusing on a topic, but we brought two experts on today, to talk about what’s going on in the sort of litigation part or the legal part of the marketplace. And we’re going to kind of focus on a term that we’re going to kind of maybe cut apart a little bit, the nuclear verdict of what goes on inside of transportation, where a lot of these legal outcomes have really changed the bottom line of transportation companies. And we see this at Truckstop. I mean, you guys know that we have a tremendous focus on the carrier marketplace and protecting that one truck, two truck, five truck on our operator operation. But we also have a lot of small fleets that deal with those too. So this nuclear verdict thing is something that if you don’t know a lot about it, Freight Nation, please, please listen all the way to the end because we brought two experts on today to help you understand more about the marketplace and understand more about how these can impact your business. It’s all about your business bottom line here at Truckstop, and we’re thankful that you could be a part of it. So joining me today is the gentleman here. You probably see him in the red jacket. You probably see him online on LinkedIn and other places. I just smile at his personality. That’s Matt Leffler, The Armchair quarterback. He’s also the founder of Leffler Technologies. Matt, thanks for joining us today on Freight Nation.
Matthew – 00:01:58:
Brent, it’s great to be here. I am the Armchair Attorney. I have spent the last 15 years…
Brent – 00:02:03:
Armchair quarterback. I did it again. I love it. The Armchair Attorney. Look, that just shows you my love for football. The Armchair Attorney. Sorry about that, Freight Nation. The Armchair Attorney. I’ll say it 10 times, man. I’m so sorry.
Matthew – 00:02:16:
It’s no problem at all. I am so excited to be here. I’m a third-generation person in the transportation industry. My grandfather used to haul grain in central Illinois. My father worked at Roadway and started his own maintenance company. And I have been in the business of helping trucking companies navigate complex legal challenges, including this stuff around nuclear verdicts. So thank you for having me on the program. I’m so excited to have this conversation today.
Brent – 00:02:37:
Yeah, man. Thank you so much. And Freight Nation, we’ll also talk about Matt’s sort of passion for the technology in the marketplace. Well, he owns a company called Leffler Technologies that deals with those things in the market. So also joining me, you can’t talk about nuclear verdicts without talking about the impact to the bottom line of the insurance marketplace. And joining me today and joining us today on Freight Nation is Brandon Minert. He is the President of United Commercial Insurance out of guess where? He’s sitting there. He’s out of Boise, Idaho, which is very important at Truckstop, because we are an Idaho based company. And even though we do business all over the United States and Brandon, thank you so much for joining us today on Freight Nation.
Brandon – 00:03:13:
Yeah, I appreciate the invite. No, we’re excited. So we have these conversations with our customers every day. It’s nice that we can finally record it so that more people can get it at the same time. And so excited to talk about it and something that we deal with quite often.
Brent – 00:03:26:
Thanks for saying that, Brandon. The purpose is to bring on experts, Freight Nation, for you to listen to people that talk about this every day. This is what they do for a living and for Truckstop to bring that to you so you can be more educated in your business. And Brandon has a tremendous insurance background. Matt has a tremendous legal background being the Armchair Attorney. So, hey, I won’t miss it again, man. Nothing like screwing up, but it’s okay, man.
Brandon – 00:03:51:
When you said Armchair quarterback, that sounded okay to me. That’s the phrase you always hear. So it’s tough to reprogram.
Brent – 00:03:57:
Oh, I know it.
Matthew – 00:04:02:
I like alliteration. So armchair attorney, got the domain, got the law firm. Alliterations where it’s at.
Brent – 00:04:08:
Well, you know, that fun thing about today’s world is that you can get your media anywhere. And so this is what we love. We’ve been enjoying doing the Freight Nation podcast because this can be sort of recorded and you can watch it anytime you want to. So we’re excited to talk about this. This is an important topic. So both you gentlemen have backgrounds, and experience in transportation and in supply chain and how we’re connected to everything. And I know that when I did some of my research on this, it talked about the two different types of the segment that gets the highest rewards are like product liability cases. The second, and this is why it’s important, Freight Nation, are auto liability issues going on with legal cases. So auto and trucking is in the middle of auto is the second most. So this is not like you’re way down the chain. This is why this is so important. You guys, Freight Nation, you’ve probably seen the news out there with some of the cases that involve very large players in the market from Schneider to Warner that involve accidents that have happened in legal cases. And sometimes when you read, when you read the filings, it appears that there’s no fault of their own. But a jury case will award something to the plaintiff because of the mitigating circumstances that you don’t necessarily see in the headlines. And so we’ll talk a little bit about that. We’ll talk about the impact on insurance. We’ll talk about the ways in which you can prepare your business, whether you’re a single truck owner operator or whether you own a thousand trucks, how you can prepare your business to deal with them when they come up or prevent them as you go down the road? All right. So let’s kick this thing off. All right, Matt, I want to start with you. You and I were talking about just the phrase nuclear verdict. All right. So I want to start here because Freight Nation, Matt informed me that that’s a made up definition. So Matt, talk a little bit about that. Brandon, jump in there if there’s another part you want to add to it. So talk a little bit about the sort of ideology behind the words nuclear verdict.
Matthew – 00:05:58:
Yeah, thank you very much, Brent. I appreciate that. So for the folks who are watching us or listening to this recording, what I’ll say is nuclear verdict is a term that was invented by the industry. It’s not a legal term. Lawyers aren’t sitting around saying, oh, we have a nuclear verdict on our hands. The classical definition that we have in the industry of a nuclear verdict is a case that has over $10 million of liability. That is usually around a wrongful death, though it could be around some sort of catastrophic injury. And what ends up happening is when you use this phrase, it’s designed to get some sort of emotional reaction. You think, oh, there’s someone who’s been in a nuclear verdict. It must be like Hiroshima or Nagasaki. And that’s not the case. It is a tremendously painful experience, both for the people who are injured and for the motor carriers that have to experience these things. But this term nuclear verdict is, again, not a legal term. It is a term used to describe something over $10 million. And the question of how much is a human life worth? Is something that the jurors often decide. But we know about the medical expenses people have and how long they might be in the hospital for future medical care. And so that’s why these numbers are so astonishing. But I’ll use a statistic we talked about before. But between 2010 and 2019, we’ve seen wrongful deaths, these catastrophic accidents, increased by 43%. We are living in the most distracted time in human history, not just passenger vehicles being distracted, but truck drivers being distracted. So that’s kind of the origin of the term nuclear verdict. And what it really talks about is when something happens and the number of liability damages reaches that $10 million threshold.
Brent – 00:07:33:
Hey, Brandon, real quick, I want you to comment on that. But I want you to talk about a little bit also on the number of cases and how it’s increased within the marketplace.
Brandon – 00:07:42:
On my side?
Brent – 00:07:43:
Yes, sir.
Brandon – 00:07:44:
Yeah, so certainly it’s increased significantly. I think to talk about what Matt’s discussing from a term that communicates really, really heavy, I think, situations, right? And so from our perspective, I’m fine with the nuclear portion just because our customers can understand, hey, you don’t want to be involved in that. That’s something you always want to stay away with. When I first started 12 years ago, 13 years ago, it was part of the industry in that occasionally these cases happen. And rightly so, because if you’re in a situation where you’re on the freeway and you get hit and it causes massive amounts of damage to, let’s say you have your whole family or a lot of vehicles, okay, so that’s going to be a situation that’s going to involve a lot of liability that could raise over the 10 million. But along with the nuclear verdict, there’s another term that’s frequently associated with it, and that’s reptile theory, where the plaintiff’s bar or an attorney, they’re looking for specific factors of a case that they can raise into that $10 million range. And so they’re looking for the right victim, they’re looking for the right company to go after, and they’re looking for the right scenario. And so this reptile theory, if you never heard about it, trial attorneys or the plaintiff’s bar, they look for ways to make the jury sympathetic to the victim. And they kind of play on your reptilian mindset that you’re like, hey, I wouldn’t want to be in that scenario. I wouldn’t want to be the victim. I wouldn’t want to have my family affected or my long-term health affected this way. And so, yeah, they have to pay for that. And so, because of that game plan that is widely accepted, that the attorneys are having conferences every year to discuss this and their training towards this, the number of cases has skyrocketed. I think from that original billion dollar verdict in Florida in 2017 or 2018 on, I mean, I guess I don’t have the exact numbers, Brent, that you can talk about it, but they’ve gone up substantially. And it’s not just the market naturally trying to correct these accidents. It’s a specific play on finding the scenarios, going after those scenarios, and then actually getting financing for the scenarios by these third party out private equity lenders that are financing the attorneys that are getting in and out.
Brent – 00:10:01:
Hey, Brandon, hold on to that one because I want to talk about that. I’m glad you brought up reptile theory because I just learned of that. I know that Matt has a lot of experience with understanding that philosophy or that tactic you might take.
Brandon – 00:10:14:
Matt worked with attorneys. He knows reptiles. He knows like lizards and snakes in downtown Chicago.
Matthew – 00:10:22:
Absolutely. I’d like to kind of explain how reptile theory works so that a motor carrier can understand this.
Brent – 00:10:28:
Yes, please do. Please do. All right. So hold on, Matt. Hold on. Freight Nation, get ready because you’re about to learn something new. You already learned to understand the nuclear verdict, but this thing is unique. And to understand it, it should be really beneficial to you. So jump in there, Matt.
Matthew – 00:10:42:
I appreciate that. I like to look at this as kind of educational and entertaining. So I want to make people understand what this term really means. So reptile theory, again, is not a legal term. What it really boils down to is when you have a catastrophic event, whether it’s the truck driver who’s at fault or it’s the passenger vehicles or the four wheelers out there, the question is, who’s having the worst day? Is it just the driver having a bad day and we need to reconcile that? Or is there some way that I can show there’s a pattern and a practice within that overall motor care that says, no, no, no. This wasn’t just Joe’s bad day that had this thing happen. No, this was the institution having aligned itself to do things that are fundamentally unsafe. I think this idea of how you go above the driver into the company and trying to show this, again, pattern and practice is about saying, what are your safety standards? How do you encourage drivers, incentivise them to do things that are safe? And how do you deviate from those things? Many plaintiff attorneys are general practitioners. We do wrongful death. We do product liability. We do slip and fall. But this truck crash stuff is more professionalized now. Now, plaintiff attorneys are able to understand how many hours of service violations do you have? What’s your accident record? What is your drug and alcohol policy? And if we’re able to find out that you have made a mistake in your overall practice, in how you mitigate safety and maintenance, that is the hook that we use. And we are not out there saying this driver is the villain. They have gone too fast. No, we’re saying the driver is also a victim. The driver is a victim of their hiring entity who knows the risk, knows the liability. And so this whole idea of reptile theory is to go into the jury room and say, this happened to this person, but it could happen to you. It could happen to your mom or your dad or your kids. And do you want them on the road? And if you want to mitigate this type of liability as a professional driver or as an organization with a bunch of professional drivers, it is to create safety standards and never deviate from them, to make sure you’re following your practices because the minute a plaintiff attorney sees the ability to go after you, they will. And that’s what these verdicts are all about. There’s compensatory damages. That’s the money you pay to pay for the healthcare or the surgeries, whatever. But this other piece, this punitive damages, the punishment damages, that is all about pattern and practice. And so we as an industry need to understand that it’s not just that one day that matters. It is the work that you’ve done for the last six months or even 24 months. And insurance folks understand this. We are focused on making sure we can help you mitigate that risk. But that is reptile theory. It’s not necessarily anything new. It’s about finding ways to bridge the gap between the plaintiffs, individual who’s been hurt, and that jury to tell them the story.. You will be in the same situation. Let’s make it never happen again. That’s what reptile theory is all about.
Brent – 00:13:50:
Yeah, it was something that kind of opened my eyes when I, just the idea that human nature, we retreat to safety. And so how can you give that safety to others? And so using that as a legal tactic to help a jury be sympathetic to a certain situation and make sure that, and using them to help make sure that doesn’t happen again, as you just mentioned, Matt. So Brandon, I appreciate you bringing up reptile theory. That was super cool. I certainly hope, Freight Nation, that you understand. Is there anything you’d add to that, Brandon?
Brandon – 00:14:17:
Yeah. So to make it for me, I always see when you see a billboard on the side of the freeway, that’s reptile theory. In my opinion, that’s what I related to. And the more they’re advertising, they want these accidents to happen. They want to sift through. They want people to call them and describe the situation. They want to do some basic research on the company. And that’s that they’re just looking for cases that fit. And then once they find them, if they can get them, they need financing because they could go on for a while. They can get outside financing, which is, I think the whole point of this conversation may be, you know, how do we get the abuse to go away? I think some of these cases are needed. Some of these cases, like if you remember the specific case, the Walmart case, we probably, we don’t have to go into that. But some, there’s some large cases that happen that are significant and they do show lapses in safety and training and hiring and all that stuff. And that’s fine. And, those are needed. But the abuse of it is what’s driven the insurance, in my opinion, all the way just the insurance portion through the roof, that’s very difficult for these owner operators to keep up with thosewho aren’t going through it.
Matthew – 00:15:24:
Can I push back a little bit on this? With all respect, no one wants to see these accidents happen. I’ve been a defense attorney for trucking companies. And to see people go through these cataclysmic events is awful. I’ll also mention, and this is people don’t really know how lawyers get paid. Usually it’s either transactional, hourly. But in cases of injury, it’s all contingency, which means I get nothing unless I win something. And you, the person who’s been injured, you’re probably going to go bankrupt before we get to a judgment. And so there are these institutions that do finance people based on the understanding that they may end up winning. But the big thing is lawyers don’t make money and plaintiffs don’t make money unless they win. And so the thing I want to also kind of emphasize for folks is we as an industry are not doing ourselves a lot of favors. If you look at the FMCSA records on vehicle maintenance, as the example I like to use, the average out-of-service rate in this country is 21.6%. That means one in five commercial vehicles on the highway at any given moment would not meet the minimum threshold for safety for a DOT. Now, maybe the airlines are rubbing together or there’s a light out. Sure. But we need to get better. And I’d say that as time has gone on, the lawyers have gotten better at advertising. I’ll tell you, billboards are terrible advertising structures. SEO is so much better. If you get hurt and look for truck crash lawyers, you’ll find a lot of stuff. And so lawyers have tried to find ways to advertise their services. But at the end of the day, these accidents are increasing, fatalities are increasing and ultimately inflation of medical care as we all know, with our insurance every year goes up. Medical care is very expensive. And so I’ll use this kind of a short kind of story. I had a client many years ago who was a trucking company owner operator. And they changed lanes and they inadvertently knocked a small passenger vehicle into a telephone pole. And that injured plaintiff destroyed her pelvis and broke her leg. And we went to trial. We went into litigation and our insurance company tendered the policy. Many people don’t understand this, but in the United States, the minimum threshold for insurance to operate interstate is $750,000. That number was established in 1980. That’s like a week or two weeks in the hospital. And ultimately the whole case was settled for under a million dollars. I remember talking to the motor cure and he said, well, what happens next? I now have to pay this money from the insurance proceeds, but am I done? No, no. Your liability for the insurance company ends at the tender policy, the $750,000. The Delta that’s on you. And you’re going to probably sell your truck, sell your car, sell your trailer, and then maybe even have your house repossessed or foreclosed upon because you will pay the victim the amount that has been established against you, whether you have insurance for it or not. So in this industry, we have, in my opinion, unsafe equipment at a level we shouldn’t have and insurance policies that are not enough for the liability risk that we have. So just like, as we look at this, this is a very difficult conversation because insurance is very expensive for motor cares, but we have to know as an industry, really what the risk is we’re putting out on the roads.
Brent – 00:18:30:
Right. So thanks, Matt, for pushing back a little bit on that. I don’t think Brandon meant that people are wanting it. They’re just preying on people that once it happens. And so..
Matthew – 00:18:38:
We’re not monsters. Like I know, a lot of lawyers.
Brandon – 00:18:40:
Ah, ah, prove it. Prove it.
Brandon – 00:18:43:
I think.
Brandon – 00:18:44:
Yeah.
Matthew – 00:18:46:
We’re not looking for misclassification cases. We’re looking for personal injury, but that’s the business that we live in. I mean, there’s no insurance policy that you buy that takes care of legal fees. You really have to go out there and find a lawyer on your own. And so again, it’s an interesting thing. I have to help my brethren in the legal profession. I tolerate most of them.
Brent – 00:19:03:
So let me bring this up because Freight Nation, the reason why we’re talking about this day, is because it’s increased dramatically. I’ll read a couple of things to you. From 2010 to 2018, and Matt hit on this just a little bit, the average verdict for trucking-related accidents rose from $2.3 million to $22.3 million. $2 million to $22 million. Last time I checked, that’s a pretty big increase. Now, between 2020 and 2023, that $22 went to $31 million. Now, here’s the frequency because, Brandon, you spoke about the frequency. Trucking litigation between 2006 and 2019 showed 26 cases over $1 million. This is from the US Chamber of Commerce. From 26 cases over $1 million from 2006 to 2011. However, the last five years of the data set, so 2015 to 2019, 300 cases over $1 million. So, a massive increase from 26 to 300. The point being, and this is what Brandon and Matt were talking about, when you go down the highway and you see those billboards, they’re there for a reason. They’re there to create a sympathetic audience. They’re also there to create an opportunity for these cases to be brought to these attorneys. I live in Tuscaloosa, Alabama. They’re a freight nation, and I drive to the airport in Birmingham. It’s about 60 miles away. Between my exit 73 at the airport, which I think is exit 120, there are six truck stops, and there are 100 billboards that say, this law firm, call me. And so my point to you about this is when you see these things, you’re probably driving in a state that’s sympathetic to these large verdict cases. So, Matt and Brandon, freight nation, are just trying to set the paradigm in which you, as a truck operator, are operating in. So, the environment that you’re operating in. So, Brandon, I’d love for you to comment. Obviously, for the insurance part, your job is to protect them. Matt, I know your job is to do that, too. Your job is to protect a trucking company as well. But from an insurance standpoint, insurance is protection, right? So, talk a little bit about the environment in 2024 that we’re in, and how you guys, as an insurance, look at the environment and the protection of that environment.
Brandon – 00:21:09:
Yeah. Gosh, it’s such a big question. I think the hard part about insurance has always been, insurance is an expense. It’s not an asset. And you don’t want that percentage of your overall budget on insurance to continue to rise. You know, it gives you value when you need it, but you typically don’t want to use it. So, to continue on with the conversation, you can’t really be reactive anymore. I don’t know if you ever could be reactive. You really need to be proactive. And there’s a lot of resources out there to be proactive. Insurance carriers, if you’re with an established, certainly a trucking insurance carrier, they want to educate you. They want to help you. They need to be on the same team as you in the event of an accident. And potentially, or more beneficial, they want you to be operating in this space or let’s see, they want to prepare you to operate throughout the year with the option of this situation possibly coming up. There’s one of our carriers, they identify or they train their underwriters to identify these cases. And they use the term reptile theory cases. And so, when they identify it, the carriers should hopefully submit the claim within 24 hours or as soon as possible so that they can identify these situations early. And they are very, very, very proactive. The good carriers are very proactive in saying, we’re going to jump in, we’re going to talk to the victim as quickly as possible, help them out as best as we can and get this off the books as quickly as possible, right? And so, they want to work with the carrier to say, look, help us, prepare yourself, prepare your customers. You can’t do anything to replace culture. And this is something that’s so very basic. The culture of your company will solve, I would say, 90% of the problems that you’re going to have. And you can’t get away from that. The culture of your trucking company has to be, I want to get home safe, not just for me, but everybody else on the road. If you don’t have that, there’s nothing that you can do to prepare yourself or prepare your drivers because it’s going to happen. And so, I guess, and to operate in 2024, if I were to look at, let’s just go through a few of the states. There’s only 10 or so states that even have some sort of reform or tort law that helps or is more beneficial to the insurance carrier. So, for all the other states, you’re going to be in a situation or you could get yourself in a situation where you’re going to get underwater. And if you’re a small carrier, you’re out. That’s it. I mean, you don’t recover from that. And hopefully, it’s not tied to your personal assets, because if that’s the case, you’re toast. And so, you have to be aware of it. And there’s ways, there’s a strategy that you have to be proactive. I think some of the ways that a few companies have described it when they’re training carriers on this is the whole point of nuclear verdicts or reptile theories. The plaintiff’s bar, they want to be up 50 to 10 at halftime because there’s this cycle that we’re stuck in, which is sue and settle, sue and settle, sue and settle. That’s what they really want. Nobody really wants to go on for three or four years on this battle. The cases that Brent was talking about, I’m sure the number of cases or maybe even more that are just settled before it even gets there. And so, anyway, to break that cycle, there’s a lot of things that you can do proactively to help out the insurance company, to help out everybody on your side. Go for it, Matt.
Matthew – 00:24:49:
To jump in with that, I think for everyone who’s listening or watching, time is of the essence. This is what we’re talking about is what to expect when you’re not expecting. Or put another way, if you fail to plan, plan to fail. There is so much that can be done in the initial parts, even before an accident ever happens. That culture that Brandon mentioned is so important. If you teach your drivers that doing pre and post-trip inspections and red flagging things that are dangerous and they jump in and help out, that is how you establish as an organization your commitment to safely moving freight on time and on damage. Driving a truck remains one of the top 10 most dangerous jobs in this country. So we talk about general liability insurance. Workers’ comp is just in that same bucket, folks. You want to mitigate your risk. And so today’s modern technologies that are there to help you understand your liability, from telematics to ELDs to driver-facing cameras or outward-facing cameras, collision avoidance systems, that data will be subpoenaed by somebody. It will. And so building up the case of what it is that you do as an organization is so critical. And bad news can’t wait. If you’re in an accident, you should be working with your insurance company to make sure you have a plan. Who do you call? When do you call them? How do you escalate? And follow that the same way every single time. I want to kind of put a little thing for everyone to always know is, in the world of transportation and any liability, right? Most things settle. 90% of all cases, I mean 95% settle before they ever see the light of a trial. But we have a thing called joint and several liability. What joint and several liability means? Is it if you’re at fault for a portion of the risk that took place, the injury that took place? Not the whole thing, but a portion of it. You’re still on the hook for all of it. That’s how joint and several liability works. Every state’s different. Sometimes they say if you’re more than 50%, there’s one thing. If you’re under 50, there’s a different thing. But in almost every accident that I’ve ever encountered in my entire career, there’s multiple people who’ve made mistakes. Not just the truck, not just the motor carrier, not just the drivers. Everyone makes mistakes.
Brent – 00:26:49:
Hey, Brandon, before you jump in there, I want to hit on something because Matt hit on it and you hit on a little bit. You talked about some of the safety measures that could be taken by an operation, a trucking operation. It used to be back in the day, if you didn’t collect the information, you weren’t liable for it. But I’d like for you guys to talk about, are you liable today? If you could have or should have been collecting this information, you’re liable for it. Talk a little bit about that because I think it’s a little bit some of the things I’ve heard just as tangentially in the past.
Matthew – 00:27:19:
No one has a rule yet as to what is the best practice. Very state to state, there’s a lot of ambiguity. But the best thing to do is work with your insurance providers and work with your experts to say, what is the state of the art today? Outward facing cameras, you have to have them. FMCSA isn’t mandated. If you don’t have driver outward facing cameras, you are at a disadvantage. Driver facing cameras is incredibly controversial. Some companies will do them. Some companies don’t. Owner ops generally don’t want to do it. But that is absolutely the future in the next five to 10 years.
Brent – 00:27:48:
Right. Certainly.
Brandon – 00:27:48:
Yeah, I would agree with that. For me, like we talked to our carriers, there was one carrier that said they would only write your policy if you had a forward facing and a driver facing camera. And a lot of guys, I would say 6 out of 10 would just say absolutely no to that. And then the other four guys, they didn’t really care after a while, right? Like, so once you get used to it, you get used to it. I actually see it as a benefit. Certainly if you feel like, hey, it’s not me, that’s the problem. It’s everybody else. Well, this is sort of the proof of that, right? You’re not on your phone all the time. You’re not distracted driving. I don’t have any problem with that. When an accident occurs, there’s actually a lot of information you could collect that I thought there was an attorney that gave a presentation at Insurance Conference the other day that said, look, some of these are staged. Some of these claims accidents are staged and that’s a part of it. And so some of it is the driver could go over to the vehicle they hit and take some pictures and do some other things. And there’s some strategies on collecting information at the scene of the accident of the other person, right? And I think the defense attorney, they want everything because they want to have some material that they can throw the other way and say, look, you didn’t do this or you didn’t do that and kind of be on the offensive on that way. So I guess to the collection of information, I think the more typically the better, certainly if you feel like if you’re not the problem, everybody else is, which is a common thing that truckers say, this is the way to prove that.
Brent – 00:29:05:
Well, thank you for that, Brandon. All right. So I want to ask a question about this because this is important in the spot market where Truckstop is and our broker and carrier customers operate. So when we say nuclear verdicts and we look at the companies that are involved, usually they’re large operations, right? I realize that the plaintiff’s attorneys go after where there’s deeper pocketbooks. Okay, that’s pretty normal. But I’d love for you guys to talk a little bit about the impact that you guys see on the one or two trucking operations or the small brokerage company. And also, I’d love for you to talk on, you know, sometimes brokers feel like they’re a semi-disconnected third party and they’re outside of this potential liability against this. So I’d love for you two guys to talk about what goes on with small carriers and what goes on to brokers. Because we want to make sure we hit the needs of the customer Truckstop.
Matthew – 00:29:48:
I think they go hand in hand. So a small motor carrier is going to have a very small insurance policy. Typically, you don’t see a lot of smaller owner ops carrying five million or ten million dollars of liability policy. So what ends up happening for the plaintiff attorney as they put their reptile hat on, they say, who else can I go after? Who else can I target? And that is often the broker, the C.H. Robinson, the TQL, the Echo. And they say, look, you have millions of dollars. I’m going to figure out whether you hired this motor carrier, negligently. Did you make the wrong selection? What was your process? And many brokers, I’ve represented over the years have thought inadvertently that they couldn’t be held liable. They were an arm length transaction. They only care about price, route and service. They’re not in the safety business. They’re not in the validation of this motor carrier’s behaving properly. But the answer is, can a broker be held liable for the negligence of a motor carrier? And the answer is, it depends. It depends on what federal circuit you’re in. So what ends up happening is there’s this law, everyone calls it FAAAA. It’s F with four A’s in the name of it. And it basically exempts brokers, according to some, from being liable for the negligence of a motor carrier. And in some jurisdictions, like the Eleventh Circuit and the Seventh Circuit Court of Appeals, that’s true. They’re not liable. In other circuits, like the 9th Circuit, they could be liable. So we look at a case where a motor carrier, small motor carrier, gets hit for $100 million of liability, the broker may be tagged. And it hasn’t gone to the Supreme Court. It’s gone up in litigation. There was a C.H. Robinson v. Miller case. There was a GlobalTranZ VE. They’ve tried to get to the Supreme Court to weigh in. And SCOTUS has punted and said, not yet. It’s not right. So we are going to continue to have a patchwork of whether or not a broker can be held liable for the negligence of a motor carrier. And that should make every broker say, Brandon, I want to talk with you.
Brent – 00:31:38:
Yeah, I want to make sure that brokers understand this. I want to make sure carriers understand this, that in the reason that connection may be, and Brandon, I’d love you to jump in here on this, is that it’s because in a sense, the broker chose that carrier to haul that piece of freight. All right, so jump in there, Brandon.
Brandon – 00:31:52:
Yeah, that connection is becoming more and more apparent where the broker needs to vet the carrier. That’s why I think some of the services Truckstop is offering as far as vetting of the carriers and having to qualify is just a really good initial step to say this is a real carrier, right? This is somebody that actually exists. Going back to talk to your initial question, the single truck guys or even one to four guys, how this affects them. So American Trucking Research Institute, right? So they actually came out with it, I think it was just a couple of weeks ago. So they did their 2023 analysis of cost, right? And they came out with the cost per mile. in 2014, the cost for insurance per mile was $0.07. In 2023, it is $0.10. And so it was a 40% increase. The reality is the insurance company won’t go out of business. So they take all the money they spent last year and they add how much claims they paid out. And then they increase their premium to cover what that cost is. They’re not going to go out of business, right? And so the carriers, it doesn’t matter if you had a ton of claims. It doesn’t matter if you were perfect. Your rates are going to go up because they’re going to charge across the board. And so they have to go to every state, declare we’re going to have a 15, a 50, a 60% rate increase across the board, right? And if you’re a carrier, you want these to go down. Like you don’t want the insurance company to pay out a lot of money every year. Because your rates are going to keep going up. And the cost per mile of the insurance line, you don’t want that to be a lot because it doesn’t add any value necessarily to your company. Like drivers, like fuel costs, you know, in adjusting all that. And so our equipment or maintenance and assets portion. And so I guess what I struggle to explain to the carriers when they say, why are my rates going up when I didn’t do anything wrong? You have to look at the macro level. Everybody’s paying out a ton of money in the insurance company. All they do is they look at last year, they increase the rates to cover the cost of last year. They’re not going to go out of business, but it could push the carrier out of business, right?
Brent – 00:33:58:
Yeah, absolutely. So Freight Nation, if you’re a carrier in this, Brandon, thank you for explaining the rationale behind rates increasing. As we all know, everything rolls downhill, right? So whatever happens, as it rolls downhill, the interesting thing, and this is from ATRI as well, the American Transportation Research Institute, which, by the way, if you don’t know this, Freight Nation, ATRI is the research arm for the American Trucking Association. So they are simply a part of that. But the reason I bring this up, Freight Nation, is because of this. If you’re a small fleet, so if you run 10 trucks to 100 trucks and you’re a small fleet, it’s possible that you pay three times more per mile for your insurance because of the category that you’re in and where you are. And this is why I asked Brandon and Matt about the impact to the single truck or two truck owner operator because it rolls further downhill. It always does because, to Matt’s point, and this is where Freight Nation, most carriers don’t think about this and a lot of brokers don’t either. You have to remember, an insurance company is a for-profit business. They exist to make a profit themselves. And so they’re going to do the things to create a profit, just like a trucking operation is going to increase their cost per mile that they’re going to quote to a shipper or a broker to be able to move freight because they’re going to need to cover their cost as well. So, Matt, jump in there on the one truck, unless you have one more thing you wanted to add, Brandon.
Brandon – 00:35:16:
Well, and I could add it after if you want to, Matt, but from the insurance carrier perspective, the premium they collect, let’s say it’s $10,000 for the year. They don’t care if they lose that account because it represents up to a million dollars or 750 or whatever the liability limits, they would rather not collect $10,000 than pay out $800,000 in claims. And so they just don’t care if they lose your account, the one to 10 guys, right? They want to grow. They want to be profitable and grow, but they don’t necessarily shed a tear if you don’t go with them, right? And so you can’t take it personally that way.
Brent – 00:35:54:
Yeah. Matt, jump in there. Then before you start, I want to put this in your mind real quick because we’ve got about five or six minutes left. Make a great comment. I know you will, Matt, but I want to talk about the culture of safety and what are some suggestions from the Armchair Attorney and the insurance expert on what are some of the things that are have-tos and what are some of the things that you would like to have in your operation to build that culture of safety to protect yourself? So jump in there, Matt.
Matthew – 00:36:20:
First, let me just say, this is not legal advice. Nothing I say is intended to be legal advice. I am not your attorney. If you think you need an attorney, you probably do. But let me talk about how this impacts small fleets and how you can adjust it. So to Brandon’s point, these costs go up and we see motor carriers today in this freight recession that we’re experiencing, operating their trucks at a loss. They’re moving freight beneath the operational cost of their fleet. They’re not able to maintain things the way that they are. And how you adjust for this, it’s going to take some time. More capacity will leave the market. But if you are trying to get best practices in place, you need to work with your experts. That’s with your insurance adjusters, your insurance partners, your legal team to say, how are we doing our best to mitigate our risks? This begins with safety and maintenance. Nothing moves unless you’ve maintained it properly. The FMCSA requires one federal inspection. That’s it, one inspection. Most motor carriers of any scale do this maybe three times a year, maybe four times a year, they’re inspecting this equipment. Be vigilant with your DVIRs. When you have drivers that become disengaged with the process of reporting safety and out-of-service elements, you’re setting the table for something that could be absolutely catastrophic. And at the end of the day, you want your drivers to know that you care about safety as much as they do. You want them to get home in the same condition that they left. And that culture requires a lot of grit to make sure everybody is aligned and that this is the job that we take professionally and we will do our best to avoid them. Things you can do, and maybe they’re going to be mandated by the federal government, slow down. The FMCSA is likely to put out a rule, not this year, but likely next year, governing the speed of trucks. The first thing they talked about was 68 miles an hour. Whether they do that or not, we don’t know the number they’re going to settle on. But going slower gives you more time to break, gives you more time to understand the elements that you’re in. And it’s better for your fuel, better for your tires, better for your maintenance. There’s a lot of value in slowing down, even if it ultimately takes a little bit longer to get where you’re going. And, we as an industry, we must do better communicating with enterprise shippers and customers that are end users of retail establishments, how difficult this job is. Moving freight was never easy, even under the best of circumstances. But we want everybody on the road to be safe. And that is likely adopting technologies that people are adverse to. And I look at driver-facing cameras, and as time goes on, automation of driving will be something we’ll see. Ultimately, chip away at the safety issue. But at the end of the day, Brent, the goal is people need to feel empowered to make the safe decisions, not the decision that gets the freight there as quickly as possible.
Brent – 00:38:57:
Yeah, fantastic. Brandon, jump in there with some of the advice from an insurance provider, because I know and I appreciate the Freight Nation, just so you know, and I appreciated Matt saying this and Brandon is going to echo the same thing. If you’re an operation, you need to have legal understanding and insurance understanding of the operation when it comes to the safety of your operations. So Brandon, jump in there and some of your advice to the small operators or medium operators or large operators.
Brandon – 00:39:20:
Yeah. So the main thing, if you’re going to do it in under two minutes, is culture. You have to have a culture no matter what it is. If you wanted to look for two things you could do today, if you do not have a safety manager, if you don’t have that. So if you’re a smaller carrier, one to five, whatever that is, there are two things that you could do. If you have a website and you should have a policy and procedures manual, take out the word safety. Take out the stuff that you have in there that says we’re the safest carrier on the road, where the safest is. Yeah, you do that, but they’re going to beat you over the head in the courtroom to say, you said that you are the safest or that you do this or that you do that. And you did it because it’s difficult to. So that’s two things you could probably do today that would help set you up. Well, it’s kind of intuitive because, you know, it’s first of all, it’s not genuine when you say you’re there to make money, you’re there to operate a company, you’re there to do what it is to take care of your family. But there’s this, hey, we’re the safe guys. You can go with us. Don’t say that. Don’t do that. Okay? You’re trustworthy. You’re there. You’re available. Call us. Right? Check out your policy and procedures manual. You should have it. Okay. Take out anything that really relates that has the word safety or safety focused, all this stuff. Just take that out because it really doesn’t help you in any way. The culture is really what lays the foundation. You need to have that in mind when you’re operating day to day. You want to get home safe. You want everybody to be home safe. But the wording that you have in your marketing, Brent, you’d probably appreciate that. Take that out. I mean, that’s not helping.
Matthew – 00:40:55:
To Brandon’s point, that’s how we show pattern and practice in many cases. We get the CEO on the stand or deposition and say, you have this safety as your number one priority. Yeah, it is. Let’s look at all these instances where you didn’t do that. That doesn’t seem right, does it? And then you tag them.
Brent – 00:41:08:
To kind of wrap this up a little bit. So I’m going to go a little further with what you just said, Brandon. I want you to give your advice on this. So it is important if you’re a one, two truck, three truck operation, and certainly they don’t have an attorney in their pocket. They don’t have, yes, they deal with insurance companies, but it’s more of a, I just got to pay that and that sort of thing. So what you’re saying is that one of the best things you can do is to have some type of outward expression of who you are as a company, but make sure that you are talking about the right things in the right way. So you can show that you are about the right operation, but you’re not saying the wrong things to the marketplace or the wrong things that might get you in court. Is that kind of what you’re talking about?
Brandon – 00:41:47:
Yeah. I mean, less is more in those situations. I mean, you want to put down your policy and procedures on how you hire and you want to follow those.
Brent – 00:41:55:
There you go. Okay. So express those publicly so they can be pointed.
Brandon – 00:41:59:
Yeah. And so you want to, you know, you’re going to hire people that pass certain criteria that you’re following the regulations that are drug testing and, you know, CDL and all this stuff, right? You want to say that, but less is more in a lot of ways because you don’t have to add fluff. Oh, we’re the safest, you know, I guess avoid that, right? If you buy a template policy and procedures, there’s a ton of vendors out there that sell them. Be very careful what you buy because it doesn’t help you at all. I mean, you’re there as a carrier to make money, to haul loads, to haul goods for a fee, to take care of your family. Great. You don’t have to put in the fluff of we’re the safest because it doesn’t help you. It just, it doesn’t get you anywhere.
Matthew – 00:42:39:
I would say also, even just removing those things still won’t make you not liable for something, but that’s the right method to approach it. Here’s what I would say is that if you’re a small carrier and you don’t have access to experts all the time, and most people don’t, you should leverage your local chamber of commerce. You should leverage your local trucking associations, local, like the state level trucking associations are there to help you. And then ultimately, if your partners, like your insurance company or your partners, if they are not giving you good ideas and good pathways to solve this risk management, find better partners. And ultimately, we inspect our trucks for preventative maintenance, inspect your processes and procedures every couple of years, have someone else look at it and say, this is a good path. This is different because the law changes every couple months, folks, it’s going to continue to do this. So make sure you’re staying proactive because if you’re reactive, you will fail. You’re not going to be successful. Ultimately, you have to step forward and find the right relationships.
Brent – 00:43:35:
So be on the offense, not on the defense. Brandy, you want to jump in there?
Brandon – 00:43:38:
Plug on that. So as an insurance agent, there are a lot of different places you can get your insurance. A plug on having a trucking specialist, you can call us or you can call anybody else. There’s a lot of guys that write a truck policy in the middle of their home and auto and RV policies, and they’re out fishing or hunting when the trucker calls and they need your help. They’re like, look, I don’t know, but they still collected the same amount of commission that we do. There’s a partner in the trucking industry that has a specialty in doing that. That actually is a lot more valuable than you may think than going to a friend or a cousin or a neighbor or whatever.
Brent – 00:44:12:
Yeah. So, hey, Freight Nation, just so you know, it’s always buyer beware in any commercial industry that you need to prepare yourself. And it doesn’t matter whether you have one truck or 10,000 trucks. Everybody has the same liability in the industry for what’s going on out there. So what a great topic. I feel like we’re just kind of scratching the surface a little bit on this thing. So, Freight Nation, there are great things that you can look at. And, Brandon, I appreciate you talking about the associations and stuff out there. They all have attorneys that are on their staff, whether it’s the American Trucking Association. You talked about state associations. They’re all part of the American Trucking Association, whether you’re the Truckload Carriers Association, whether you’re the Owner-Operator Independent Drivers Association. If you’re a small carrier, there’s all kinds of ways in which people can give you the legal representation and the advice on insurance protection and information that you need to run your operation. Matt, Brandon, thank you so much for being on Freight Nation today. Such a fun topic. Loving the banter back and forth between you guys. I love, Brandon, when you said prove it, you said, hold on, I got to correct some things, Matt. That’s fantastic. So, well, here’s the thing, Freight Nation. I hope you took away that both Matt and Brandon are straightforward guys. They just want to give you the information straightforwardly because we know trucking. That’s the way trucking operates. We just want the information so we can deal with it. When it comes to the litigious part of our society and the insurance part of our society, all wrapped around safety, it can be confusing and hard to understand or layered to understand. There’s so many things that you have to do. But the thing is to prepare yourself. And so today, that’s what we wanted to do on Freight Nation was to give you two experts to bring you some ideas and opportunities for you to continue to improve your operations. So, Matt and Brandon, thank you so much for being on Freight Nation today.
Brandon – 00:45:48:
Pleasure to be here. Thank you.
Brandon – 00:45:49:
Appreciate it.
Brent – 00:45:49:
Yeah, man. Thank you, gentlemen. Hey, Freight Nation, that’s a wrap. Hope you know a little bit more about nuclear verdicts, your liability in the marketplace, and how you can protect yourself. That’s our heart at Truckstop. And I know it’s Matt’s heart and Brandon’s heart as well to protect your operations. So thank you for listening and watching today. We appreciate you being around. And as we like to say at Freight Nation, don’t forget to work hard, to be kind, and to stay humble. That’s a wrap, Freight Nation. We’ll catch you on the next podcast.
Brent – 00:46:15:
On behalf of the Truckstop team, thanks for listening to this episode of Freight Nation. To find out more about the show, head to truckstop.com/podcast. If you enjoyed this episode, make sure you hit subscribe so you don’t miss any future episodes. Until then, keep on trucking and exploring the open roads with Freight Nation: A Trucking Podcast.
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