Bill Graves, the new president and CEO of the American Trucking Assns., sent a letter to President Bush late last week, lauding his call for reform legislation
that Bush says would protect the medical profession from costs associated with out-of-control lawsuits.
Saying that "the nation's economy can simply no longer afford to foot the bill for frivolous lawsuits," Graves pointed to liability insurance costs that have increased dramatically over the last two years in the trucking industry, "even as our safety record improves."
The ATA president cited an association survey that showed an average increase in general liability to be more than 35% in 2001, and costs of umbrella insurance increasing an average of 120% after Sept. 11, 2001. He said individual examples of 200% and 300% increases are common.
"Trucking is a $576-billion industry and provides employment for more than 10 million people in jobs that are directly related to trucking. Trucking represents 86% of the country's freight transportation market and over 75% of all communities rely exclusively on trucks to deliver their food, clothing, and all other consumer goods," he wrote.
"The trucking industry's ability to provide these vital transportation services is being severely hampered by the tremendous increases in liability insurance premiums. In an industry where average profit margins hover around 3% in good times, it is not surprising that the cost of liability insurance can make the difference between profitability and bankruptcy. Indeed, trucking saw a very large number of bankruptcies in 2002, with more than 3,000 trucking failures."
Graves said the ATA is calling for limits on non-economic and punitive damages to amounts that would reduce the incentives to engage in lengthy litigation and would eliminate a threat that sometimes leads to nuisance settlements.
"A provision that defendants pay judgments only in proportion to their fault would also help eliminate the common practice of turning a lawsuit into a search for a deep-pocketed defendant instead of attempting to secure appropriate relief from those that caused the plaintiff's harm.
"Finally, recognizing compensation a defendant has received from other collateral sources and reducing any award by that amount is fair and again eliminates the incentive for protracted litigation."