After largely stalling for nearly two years due to the Covid pandemic, the pace of claims litigation is beginning to pick
up. At the same time, the number of new claims is likely to rise as businesses begin to rebound. Claims administrators, however, face a changed claims landscape. Across the United States, courts are moving toward more creative operations, although at varying speeds and with different goals. For instance, in New York State, the court appearances are still virtual and will likely remain that way; California courts are resuming in-person appearances and trials at mid-year. But every jurisdiction can be different, with varying restrictions on access. Some local courts prefer to remain virtual, and some opt for a hybrid approach. This necessitates a highly flexible approach to claims administration going forward with the ability to adapt to all scenarios. Nimble and proactive claims administrators that have shown they can perform well in all-virtual, hybrid, and traditional in-person settings will be best placed to handle this new normal.
THE LITIGATION LULL
Litigation came to a near-halt in 2020 as Covid spread across the country and courts shutting down completely. Reported claims dropped sharply as fewer accidents occurred without workers on the job sites. For traditional accident claims, those are claims that will never happen. The shutdowns brought a slow down for construction defect claims, in large part because plaintiffs’ attorneys were unable to meet in person with potential clients and perform inspections since many people were unwilling to open their doors to strangers amid soaring Covid cases. The ability to investigate claims also slowed for the same reason—people weren’t willing to cooperate with engineers or other experts in person, and accident scenes were often inaccessible.
With the courts shut down, claims litigation came to a halt with little movement on motions practices and no jury or bench trials. As the backlog of cases began, the courts started to leverage technology, permitting depositions to be held by video conference and ruling on motions virtually. Still, the legal backlog grew, stalling discovery and trials and pushing many cases from 2020 into 2022, 2023, and beyond. For some claims, these delays opened opportunities to resolve claims early with limited existing discovery rather than waiting for court dates. Some existing cases will continue to need additional development because the claims exposure has not yet been determined.
THE NEW LEGAL LANDSCAPE
Today, as more construction projects move ahead, more claims will follow, and with them, a rising number of lawsuits may add to the legal backlog. Many courts, however, are still operating under procedures adopted in response to the Covid pandemic. Those measures include holding trials with counsel and witnesses separated by plastic barriers and jurors participating via video from a separate room. In many cases, virtual trials and virtual depositions remain the rule and hybrid trials with only judges and counsel physically present in the courtroom. Some mask mandates remain in place as directed by local jurisdictions and the current CDC guidelines.
These measures pose challenges for counsel, particularly as it concerns the jury. With and through video participation, counsel’s ability to read the jury is limited, that is, gauge jurors’ reactions to arguments, expert witnesses, or other testimonies. Video removes the nonverbal cues that litigators look for to see how their message resonates with jurors. The jury, of course, may only see the person speaking on video rather than everyone in the courtroom, which also limits their ability to gauge the demeanor of other participants and their reactions to testimony.
These restrictions also have a significant impact on the voir dire process of vetting jurors, making it more difficult to evaluate the mindset of jurors, whose experience with Covid may affect how they approach jury service or how they react to corporate defendants. Some jurors may still be highly concerned about Covid because of potential comorbidities or have had experiences with corporate entities during the pandemic, making them more skeptical of defense testimony from any corporate client. And social inflation remains a consideration as news about nuclear verdicts influences how potential jurors view awards.
As courts have adapted to new technology, various hybrid approaches are likely to continue. There is little consistency today among courts throughout the country. Some courts were leaders in adopting technology, while others did not have access to the equipment nor the resources to acquire it. Another factor is that some courts have extended statutes of limitations. Plaintiffs’ attorneys are likely to be looking for opportunities to market construction defect claims among those that were not reported during the pandemic.
In construction, lawsuits dropped sharply between 2019 and 2020, but a steep rise in the number of lawsuits is likely as construction activity picks up and people get back to business. The rise in frequency is likely to be accompanied by a change of expectations among the general public coming out of this experience.
Effective claims administration requires a highly flexible approach to settlement negotiations, depositions, and trials. Claims professionals and counsel have to be adept and well-versed in all forms of in-person and virtual litigation. This is when the investments in staff and technology made during the pandemic can prove their worth. Claims administrators who have proven they can adapt seamlessly to virtual and hybrid legal environments can provide effective representation in all settings as claims litigation moves into a future where changes necessitated by the pandemic are likely to endure. Remaining agile and at the ready will continue to be a priority for any claim operation that aims to provide world class claim service to its clients.
- Michael Hinojosa, Chief Claims Officer, Senior Vice President, National Claim Services LLC
- George Wilewicz, Vice President – Claims, National Claim Services LLC
ABOUT NATIONAL CLAIM SERVICES, LLC
National Claim Services (NCS), a division of Constellation Affiliated Partners, is a full-service, highly experienced Third Party Administrator dedicated to helping clients appropriately manage and control losses. The NCS claims management team specializes in high exposure Commercial General Liability, Inland Marine, Premises Liability, Construction Defect, and other specialty lines domestically and in the London market. Learn more at natlclaim.com.
- Court backlogs have increased by an average of one-third during the pandemic, new report finds, August 31, 2021, https://www.abajournal.com/news/article/many-state-and-local-courts-have-seen-case-backlogs-rise-during-the-pandemic-new-report-finds