It seems not even a week can pass without a news story of a fatal crash involving a semitrailer truck or commercial tractor trailer; last weekend, a Winthrop, Minn., teenager died in such an accident.
But often, because of a federal law that has remained unchanged for 32 years, insurance payments following these accidents aren’t nearly enough to compensate accident victims and their families. A local trial attorney is helping lead the charge to get that law changed.
The Federal Motor Carrier Act (FMCA) of 1980 provides that truck drivers involved in interstate commerce must carry a minimum of $750,000 in liability insurance. Most states require less coverage than that for truckers who work strictly within the state; Minnesota statute requires $300,000 in accident coverage for intrastate truckers.
But Inver Grove Heights trial lawyer Peter J. Kestner is part of a movement to change that, at least at the federal level. Kestner, who specializes in truck accident cases, joined a delegation of the American Association for Justice (AAJ) in June to lobby Congress to change the
Federal Motor Carrier Act rules regarding mandatory minimum coverage for truckers.
“Because we handle a lot of trucking cases, we run into these catastrophic cases with multiple fatalities and serious injuries where there wouldn’t be enough insurance to even begin to compensate the victim,” said Kestner. “If you look at inflation of medical costs, $750,000 of medical treatment in 1980 is worth $4.8 million in today’s money.”
As part of the deregulation of the trucking industry, the 1980 act vested the Federal Motor Carrier Safety Administration (FMCSA) with the ability to increase the minimal limits. Mandatory coverage minimums were set at $750,000 for interstate truckers and $5 million for buses. Kestner and the AAJ would like to see the mandatory minimum set at $5 million for truckers as well.
“[The FMCSA] thought the insurers would act as risk managers — that they would weed out unsafe truckers because their insurance costs would be too high,” he said. “That might have been a good idea, but it didn’t happen. The rates have not gone up with inflation.”
Crunch for smaller firms?
The AAJ delegation, spearheaded by Pennsylvania personal injury attorney Dan Munley, met with nine members of Congress during a June trip to Washington, D.C. Their argument was that the current limits end up acting as a de facto tax when accident victims turn to public assistance after a six-figure insurance settlement runs dry.
“People end up on Social Security disability, Medicaid and Medicare,” said Munley. “They’re no longer paying taxes into the system. We’re shifting the burden of these injured people onto the public.”
Kestner explained that larger trucking companies, with more assets to protect, have tended to either self-insure in order to make sure they’re covered in case of an accident or simply buy insurance in greater amounts.
“All the larger entities in the trucking industry already have [$5 million or more in liability coverage],” he said. “They know just from the number of trucks they have on the road that there are going to be accidents.”
Smaller trucking firms, however, may be more likely to stick to the mandatory minimum, according to Kestner. But an association representing such smaller companies, the Missouri-based Owner-Operator Independent Drivers Association, said many of its members go beyond what’s required by law and have $1 million or more in liability coverage.
“The insurance industry has not seen any need to raise the minimum since the last time they did so, which was by 50 percent from $500,000 to $750,000,” said the association’s head of public affairs, Norita Taylor. “That change created a capacity crunch overnight. [An increase] from $750,000 to $5 million would wipe out half of all small-business truckers.”
William Daniel of the Mississippi-based America’s Independent Truckers’ Association agreed that such a hike would be prohibitive and suggested that the lawyers behind the push to increase liability minimums may at least partly have their own interests in mind.
“While I am confident that [Kestner’s] interest is [in] the potential client, raising the limit would provide a huge increase for him as well,” Daniel said via email.
A slow change
Kestner and the AAJ have no illusions about the law changing anytime soon, and he anticipates returning to Capitol Hill annually to continue the association’s lobbying effort. Munley pointed out that absent a change in law, U.S. Secretary of Transportation Ray LaHood could change the law at any time.
“A lot of congress people said, ‘Look, this is great stuff, but we can’t even pass a budget,’” Kestner said.
But until then, Kestner said, trial lawyers have in some cases attempted to make up for the gap between damages and coverage limits by suing brokers and third-party logistics companies for negligent selection of an independent contractor in accident cases.
“We need another pocket to collect from to compensate [victims],” he said.
Insurers, Kestner said, seem neutral on the issue, since providing more coverage would inevitably mean tighter restrictions and higher premiums for trucking companies with shaky safety records. He hopes a change in the Federal Motor Carrier Act rules will work to weed out unsafe companies.
“It’s a long-term issue that we’ll have to continue to push,” Kestner said. “We know we’re pushing a rock uphill, but we feel it’s the right thing to do.”
Minnesota Lawyer – September 21, 2012 – By Dan Heilman