Commentary: The trucking insurance crisis, part 2

The views expressed here are solely those of the authors and do not necessarily represent the views of FreightWaves or its affiliates. This is part two of a two-part series of articles focused on the current trucking insurance crisis. The first article, It’s time for less talk and more solutions to trucking insurance crisis, was published Jan. 17 and can be read here.

In one notable personal injury case, a medical provider billed more than $14,000 for a procedure that’s typically reimbursed by insurance at less than $400. Grossly inflated claims are costing the industry dearly and in some cases are driving trucking companies out of the marketplace because they can no longer afford insurance.

Part one of this series (“It’s time for less talk and more solutions to trucking insurance crisis”) described the financial vise that’s gripping the industry and outlined upstream measures operators can take to avoid these costs by reducing risk. In part two, the focus is on the critical need for changes in a “worst practices” system in which doctors and lawyers scheme to inflate costs.

How does this happen?
Commercial liability insurance rates continue to spiral, with costs passed through to businesses and consumers. A primary culprit is a corrupt personal injury legal system where attorneys drive medical care. In this unethical alliance, certain attorneys and medical providers maximize settlements using arbitrary, grossly exaggerated medical costs.

It starts when plaintiffs’ attorneys refer clients to defined medical networks in which damages are wildly inflated. While they may never take place, unnecessary surgeries are recommended to inflate the damages claims and then included in settlement demands. These procedures are then claimed to collectively cost hundreds of thousands of dollars more than the actual cost.

In this system, a claimant is instructed not to use health insurance or workers’ compensation insurance, which preclude attorneys and providers from claiming that the full inflated charge is owed. Instead, the covered individual is directed to a defined medical provider network that specializes in personal injury claims, i.e., one that will sidestep insurance. One medical provider was found to have testified more than 200 times at the request of the same law firm in less than four years.

A provider may accept insurance at contracted rates from other patients. But in a personal injury case, medical providers often sidestep those rates. The provider can then “charge” exorbitant amounts that oftentimes are more than 20 times the amount the provider actually gets paid for the services.

The bloated costs are used to leverage a settlement. While multimillion-dollar verdicts make headlines, abuse more frequently occurs in routine settlements under $1 million. These unwarranted settlements burden the system as much as, if not more than, the occasional extreme verdict.

Case in point
The trucking industry is being taken for a ride, and society is paying the price. Here is just one example:

In October 2015, a man named Joe Cantu was involved in a car accident in Austin, Texas. His lawyer referred him to the medical group Pain Care Physicians (PCP). PCP accepted Cantu’s United Health Care insurance. But he chose not to use it, allowing the provider to submit over $80,000 in excessive medical bills and claiming those were actual amounts owed. PCP charged $14,290 for a procedure for which expert testimony showed medical providers typically get paid less than $400. PCP also charged $3,893 for a back brace that’s available for $150 on the manufacturer’s website.

The defense asked for a copy of the United Health Care contract to reveal maximum rates that could be charged. But PCP fought to protect the secrecy of its contracted rates, and the matter went to the Texas Supreme Court.

While the court was considering a possible landmark decision, Cantu withdrew the claim for medical bills. With a pending ruling that could have jeopardized the scheme to inflate costs, the claim was dropped, and the Texas Supreme Court was forced to dismiss the appeal. As a result, the court did not get the opportunity to weigh in on this issue.

The Cantu case is an example of abuse that occurs every day and needlessly inflates claims and insurance costs for the trucking industry.

It’s time for a change
Given this sad state of affairs, how do we restore ethics, integrity and fairness to the judicial system? The answer is to advocate for legal and insurance industry changes. Truckers must tell their stories and enlist other fair-minded people in the effort.

• It’s time to pull the Band-Aid off the festering lawyer/doctor sore and expose it to the light of day. Attorney-provider relationships should be fully disclosed at trial. Juries must know whether the provider is part of a network that is incentivized to overcharge and overtreat.
• Jury awards should be based on objective standards, with contracted reimbursement rates heavily weighted in determining the reasonableness and amount of damages. State legislation should limit recovery of medical or healthcare expenses to the amount actually paid or incurred by the claimant.
• Claimants must be required to mitigate damages, as in any other legal matter. If a claimant has health insurance that would cover an injury, there is no reason he or she should be allowed to submit charges into evidence that are 10 times the amount allowed under the claimant’s insurance.
• The practice of litigation financing — the loaning of money to litigants or law firms by third-party lenders — should be regulated.
• Insurance companies must be willing to fight. Too often, the choice to settle a case is a business decision that has little to do with health outcomes or a company’s ongoing viability. The certainty of a settlement is considered preferable to the risk of losing at trial. This paves the way for even more lawsuit abuse.

Let’s take control
This article reflects our personal experience, which we know is replicated every day across the country. Plaintiffs’ attorneys have come to view trucking companies and their insurers as slot machines. They pollute the airwaves with an endless onslaught of inflammatory ads. Tragically, the industry is allowing the plaintiffs’ bar to sensationalize and distort a good story.

Ultimately, the cost of lawsuit abuse will be passed through to shippers and consumers. It’s time for the trucking industry to take the lead in righting these wrongs.

Brian Fielkow is CEO of Houston-based Jetco Delivery and executive vice president of  Montreal-based The GTI Group. He is co-author of “Leading People Safely; How to Win on the Business Battlefield.” Fielkow received the National Safety Council’s Distinguished Service to Safety Award, the council’s highest-level individual recognition.

Robert Fuentes is a Texas attorney and founder of The Fuentes Firm P.C. He serves on the board of directors of the Texas Transportation Association and remains engaged in the Texas legislative process, advocating for reforms to protect against abusive litigation.