Trials Vs. Settlements Skew EPL Stats

Disability claims came in a distant second behind age claims, with a median award of $175,001. Sex and race case median awards were $100,000 and $120,951, respectively.

"I don't know that I can say we mimic that," although the numbers "make some sense," Mr. Maloney said. He reasoned that age discrimination claims could indeed come out the largest, because the plaintiffs in those cases are those who "have tended to be in the workforce longest and have had the opportunity to move their compensation up to the highest levels."

Mr. Maloney said that while Chubb doesnt specifically track dollars that it spends on "race versus age versus gender," in the insurers book, race discrimination is still the most frequent allegation. "I think the majority of cases in the employment arena don't actually go to trial and to verdict. But certainly when you see statistics like that, that is going to potentially have an influence on settlement values and they may rise in the future as well," he said.

Ann Longmore, national EPL practice leader for Willis in New York, said that she uses the Jury Verdict Research numbers to help clients understand where to set retentions on EPLI policies. "They demonstrate what single-action complaints are coming in at," she said.

But "its the catastrophe loss youre looking" for protection against, "and not the one-off instance that you should be absorbing as a cost of doing business," she added, reminding clients that average class-action claims will be multiples of the reports averages.

While Ms. Longmore attributed the high ranking of age discrimination claims to the fact that the report tracks single-action complaints, she said that a recent U.S. Supreme Court action, potentially creating an environment for more individual than class-action age-bias cases, should give employers cause for concern.

The court made a "bizarre U-turn" on an age discrimination case, she said, noting that in Adams v. Florida Power Corp., the court refused to rule on whether "disparate impact" could be used to decide the dispute.

Discrimination cases decided on the basis of disparate impact basically show that some workplace policy or action, such as a layoff, disproportionately impacted a protected category of people, obviating the need to prove a specific bias motive. While disparate impact can be used to prove other types of discrimination, Ms. Longmore said that the circuit courts are split on whether it can be used in age bias cases.

In the Florida case, the 10th Circuit Court said, "No, you have to prove individual bias on a case-by-case basis," she noted. Subsequently, the Supreme Court agreed to hear the matter, but more recently said it would not issue a decision.

"That means that if youre that [defendant] company involved, then instead of having one class action, youre going to have individual battles" to fight, Ms. Longmore said.

Giving an example of an EPL insurer that might spend $20 million to fight off a class action–and win–only to face 20 individual battles costing $200,000 each, she said, "sometimes that type of win can be a loss for the company."

In addition to jury verdict trends by discrimination category, the Jury Verdict Research study also gives trends for constructive discharge, hostile work environment, retaliation, sexual harassment and wrongful termination cases.

The study also provides an analysis of plaintiff recovery trends. Plaintiff recovery–the ratio of plaintiff verdicts to defense verdicts–has increased from 50 percent in 1994 to 67 percent in 2000, the study reported. The report contains trends in federal district court and state court awards, as well as descriptions of the cases that resulted in the top awards for employment practice liability.

Although most of the report is devoted to jury verdict analysis, it also shows that the EPL settlements studied had a median value of $60,000 from 1994-2000. Among the discrimination categories, claims based on gender showed the highest median at $70,000, followed by age cases at $65,500.

Copies of the study are available from Jury Verdict Research for $29.50 plus $4.50 shipping and handling, by logging onto www.juryverdictresearch.com, calling 1-800-341-7874, ext. 307, or by e-mail at custserve@lrp.com. Jury Verdict Research maintains a nationwide database of more than 186,000 plaintiff and defense verdicts, and settlements resulting from personal injury claims.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, May 20, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.