Why Do The Courts Allow This Rule?

Josh and Aaron discuss a current rule in the court system that prevents the jury from being told if the defendant has insurance. Why is this a thing?

Listen here or read the transcript below. FVF’s Summary Judgment podcast is available wherever you listen to podcasts including Apple Podcasts, Spotify, iHeart Radio, and more.

0:00:00.0 Aaron Von Flatern: Thank you for tuning in to Summary Judgment where Austin personal injury attorneys, Josh Fogelman and Aaron Von Flatern of FVF Law discuss the ins outs and in-betweens of personal injury cases.

0:00:17.1 AF: Hey, Josh.

0:00:19.3 Josh Fogelman: Oh, hey Aaron. I didn’t see you sitting there.

0:00:22.3 AF: I’ve been here for like two hours.

0:00:23.3 JF: That’s so weird.

0:00:26.1 AF: Yeah. Well, I know you’re an observant guy.

0:00:29.9 JF: [chuckle] Yeah, sure. Absolutely.

0:00:31.1 AF: You’ve been to trial before.

0:00:33.7 JF: I have done that. Yeah.

0:00:34.4 AF: Have you ever observed that it’s not perfect.

0:00:38.7 JF: I have observed that it’s not perfect. Yes.

0:00:39.2 AF: If you… [chuckle]

0:00:40.0 JF: Much like I observed you sitting there earlier.

0:00:43.4 AF: [chuckle] Yeah. Eventually you got there.

0:00:46.1 JF: Got, got it.

0:00:49.7 AF: If you were gonna change one thing about trial in Texas what rule or thing would you change?

0:00:55.4 JF: So I was thinking about that earlier before we started this podcast. And then you said something that was like, “Oh yeah, that’s clearly the answer.” And it’s this, are you ready for my moment of brilliance?

0:01:06.7 AF: [chuckle] Yes, go ahead.

0:01:07.4 JF: ’cause if it’s on camera, it means that I…

0:01:12.1 AF: I know, I know.

0:01:12.2 JF: I did it. We are currently not allowed to tell a jury at trial that the defendant has insurance.

0:01:20.3 AF: Yeah. And on its face that seems like it’s okay, but is it?

0:01:25.3 JF: It’s not okay.

0:01:29.3 AF: What are the reasons to even have that rule?

0:01:30.4 JF: So the reason that rule exists is the court system is concerned that if a jury knows that the defendant is covered by insurance and is gonna be not having to pay for a judgment out of their own pocket that the jury will result in… There’ll be runaway verdicts.

0:02:01.9 AF: Irrational.

0:02:02.2 JF: Irrationally [0:02:02.3] ____ verdicts.

0:02:04.0 AF: But the… If the… If you put the opposite proposition out there and said, “Hey, Texas law allows for five different elements of damages.” There’s medical bills, lost earnings, pain and suffering, impairment and disfigurement, and all five of those are actually 10 because there’s past and future for each. There’s 10 different elements of damages that you can ask a jury for. And yet if a jury found that a person had large numbers in each of those categories, they might hold back if they thought that the person that they were entering these numbers against was a paycheck-to-paycheck person who, if we’re all honest, could not afford it, the jury might have concerns that these numbers, although accurate, although supported by evidence, although authorized by Texas law, would potentially ruin that person’s life.

0:03:07.5 JF: Yeah.

0:03:07.7 AF: And so it seems like the rule against talking about insurance is causing the wrong kind of irrationality. There’s another irrationality out there, I guess; is that fair?

0:03:20.0 JF: Yeah. Absolutely. Yeah. You have a situation sometimes where you’ve got a client whose life has been changed by the carelessness of a nice person.

0:03:34.1 AF: Right.

0:03:34.2 JF: It happens of a nice… Of your next door neighbor that gave you chocolate growing up and it’s hard to write a big number in a verdict form when the person that you think is gonna be responsible for it reminds you of your grandmother or your aunt or uncle, someone that you care about, someone that you like, and it’s a problem. It’s…

0:04:07.1 AF: We probably should have told people just to start with, in Texas, in every state, if there’s like a car accident or some kind of industrial accident you have to sue the actual defendant.

0:04:20.5 JF: That’s right.

0:04:20.6 AF: You don’t get to sue the $50 billion insurance company and have them as your defendant.

0:04:25.8 JF: That’s right.

0:04:26.3 AF: You have to sue the person who you claim did something wrong, who committed the negligence; is that right?

0:04:32.5 JF: That’s right. Yep. That’s right.

0:04:32.5 AF: I think a lot of people are shocked by that. They’re like, “I don’t wanna sue the other driver. That’s… That person was nice to me. They asked me if I was okay.” The fact is that other driver went and purchased an insurance policy, and whether they realized it or not, they gave that insurance company money in exchange for a promise. And the promise is written in black and white and it says, “We will pay for your legal liability.” So if you run a stop sign, you would owe somebody who you hit if they, in fact, had harms and losses, damages that fit into the Texas law categories that we just described. That is the legal liability. The insurance company said, “Hey, look, if something bad goes… If something happens, we’ll pay.” That’s the promise they made. And then oftentimes they don’t pay.

0:05:23.7 AF: And so you would love to be able to come in a Texas court and say, “I’m suing this massive insurance company because they didn’t keep their promise.” That’s really what it’s all about. It’s not about the person who had 10,000 things on their mind and made a mistake in traffic.

0:05:42.6 JF: Yeah.

0:05:43.7 AF: It’s about the fact that there was an insurance company who received… Who’s making a lot of profit, who made the money on this promise that they would take care of that and didn’t. So in my opinion, the first thing is I wish I could sue the insurance company directly.

0:05:57.8 JF: Sure.

0:05:58.7 AF: Because that’s who we’re really all mad at when these aren’t being paid properly. And second, I wish I could tell the jury that… In fact, we did have a case just like this, where the defendant was, I believe 80 years old?

0:06:15.1 JF: Yeah. That’s right.

0:06:15.4 AF: And she was diminutive and she was rather sweet.

0:06:20.4 JF: Yeah. She was great.

0:06:21.0 AF: And that was a tough trial. We did okay.

0:06:25.0 JF: Yeah.

0:06:26.9 AF: But huge concern…

0:06:28.7 JF: Absolutely.

0:06:30.3 AF: That they wouldn’t understand the patent unfairness of the insurance company believing that they could use the “little old lady” to get us to take a substantial reduction off of the actual proven harms and losses that our client had sustained.

0:06:49.9 JF: Because of this rule. And even worse to compound the problem, the defendants are represented by a lawyer, and that lawyer is paid for by the insurance company. Often times, that lawyer is as close to being an employee of the insurance company as is ethically possible.

0:07:13.6 JF: And they show up at trial and never mention the fact that their bill is being paid for by the insurance company, that the defendant themselves has not had to put one penny out of pocket to pay for their defense or to pay for that lawyer. And it puts a perception on us and on the plaintiff, if you don’t manage this appropriately in voir dire, which is a huge part of the voir dire strategy in many cases, that we have unreasonably dragged this super nice person into the courthouse because we’re greedy and have won a whole, whole bunch of money and are now wasting this jury’s time. You start out at a disadvantage when the jury… When the jurors come into that room, and unless you’ve done a really good job preparing them for the trial with voir dire and making sure that you get rid of the bad jurors, you start out at a significant disadvantage just from sort of a social acceptance point of view.

0:08:22.4 AF: Yeah. It’s disproportionate, right?

0:08:24.0 JF: It is.

0:08:24.8 AF: So even in a, like you think a divorce case, and you have… The judge has the power to garner the wages of one of the parents. In that scenario, the judge is taking into account proportionality. It’s like, “I know this person has to pay their rent, they have to eat, they’ve got all these other expenses with lights and insurance and internet and all that, so I’m gonna make my order to where this defendant has to pay like 15% of their wages to the child supporter.” That might be what the order says. And so likewise, if someone makes a mistake in traffic, causes an injury, and the injury costs say $5 million, just some horrific paralyzation or something like that, the jurors are already defaulting to the idea of proportionality. They wanna know, “Well, I do think this person should be responsible.”

0:09:22.3 AF: They should have a hand in helping this person, but they also need to live and eat and work in order to do that. So can I just assign 10 or 20 or 30 percent of that person then come over to this person? Like that’s probably what they wanna do. And then we come in saying, “Well, we want $5 million,” or if they’re paralyzed, “$50 million, $100 million,” whatever it is. And they automatically see that we’re the bad guys. Which is tough because in the background there is an insurance company that’s banking on the fact, banking literally, like actually profiting on the fact that the jury has this misperception. And so a lot of times when I meet people out in the world who are my friends who own businesses, and they say, “Well, I’m a commercial company, I’ve got a target on my back, but you guys are always looking to get these commercial cases and take us down in court.” The truth is commercial… The reason we like commercial cases is those are the only ones where the jury doesn’t have that irrational downplaying of the case. So those are appropriately sized. It’s the regular personal private auto cases that are basically like the volumes turned down on those because of, I think, an irrational perception.

0:10:41.8 JF: Yeah. No one wants to be the one that was responsible for bankrupting a person in their community.

0:10:46.5 AF: Right.

0:10:47.3 JF: And they feel that responsibility. And there’s… There are a couple of things. What makes matters even worse than what I mentioned earlier [chuckle] is you see defense lawyers that’ll play it up. That will do things like let’s say you and I are trying a case together, we got three lawyers at trial and we’re not getting paid to be there. We’re only getting paid if we win, we might be getting paid $0 if things go sideways. Fortunately, that’s hopefully an unlikely scenario. We try and choose good cases, but you got three lawyers and they’ve got one lawyer and they’ll point over to the plaintiff’s table and say, “This person’s over here paying three lawyers to litigate…

0:11:35.5 AF: And we only got one.

0:11:35.6 JF: And we only got one,” when really it’s just so opposite. The truth is so opposite of the message that’s being sent and that kind of gamesmanship that gets opened up by not having transparency in the courtroom is really something that we have to take into consideration when we’re preparing for trial and understand how to make sure that the jury that actually gets seated is one that isn’t going to let that kind of sympathy for the defendant control the way that they view the evidence and the way that they make those decisions. But yeah, I think that’s the rule that I would change. I think that’s the one that leads most fundamentally to unfair outcomes and I think it would make a big difference.

0:12:32.2 AF: I’m so glad you thought of it.

0:12:35.7 JF: Thank you. Well, you know.

0:12:37.4 AF: It’s so good.

0:12:38.6 JF: I kind of feel like I always carry the load…

0:12:42.1 AF: You’re an inspiration.

0:12:42.5 JF: If we’re being honest in this partnership.

0:12:42.6 AF: Yeah. You drag me along. I appreciate it.

0:12:47.0 JF: You’re welcome.

0:12:48.8 AF: Thank you.