Horse injury suit will discourage charity programs

by Walter Olson on October 13, 2009

Work To Ride Inc. is a celebrated philanthropic program in Philadelphia’s Fairmount Park meant to give at-risk urban kids experience working with horses. Now a jury has awarded $2.36 million against the program to a boy whose jaw was broken when a horse kicked him in the face while being loaded into a trailer. There was some dispute over the circumstances:

Both the plaintiffs and defense papers said that [plaintiff] Williams hit the horse with a stick on the hindquarters and the horse kicked Williams in the face after being hit with the stick. But the plaintiffs said Williams was asked by [program employee] Shuler to use the stick on the horse’s hindquarters to get the horse to go onto the trailer. And the defense said that Williams hit the horse without any instruction from Shuler, Shuler commanded Williams to not hit the horse and Williams then hit the horse a second time in defiance of Shuler’s command.

The jury attributed 10 percent of the negligent responsibility to Williams, who was 12 at the time of the accident, and 90 percent to Work To Ride. Work To Ride’s insurance limit is $1 million, and plaintiffs are talking about going after its insurer, Lloyds, for the remainder on a bad faith theory. [Amaris Elliott-Engel, Legal Intelligencer]

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Litigation and Trial - Max Kennerly
10.15.09 at 10:06 am

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1 Max Kennerly 10.13.09 at 9:49 am

I’d like to hear your explanation for how the suit “will discourage charity programs” if, indeed, the plaintiff has quite explicitly said they will be “going after its insurer” for the full amount of the judgment. It seems likely the charity will pay nothing out of pocket for the suit; at most, their premiums might rise, but that, too, is unlikely if the insurer genuinely believes that the charity wasn’t at fault, which apparently they do.

2 Frank C ostanza 10.13.09 at 11:05 am

“…awarded $2.36 million against the program to a boy whose jaw was broken when a horse kicked him in the face while being loaded into a trailer.”
Why was the little boy being loaded in a trailer? He probably got the oversized award due to child abuse.

3 tyree 10.13.09 at 11:23 am

Max,
I do approximately 12 hours a week of charity work. During those hours there are an amazing number of times that our work is interupted to discuss or deal with insurance, liability and lawsuits. Getting volunteers is difficult in part because people, ” …don’t want to put their house on the line because they were trying to help some kids.” Are you saying that a $2.36 million award against a charity encourages them? That has not been my experience over the decades.

4 Max Kennerly 10.13.09 at 11:41 am

I don’t think it encourages charity programs, but note what happened here: even with an award far larger than the policy, the plaintiff has skipped right past enforcing the judgment against the charity or its personnel and has gone right to the insurer.

People, in theory, put their “house on the line” every time they get in their car. In practice, tort verdicts rarely result in direct payments from the tortfeasor, and very rarely result in anyone losing a house. Even in bankruptcy, the house includes a large exception for single persons and is usually totally untouchable in married couples.

Frankly, if Duffy & Partners is already talking bad faith, that suggests to me that Lloyd’s did absolutely nothing to try to resolve this case, and probably instead paid >$150k for the defense lawyer to do whatever they could to frustrate the case and antagonize the plaintiffs. The bad faith talk also suggests to me the plaintiff made a demand within Lloyd’s policy limits, which Lloyd’s refused.

What would have been your preferred outcome here? No compensation for the child at all?

5 Ed 10.13.09 at 12:24 pm

I would have preferred that his $117k medical bills had been paid by the insurer and he learn that you shouldn’t hit a horse with a stick.

Instead he has learned that a bad attitude and a lawyer can make you rich.

6 B. RAD 10.13.09 at 3:26 pm

I’d like to hear your explanation for how the suit “will discourage charity programs”

Are you kidding? Reguardless of who pays, who in their right mind would want to put up with this kind of tsoris when it’s often easier to discontinue service. A huge amount of good trumped again.

7 Ted Frank 10.13.09 at 3:27 pm

A recent paper I wrote shows the distorting effects on settlements caused by bad-faith insurance lawsuits.

8 Invid 10.13.09 at 4:56 pm

This is in Philadelphia. I’m surprised the jury limited itself to such a low sum of money for the plaintiff.

9 tyree 10.14.09 at 1:40 am

Max said, “…and very rarely result in anyone losing a house.”
Millions of people fear losing their houses to tort lawyers and their clients. Just because it is rare doesn’t mean it doesn’t happen, and it usually makes headlines because of the lawyer’s grandstanding. The fear of retribution for good deeds hurts millions out of the proportion of help the small minority get from “jackpot justice”.

“What would have been your preferred outcome here? No compensation for the child at all?” you say.

Medical coverage, yes. But nothing above that. We take a huge risk everytime we open our building to the public for free, and there shouldn’t be a huge risk for helping people for free. There is no mortgage on the building, but our insurance costs means we have to do constant fund raising to provide services to the community, because of lawsuits, and the fear of them. The fees for signing up a child for soccer or baseball nowdays is getting ridiculous because of the greedy tort lawyers and their desire for more wealth redistribution. It is bad enough that the lawyers think that all the money that a profit making company makes is on the line if anything goes wrong anywhere in their operation, but this continuing, unrelenting war on charity workers has to stop, and never should have started.

10 Kaycee Blue 10.14.09 at 10:32 am

Max, let’s apply your same line of reasoning to another scenario: if we follow your line of thinking, then police shouldn’t bother doing anything about bank robberies because the FDIC covers the bank’s customers for the money they lose and people rarely get shot during bank robberies nowadays.

I agree with Tyree — we have created a society of greedy viticrats in which even those who week to do good must live in constant fear of someone alleging harm. What happened here, in this case? The kid learned that if you act like a fool and get hurt in the process, just get a good lawyer, blame others, and you’ll get rewarded. So what if insurance paid the claim? The charity still pays the insurance premium, which is now going to rise; the volunteers may not have lost their homes but still had to spend their personal time dealing with the lawsuit. This is a stressful and frustrating experience for anyone, but all the more so for someone who was simply trying to do some good for the world. No good deed, it seems, goes unpunished when there’s money to be made.

11 matth 10.14.09 at 12:39 pm

Max,

You see, insurance companies don’t have a magic money machine. When they have to pay a claim, they pay using money that they collected from their insureds. How do they know how much to charge, you ask? Ah, that’s a fascinating question. What they do is, they look at their loss history with that particular insured and with similar classes of insureds. This kind of verdict will effect those loss histories. It thus makes it more expensive to run a charity because it makes the charity’s insurance more expensive.

12 matth 10.14.09 at 12:41 pm

Argghhhhh. Should be “affect those loss histories” above.

13 Max Kennerly 10.14.09 at 1:11 pm

Max, let’s apply your same line of reasoning to another scenario: if we follow your line of thinking, then police shouldn’t bother doing anything about bank robberies because the FDIC covers the bank’s customers for the money they lose and people rarely get shot during bank robberies nowadays.

Police investigation of bank robberies serves, in part, a deterrent purpose. Egro, that’s an argument in favor of increased tort recovery as a method for deterring tortfeasors from future negligent conduct, which doesn’t seem to be what you want.

If you mean to characterize my remarks as being that “rare” risks shouldn’t be guarded against, that’s incorrect. I’m not saying charities or people shouldn’t be insured, I’m saying that “losing your house for negligent charity work” is an extraordinarily unlikely event.

Of course, “not being negligent” is the best way to protect your assets and your insurance policy. Also, “not making up your defense” is the best way to avoid an above-average verdict; from the little bit we know here, it seems the charity defended itself not by noting that horse kicks were a possibility that participants assume the risk of (which is probably why you and most readers assume this case is meritless), but instead by inventing a story whereby the boy runs over to the trailer and starts whacked the horse for the heck of it. Once the jury rejected that as incredible, they likely rejected defendant’s damages arguments as well.

The fees for signing up a child for soccer or baseball nowdays is getting ridiculous because of the greedy tort lawyers and their desire for more wealth redistribution.

You could always ask the parents to sign a waiver prior to participating. They’re typically upheld and will reduce premiums.

That said, what’s so bad about contributing a little bit to ensure (by insuring) that, if the charity is negligent and hurts someone, the injured participant will be compensated? A little risk-spreading is not always a bad thing, particularly in countries like the US without universal health care.

Of course, Lloyd’s could have evaluated the claim in good faith. That would have helped. Ted’s paper on using game theory to model the role of third-party bad faith claims looks interesting; I’d imagine there’s a double-distorting effect of the current system, such that plaintiffs with above-policy claims are typically short-changed, but have a higher likelihood of settlement than do plaintiffs with below-policy claims.

14 Max Kennerly 10.14.09 at 2:01 pm

You see, insurance companies don’t have a magic money machine. When they have to pay a claim, they pay using money that they collected from their insureds. How do they know how much to charge, you ask? Ah, that’s a fascinating question. What they do is, they look at their loss history with that particular insured and with similar classes of insureds. This kind of verdict will effect those loss histories. It thus makes it more expensive to run a charity because it makes the charity’s insurance more expensive.

See bolding. See my prior remark:

… at most, their premiums might rise, but that, too, is unlikely if the insurer genuinely believes that the charity wasn’t at fault, which apparently they do.

Lloyd’s hiking up the premiums specifically for the charity due to this loss is incompatible with a good faith belief that the charity was not at fault. Assuming Lloyd’s believes, in good faith, that the individual charity was not at fault, they then assess the charity based not on this particular loss, but on losses to the class as a whole.

Ergo, the verdict might raise the charity horse ride premiums as a class, but not the charity itself.

Again, all of this could have been avoided if (i) the charity hadn’t been negligent and (ii) the insurer had acted in good faith and settled within the policy limits. If there’s discussion of bad faith, it means the plaintiff did indeed make a demand within the policy limits.

15 SmokeVanThorn 10.14.09 at 3:53 pm

The specter of tort liability often results in the decision not to engage in worthwhile activities. See The Burden of Bad Ideas.

In addition, it is NOT the case that parental waivers of claims for injuries to children are “routinely upheld.” In fact, they are unenforceable in many states.

16 matth 10.14.09 at 6:00 pm

Max—

I don’t know why you keeping bringing up Lloyd’s belief that the verdict was wrong. An insurer doesn’t care whether verdicts are right or wrong: it just cares about losses. There’s absolutely no inconsistency in Lloyd’s saying, “We think this verdict was an injustice” and simultaneously saying, “Yet we must charge more for fear of similar, equally unjust, verdicts.”

Anyway, it seems to me you’re no longer disputing Walter’s point. Walter claimed that this sort of verdict “will discourage charity programs.” You acknowledge that “the verdict might raise the charity horse ride premiums as a class.” Higher costs discourage things. Perhaps the increase will be small, but only because it is spread over many insureds, and thus affects many people.

(You then go on to note that the verdict won’t hurt “the charity itself.” This is an odd thing to say, because the charity is a member of the “charity horse ride” class, which you acknowledge will be hurt. It also strikes me as dubious: insurance premiums, in my experience, depend both on class experiences and on individual insureds’ loss histories. Again, the insurer doesn’t care whether a verdict was right or wrong; it just cares about whether a claim had to be paid.)

Anyway, thanks for your reply.

17 tyree 10.14.09 at 7:19 pm

Max said,
“What’s so bad about contributing a little bit to ensure (by insuring) that, if the charity is negligent and hurts someone, the injured participant will be compensated?”

A little bit, in reality, is not so little, and a significant number of charities have had to close their doors or offering services because of liability insurance premiums. You say “if the charity is negligent” as if an award is based on that. Juries award millions all the time in situations where no one was “negligent”. Perhaps the lawyer was able to convince the juryr that they were “negligent”, but that doesn’t mean they did anything bad or wrong.

The way you write you seem to believe that an alleged bad legal defense means the defendant gets millions. Just because a legal team blows the case does not mean the isurance company should have to pay millions. The award should have been a much more reasonable amount. All awards of this kind should take into account their chilling affect on the people who sacrifice so much to try to help people out. That chilling affect is real and even if the law doesn’t care about it, it hurts millions of people through lost donated man hours.

18 Bumper 10.15.09 at 12:55 pm

Max said:
“You could always ask the parents to sign a waiver prior to participating. They’re typically upheld and will reduce premiums.”

This has never been my experience, especially with children. Many/most courts hold that the parents cannot sign away the rights of a minor child.

19 tyree 10.15.09 at 11:49 pm

So we have the Maxes of the world outnumbered. All we have to do now is make sure that our elected officials know that.

Over and Over.
Until they start listening.

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