In a consumer society, the procedures for providing compensation to many claimants are very important, especially as litigation becomes more public due to 24/7 news and the Internet. During this May 19, 2017, conference, participants explored issues that affect compensation speed, efficiency, and fairness. These conference proceedings explore stakeholder observations on the changing roles of regulators, the impact of liens, and claim aggregation.

Emerging Trends in Compensation for Widespread Losses

Lloyd Dixon, Kathryn Kuznitsky

Expert InsightsPublished Dec 4, 2017

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In a consumer society where widespread losses can easily occur, the processes and procedures for providing compensation to large numbers of claimants are very important. To explore issues that affect the speed, efficiency, and fairness with which the compensation system for such losses operates in the United States, the RAND Institute for Civil Justice and the RAND Center for Catastrophic Risk Management and Compensation convened a conference on May 19, 2017, in Arlington, Virginia. These conference proceedings explore stakeholder opinions on the changing roles of regulators, the impact of liens, and claim aggregation. Participants discussed how previous cases — particularly the Volkswagen diesel emissions case — provided examples of how regulators and claimants could cooperate to create satisfactory outcomes for both defendants and plaintiffs. They also explored the role of liens in the settlement process and how different aggregation processes (class action, multidistrict litigation, and inventory settlement) affect compensation. Multiple participants argued that collecting more data on the liens and aggregation processes, as well as exploring how other countries approach claim aggregation, would help the legal community better handle compensation issues.

Key Findings

Regulators' Roles

  • Participants agreed that coordination between public and private litigants is becoming more common, but that it is not new and it does not happen all the time.
  • The advantages and disadvantages of increased coordination can be very different from the perspectives of private plaintiffs, the government, and defendants and vary with the particularities of the case.
  • Obstacles to the speedy resolution of complex cases include lack of plaintiff coordination and cooperation, purposeful delay by the defense, lack of coordination between federal and state courts, lack of urgency on the part of judges, lack of transparency, and conflict between government agencies.

Liens

  • Lien resolution has become an increasingly important part of the settlement process and can reduce or delay payment to injured parties.
  • Better data on the extent to which liens are discounted and on lien payments as a percentage of settlements are needed.
  • Several participants felt that the procedures for determining liens for future medical costs was an area ripe for legislation, as the current system is not working well.

Claim Aggregation

  • Class actions, quasi–class actions, multidistrict litigation, and inventory settlement all have various potential advantages and disadvantages.
  • More information on the outcomes of the various aggregation procedures, including payments to injured parties, legal fees, and prevalence of fraudulent claims, is needed to better understand how current approaches are working and can be improved upon.

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Dixon, Lloyd and Kathryn Kuznitsky, Emerging Trends in Compensation for Widespread Losses. Santa Monica, CA: RAND Corporation, 2017. https://www.rand.org/pubs/conf_proceedings/CF377.html.
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This project is a RAND Venture. Funding was provided by gifts from RAND supporters and income from operations. The conference was convened by the RAND Institute for Civil Justice (ICJ) and the Center for Catastrophic Risk Management and Compensation (CCRMC) and sponsored by ICJ, CCRMC, and Tom Girardi of Girardi | Keese.

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