Could a Toxic Tort be Toxic to Your Bottom Line?

As a nation we have been “thinking green” since the late 1960s. With the establishment of the Environmental Protection Agency in 1970, however, preserving the environment went from a popular sentiment to another regulatory requirement for corporate America.

When this concept got its legal teeth, it gave rise to another phenomenon, the toxic tort.

A tort is quite simply an injury to a person’s physical being or their financial situation caused by another person’ negligence or carelessness. The injured party has the legal right to be returned to the position they were in before the tort occurred. This is the basis for our country’s tort law and the beginning for every lawsuit resulting from a tort. A toxic tort is an injury caused by coming into contact with a toxic substance. Over the years, industry has been able to lengthen the list of substances that are considered toxins, which has created even more opportunities for individuals to sue.

Toxic tort cases are difficult to prove. An injured individual who believes they have been adversely affected by exposure to a toxin is only required to prove that their claim is more likely true than not true. The burden of proof is significantly less than that required in a criminal case. In a criminal case, the standard is proving “beyond a reasonable doubt.” But in a toxic tort case, the jury can have some doubts about the validity of the claim and the injured party can still win a favorable judgment.

Also keep in mind that an instance of toxic exposure doesn’t affect a single individual. An event like finding asbestos insulation in a building or dumping hazardous medical waste into a stream will subject large numbers of people to risk. A smart attorney will find as many members of the exposed “class” as they can because there is strength in numbers especially when it comes to convincing a jury. Settlements in class action suits are notorious for being huge amounts of money; so large in fact that these settlements have been the impetus behind the movement for tort reform in this country.

The irony of the situation is that large settlements stem from the very nature of tort law itself. Remember, the law requires that the injured party be returned to the position they were in before the tort. Since the effects of toxic exposure are usually irreversible, this is impossible. The only alternative for righting the wrong is to give the victim monetary compensation that is equivalent to the amount of damage suffered. When juries start to examine the types of damages suffered such as the cost of past and future medical care, the loss of earning capacity and pain and suffering to name only a few, the numbers head toward the stratosphere.

What does all of this mean for your business? It means two things. First an ounce of prevention is worth a pound of cure. Following the mandates of environmental regulatory agencies lessens the chance that you will be involved in a tort case. The second thing is that it is always good to have a backup plan. An insurance policy such as pollution legal liability coverage allows you to anticipate the risk before it happens by providing a means for paying settlements. It lets you transfer a risk to your carrier that could potentially be lethal to your bottom line.