What Is a Nuclear Verdict?
Nuclear verdicts, including employment practices liability claims, refer to exceptionally high jury awards—generally, those exceeding $10 million. Such verdicts have become increasingly common in the past decade. In fact, the National Law Journal reported the average jury award among the top 100 U.S. verdicts more than tripled between 2015 and 2019, skyrocketing from $64 million to $214 million. Furthermore, 30% more verdicts surpassed the $100 million threshold in 2019 compared to 2015.
A variety of factors have contributed to this trend, including rising litigation funding, eroding tort reform and, above all, deteriorating public sentiment toward businesses. Amid growing corporate distrust, businesses have not only been expected to meet higher standards within their operations but have also been held more accountable for their wrongdoings. Upon being sued and taken to court, businesses have frequently encountered juries that are sympathetic to plaintiffs. Compounding this issue, there’s a rising perception that businesses (especially large ones) can always afford the cost of damages. This means juries are likely to have fewer reservations when awarding substantial damages to plaintiffs, resulting in nuclear verdicts.
Nuclear verdicts can carry significant consequences for businesses of all sizes and sectors, causing lasting reputational harm, posing underinsurance concerns and wreaking largescale financial havoc. That’s why it’s vital for businesses to better understand these verdicts and how to prevent them. This case study summarizes a recent nuclear verdict, outlines factors that led to the verdict, highlights associated compliance considerations and provides related risk mitigation measures.
$28.7 Million Employment Practices Liability Verdict
Case Details:
In 2015, a highly experienced 77-year-old physician, who dedicated nearly 20 years of his career to the prestigious Cleveland Clinic in Ohio, was pressured to retire against his wishes. The impetus for this decision was attributed to his advanced age, as the newly instated leadership deemed him “no longer a fit” for the institution. Troublingly, it came to light that the hospital had been deliberately steering the older physician’s patients to younger physicians.
When the aggrieved doctor voiced his concerns to both his supervisor and the HR department, the hospital responded by not reappointing his patients, effectively exacerbating his professional and financial predicament. With fewer patients, the doctor experienced a decline in income, prompting him to seek employment at a different medical center.
In response to this ordeal, the doctor pursued a legal course of action, filing an employment discrimination and retaliation lawsuit against the Cleveland Clinic Foundation. This legal battle unfolded in the Common Pleas Court in Cuyahoga County.
After thoroughly examining the case, the jury reached a verdict in 2018 that upheld the doctor’s claim. The Cleveland Clinic was found to have violated both age discrimination and retaliation laws. As a consequence of this verdict, the jury awarded the physician a substantial sum of $28.7 million. The comprehensive award consisted of $1.95 million in economic compensatory damages, $325,000 in emotional distress damages and $26.375 million in punitive damages.
It’s noteworthy that, in accordance with Ohio law, punitive damages were subject to a limitation, specifically capping them at a maximum of two times the compensatory damages. This legal restriction resulted in an adjustment of the final award, which amounted to $6.8 million, in addition to covering the attorney fees incurred during the litigation.
Factors That Led to the Verdict – $28.7 Million Employment Practices Liability Verdict
Age Discrimination:
The U.S. Equal Employment Opportunity Commission (EEOC) defines age discrimination as treating applicants or employees less favorably because of their age. The EEOC notes that discriminating in any aspect of employment against an individual who is 40 or over is a violation of anti-age discrimination laws. Examples of employment that receive protection include workers’ hiring, firing, pay, job assignments, promotions, layoffs, training, benefits and any other terms or conditions of employment. Age discrimination can still occur even if the actor and victim are both aged 40 and older. Additionally, an employment policy or practice that applies to everyone, regardless of age, can still be against the law if it negatively impacts applicants or employees aged 40 or over and is not based on a reasonable factor other than age. The EEOC reported that 11,500 age discrimination charges were filed in fiscal year (FY) 2022, and 15.6% of all charges filed with the EEOC involved age discrimination. As it relates to this verdict, the hospital’s pressure on the doctor to retire and the alleged patient steering based on age were key factors that led to the jury’s finding of age discrimination and subsequent damage award in his favor.
Retaliation:
In employment settings, retaliation occurs when an employee treats an applicant, employee or former employee, or people closely associated with these individuals, less favorably after asserting their rights to be free from employment discrimination, including harassment. Protected activities include communicating with a supervisor about discrimination; requesting job accommodations for a disability or religious practice; filing or being a witness in an equal employment opportunity charge, complaint, investigation or lawsuit; refusing to follow instructions that would lead to discrimination; resisting sexual advances or intervening to protect others; and asking others about wages. Examples of prohibited retaliation by employers include abusing an employee (verbally or physically), giving them an unjustified poor performance review, increasing scrutiny of their work, transferring them to a less desirable position, threatening to report or reporting their immigration status to authorities or making their work harder after they exercise their workplace rights. Retaliation has been a top cause of employment litigation in recent years. According to the EEOC, more than half (51.6%) of all employment charges filed in FY 2022 involved retaliation. Regarding this case, the retaliation aspect of the verdict revolved around the hospital’s adverse actions after the doctor voiced his age discrimination complaints to his supervisor and HR department. The court found that these actions constituted retaliation and, as a result, awarded significant damages in his favor.
Compliance Considerations
This nuclear verdict also poses some compliance considerations related to age discrimination and retaliation. The Age Discrimination in Employment Act (ADEA) prohibits discrimination and agebased harassment against individuals who are 40 years or older. States may also have laws that provide protection from age discrimination for workers under 40. The ADEA applies to U.S. employers with 20 or more employees.
The ADEA and other employment laws (e.g., Equal Pay Act, Title VII of the Civil Rights Act of 1964 and Americans with Disabilities Act) also make it illegal for employers to retaliate against an employee for opposing the employer’s discriminatory practices. The EEOC notes that participating in a complaint process is protected from retaliation under all circumstances. Employee acts to oppose discrimination are also protected as long as the employee acted under a reasonable belief that something in the workplace may violate equal employment opportunity laws.
Risk Mitigation Measures
Eliminate Age Discrimination and Retaliation Exposures
The following actions can help eliminate age discrimination and retaliation incidents:
- Evaluate business culture, practices and policies. By assessing their current culture, practices and policies, employers can identify and eliminate assumptions about older employees and build a multigenerational culture that rejects ageism. Employers should also implement a zero-tolerance policy against any kind of discrimination or harassment.
- Scrutinize recruitment practices. Recruiters and interviewers should be trained on proper recruitment practices, including how to avoid ageist assumptions, such as the belief that an older candidate may retire soon. Applications should also eliminate age-related information (e.g., date of birth or graduation year) and interview panels should be multigenerational.
- Include age in diversity, equity and inclusion strategies. Age can often be overlooked within diversity, equity and inclusion efforts. Employers should educate employees about ageism in the workplace and provide training on how to eliminate it. Additionally, spreading awareness of what ageism is may increase the likelihood that employees who witness it will report it.
- Take all complaints seriously and respond to them immediately. Complaints regarding ageism should be taken seriously and handled promptly. Investigations should include interviews with all parties connected to the claim and a thorough review of other relevant evidence. Employers and employees should be held accountable for following and enforcing discrimination policies.
- Avoid basing employment decisions on age. Employers should use objective performance metrics for determining performance bonuses, promotions or other employment decisions. Additionally, since the highest-paid employees are often the most senior, using salary as a reason for dismissal may expose an employer to an age discrimination claim.
- Assure workers they will not be punished for exercising their workplace rights. Employers should educate their employees on workplace rights and protected actions and communicate that their jobs will not be adversely impacted for exercising their rights.
- Train managers and supervisors on retaliation. Employers should educate managers and supervisors on what constitutes retaliation and make it clear that such behavior is not allowed. Managers and supervisors should also be trained to stop, prevent and address retaliation and handle employee complaints without engaging in retaliatory behavior.
Ensure Compliance
Employers should regularly assess workplace policies and employment practices to maintain compliance with age discrimination and retaliation laws as well as other applicable federal, state and local regulations. Consult legal counsel for additional compliance requirements.
Secure Proper Coverage
In this increasingly litigious environment, it is crucial for businesses to purchase adequate insurance. Businesses should reach out to trusted insurance professionals to discuss their specific coverage needs.
Reach out to one of our trusted insurance advisors to discuss specific coverage needs, so you can avoid a nuclear verdict or employment practices liability claim.