Leveraging Technology to Protect Companies from Big Verdicts

Posted in Profile Stories on September 1, 2021

Many companies are taken to court for a variety of false claims, fraudulent allegations, and more that result in the businesses paying out exorbitant sums of money, sometimes considered “nuclear verdicts” because they can completely bankrupt a company, destroying it like a nuclear bomb. Massive punitive damages, commonly exceeding $10 million, can damage a company’s reputation all because of a false or extremely misleading narrative. Companies with permanently tarnished reputations may have to change the direction of their business in the future just to stay afloat. To prevent this from occurring, companies in multiple industries are turning to technology to help protect their reputations, predict when fraud is occurring, and prevent unmeritorious claims from being brought against them. This technology could be seen as extreme in some circles, however, using it to protect a business is incredibly common. Security systems with video surveillance have been around for decades and have helped prevent theft of physical items and prove when fraud occurs in some cases. Newer AI-driven technology can increase that level of security and protect a company from lawsuits with potentially big verdicts.

Artificial Intelligence Counters False Plaintiff Narratives

One industry beginning to implement more artificial intelligence (AI) driven software is the trucking industry. Bluewire, a company that has developed an AI-software service, wants to protect motor carriers and their insurers by giving them data that will help prevent meritless lawsuits from ever reaching the court system. The new technology can also help to counter any potentially negative impacts on a business’s public image by showing facts derived through AI acquired data proving a motor carrier is following all applicable safety guidelines and regulations. Plaintiffs bringing forth lawsuits against motor carriers are often found to use what is called “the reptile” theory strategy in litigation. Plaintiffs’ attorneys will attempt to establish a general safety rule with the jury that the motor carrier must follow and then will try to demonstrate that the motor carrier somehow broke this safety rule. This theory can be combatted using the data collected through the AI system Bluewire has developed. The data will show facts and will counter the inaccurate portrayal of motor carrier behavior by plaintiffs’ counsel. There are many types of technology motor carriers already use to help preclude and/or defeat false claims of negligence, including tire inflators and speed limiters. The bigger picture, though, requires technology that can unify all safety methods and present a clear picture of how the company prioritizes safety.

Through this technology, Bluewire purports to be able to identify potential vulnerabilities that a motor carrier company may have. These vulnerabilities give savvy plaintiffs’ counsel inroads to allege negligence by focusing on small issues that should have been covered by the motor carrier. If safety cameras do not work, driver qualifications are not on file, or the motor carrier is not providing or requiring ongoing driver safety training, the new AI technology can identify that as a problem and suggest the best solutions to address these lapses. This will then proactively prevent plaintiffs from focusing on minor internal inconsistencies in an attempt to file frivolous lawsuits. This technology is still under development and has not been fully implemented yet, but Bluewire is confident its system will be adopted by motor carriers worldwide to protect their assets.

Preventing Insurance Fraud

Another industry that suffers from fraudulent claims and false narratives is the insurance industry. Insurance fraud is rampant nationwide and insurers are turning to new technology to help prevent this sort of fraud from taking place. The adoption of data technology can quickly cut down on the time needed to recognize fraud is taking place. As new scams are developed by creative, insidious scammers, insurance technology must keep up to be able to quickly detect a scam is taking place. Previously used tactics – including automated red flags and business rules – are being adapted to incorporate predictive modeling and link analysis. Link analysis examines the relationships between people, places, and events. New AI can be used to uncover insurance fraud before a claim payment is made. AI can check claims from the beginning, flagging suspicious claims quickly based on programmed and learned factors which then lead to an immediate further review. Those with no suspicious elements detected by the AI software can be processed normally.

The insurance industry has seen fraud increase steadily since 2014. The Coalition Against Insurance Fraud and the SAS institute published a report called the State of Insurance Fraud Technology in 2019 revealing that 90 percent of participants used technology primarily to detect and/or prevent fraudulent claims. Approximately 75 percent of participants said fraud had increased in the past few years. No insurer said that fraud had decreased over that same time period. Almost half of the insurers polled said they would be increasing their technology budgets with predictive modeling, link analysis, and social network analysis as the types of programs most likely considered for investment. Like much of the nation, the greatest challenge that comes with the increasing use of technology is having limited resources for information technology departments. As technology progresses, companies must shift their budgets to allow for an increase in technology use to prevent possible costly litigation and to protect their valuable brand names and reputations.