When CVS Pharmacies announced that it was closing 900 stores around the country just weeks after a Georgia appeals court upheld a $43 million premises liability verdict against the company, some saw it as a sign of the times.

“Yes, there is a cost to these verdicts,” said William Large, president of Florida Justice Reform Institute, which advocates for reforms in the civil justice system.

A national insurance research and trade organization said the verdict and others like it have not gone unnoticed by the industry.

“We have seen several nuclear verdicts across the U.S. on premises liability cases involving criminal acts, and inadequate security is a common thread that juries have cited,” said Mark Friedlander, director of communications for the Insurance Information Institute. “As a result, some commercial insurers have refined their underwriting standards to ensure their retail business insureds have adequate security measures in place to better protect their customers and prevent incidents like this from occurring on their property.”

But plaintiffs’ attorneys, including those who have been involved in some of the recent high-dollar cases against retailers, said that the judgments and settlements, while eye-popping, have little to do with the CVS store closings and are unlikely to move major insurers or huge retail corporations to make improvements.

“I’ve never seen these guys change their ways because of a big verdict,” said Trent Speckhals, an Atlanta trial lawyer who has landed some major wins against drug store chains over pharmacy malpractice, prescription errors and other negligence claims. “They all seem to act as if this is the cost of doing business.”

On some premises liability claims, such as tripping hazards from uneven floors, retailers have been known to make low-cost repairs, often after a nudge from their insurers, attorneys said. But after judgments on claims related to crimes, like the $43 million CVS verdict, which could require more extensive investments, corporations have been slow to react.

Real change usually comes only after “motherlode-level” judgments, such as the one against Ford Motor Co. in 1978 after a Pinto car’s gas tank exploded—which would equate to about $530 million in today’s dollars—or after repeated verdicts over the same issue, Speckhals said.

Some companies in the hospitality industry, for example, have come to understand after lawsuits in recent years that hotels with one main entrance through the lobby are much safer than motels with rooms that open directly to the parking lot. But many motel chains still don’t follow that model.

In the recent Atlanta CVS case, a man named James Carmichael was robbed and shot in 2012 while he was sitting in his car in the CVS parking lot on Moreland Avenue. A jury last year found that the pharmacy chain knew the dangers, that other robberies and assaults had happened there, and that the store should have hired security guards and installed better lighting.

The verdict came a year after juries awarded almost $70 million to a man who was shot in the Kroger grocery store parking lot on Moreland Avenue, not far away. That same year, another jury granted $52 million to the estate of a man who was gunned down outside an Atlanta convenience store, according to TopVerdict.com.

The Court of Appeals of Georgia upheld the CVS verdict in November, noting that management had knowledge that robberies were a problem and that a shooting was foreseeable.

“Unfortunately, CVS chose, despite years of requests, not to move forward with security, despite its nominal costs,” said James Rice, one of the lead plaintiffs’ attorneys in the Carmichael case.

Three weeks after the appeals court decision, CVS announced it would close 300 stores a year for the next three years. The list won’t be announced until next spring, and a company spokesman did not say if the Moreland Avenue store is on that list. It’s part of a major restructuring for the pharmacy giant—the largest in the country—as it plans to focus on stores that also offer health clinics, the company has said.

CVS officials did not comment on the impact that the Atlanta verdict has had on its operations or its insurance costs, or if it plans to improve security measures at stores. The company appears to have multiple layers of insurance and may be at least partly self-insured, attorneys said.

Nationwide, similar verdicts above $10 million appear to be on the rise, according to some researchers. Verisk, which compiles insurance data from around the country, reported that the average size of jury awards climbed almost 1,000 percent from 2010 to 2018, to about S22 million. The year 2019 saw a 300 percent jump in verdicts of $20 million or higher compared to the average size of verdicts in the decade from 2001 to 2010.

Several insurance carriers declined to talk about the recent high-dollar premises liability cases. But attorneys said the industry is paying attention, and the litigation could put more pressure on insurance companies to settle before cases get to a jury.

“Insurance companies are 100 percent concerned about this and are very aware of these nuclear verdicts,” said David Henry, an insurance defense attorney with the Kelley Kronenberg firm, based in Fort Lauderdale.

He and other defense lawyers noted that in some “politically liberal” or plaintiff-friendly jurisdictions where large premises liability or negligence verdicts seem more likely, insurers are now considering increasing their levels of reinsurance, auditing properties for security measures and incentivizing businesses to step up safety.

“I fully expect more landowners to do more on security now,” Henry said.

That could ultimately mean more costs, higher premiums or a switch to self-insurance for some businesses—a potentially fatal blow for mom-and-pop stores in urban areas that already struggle to maintain a healthy economic and tax base, some said.

“It’s unfortunate for urban core areas,” said Vince Gunter, a lawyer with RDM Law in Kansas City. “You could say it’s the law of unintended consequences.”

It certainly seems reasonable for insurers to encourage CVS and other retailers “to comply with Georgia law and act reasonably to keep their premises safe,” Rice, the trial attorney said. “In doing so, it would decrease litigation as well as provide the proper environment where citizens could safely shop and support their local retailer.”

He argued that improvements don’t have to be costly. “There is a plethora of examples where retailers have worked with local police and others to ensure a safe shopping environment along with profits for the retail community,” Rice said.

But increasing security measures is not as simple or as effective as it may seem, Henry and Gunter said. Security guards can’t spend hours outside in the parking lot, especially in inclement weather. And other types of businesses have stayed away from outside guards for a number of reasons. Banks, for example, never have security guards outside, despite knowing that customers leave the building with wads of cash, Gunter said.

Others have suggested that retailers and their insurers can’t protect against every possible scenario and can’t react to every verdict. In this case, some commenters have said, Carmichael knew what he was getting into when he sold an iPad computer tablet to an acquaintance in the CVS parking lot. He carried a gun, but it jammed when he tried to shoot his robber, according to court testimony.

That showed that Carmichael was a businessman, and his shooting was unforeseeable and was substantially different from previous robberies, said Large, of the justice reform group.

*This article was originally published by our sister publication Insurance Journal