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NCDOT Used To Deny 99% of Pothole Damage Claims. LegalTech Changed That

After telco contracts and real estate leases, Veeto is finally getting into pothole damage claims for drivers in North Carolina.

· LegalTech,Pothole Claim,Low-Value Claims,Evidence,Access-To-Justice

In 2005, 12-year-old Cameron Schneider was riding his bicycle home from the grocery store when he hit a pothole on Balsam Road in Jacksonville, NC. Upon impact, he fell from his bike and broke his right leg.

pothole damage

Because Balsam Road is maintained by the North Carolina Department of Transportation (NCDOT), Cameron's mother filed suit against NCDOT under the North Carolina Tort Claims Act, seeking to recover damages stemming from Cameron's medical bills.

To win her lawsuit against NCDOT, Ms. Schneider needed to prove four elements:

  1. That NCDOT owed a duty to Cameron Schneider/Ms. Schneider.

  2. That NCDOT breached a duty that they owed to Cameron Schneider/Ms. Schneider on the day that Cameron hit the pothole in 2005.

  3. That Cameron Schneider/Ms. Schneider was damaged due to a breach of duty by NCDOT.

  4. That Cameron Schneider/Ms. Schneider is entitled to recover damages from NCDOT.

The second element is almost always the hardest to prove in pothole damage cases--so hard, in fact, that 99% of claimants fail to prove it.

Ms. Schneider's court complaint alleged each of the required elements. Her allegation of the second element used the key language required in North Carolina, that NCDOT had been negligent: NCDOT had "negligent[ly]. . . . allowed a hazardous condition to exist on Balsam Road for an unreasonable period of time after which [DOT] either knew or should have known that the condition [sic] existed."

To the untrained observer, Ms. Schneider's case might have seemed strong. The pothole existed. It was large enough to present a hazard, and it did in fact injure her son as he rode his bicycle down the street. There was physical evidence of the injury (her son's broken leg) and documentary evidence of her medical costs. There was also no dispute that the pothole was the cause of her son's injuries.

pothole damage nc

After six years of hearings, findings, and appeals, however, in the end, Ms. Schneider lost her case. Why did she lose? She lost for the same reason that NCDOT has historically been able to deny about 99% of all pothole damage claims (see table above). At Ms. Schneider's trial, the loophole, it turned out, was bigger than the pothole--and NCDOT used that loophole to deny Ms. Schneider's claim.

The Pothole Claim Loophole, Explained

There's a massive loophole in the law which NCDOT has long exploited. In practice, it allows NCDOT to avoid liability and deny recovery to drivers who suffer injury or damage from potholes on state-maintained roads.

That loophole stems from the fact that, to win a damages claim, claimants must prove that NCDOT was aware of the pothole prior to the claimant's accident, and that NCDOT failed to fix the hazard within a reasonable period of time. In other words, to win a pothole damage claim in North Carolina, you essentially have to prove that NCDOT was negligent.

...and that's super tough to do when you need the one piece of evidence that only NCDOT holds: that they already knew about the pothole. That's the loophole.

Filing a claim is the easy part. Actually winning is the challenge.

We started working on this problem in the summer of 2019, when we asked our team: How could we close that loophole so that pothole damage claimants like Ms. Schneider can consistently win their cases against NCDOT?

As it turns out, it only took three steps.

Step 1: enter road quality apps to collect pothole data.

Road quality apps weren't around when Cameron Schneider hit that big pothole in 2005. For if they were, then Ms. Schneider might have been able to find her own pothole report data to present at trial.

Today, there are road quality apps assessing road conditions all over the world. A quick sample...

While most of these new road quality companies probably didn't have in mind a mission to "help claimants win pothole damage claims" when they launched their companies, they're contributing to that end nonetheless.

The first step to closing this massive pothole claim loophole is to collect data on pothole reports---and, now, with so many apps and companies collecting that data, it's possible for LegalTech companies like Veeto to take care of step 2.

Step 2: enter LegalTech companies to turn that pothole data into evidence of "prior notice."

Most of the literature devoted to the problem of potholes features case studies just like the one you've found in this article: people like Ms. Schneider suffer damage, have a legal right to pursue compensation, but are denied that compensation in the end due to this intractable catch 22 regarding prior notice of potholes.

Almost pathetically, many of those articles end with an altruistic call-to-action consisting of basically three bullet points:

  • "I know this isn't going to help you win your claim."
  • "But take solace in the fact that your report now may help someone else in the future."
  • "So, let's all fix this together--if we all just proactively report potholes all of the time, then this loophole wouldn't be so big."

The problem is not that potholes are not universally disliked (they are). The problem pertains to transaction cost. Basically, most people don't care enough about fixing the pothole problem unless/until they hit a pothole and suffer damages, and the only difference between the two levels of motivation is your potential ROI on the time you would spend telling road owners about the potholes you encountered.

In short, when you stand to gain a $500 reimbursement for your tire replacement, you're a bit more motivated than if you had not had to replace the tire. This is why the pothole report numbers you see in the table above are so low relative to the total number of potholes drivers are enduring every day in North Carolina.

So, what we all need is someone to do the reporting for us. That way, anytime you hit a pothole, you stand a good chance of finding evidence that NCDOT had received a prior notice about that pothole.

pothole evidence

That's what Veeto started doing this year: taking pothole report data from non-governmental sources and putting the proper road owner on notice of the existence of each and every pothole reported. With thousands of pothole reports daily, this is a massive chore. But LegalTech companies like Veeto have been similarly automating documentary chores like this for years.

In Veeto's case, for example, we've made significant dents in problems related to telco contracts and real estate leases over the years, and now we're excited to lend our core competencies to a problem that's a little more civic, and a lot more universal.

The simple way to think about it is this: we're essentially automating citizen reporting of pothole encounters (including the step of figuring out exactly who to send that report to, which is a time-consuming step on its own when you're reporting potholes the old-fashioned way). Within two days of receiving any such pothole report, NCDOT is required by law to either have it fixed or face liability for damage it causes. With that rhythm in place, there's only one more step to go before NCDOT's loophole is effectively closed.

Step 3: make evidence of prior notice readily available to pothole damage claimants.

Imagine this. You hit a pothole. Your tires explode. You're frustrated, and you're worried sick about having to shell out that unexpected $500 this month. A quick Google search reveals to you two things:

  1. You may file a claim.
  2. But you'll probably lose.

You read on, trying to understand if there is any way to not lose. You happen upon a description of this loophole, and you realize, "well, man, I don't know where to look for evidence that NCDOT has received a prior notice about this pothole." If you're savvy enough to understand the ramifications of that shortcoming, then you might not even begin the claim at all--or, if you're like Ms. Schneider, then you might waste six years of your life only to lose in the end.

But, then, you find this article (meta, I know), and you read that there is a central repository of prior pothole notices to NCDOT, and you can search that repository in a couple clicks to see if it has the exact evidence your case would need--and if it does, you can download that data to win your pothole damage claim.

Veeto's doing that part right now--as you read this, as you sleep. Every single day, Veeto is automatically putting agencies on notice of potholes reported on the roads they're responsible to maintain. In partnership with some of these road quality companies, Veeto is closing this pothole claim loophole by putting NCDOT on notice of every single pothole reported to this partner network.

pothole charlotte

Large pothole reported on route 4 in Charlotte, NC.

The consequence is not just that NCDOT will suddenly have to start paying for claim damages, but also, and more importantly, it's that NCDOT will soon find that the status quo of not improving roads fast enough is far more expensive than investing in whatever is required to finally give North Carolina drivers better roads.

I like to think of this new offering as one part offense and one part defense. The defense part means you're likely to find a way to get reimbursed if you hit a pothole and sustain damage. But the offense part is more exciting: it's a way to get more return on the tax dollars you're already paying--better roads, less vehicle damage, improved gas mileage, etc.

As Raleigh resident Larry Huff put it, “Make ’em do what they’re supposed to do. That’s what we pay our taxes for.”

Have a pothole claim?

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