Damage Caps and Other Limits on Personal Injury Compensation
State laws put limits on the amount of money that can be awarded for various damages in a personal injury case.
Damages in personal injury cases can be limited by a variety of state statutes and legal concepts. This article discusses some of the most common limits on compensation in a personal injury lawsuit.
Non-Economic Damage Caps
“Economic damages” are concrete damages that the injured person (the plaintiff), or the plaintiff’s insurance company, has paid out and/or will continue to pay out as a result of the injury -- for example medical bills stemming from the injuries. Economic damages are also concrete amounts the plaintiff has missed out on and/or will continue to miss out on, for example lost wages.
“Non-economic damages” are every other category of injury damages, most importantly the various types of “pain and suffering” and “loss of enjoyment of life” damages. Unlike economic damages, a jury does not base a plaintiff’s non-economic damage awards on past losses and future calculations, it has to make a more subjective evaluation.
Many states have non-economic damage caps for medical malpractice cases. A smaller number, less than a quarter, of states have in place non-economic damage caps for any personal injury claim. The cap amounts (i.e. the maximum amount of non-economic damages the plaintiff can recover) vary, ranging from $350,000 to $750,000. The damage cap laws, however, all make exceptions for cases involving death and serious injuries, for example loss of a limb or organ system. These exceptions either permit a higher damage cap or eliminate the cap altogether.
Punitive Damage Caps
Punitive damages are designed to punish intentional wrongdoing and deter future bad conduct and, importantly, are usually based on the defendant’s wealth. Before punitive damage reforms, if a plaintiff proved that a very wealthy defendant (like a large corporation) intentionally caused the plaintiff's harm, the punitive damage award could vastly exceed other damages in the case. A 2005 U.S. Supreme Court case put in place guidelines to prevent excessive punitive damage awards, but those guidelines still permitted some pretty large awards.
A number of states, however, have enacted statutes that more aggressively limit punitive damage awards in personal injury claims, or eliminate them altogether. Some have fixed caps -- $250,000 on the low-end and $10,000,000 on the high -- and others have a fixed multiplier based on other damages in the case. For example, a punitive damage cap law might require that punitive damages be no higher than three times the economic and non-economic damage awards.
Other Changes to Traditional Rules Affecting Damages
States have also made other changes to traditional rules in the name of tort reform. The first is a change to the traditional rule of “joint and several liability.” Under the traditional rule, a plaintiff could collect the full amount of damages from one defendant, even though multiple defendants were at fault. The rationale for joint and several liability was that the plaintiff should not be punished simply because one of the defendants was broke or impossible to find; it was more fair for a partially at-fault defendant to pay more than her share of the liability to make the plaintiff whole. A majority of states have passed laws eliminating joint and several liability and now require a defendant to pay only his or her proportionate liability.
Secondly, the “collateral source rule” prevents the defendant from presenting at trial evidence that the plaintiff has received compensation for the injuries from another source, for example from his or her medical insurance. The rationale behind this rule was that the jury would reduce the plaintiff’s damages if they heard about the other compensation, and that most insurers would collect from the plaintiff’s damage award what they had paid out. To treat the situation otherwise would give the defendant a windfall, despite being liable, and punish the plaintiff and/or the insurance company (an insurance company will typically have a lien on any amount the plaintiff is awarded up to the amount the insurance company paid out).
Many states have modified the collateral source, predominantly in medical malpractice actions, but also in general civil liability cases like personal injury. Most of the modifications provide that the rule is still in place if a medical insurance lien (called a “subrogation right”) is involved, but some do not. As with some state damage caps, a number of the collateral source rule statutes have been ruled unconstitutional by state courts.
Find Your State's Law
See our state laws page to find out if a particular state has a cap, as well as other important state laws affecting a personal injury case.
To learn more about compensable damages, see the articles in Allaw's Personal Injury Damages Section.