Damages Caps and Other Limits on Personal Injury Awards

The amount of money you can receive in a personal injury lawsuit is often referred to as "damages." In most kinds of personal injury cases, when a lawsuit goes all the way to trial, a jury is usually free to award whatever amount in damages they think is appropriate if the injured person wins. But in some states there are laws that place limits (or "caps") on specific kinds of damages in certain types of cases.

What Are Damages in Personal Injury Cases?

The first thing to understand is that there are two main categories of damages in a personal injury case:

• economic damages, and
• non-economic damages.

What Are "Economic" Personal Injury Damages?

"Economic damages" are easily-calculated dollar amounts 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—medical bills, for example. Economic damages also include concrete financial harm resulting from the injuries, like the plaintiff's lost income.

What Are Non-Economic Personal Injury Damages?

"Non-economic damages" include most other categories of harm and negative effects of the underlying accident, most importantly the various types of mental and physical "pain and suffering" and "loss of enjoyment of life" experienced by the plaintiff as a result of their injuries.

Compared with economic damages, non-economic damages are difficult to calculate, and are much more subjective from plaintiff to plaintiff.

What Is "Tort Reform"?

"Tort reform" refers to legislative changes (both laws that are proposed and laws that are passed) that try to change the way personal injury cases work. "Tort" is just a legal term for personal injury, and tort reform typically involves placing limits or "caps" on how much an injured person can receive in damages after a successful lawsuit.

Arguments for Tort Reform

The pro-tort reform side say that caps on damages are essential for protecting against the crushing societal effects of unreasonable jury verdicts, including the high cost of liability insurance, and, when it comes to medical malpractice lawsuits, the skyrocketing cost of health care.

In the medical malpractice context, the arguments are that:

• doctors, hospitals and health care providers have to pay more and more money for malpractice insurance, and to defend against lawsuits, and these costs are passed on to consumers, and
• doctors sometimes make treatment decisions based on the fear of a lawsuit, rather than solely on what they believe is best for the patient.

Arguments Against Tort Reform

Those against tort reform efforts say it's not fair to cap damages and prevent plaintiffs from getting full compensation for losses that were caused by someone else. Some argue that damages caps in particular are unconstitutional, and in a number of states, courts have agreed.

Caps on Non-Economic Damages in Personal Injury Cases

While no state currently has a cap in place on economic damages across all kinds of personal injury cases, around ten states have capped non-economic damages in most injury-related cases (whether arising from a car accident, a slip and fall, or any other kind of incident). These include Colorado, Ohio, Oregon, Maryland, and Tennessee. It's important to note that a number of exceptions either permit a higher damages cap or eliminate the cap altogether in certain kinds of cases.

Caps on Medical Malpractice Damages

About half of states in the U.S. have also capped non-economic damages in medical malpractice lawsuits. The cap amounts (i.e. the maximum amount of non-economic damages a successful medical malpractice plaintiff can recover) vary, and there are exceptions that can increase or eliminate the cap. Learn more about medical malpractice damages caps state-by-state.

Caps on Damages in Defective Product Lawsuits

A small number of states have also capped non-economic damages in defective product (or "product liability") cases, but again, exceptions and other special rules can apply to these limits.

Punitive Damages Caps in Personal Injury Cases

They're rarely applied in personal injury cases, but punitive damages are designed to punish intentional wrongdoing and deter future bad conduct. They're usually assessed based on the defendant’s financial resources.

A number of states have enacted laws that limit punitive damage awards in personal injury claims. For example, a punitive damages cap law might require that an award of these kinds of damages be no higher than three times the plaintiff's economic and non-economic damages.

Is It Possible to Get Around Damages Caps?

Not usually, no. If it looks like a damages cap might affect your case under the law in your state, in rare situations it might be possible to file your lawsuit in a different state (one that doesn't have any damages caps on the books).

The other possibility is that the specifics of your case might mean the cap won't apply to your particular lawsuit. The laws setting out damages caps in some states say that a higher cap (or no cap at all) applies to cases involving "catastrophic" injuries or other particularly severe kinds of harm. If you're in this situation, it probably makes sense to talk to a lawyer who can take a deeper dive into your circumstances.

Changes to Other Rules Affecting Damages

States have also made other changes to traditional damages-related rules in the name of tort reform.

"Joint and Several" Liability in Personal Injury Cases

Under the traditional rule, a plaintiff could collect the full amount of damages from one defendant, even though multiple defendants might have been at fault for the accident that led to the claim. This is known as "joint and several" liability.

The rationale for joint and several liability was that the plaintiff shouldn't be punished simply because one of the defendants had no assets, or was impossible to locate; it was more fair for a partially at-fault defendant to pay more than their share of the liability so that the plaintiff could be made whole. A number of states have passed laws eliminating joint and several liability and now require a defendant to pay only their proportionate liability.

The "Collateral Source" Rule in Injury Cases

The "collateral source rule" prevents the defendant from presenting evidence that the plaintiff has received compensation for their injuries from another source, like their medical insurance.

The rationale behind this rule was that the jury would reduce the plaintiff’s damages if they heard about the other compensation, even though most insurers would collect from the plaintiff’s damages award what they had paid out (via a personal injury lien). This might unfairly limit the defendant's liability and punish the plaintiff for having the safety net of insurance coverage.

Many states have modified the collateral source, though the rule is usually still in place if a medical insurance lien (called a “subrogation right”) is involved. As with some state damages caps, a number of the collateral source rule statutes have been ruled unconstitutional by state courts.

If you're thinking about filing a personal injury lawsuit, and you're wondering how the laws in your state might affect the amount of compensation you can receive, check out Nolo's collection of state-by-state personal injury laws. You can also ask your personal injury lawyer to explain how your state's laws might affect your case.