In the context of a construction injury case, most damages are meant to compensate the injured person for all foreseeable harm resulting from the defendant’s mistake. Compensatory damages can include lost wages, medical bills, or pain and suffering. The purpose is to "make the plaintiff whole again." In other words, compensatory damages are not meant to punish the defendant. They are meant to make up for the harm caused -- no more, no less.
Punitive damages serve a fundamentally different purpose. Punitive damages ask the question, "should the defendant be punished for what happened?"
In the sections that follow, this article will explore the following issues:
A construction company must compensate an injured person for harm caused by any mistakes for which the construction company is legally liable. In order to go beyond compensation and obtain punitive damages, the injured person must prove that the construction company did something so deplorable that it would get off lightly by merely having to compensate the victim for the injuries.
This requires intentional or particularly reckless behavior. For example, imagine a foreman for a general contractor at a construction site gets into a heated argument with an electrician over the worker’s consistent failure to arrive at work on time. The foreman decides that the work site would be better off without the worker. So, the foreman "forgets" to turn off the electricity to the electrician's work station at an inopportune time, and the electrician is electrocuted.
That situation would call for punitive damages (not to mention criminal charges). The foreman did not merely make a mistake. The foreman intentionally harmed the electrician, which warrants punishment.
Another example of when punitive damages might be available would be if a construction company were to make an economic calculation to trade lives for profit. Imagine a construction company is building a warehouse and has to make a decision on the type of insulation to buy. The company decides to purchase asbestos-based insulation because it is 80% cheaper than any other kind of insulation. The company knows that asbestos is a cancer-causing agent. But the company determines that since cancer takes a long time to develop, any lawsuits would happen well down the road, and the cost of those lawsuits would not exceed the company’s profit for using the cheaper insulation.
In this sort of case, punitive damages might be ordered as a way to hit the construction company in the pocketbook for their decision to put workers' lives at risk.
Personal injury lawsuits increase the costs of doing business for construction companies. That in turn increases the costs of building new buildings, which can hamper economic growth. Thus, some reformers look to ban or limit punitive damages.
Critics of punitive damages would argue that punitive damages are unnecessary because other means exist to satisfy the same goals, such as safety regulations and licensing agencies.
Furthermore, critics contend that punitive damages make little sense because the money should not go to the harmed individual. A plaintiff who has already been made whole with compensatory damages receives a windfall if punitive damages are awarded. Arguably, this encourages frivolous litigation.
Many states limit punitive damages, which are often calculated as a multiplier of compensatory damages. So, for example, if a plaintiff is owed $1 million in compensatory damages, a court might award punitive damages at a 3 to 1 ratio, so $3 million will be added to the award, for a total of $4 million.
Punitive damages rarely exceed a ratio of about 7 to 1. Some states have laws that cap punitive damages at certain ratios. Other states have laws that make it extremely difficult to win punitive damages, perhaps by requiring the intentional infliction of harm. One way or another, lawmakers in most states have imposed ways of limiting the use of punitive damages in injury cases. To find the laws on damage caps for a given state, see AllLaw's State Personal Injury Laws page.