7.3 Limitations on Damages

Tort law sets limits on damages to balance fairness and prevent excessive awards. These caps, often controversial, apply to economic, non-economic, and punitive damages. They aim to control insurance costs and encourage settlements, but critics argue they unfairly restrict compensation for severe injuries.

Damage caps vary by state and case type, with medical malpractice being a common focus. Courts have reached different conclusions on their constitutionality. When applying caps, lawyers must carefully calculate damages, considering specific limitations for each category to determine the final recoverable amount.

Limitations on Damages in Tort Law

Damage caps in tort litigation

Top images from around the web for Damage caps in tort litigation

• 

  Torts - 1L Survival Guide - Research Guides at Florida State University College of Law Research ... View original

  Is this image relevant?

• 

  Tort Law, Liability, and Damages | Introduction to Business View original

  Is this image relevant?

• 

  Tort Law - Free of Charge Creative Commons Legal Engraved image View original

  Is this image relevant?

• 

  Torts - 1L Survival Guide - Research Guides at Florida State University College of Law Research ... View original

  Is this image relevant?

• 

  Tort Law, Liability, and Damages | Introduction to Business View original

  Is this image relevant?

1 of 3

Top images from around the web for Damage caps in tort litigation

• 

  Torts - 1L Survival Guide - Research Guides at Florida State University College of Law Research ... View original

  Is this image relevant?

• 

  Tort Law, Liability, and Damages | Introduction to Business View original

  Is this image relevant?

• 

  Tort Law - Free of Charge Creative Commons Legal Engraved image View original

  Is this image relevant?

• 

  Torts - 1L Survival Guide - Research Guides at Florida State University College of Law Research ... View original

  Is this image relevant?

• 

  Tort Law, Liability, and Damages | Introduction to Business View original

  Is this image relevant?

1 of 3

• Statutory limits on the amount of damages a plaintiff can recover in a tort case
  • Apply to economic damages (medical expenses, lost wages), non-economic damages (pain and suffering), or punitive damages
  • Economic damage caps limit recovery for financial losses
  • Non-economic damage caps limit recovery for intangible losses
  • Punitive damage caps limit the amount awarded to punish the defendant and deter future misconduct
• Impact of damage caps on tort litigation
  • Reduce the incentive for plaintiffs to bring tort claims, especially for severe injuries (spinal cord damage)
  • Lead to more settlements, as plaintiffs have less bargaining power when damages are capped
  • Limit the deterrent effect of tort law, as defendants face less financial risk for wrongdoing (medical malpractice)

Statutory limitations on damages

• Medical malpractice damage caps
  • Many states have enacted caps specifically for medical malpractice cases (California, Texas)
  • Caps often apply to non-economic damages, such as pain and suffering
  • Some states also cap total damages, including both economic and non-economic losses (Colorado)
• Other common statutory limitations on damages
  • Caps on punitive damages, often tied to a multiple of compensatory damages or a fixed amount ($500,000)
  • Caps on damages in cases against government entities or employees, based on sovereign immunity (Federal Tort Claims Act)
  • Caps on damages in product liability cases, particularly for certain industries (pharmaceuticals, medical devices)

Policy debates on damage limits

• Arguments in favor of damage caps
  • Help control the cost of liability insurance, particularly in high-risk industries (healthcare)
  • Reduce the practice of defensive medicine, where doctors order unnecessary tests to avoid liability
  • Prevent excessive or arbitrary damage awards by juries (runaway juries)
  • Encourage settlement and reduce the burden on the court system
• Arguments against damage caps
  • Unfairly limit compensation for plaintiffs with severe injuries and high economic losses (brain damage)
  • Disproportionately affect vulnerable populations, such as the elderly or disabled
  • Undermine the deterrent function of tort law by reducing financial consequences for defendants (nursing home abuse)
  • Infringe on the constitutional right to a trial by jury and access to the courts

Constitutionality of recovery limitations

• Challenges to the constitutionality of damage caps
  • Plaintiffs have argued that caps violate the right to a trial by jury under the Seventh Amendment
  • Some have claimed that caps violate equal protection by treating severely injured plaintiffs differently
  • Others contend that caps infringe on state constitutional rights, such as the right to a remedy (open courts provision)
• Court decisions on the constitutionality of damage caps
  • State courts have reached varying conclusions on the constitutionality of caps under state constitutions
  • Some states, like Illinois and Georgia, have struck down caps as unconstitutional
  • Other states, like California and Texas, have upheld the constitutionality of caps
  • The U.S. Supreme Court has not directly addressed the constitutionality of state damage caps

Calculating Damages with Limitations

Apply damage caps and statutory limitations to calculate recoverable damages in hypothetical cases

• Calculating damages with a non-economic damage cap

1. Determine the total amount of non-economic damages awarded by the jury ($1,000,000 for pain and suffering)
2. If the non-economic damages exceed the statutory cap, reduce the award to the maximum allowed amount ($250,000 cap)
3. Add the capped non-economic damages to any economic damages to determine the total recovery ($250,000 +$500,000 medical expenses = $750,000)

• Calculating damages with a total damage cap

1. Determine the total amount of damages (economic and non-economic) awarded by the jury ($2,000,000)
2. If the total damages exceed the statutory cap, reduce the award to the maximum allowed amount ($1,000,000 cap)

• Calculating damages with a punitive damage cap

1. Determine the amount of compensatory damages (economic and non-economic) awarded by the jury ($500,000)
2. Calculate the maximum allowable punitive damages based on the statutory cap ($500,000 or 3 times the compensatory damages =$1,500,000)
3. If the jury's punitive damage award exceeds the cap, reduce it to the maximum allowed amount ($5,000,000 reduced to$1,500,000)
4. Add the capped punitive damages to the compensatory damages to determine the total recovery ($1,500,000 +$500,000 = $2,000,000)