Non-economic damages caps

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Non-economic damages caps are tort reforms to limit (i.e., "cap") damages in lawsuits for subjective, non-pecuniary harms such as pain, suffering, inconvenience, emotional distress, loss of society and companionship, loss of consortium, and loss of enjoyment of life. [1] [2] This is opposed to economic damages, which encompasses pecuniary harms such as medical bills, lost wages, lost future income, loss of use of property, costs of repair or replacement, the economic value of domestic services, and loss of employment or business opportunities. [2] [1] Non-economic damages should not be confused with punitive or exemplary damages, which are awarded purely to penalise defendants and do not aim to compensate either pecuniary or non-pecuniary losses. [1]

Contents

Chart illustrating the various categories of economic (pecuniary) and non-economic (non-pecuniary) damages that can be awarded in personal injury claims under Indian tort law. Personalinjury.png
Chart illustrating the various categories of economic (pecuniary) and non-economic (non-pecuniary) damages that can be awarded in personal injury claims under Indian tort law.

Non-economic damages caps are intended to reduce the ability of courts and, in the few jurisdictions which continue to maintain juries in civil cases, juries to award excessive or otherwise large damages for subjective harm that cannot easily be objectively assessed. [2] [3] The rationale underlying such caps is to curtail the impact of excessive damages on plaintiffs, particularly in the context of lawsuits against private individuals or companies for negligence causing personal injury or property damage and against medical professionals for malpractice claims brought by patients. [3] With regard to the former, proponents of tort reform argue that large and subjective awards of damages against individuals who did not necessarily intend to cause harm is fundamentally unjust as it can severely impact the defendant's financial independence while large and unpredictable awards against businesses can increase the legal cost of doing business thus leading to unsustainably higher prices for consumers and decreasing overall economic activity to the detriment of society at large. With regard to the latter, proponents of tort reform argue that large, unpredictable damages causes an increase in the cost of medical malpractice insurance for healthcare professionals [4] and encourages the practice of defensive medicine whereby medical practitioners agree to unnecessary treatment in order to decrease the likelihood of future malpractice claims. [5] Opponents of tort reform regard non-economic damages caps in both instances as unfair to plaintiffs, particularly in cases involving personal injuries whose financial cost to victims may greatly exceed acceptable economic damages. Additionally, opponents argue that limits on damages in cases of medical malpractice may create moral hazard as healthcare professionals face reduced liability. Consequently, the implementation of non-economic damages caps and decisions as to the extent to which different areas of tort law are subject to caps is more contentious than caps on purely punitive damages.

Medical malpractice caps

Many jurisdictions have enacted legislation imposing caps on non-economic damages in medical malpractice suits. In America, former President George W. Bush proposed a nationwide $250,000 cap in medical malpractice cases. [6]

Impact on healthcare costs

In a study published in 2005 in the Journal of the American Medical Association, 93% of physicians surveyed reported practising defensive medicine, or "[altering] clinical behaviour because of the threat of malpractice liability." [5] Of physicians surveyed, 43% reported using digital imaging technology in clinically unnecessary circumstances, which includes costly MRIs and CAT scans. [5] Forty-two percent of respondents reported that they had taken steps to restrict their practice in the previous 3 years, including eliminating procedures prone to complications, such as trauma surgery, and avoiding patients who had complex medical problems or were perceived as litigious. [5] Proponents of tort reform thus endorse caps on non-economic damages in medical malpractice claims as a way to reduce the extent to which physicians practice defensive medicine, the provision of unnecessary medical care in order to avoid potential liability, and would increase access to health care. [7] [8] Nevertheless, a study by the U.S. Congressional Budget Office published in 2004 found that "Malpractice costs account for less than 2 percent of health care spending." [9]

Impact on malpractice insurance premiums

Although proponents of damages caps in medical malpractice cases argue that the caps reduce malpractice insurance premiums for doctors, [10] despite a considerable amount of research on the subject the data in support of that argument is not compelling. [11] Within the United States, the impact of damages caps on the number of malpractice claims paid out by insurance companies varies by state and, in many states, reviews of malpractice premiums following the implementation of damages caps showed that the caps had no effect on premiums. [12]

Personal injury caps

In a personal injury lawsuit in common law jurisdictions, the two basic forms of compensatory damages that may be awarded are economic damages, compensation for the injured person's past and future financial costs and losses, and non-economic damages, compensation for the pain and suffering which results from an injury. As many jurisdictions lack adequate approaches to assessing the worth of unpaid labour or harm to minors and retirees who do not work, non-economic damages are often used as a practical way to ensure that such individuals receive compensation comparable to that received by working adults. [13]

Nevertheless, it is difficult for courts to assign a dollar value to these losses, which are thus arbitrary in nature. Because of the emotionally charged environment of personal injury trials, some awards will inevitably be unreasonable. [14] For example, in Ernst v. Merck, a Texas Vioxx products liability case, the jury issued a verdict of $24 million in compensatory damages, which includes non-economic damages, for a widow of a 59-year-old triathlete who died from arrhythmia, or an irregular heartbeat, that could have been prevented had Merck provided warnings about the drug. [15] Tort reform supporters argue that the widow had not been married a long time, and suggest that the damage award was excessive. This illustrates the extent to which the factors for which non-economic damages are awarded cannot objectively be assigned a monetary value. [16]

Opponents of tort reform contend that courts should assess damages on a case-by-case basis, that non-economic damages caps risk creating moral hazard, and that non-economic damages caps themselves may be arbitrary or produce unjust results if applied rigidly and without exception. [17]

Alternatives

In New Zealand, personal injury and medical malpractice have been eliminated from the tort system entirely and replaced by a system of no-fault insurance. The Accident Compensation Corporation is responsible for providing compensation for injuries in New Zealand. Due to the scheme's no-fault basis, people who have suffered personal injury may only sue an at-fault party for exemplary damages. [18]

Non-economic damages caps in American states

Overall, non-economic damages throughout the United States cover pain, suffering, and other nonpecuniary injuries, and in medical malpractice cases many states have imposed caps that range from $250,000 to $750,000 or more. [19] Damage caps have various purposes; for instance, they can discourage malicious lawsuits and prevent the costs of transacting business from being overly inflated, but have also been criticized as unjust. [20] Many American jurisdictions with non-economic damage caps have defined non-economic damages by statute.

While opponents of caps on damages in America argue that limiting total damages that jurors may award violate the right to a trial by jury, [21] tort law is a question of state law and only state constitutions can mandate or define the scope of a right to trial by jury in civil matters. Outside the United States and a minority of other common law jurisdictions, civil juries do not exist in the majority [22] [23] [24] of common law jurisdictions and virtually all civil law jurisdictions, where the notion of trial by jury is generally regarded as antiquated and seen as introducing societal biases into the legal system. [25] Consequently, the use of preserving a right to civil juries as a rationale for opposing non-economic damages caps is limited to American discourse on the matter.

Roughly half of U.S. states have imposed damages caps in medical malpractice litigation. Eleven states impose damages caps for all general tort and personal injury cases. [26]

California

In California, non-economic damages awarded in medical malpractice actions are capped at $250,000. Non-economic damages are meant "to compensate for pain, suffering, inconvenience, physical impairment, disfigurement and other nonpecuniary damage." [27]

Illinois

The Illinois Supreme Court found in the 1997 case Best v. Taylor Machine Works found that a $500,000 cap on noneconomic damages was (in addition to serving as a "legislative remittitur") special legislation that made an arbitrary distinction between those who sustained major noneconomic damages in a single tort versus multiple tortious actions and between those that suffered minor amounts of noneconomic damages versus amounts about the $500,000 cap (such as a plaintiff who becomes permanently disabled). [28]

In the 2010 case Lebron v. Gottlieb Memorial Hospital, the Illinois Supreme Court ruled that Section 2-1706.5 of Public Act 94-677, which placed caps on non-economic damages in medical malpractice actions, violated the separation of powers clause in the Illinois Constitution and was therefore facially invalid. Additionally, because Public Act 94-677 contains an inseverability provision, the entire Act was held void and invalid in its entirety. [29]

North Carolina

North Carolina has statutorily capped damages from nuisance claims to the value of the plaintiff's property. The law, which overrode a gubernatorial veto to pass in 2017, was criticized in the aftermath of Hurricane Florence, which resulted in significant nuisance litigation against regional hog-farming conglomerate Smithfield Foods due to the failure of many hog-waste lagoons. [30]

Maryland

In Maryland, non-economic damages are capped at $800,000. In personal injury cases, non-economic damages are defined as "pain, suffering, inconvenience, physical impairment, disfigurement, loss of consortium, or other nonpecuniary injury". In wrongful death cases non-economic damages are defined as "mental anguish, emotional pain and suffering, loss of society, companionship, comfort, protection, care, marital care, parental care, filial care, attention, advice, counsel, training, guidance, or education, or other noneconomic damages authorized under Title 3, Subtitle 9 of this article." [31]

Michigan

Michigan normally has a cap of $280,000 for "noneconomic loss," which is defined as "damages or loss due to pain, suffering, inconvenience, physical impairment, or physical disfigurement, loss of society and companionship, whether claimed under section 29222 or otherwise, loss of consortium, or other noneconomic loss. [32] However, the cap is increased to $500,000 where the plaintiff, due to physician negligence, is made "hemiplegic, paraplegic, or quadriplegic resulting in a total permanent functional loss of 1 or more limbs caused by [either] injury to the brain [or] injury to the spinal cord"; "when the plaintiff has permanently impaired cognitive capacity rendering him or her incapable of making independent, responsible life decisions and permanently incapable of independently performing the activities of normal, daily living"; or "there has been permanent loss of or damage to a reproductive organ resulting in the inability to procreate." [32]

West Virginia

In West Virginia, non-economic damages are capped at $500,000. Non-economic damages are "(1) wrongful death; (2) permanent and substantial physical deformity, loss of use of a limb or loss of a bodily organ system; or (3) permanent physical or mental functional injury that permanently prevents the injured person from being able to independently care for himself or herself and perform life sustaining activities." [33]

Wisconsin

In 2005, a Wisconsin court ruled that a $350,000 cap on non-economic damages in medical malpractice cases violates the state's equal protection guarantee. In Ferdon v. Wisconsin Patient's Compensation Fund, [34] the court ruled that there was no rational relationship between the objectives identified by the legislature that were intended to prevent a medical liability crisis in Wisconsin and treating people with more severe injuries and higher non-economic damage awards different from people with lower non-economic damage awards. [34]

In Wisconsin, non-economic damages for medical malpractice are capped at $750,000. Non-economic damages mean "moneys intended to compensate for pain and suffering; humiliation; embarrassment; worry; mental distress; noneconomic effects of disability including loss of enjoyment of the normal activities, benefits and pleasures of life and loss of mental or physical health, well-being or bodily functions; loss of consortium, society and companionship; or loss of love and affection." [35]

Related Research Articles

At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at law, the loss must involve damage to property, or mental or physical injury; pure economic loss is rarely recognised for the award of damages.

Negligence is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as negligence involves harm caused by failing to act as a form of carelessness possibly with extenuating circumstances. The core concept of negligence is that people should exercise reasonable care in their actions, by taking account of the potential harm that they might foreseeably cause to other people or property.

Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause. Although the word "product" has broad connotations, product liability as an area of law is traditionally limited to products in the form of tangible personal property.

A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable by the state. While criminal law aims to punish individuals who commit crimes, tort law aims to compensate individuals who suffer harm as a result of the actions of others. Some wrongful acts, such as assault and battery, can result in both a civil lawsuit and a criminal prosecution in countries where the civil and criminal legal systems are separate. Tort law may also be contrasted with contract law, which provides civil remedies after breach of a duty that arises from a contract. Obligations in both tort and criminal law are more fundamental and are imposed regardless of whether the parties have a contract.

Punitive damages, or exemplary damages, are damages assessed in order to punish the defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. Although the purpose of punitive damages is not to compensate the plaintiff, the plaintiff will receive all or some of the punitive damages in award.

Medical malpractice is professional negligence by act or omission by a health care provider in which the treatment provided falls below the accepted standard of practice in the medical community and causes injury or death to the patient, with most cases involving medical error. Claims of medical malpractice, when pursued in US courts, are processed as civil torts. Sometimes an act of medical malpractice will also constitute a criminal act, as in the case of the death of Michael Jackson.

In some common law jurisdictions, contributory negligence is a defense to a tort claim based on negligence. If it is available, the defense completely bars plaintiffs from any recovery if they contribute to their own injury through their own negligence.

In its broadest sense, no-fault insurance is any type of insurance contract under which the insured party is indemnified by their own insurance company for losses, regardless of the source of the cause of loss. In this sense, it is similar to first-party coverage. The term "no-fault" is most commonly used in the United States, Australia, and Canada when referring to state or provincial automobile insurance laws where a policyholder and their passengers are reimbursed by the policyholder's own insurance company without proof of fault, and are restricted in their right to seek recovery through the civil-justice system for losses caused by other parties. No-fault insurance has the goal of lowering premium costs by avoiding expensive litigation over the causes of the collision, while providing quick payments for injuries or loss of property.

Where two or more persons are liable in respect of the same liability, in most common law legal systems they may either be:

Attorney's fee is a chiefly United States term for compensation for legal services performed by an attorney for a client, in or out of court. It may be an hourly, flat-rate or contingent fee. Recent studies suggest that when lawyers charge a flat-fee rather than billing by the hour, they work less hard on behalf of clients and clients get worse outcomes. Attorney fees are separate from fines, compensatory and punitive damages, and from court costs in a legal case. Under the "American rule", attorney fees are usually not paid by the losing party to the winning party in a case, except pursuant to specific statutory or contractual rights.

<span class="mw-page-title-main">Personal injury</span> Legal term for an injury to a person

Personal injury is a legal term for an injury to the body, mind, or emotions, as opposed to an injury to property. In common law jurisdictions the term is most commonly used to refer to a type of tort lawsuit in which the person bringing the suit has suffered harm to their body or mind. Personal injury lawsuits are filed against the person or entity that caused the harm through negligence, gross negligence, reckless conduct, or intentional misconduct, and in some cases on the basis of strict liability. Different jurisdictions describe the damages in different ways, but damages typically include the injured person's medical bills, pain and suffering, and diminished quality of life.

<span class="mw-page-title-main">Canadian tort law</span> Aspect of Canadian law

Canadian tort law is composed of two parallel systems: a common law framework outside Québec and a civil law framework within Québec. Outside Québec, Canadian tort law originally derives from that of England and Wales but has developed distinctly since Canadian Confederation in 1867 and has been influenced by jurisprudence in other common law jurisdictions. Meanwhile, while private law as a whole in Québec was originally derived from that which existed in France at the time of Québec's annexation into the British Empire, it was overhauled and codified first in the Civil Code of Lower Canada and later in the current Civil Code of Quebec, which codifies most elements of tort law as part of its provisions on the broader law of obligations. As most aspects of tort law in Canada are the subject of provincial jurisdiction under the Canadian Constitution, tort law varies even between the country's common law provinces and territories.

Loss of chance in English law refers to a particular problem of causation, which arises in tort and contract. The law is invited to assess hypothetical outcomes, either affecting the claimant or a third party, where the defendant's breach of contract or of the duty of care for the purposes of negligence deprived the claimant of the opportunity to obtain a benefit and/or avoid a loss. For these purposes, the remedy of damages is normally intended to compensate for the claimant's loss of expectation. The general rule is that while a loss of chance is compensable when the chance was something promised on a contract it is not generally so in the law of tort, where most cases thus far have been concerned with medical negligence in the public health system.

The Medical Injury Compensation Reform Act (MICRA) of 1975 was a statute enacted by the California Legislature in September 1975 (and signed into law by Governor Jerry Brown in September), which was intended to lower medical malpractice liability insurance premiums for healthcare providers in that state by decreasing their potential tort liability.

Pain and suffering is the legal term for the physical and emotional stress caused from an injury.

<span class="mw-page-title-main">Tort reform</span> Legal reforms aimed at reducing tort litigation

Tort reform consists of changes in the civil justice system in common law countries that aim to reduce the ability of plaintiffs to bring tort litigation or to reduce damages they can receive. Such changes are generally justified under the grounds that litigation is an inefficient means to compensate plaintiffs; that tort law permits frivolous or otherwise undesirable litigation to crowd the court system; or that the fear of litigation can serve to curtail innovation, raise the cost of consumer goods or insurance premiums for suppliers of services, and increase legal costs for businesses. Tort reform has primarily been prominent in common law jurisdictions, where criticism of judge-made rules regarding tort actions manifests in calls for statutory reform by the legislature.

The following outline is provided as an overview of and introduction to tort law in common law jurisdictions:

The American Tort Reform Association(ATRA) is a nonprofit, nonpartisan organization dedicated to reforming the civil justice system and advocating for tort reform. It was founded in 1986 by the American Council of Engineering Companies and was joined shortly thereafter by the American Medical Association.

<span class="mw-page-title-main">Tort law in India</span> Aspect of Indian law

Tort law in India is primarily governed by judicial precedent as in other common law jurisdictions, supplemented by statutes governing damages, civil procedure, and codifying common law torts. As in other common law jurisdictions, a tort is breach of a non-contractual duty which has caused damage to the plaintiff giving rise to a civil cause of action and for which remedy is available. If a remedy does not exist, a tort has not been committed since the rationale of tort law is to provide a remedy to the person who has been wronged.

<span class="mw-page-title-main">Medical malpractice</span> Legal cause of action when health professionals deviate from standards of practice harming a patient

Medical malpractice is a legal cause of action that occurs when a medical or health care professional, through a negligent act or omission, deviates from standards in their profession, thereby causing injury or death to a patient. The negligence might arise from errors in diagnosis, treatment, aftercare or health management.

References

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  27. Ann.Cal.Civ.Code § 3333.2(a)
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  31. Md. Code Ann., Cts. & Jud. Proc. § 11-108
  32. 1 2 Mich. Comp. Laws Ann. § 600.1483
  33. W. Va. Code Ann. § 55-7B-8
  34. 1 2 "Ferdon ex rel. Petrucelli v. Wisconsin Patients Compensation Fund, 284 Wis.2d 573, 701 N.W.2d 440 (2005)". Google Scholar. Retrieved 3 October 2017.
  35. Wis. Stat. Ann. § 893.55