Since the 1970s, big business and insurance interests have lobbied for “reforms” designed to reduce tort litigation and damages. Proponents argue the civil justice system is biased in favor of high plaintiff awards, which drive up liability insurance premiums and cause economic harm through social inflation.
Reforms have involved caps on attorney fees and damages, pre-suit proof requirements in medical malpractice cases, shifts to proportionate rather than joint and several liability, and changes to statutes of limitation, admissibility of apology statements, and rules relating to forum shopping, expert witnesses, and collateral sources of compensation to the plaintiff.
Rather than allow individual cases to resolve on their merits, these reforms paint with the broad brush of legislation to make it more difficult for injured people to find legal representation, file and persist in a lawsuit, obtain just compensation for their injuries, and punish wrongdoers.
Damages caps in particular may reduce litigation and lower insurance premiums, but also disincentivize lawyers representing plaintiffs in contingency cases where the costs could exceed the eventual limited recovery.
Take, for example, California’s limit on non-economic damages in medical malpractice cases: The $250,000 cap, set in 1975, has never been adjusted for inflation. Each passing month makes it harder for attorneys to justify taking cases affected by this rule.
State approaches and views regarding damages caps vary greatly. A few states constitutionally prohibit them. Some states cap damages in only medical malpractice suits, while others cap them in all personal injury cases. Caps may apply only to punitive or non-economic (pain and suffering) damages or cover economic damages as well.
Certain states exempt catastrophic injuries from damages caps to allow for a substantially higher recovery in such matters, but individual cases, like one up for state supreme court review in Ohio, illustrate the hazards of using a blunt tool to do precision work.
Ohio limits non-economic and punitive damages. A catastrophic injury exception, however, applies to specified physical injuries, such as loss of limb or physical deformity, but excludes psychological harm. In a case that has bizarrely aligned business interests with those of a convicted child rapist, the statutory cap reduced a victim’s damages award for millions of dollars to $250,000. Though the plaintiff is not likely to see a big recovery from the indigent defendant, she seeks an acknowledgment that her psychological suffering is deserving of extraordinary compensation. But where tort victims see a question of fairness, businesses see the threat of a precedent that could harm their bottom lines.
Whatever the resolution of this case, there will continue to be tensions between tort systems that aim to curb misconduct and compensate victims and reform attempts to weed out greedy victims.
Despite legislators’ efforts to define in concrete terms the cases worthy of an outsized recovery, their reasoning is ultimately no less arbitrary than that of a jury making an award.
At LevelEsq, we take our hats off to the lawyers that navigate these murky waters. Their diligence in documenting economic damages, consulting with economic experts, and presenting those economic losses to the jury in a compelling and comprehensible way ensure that their clients’ losses are properly classified for a just damages award. We know these efforts require significant time, skill, and often substantial funds.
We are honored to support plaintiffs’ representatives with creative solutions for protecting lawyers’ own investments in their cases and for cash infusions when necessary. Learn more about how our Litigation Cost Protection insures out-of-pocket costs in the event of a trial loss and our best-in-class Lawsuit Cost Financing gives attorneys quick, seamless access to capital as needed, while boosting firm profitability.