Personal Injury Damage Caps

Last updated on: November 15, 2022

When you imagine a successful personal injury suit, you might envision a large courtroom with ornate wood furnishings and décor. You may picture the solemn judge sitting behind a large wooden bench, looking out upon a courtroom packed with spectators sitting on wooden benches near the back of the room. Between the spectators and the judge sit the litigants, one at each table.

You might think of the victim as fully bandaged from head to toe, seated next to his attorney, with the other litigant and her attorney seated at the other table. During the trial, the victim testifies about his expensive medical bills and all the pain, suffering, and anguish he has had to endure because of the injury. The jury sympathizes with the injury victim and awards him his medical expenses, along with millions of dollars to compensate him for his pain and suffering.

Can victims really earn millions of dollars in personal injury cases? In some extreme cases, yes. More often, however, you will probably not become a millionaire from your settlement, especially if you live in a state with statutory damage caps.

What is a Damage Cap?

In an effort to reign in the costs of lawsuits like the one described above and keep the amount of damages a victim receives reasonable in light of the severity and extent of his or her injuries, many states have enacted a “damages cap.” A “damages cap” is a law that indicates the maximum amount of non-economic damage that an injured plaintiff may receive.

An injured plaintiff must still plead and prove he or she suffered non-economic damages in order to be able to recover such damages. However, a jury verdict that awards an amount of non-economic damages in excess of the cap will be reduced to the amount of the cap.

There are exceptions to a strict cap on non-economic damages. For example, thirty years ago, Colorado’s statute capped non-economic damages at $250,000 plus inflation. If clear and convincing evidence existed that this amount did not adequately compensate the injury victim, the cap could be increased up to $500,000 plus inflation.

Colorado’s non-economic damages caps are just one example of how states limit the amount the plaintiff could earn in personal injury cases. Most states set damage caps in some way, but they vary by the type of damages being capped and by cap amount.

The Current State of State Damage Caps

Well over half of states have introduced damage caps into their personal injury laws. Most states that have damage caps limit the amount a personal injury plaintiff can collect in the form of non-economic damages, punitive damages, and cases against municipalities. Some states also put damage caps on medical malpractice cases, wrongful death claims, product liability, and survival actions.

A few states have ruled damage caps unconstitutional in certain cases, namely medical malpractice cases. However, most state and federal courts have held that damage caps are not unconstitutional.

Reasons for Damage Caps

Damage caps are meant to protect consumers from effects of an expensive lawsuit. For example, if a manufacturer’s product harms someone and that victim files a product liability case, then the manufacturer might raise the cost of its products to make up for the cost of the lawsuit. Damage caps can reduce the amount the manufacturer must pay the victim so that the manufacturer can avoid making its product more expensive.

Damage caps can be even more effective in medical malpractice cases, since medical malpractice affects doctors who provide vital care to patients. Caps reduce the cost of medical malpractice insurance, making the cost of medical care less expensive for patients.

Types of Damages

In personal injury cases, victims suffer two main types of damages: economic and non-economic damages. Punitive damages may also be available to victims in some circumstances.

Economic vs. Non-Economic vs. Punitive damages

When damage caps exist, they often apply to non-economic damages. An injured plaintiff can recover an unlimited amount of economic damages provided, of course, that he or she can prove that he or she did in fact suffer those economic losses. What is the difference, though, between economic and non-economic damages?

Economic damages are those expenses and losses that are objective and easily quantifiable: medical expenses, costs of continuing care, lost wages, and similar losses and expenses. Essentially, economic damages include any loss or expense for which a receipt, bill, or invoice could be created. There are no statutory caps for economic damages, since they are objective amounts that the plaintiff is owed.

Non-economic damages include those non-quantifiable but equally devastating losses such as mental pain and anguish, loss of enjoyment of life, and other mental or psychological harm suffered by the injury plaintiff. Punitive damages are sometimes awarded to a victim in extreme cases to punish the defendant and deter the defendant from committing the same act in the future. Non-economic and punitive damages are often capped in state statutes because the amount to compensate a victim’s suffering or to punish the defendant’s wrongdoing is not objective, so without a cap there is no natural limit to the amount the defendant could pay.

Compensation Damages

Economic and non-economic damages are compensatory damages, meaning they compensate the victim for the harm he or she suffered. Punitive damages are separate from compensatory damage, and are meant to punish the defendant for particularly egregious acts.

Do Personal Injury Damages Caps Apply to Your Case?

Whether caps apply in your case depends on the state you live in and the type of case you have. For example, many states include caps for medical malpractice cases but not car accident cases. Speak with one of our experienced personal injury attorneys at Zinda Law Group to find out whether damage caps apply in your case.

Damage Caps Can Seriously Limit Your Amount of Compensation

Without damage caps, there is no limit to the amount you could receive as compensation for your physical and emotional suffering. Therefore, if you live in a state that caps your non-economic damages, you might receive far less compensation than if you live in a state that does not cap your non-economic damages.

Limits on Lawsuits Against Government Entities

In addition to damage caps on medical malpractice cases, non-economic damages, and punitive damages, some states place damage caps on lawsuits against government entities. This is because when the government pays damages in a lawsuit, the payment comes from the pockets of taxpayers.

Are Caps on Damages a Good Idea?

Damage caps theoretically limit the number of frivolous lawsuits and reduce the cost of insurance and healthcare. However, reducing liability by creating statutory damage caps can also increase the number of medical malpractice cases and have no effect on insurance premiums.

Whether you agree with damage caps or not, you might be subject to them in your case. Speak with a personal injury attorney to learn more about what kind of damage caps you might face.