Limits/Caps on Damages and What This Could Mean for Your Personal Injury Case

Damage caps can seriously limit your amount of compensation

After an accident, you’re concerned about how you’re going to pay for the looming medical bills and account for the lost time at work. Compensation can offer you help, but what if there are limits or caps on that compensation?

In all personal injury cases, liability must be established for compensation to be received. For some types of damages, however, caps can come into play, and those caps can quickly complicate your case.

Types of damages 

There are a variety of damages that may be requested in personal injury case. These damages can include economic damages, non-economic damages, wrongful death damages, and punitive damages.

Economic damages

Economic damages are generally easier to prove and are more objective in nature. They typically include damages that have had a monetary impact on the victim. Economic damages can include:

• Medical bills
• Lost income
• Loss of earning capacity
• Vocational rehabilitation
• Property damage
• Household services
• Future medical expenses
• Costs associated with making renovations to a home to account for a disability

Non-economic damages

Non-economic damages are more subjective than economic ones, and they aren’t as easy to calculate. Non-economic damages often boil down to how much a jury feels someone should be compensated from an accident.

Juries typically use a multiplier to calculate the value of non-economic damages, but this is a basic guide. Instead, the jury also relies on its own beliefs regarding the value of these damages. Often, different juries come up with very different values for non-economic damages because they cannot rely on documented evidence (bills or receipts) that are used to calculate economic damages.

Some examples of non-economic damages include:

• Pain and suffering
• Mental anguish
• Humiliation
• Loss of enjoyment of activities
• Loss of consortium

While these damages may be more difficult to substantiate, they are very real damages. Sometimes the pain after an accident continues well after the medical bills have been paid. A personal injury accident can often cause lasting impact on the victim including not being able to participate in favorite activities, not being able to fully participate in daily living activities, or not being able to interact on the same social level as the one did before the accident.

Wrongful death damages

If the injury results in a person’s death, the surviving family members may bring forth a wrongful death lawsuit. Damages that may be available in this type of lawsuit include: 

• Funeral expenses
• Burial expenses
• Medical expenses prior to death
• Loss of financial contribution
• Loss of consortium
• Loss of companionship
• Loss of services and support

Punitive damages

Unlike other damages that are intended to make a person whole after an accident, punitive damages are designed to punish the responsible party. Due to this characterization, these damages are limited to specific cases that usually involve gross negligence of some sort. For example, a car manufacturer may have to pay punitive damages if they were made aware of defects in their product which they neglected to fix.

Sometimes, punitive damages are assigned when the injury is caused by intentional, reckless or grossly negligent behavior.

Damage caps

The jury is usually responsible for determining the amount of damages to award in a personal injury case; however, many states have laws that limit the amount of damages so that even if a jury awards a higher verdict, the verdict will be reduced to adhere to the limit rule.

Each state can establish its own damage cap, but there is also a federal cap on non-economic damages in medical malpractice cases.

Reasons for damage caps

Those in favor of damage caps argue that the country is prone to entering legal disputes. They seek to limit the damages that can be awarded in personal injury lawsuits to avoid excessive verdicts that are based on emotions rather than reason. These advocates argue that such high awards have a negative impact on the economy.

Damage caps reduce the potential liability of defendants in personal injury cases. They also prevent higher costs from being passed on to the consumer.

For example, if a doctor is sued for medical malpractice, the doctor's medical malpractice insurance company may pay the resulting damages. Then, the medical malpractice insurance company increases the costs the doctor will pay for insurance in the future. The doctor will likely respond by charging patients more for the medical services that they receive.

See Personal Injury Myths for a discussion of these and other controversial topics.

Types of damage caps

Most states do not have damage caps on the economic damages portion of the personal injury claim. However, several states do have caps on the non-economic damages portion, with some electing to only have damage caps on certain types of cases, such as medical malpractice claims. Another approach is to place a cap on the punitive damages that are awarded to punish a defendant.

Nolo offers a state-by-state comparison of non-economic, medical malpractice damage caps. Check it out for more information.

Ultimate effect of damage caps

Juries may not be aware of damage caps. Therefore, if they award a higher amount to a victim, this award is later modified so that the victim gets less money than his or her peers believed was fair.

The defendant involved in a personal injury claim may not be as willing to settle the case early on because he or she knows that the damages can only go up to a certain amount, and that can ultimately prolong the process and cost both parties more in legal fees and resources.