Law school is filled with fascinating information on subjects you might never have the opportunity to learn elsewhere. In-depth study on subjects such as “how the constitution can protect or limit your rights” can provide new insights and unearth additional questions on a variety of subjects. 

For example, did you know that if someone suffers a catastrophic bodily injury in a preventable accident, the amount of financial restitution they can pursue in a court of law will be impacted simply based upon where they reside? Imagine yourself as a law student, sitting at your desk, listening to your professor. Now consider this scenario:

Person X and Person Y are involved in a preventable accident. Both suffer permanent, debilitating bodily injuries requiring a lifetime of medical care.

Person X resides in Arkansas. They are limited in the amount of financial restitution they can pursue through a civil action since there is a statutory cap in place that arbitrarily limits the amount of recoverable non-economic damages (i.e. damages other than medical bills and lost wages such as pain, suffering, permanent impairment, psychological injuries etc.). 

Person Y resides in Rhode Island. They will have a better chance of recovering sufficient financial restitution because there is no cap on non-economic damages in that state. 

When viewed objectively, the notion that two people who suffer the exact same injuries incur the exact same harms and losses but each receives vastly different amounts of non-economic damages — simply based on where they live within the United States — is patently unfair and unjust.

This scenario may raise a few questions in your head (How did this situation come to pass? How does it vary state-by-state? What role does the Constitution play in all this?). If so, you have a mindset for success as a student in a law degree program and/or a legal studies degree program. Let’s explore our main subject further.

Why We Have Damage Caps

In some (but not many) personal injury cases, juries have awarded substantial sums of compensation. These are awarded for economic damages, non-economic damages, and possibly punitive damages (depending on the facts of the case). To be clear, large jury awards are the exception and not the rule. Plaintiffs who receive substantial sums of compensation from juries often suffered debilitating, horrific, and permanent bodily injuries that will remain with them for the rest of their life. There are also times when juries award substantial sums of compensation when an individual lost their life in a preventable accident, due to medical malpractice, or due to a defective consumer product.

Beginning in earnest in the 1990s, special interest groups including large insurance companies and Fortune 500 companies became concerned with the size of certain jury awards. They decided to lobby state legislatures across the country to pass statutory caps on damages in an effort to prevent what tort reform advocates call “jackpot” justice. Unfortunately, these lobbying efforts have been successful in many states. Formed from organizations with consumer-friendly names, they’re actually lobbying tools for insurance companies and Fortune 500 companies masquerading as if they are grassroots consumer groups.

Ultimately, statutory caps on economic and/or non-economic damages, along with caps on punitive damages, arbitrarily limit the amount of recoverable compensation for a plaintiff who is claiming they suffered harms and losses from a preventable accident.

Where Statutory Damage Caps are in Effect

These ten states have statutory caps in place for non-economic damages in personal injury cases:

• Alaska
• Colorado
• Hawaii
• Idaho
• Kansas
• Maryland
• Missouri
• Ohio
• Oklahoma
• Tennessee

Punitive damages (think of them as “punishment damages”) are an important form of civic penalty. They’re intended to punish a party for willful and wanton conduct or conduct in conscious disregard of safety. This takes the focus from the extent of the person’s injuries and puts it on the punishment against a party that willfully or wantonly injures a person. Since these damages affect big corporations or consumer product companies 95 percent of the time, insurers and major corporations focus on getting limitations on punishment damages. 

Caps Vary Widely By State

There is no uniform set of statutory damage caps that apply to all 50 states. In fact, it can be difficult to compare and contrast the statutory caps that are in place in different states since they can be narrowly defined to limit specific types of damages, or fairly broad and limit recoverable compensation for all “non-economic” damages. 

• 27 states have punitive damage caps in place, either by a particular amount or a punitive-to-compensatory damages ratio
• 24 states place a cap on non-economic damages in medical malpractice lawsuits
• six states have a cap on total compensation in medical malpractice cases
• ten states have a cap in place for non-economic damages in claims involving defective consumer products (i.e. faulty work product liability claims)

Statutory caps on damages also vary considerably in overall size. For example, some states limit punitive damage awards to only $500,000 while other states are even stricter and limit awards to $250,000, or another arbitrary total.

In addition, many state legislatures took steps to exempt specific factual scenarios and particular types of claims from being effects by a statutory cap (e.g. a claim filed on behalf of a minor child who suffered a permanent injury).

Legal Challenges against Statutory Caps

The Seventh Amendment to the United States Constitution states:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law.

The framers of the Constitution intended that trial by jury be available to citizens for civil cases under common law. Even “originalists” and “strict constructionists” of the Constitution must concede that, at the time the framers were drafting the Constitution, there were no caps on the amount of recoverable damages that could be awarded by a jury. This calls into question whether statewide statutory damage caps are even constitutional. Many states have their own constitutions that effectively mirror the United States Constitution and preserve the common law right to trial by jury. In some cases, these state constitutions have provided a basis for a state Supreme Court to overturn a statutory cap passed by the state legislature.

The constitutionality of statutory caps has been challenged in multiple states. Courts in Florida, Illinois, New Hampshire, Washington, and Oregon heard arguments challenging statutory caps and found that the damage caps enacted by their respective state legislatures were unconstitutional. Damage caps on medical malpractice claims were found to be unconstitutional in Alabama, Georgia, and North Dakota.

Oregon’s cap on damages was recently challenged and deemed unconstitutional in Vasquez v. Double Press Mfg., Inc., 406 P.3d 225 (Or.App. 2017) and Rains v. Stayton Builders Mart, Inc., 410 P.3d 336 (Or.App. 2018). Oregon had a statutory cap in place that limited non-economic damages to $500,000. The Oregon Court of Appeals in Vasquez and Rains ruled that this statutory cap was unconstitutional.

In both Vasquez and Rains, juries awarded damages in excess of the statutory cap. The defendants appealed the jury awards arguing the non-economic damages should be capped under Oregon law. The plaintiffs asserted that the statutory cap on non-economic damages violates the remedy clause within the Oregon Constitution.

Article I, Section 10 of Oregon’s constitution states:

No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation.

Courts found in both Vasquez and Rains that reducing the amount based on the cap would leave the plaintiffs with a “paltry fraction” of the amount granted them, which amounted to a constitutionally unacceptable remedy.

The Financial Burden on Taxpayers

Damage caps place the financial burden of long-term treatment for a catastrophic bodily injury on taxpayers. Consider a plaintiff who suffered a traumatic brain injury in a preventable automobile accident caused by an intoxicated motorist. The plaintiff is permanently disabled due to his brain injury and will require a lifetime of in-home medical care. In a state with caps on non-economic damages and/or punitive damages, the plaintiff is forced to turn to state and federal government programs (e.g. Medicaid, Social Security Disability) to defray the treatment expenses in excess of the cap. In essence, statutory damage caps shift the financial burden from the reckless defendant to taxpayers.

Judicial Mechanism Already Exists to Address Excessive Jury Awards

The debate over the constitutionality of statutory caps on damages is likely to continue for the foreseeable future because state legislatures across the country continue to pass new caps or modify existing caps. Depending on the makeup of the state Supreme Court, some caps or ceilings are deemed constitutional or unconstitutional. The debate can be quite frustrating to witness when considering the fact that the judicial system already had common law centuries old remedies in place to address any alleged excessive jury verdict. For example, most states enable a defendant to file a motion seeking a “judgment notwithstanding the verdict” (also referred to as a “judgment non obstante veredicto” or JNOV). When a JNOV is filed, it allows the court to review the outcome of a case. If a judge determines that no reasonable jury would have awarded the sum in question, they have the authority to effectively impose a new lower verdict (and in most cases, the new verdict is much smaller).

In addition to asking a court to set aside a jury verdict, defendants also have the option to file a motion that simply asks the court to reduce the jury verdict on the basis that it was excessively and unreasonably large (the legal term for this action is “remittitur”). A recent example can be found in the verdict entered against Bayer-owned Monsanto for $2 billion in a Roundup Weed Killer cancer case. The judge who presided over the case reduced the $2 billion verdict to $86.7 million.

The judicial system also has mechanisms in place for plaintiffs who are unhappy with jury verdicts. Plaintiffs can file a motion for “additur.” This enables the trial court judge to consider increasing the amount of a damages award that was rendered in a jury trial, because it was inadequate under the law.

As you can see, these centuries old judicial mechanisms highlight the fact that state legislatures do not need to weigh in on jury verdicts and damage awards. The judicial system is fully capable of handling the outcomes of jury trials.

The bottom line about statutory damage caps is that often shift the burden from the responsible party and place it squarely on taxpayer-funded programs like Social Security or Medicare.

About the Author

Richard “Rick” Shapiro is a shareholder with the Virginia Beach personal injury law firm of Shapiro & Appleton, P.C.. Rick has practiced law for over three decades, primarily in the eastern United States. He is licensed to practice law in Virginia, North Carolina, West Virginia, and Washington, D.C. He is a Board Certified Civil Trial Advocate by the National Board of Trial Advocacy (ABA Accredited) and rated as a “Best Lawyer” for personal injury litigation by U.S. News & World Report (since 2010).