Non-economic damages caps

Non-economic damages caps, or medical malpractice caps, are controversial tort reforms to limit (i.e., "cap") damages in medical malpractice cases for non-pecuniary harms such as permanent disability, disfigurement, blindness, loss of a limb, paralysis, trauma, or physical pain and suffering. These are, collectively, referred to as hedonic damages. This is opposed to economic damages, which encompasses pecuniary harms such as medical bills, lost wages, and lost future income.

Non-economic damages compensate injuries and losses that are not easily quantified by a dollar amount. Also known as quality-of-life damages, this compensation covers the family of victims who have died, or severely injured victims.

Many states with non-economic damage caps have defined non-economic damages by statute.

State definitions and caps

Overall, non-economic damages throughout the United States cover pain, suffering, and other nonpecuniary injuries, and caps range from $250,000 to $750,000. 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 for other reasons.

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."

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."

In Wisconsin, non-economic damages for medical malpractice are capped at $750,000. Non-economic damages means "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.".

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. 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."

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."

Five states have a single "Umbrella Limit" on all damages including both economic and non-economic losses.These caps range from $250,000 in Indiana to $2,500,000 in Nebraska.

Efficacy of caps

Many states have debated, passed legislation or amended their constitutions to create such caps. Former President George W. Bush proposed a nationwide $250,000 cap in medical malpractice cases. In the area of medical malpractice, tort reform advocates claim that insurance premiums would decrease, both making medical care more affordable and eliminating a disincentive for doctors to practice. In contrast, critics contend that high medical malpractice insurance rates are a result of the cyclical nature of the insurance industry, lack of competition, mismanagement of reserves and a decline in investment income. Recent data have indicated that medical malpractice rates are generally no longer rising. In 2011, data pooled from the industry by the publication Medical Liability Monitor indicated that medical malpractice insurance rates had declined for four straight years. The decrease was seen in both states that had enacted tort reform and in states that had not, leading actuaries familiar with the data to suggest that patient safety and risk management campaigns had had a more significant effect.

There are further disputes over if these caps would reduce overall medical costs for patients at all. 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." However, tort reformists cite other possible effects of limiting tort liability, such as reducing the extent to which physicians practice “defensive medicine” and preventing widespread problems of access to health care.

Fair compensation

Non-economic damages are the only compensation a jury can provide for the injury itself, as opposed to reimbursement of out-of-pocket expenses such as the plaintiff's lost wages, medical bills, and legal fees. This type of compensation is especially important for people who do not work outside the home, like the elderly, children, and homemakers. The "worth" of a homemaker's work inside the home is not easily measured by a dollar amount, and would only be compensated through non-economic damages.

Tort reform supporters argue that it is difficult for juries to assign a dollar value to these losses with the guidance they are normally given. They state that there is no basis for non-economic damages, and uncapped non-economic damages violate the equitable principles of justice by being inherently quite random, because different juries will always come to different results. Because of the highly charged environment of personal injury trials, they fear some unbounded non-economic damage awards. 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. Tort reform supporters point out the widow had not been married a long time, and suggest this award was excessive.

Tort reform supporters argue that juries give arbitrary non-economic damage awards, but fail to argue that the legislature's assignment of non-economic damage caps is any less arbitrary. Opponents of tort reform would argue that members of the legislature are at a greater risk for assigning arbitrary dollar values to non-economic damages than juries; members of the legislature are not present at trial and do not get to observe evidence, witness testimony, etc.

Opponents of tort reform contend that jurors should assess damages on a case-by-case basis and that damages should not be arbitrarily capped by a legislature.

Constitutionality of caps

Right to trial by jury

Opponents of caps on damages argue that caps on the amount of damages jurors can award violate the right to a trial by jury. Because tort law has historically been a question of state law, states have the power to establish a constitutional right to a trial by jury in civil cases. Historically, juries have decided both the question of liability and the question of how much damages to award in tort cases, subject to instructions on the law by a judge. Several state appellate courts that have considered the issue have struck down damages caps as a violation of state constitutions.

Separation of powers

Some tort reform supporters, such as the conservative Federalist Society, have criticized such decisions as a violation of the concept of separation of powers.

In contrast, critics of caps contend and state courts have held that legislatures violate the principle of separation of powers when they attempt to impose arbitrary damage caps on juries, who function as part of the judicial branch of government. In Best v. Taylor Machine Works, the Illinois Supreme Court ruled that a $500,000 cap on non-economic damages functioned as a "legislative remittitur" and invaded the power of the judiciary, in violation of the separation of powers clause. The court noted that courts are empowered to reduce excessive verdicts where appropriate in light of the evidence. The cap, however, reduced damages by operation of law, without regard to the specific circumstances of the case.

Equal protection and special legislation

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, 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.

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).

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.