Yesenia Guardiola
Should Settlement Awards Be Capped in Personal Injury Cases?
Over the last four years, I have been working in personal injury law, presently acting as a litigation paralegal. As a result of this opportunity, I have assisted clients with their case(s) from intake to preparation for trial and have gained first hand knowledge regarding how the civil court process affects individuals who are victims of someone else's careless actions. From client intake to trial prep, I get to watch the development of personal injury lawsuits. I assist attorneys with drafting and filing pleadings; getting ready to send out Rule 194 disclosures; answering written discovery requests sent to us; organizing all the documents we're producing to the defense; drafting motions; preparing court filings; communicating with the opposing counsel; and managing our litigation timelines. Each case file I work on represents someone who had their life forever changed by someone else’s recklessness. These experiences were what encouraged me to seek a degree in Legal Studies at Texas Tech University. And, as a result, attending law school to become a personal injury lawyer is my ultimate goal. Additionally, these experiences shaped my opinion that too often statutes that set caps on settlements in personal injury cases keep injured people from getting just rewards. In my mind, economic and noneconomic damages should be decided on a case-by-case basis and punitive damages should still be limited by the constitution as well as common sense.
States have used the damage cap statute to decide whether to put caps on damage awards based upon competing interests of public policies. States that favor damage caps do so primarily for reasons such as: reducing the cost of insurance premiums, encouraging doctors to stay in high risk specialty fields, protecting business from unfair verdicts, and preventing frivolous suits. All of these issues are important to consider since a healthy economy relies upon businesses and professionals being able to operate without fear of being liable for any claim brought against them. But, economic interests must never take precedence over denying a seriously injured person fair compensation.
Economic damages should never be capped. That is because economic damages are a quantifiable measure of the financial losses that a victim suffers due to his/her injuries. Examples of economic damages include: medical bills, rehabilitation costs, prescription medication, future treatments, lost wages, and decreased earning potential. All of these types of damages are proven by documentation and/or expert testimony. Therefore, all economic damages simply provide reimbursement for actual financial losses suffered by victims. For example, if a twenty-five year old construction worker is permanently disabled due to the negligence of another driver, he should receive payment for the cost of his medical treatment for decades and lost wages for decades. His award should not be reduced because his total award exceeds the statutory maximum. Capping economic damages would cause innocent victims to pay for costs caused by someone else's negligence which is contrary to the very purpose of tort law.
Capping non-economic damages is a much larger issue than capping damages for lost income or medical bills. Non-economic damages can include, but are limited to, your pain and suffering; how you feel emotionally because of what happened; if you were permanently disabled from an injury; scarring or disfigurement from an accident; and your overall quality of life has been affected by the loss of enjoying things in your daily life. Although this criticism is understandable, there is no logical reason why non-economic damages should be subject to broad statutory caps. Each person suffers catastrophically different injuries despite experiencing seemingly identical accidents. Throughout my time as a litigation paralegal I have reviewed numerous sets of medical records and discovery responses showing that virtually every injured party experiences different long term consequences from similar physical injuries. The type of injury, combined with other factors such as age, employment status, family obligations and prior health conditions determine the extent of a victim's long term recovery. Statutes that treat every catastrophic injury similarly ignore these individual differences and deny juries the opportunity to judge each case individually.
In addition to statutes passed by state legislatures, courts have also contributed to the damage cap debate. The U.S. Supreme Court ruled in BMW of North America, Inc. v. Gore (1996) that grossly excessive punitive damage awards violated the Due Process Clause of the Fourteenth Amendment. The court ruled that the punitive damage award must bear a reasonable relationship to the defendant's conduct. In a later decision, State Farm Mutual Automobile Insurance Co. v. Campbell (2003), the court stated that punitive damages must generally have a reasonable ratio to compensatory damages and that many times single digit ratios meet constitutional requirements. These decisions demonstrate that courts already provide protection against egregious punitive damage awards without need for legislatures to enact rigid damage caps applicable to every personal injury lawsuit.
Because punitive damages serve a functionally different purpose than compensatory damages they should be evaluated in a manner different from compensatory damages. Compensatory damages serve to place the injured plaintiff back into the position they would have occupied absent the injury. Punitive damages serve to punish culpable defendants and to deter similar misconduct by others. The financial resources of the defendant become relevant when assessing punitive damages because a fine which is inconsequential to a large corporation may have little deterrent value while the same fine may be ruinous to an individual defendant whose misconduct though negligent was not malicious. Consequently, courts should continue to assess punitive damages according to constitutional criteria concerning the reprehensibility of the defendant's conduct, the relationship between punitive and compensatory damages awarded, and comparable civil sanctions. By using this method of evaluation courts will find an acceptable balance between providing injured parties with fair compensation and acknowledging a defendant's financial situation.
While it may seem sensible for settlement awards to be solely dependent on injury severity – that is certainly true when it comes to compensatory damages since they should reflect the actual harm suffered by an injured party. However, settlement awards involve several other variables which must also be considered such as: comparative fault; available insurance coverage; causation; future medical expenses; credibility of evidence; and likelihood of prevailing at trial. Punitive damages must also be assessed based upon a defendant's actions and financial resources. To ignore these considerations would unduly simplify a legal system intended to provide each injured party with an individually tailored remedy.
My experiences as a litigation paralegal reinforce my respect for the complexities associated with each personal injury lawsuit. Each pleading filed, each discovery response submitted, each deposition taken, each motion drafted reminds me that achieving justice can only occur through flexible means rather than one size fits all approaches. Behind each lawsuit is an entire family struggling with uncertainty, economic hardships and attempting to rebuild their lives following an unanticipated tragic event. Those experiences strengthened my resolve to become a personal injury attorney advocating for families in what will likely be some of the most trying periods in their lives.
Ultimately settlement awards should not be controlled by overly broad statutory caps which deny severely injured parties full compensation for their injuries. A fair civil justice system should provide complete compensation for measurable losses; permit juries to independently assess non-monetary losses based on the unique facts of each case; utilize constitutional protections to ensure punitive damages remain reasonable and proportionate. Using this balanced approach provides defendants protection from unreasonable punishment while maintaining the fundamental objective of tort law: providing injured parties meaningful justice as a result of another person's negligence.
As I continue pursuing higher education and prepare myself for law school, I plan on developing a practice committed to providing all injured clients not only competent legal assistance but also the opportunity to be fairly compensated under the law.
References:
- BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996)
- Cornell Law School Legal Information Institute. (n.d.). Tort law.
- Dobbs et al. (2022). The Law of Torts (West Academic, third edition)
- State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003)
- U.S. Chamber of Commerce Institute for Legal Reform (2023). Examining Tort Reform and Civil Justice Policy