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Non-economic damages caps are somewhat controversial tort reforms to limit (i.e., "cap") damages for intangible harms such as severe pain, physical and emotional distress, disfigurement, loss of the enjoyment of life that an injury has caused, including sterility, loss of sexual organs, physical impairment and loss of a loved one, etc.
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.
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Efficacy of Caps
Many states have debated, passed legislation or amended their constitutions to create such caps. President George W. Bush has 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. [1]
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." Although 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 claim that there is no basis for non-economic damages, and uncapped non-economic damage would violate the equitable principles of justice by being inherently quite random, because different juries will always come to different results. Because of this 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 non-economic damages for a widow of a 59 year old triathelete 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.[2]
In contrast, 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. Limiting non-economic damages would fail to provide fair compensation to people who are "crippled, disfigured, blinded or live in severe pain or humiliation" as a result of a negligent hospital or doctor.[3] For example, in some jurisdictions with $250,000 caps on non-economic damages, a judge would be required to reduce an award of $1,000,000 in damages for pain and suffering down to $250,000 even in a case where a victim was rendered quadriplegic by a drunk driver or by a dangerously defective product.
For example, Steven Olsen is blind, brain damaged and physically retarded because of medical negligence. When Stephen was two years old, he fell on a stick in the woods while hiking. The hospital gave Steven steroids and sent him home with a growing brain abscess, although his parents had asked for a CAT scan. The next day, Steven Olsen came back to the hospital comatose. At trial, medical experts testified that had he received the $800 CAT scan, Stephen would have his sight and be perfectly healthy today. The jury awarded $7.1 million in "non-economic" damages for Steven's preventable severe disability and suffering. However, the jury was not told of a state cap on non-economic damages. As a result,the judge was forced to reduce the amount to $250,000. The jurors only found out that their verdict had been reduced by reading about it in the newspaper. [4]
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.[5] 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 violative of state constitutions.[6]
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.[7].
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. [8]
Equal Protection
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 noneconomic damage awards different from people with lower noneconomic damage awards. [9][10]
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