In several states that have enacted “tort reform”, the maximum amount of compensatory damages that can be awarded to a plaintiff in a personal injury or medical malpractice lawsuit is dictated by “damage caps.” (Some state courts have ruled these caps to be unconstitutional. See, e.g., https://apps.americanbar.org/litigation/litigationnews/top_stories/060214-non-economic-damage-caps.html)
In the state of Texas, damage caps are applied in three situations regarding personal injury lawsuits:
- Injuries involving the government as a defendant.
- Injuries that are a result of medical malpractice.
- Personal injury lawsuit that involve punitive damages.
Damage Caps Involved in Government Personal Injury Lawsuits
Governmental agencies are immune from many types of liability with some narrow exceptions. This general immunity includes federal, local, and state government entities. As an example of an exception to this general rule, if a road that was built by a government entity deteriorates and causes a vehicle to crash, thus injuring the driver, the driver may sue the government entity that was responsible for constructing and maintaining that road. Typically, in these situations, there are very limited statutes of limitations. In addition, liability may not be limited to the governmental entity if, for example, the government hired an outside contractor to build and maintain the road.
If a court determines that the governmental entity can be sued for the injuries, certain restrictions will be placed on the amount of money that the plaintiff(s) can receive. In Texas, each injured person who is involved in an incident that the state government was deemed liable for can receive up to $250,000, However, the government will only be required to pay a total maximum of $500,000 for any one incident. This means that if five people are injured in an incident that the government was responsible for, then the combined maximum amount that all of the plaintiffs may receive is $500,000.
On a federal level (meaning that state and local governments were not involved) the government will only be required to pay a total maximum of $300,000, and each person involved can only be awarded a maximum of $100,000.
Damage Caps Involving Medical Malpractice Claims
Everyone makes mistakes, and doctors are no exception. Unfortunately, these mistakes can cause serious, long term injury and even death if the doctor or healthcare provider acted negligently when administering medicine, making a diagnosis or performing a procedure.
Since the Medical Malpractice and Tort Reform Act of 2003 (House Bill 4) was passed, plaintiffs have been limited in the amount of noneconomic damages (which represent compensation for pain and suffering, emotional distress, loss of enjoyment of life, etc.) that they can pursue. Specifically, plaintiffs cannot be awarded more than $250,000 in noneconomic damages from a doctor or medical professional, in addition to a $250,000 maximum for any other healthcare facilities involved not to exceed $500,000. This means that the maximum amount of noneconomic damages a plaintiff can be awarded in a medical malpractice suit is $750,000, plus economic damages (which represent financial losses like lost wages, medical bills, etc.).
In the case of wrongful death resulting from medical malpractice, the maximum amount of damages a plaintiff can be awarded is based on legislation from 1977, which gives a total maximum of economic and noneconomic damages of $500,000. However, this amount would be adjusted for inflation since 1977, which bring the actual maximum to over $1,500,000.
The original intent of damage caps for medical malpractice claims was to lower the cost of healthcare. In theory, damage caps would allow the medical industry to have lower insurance premiums and thereby reduce the cost of healthcare. However, according to a study conducted by researchers lead by law professor Charles Silver of the University of Texas Law, healthcare prices have only continued to increase since the Medical Malpractice and Tort Reform Act was passed. This is true even though the number of annual medical malpractice claims have dropped 70 percent since 2003.
Damage Caps Involved in Punitive Damage Awards
If a defendant in a personal injury lawsuit is found to have been grossly negligent by a jury, punitive damages may be levied against the defendant. It is important to note that the legal purpose of punitive damages is not to award the plaintiff, but instead to punish the defendant for his or her egregious negligence or blatant disregard for the plaintiff’s safety.
According to Chapter 41 of the Texas Civil Practices and Remedies Code, the damage cap for punitive damages is: two times the amount of economic damages, plus an amount equal to the noneconomic damages found by a jury, not exceeding $750,000; or $200,000, whichever is higher. For example, if a plaintiff is awarded $500,000 in economic damages and $200,000 in noneconomic damages, then the maximum punitive damages that can be levied on the defendant is $1,200,000 (calculated by multiplying the economic damages of $500,000 by two, and then adding the noneconomic damages of $200,000).