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Non-economic damages caps are a controversial tort reform to limit (i.e., "cap") damages for intangible harms such as "pain and suffering" and "loss of companionship." Many states have debated or 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.
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. Some opponents of tort reform contend that limiting non-economic damages would fail to provide just compensation to people who are "crippled, disfigured, blinded or live in severe pain or humiliation" as a result of a negligent hospital or doctor.[1] 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. (However, that victim might still be able to receive millions of dollars in economic damages, including all of his proven medical expenses and lost wages; and in many states with caps, gross negligence or intentional torts such as drunk driving would not be eligible for caps.) Because children and the elderly often do not have substantial economic losses, caps on non-economic damages can have a particularly significant impact on these groups. Opponents of tort reform have contended that such caps are arbitrary in that they offer "one size fits all" justice. Tort reform opponents have often cited the case of Linda McDougal, an accountant from Woodville, Wisconsin, who was negligently and incorrectly diagnosed in May 2002 with an advanced stage of breast cancer, resulting in an unnecessary double mastectomy.[2] Opponents of damage caps contend that $250,000 would neither adequately compensate McDougal for her non-econonic damages nor adequately punish the hospital for an error of this magnitude.
In response, tort reform supporters note that the misuse of non-economic compensatory damages to punish defendants for negligence torts that the common law has held do not merit punitive damages is precisely the problem. They sometimes contend that it is very difficult for juries to assign a dollar value to these losses with the guidance they are normally given. They sometimes contend that, because there's no rational basis for non-economic damages, uncapped non-economic damages will violate principles of equitable justice by being inherently random, because different juries will necessarily come to different results. Because of the highly charged environment of personal injury trials, there is a risk of unbounded non-economic damages being excessive. (For example, 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 who had been married one year to a 59-year-old produce manager with arterosclerosis.) They further argue that the purpose of the tort system is deterrence, rather than to act as social insurance, and that uncapped non-economic damages "overdeter," and thus make everyone worse off for the benefit of a handful of attorneys and a handful of sympathetic plaintiffs who succeed in "lottery litigation." Finally, they note the costs of non-economic damages are eventually passed on in the form of higher prices for goods and services; the fact that individuals do not choose to purchase insurance for "pain and suffering" shows that, ex ante, consumers would be better off if there were not non-economic damages awarded and the price of goods and services were lower.
There is dispute over the effectiveness of non-economic damages caps. In the area of medical malpractice, it is argued that insurance premiums would decrease, both making medical care more affordable for everyone and eliminating a disincentive for doctors to practice. Some tort reform opponents contend that high medical malpractice insurance rates are the fault of "greedy insurers." Tort reform supporters note that most doctors are insured by non-profit mutual companies, and that to believe insurers are responsible is to believe that doctors are charging themselves too much. For more on this debate, see Medical malpractice#United States political controversy. Even opponents of tort reform such as Tom Baker acknowledge that caps would reduce insurance rates.[3]
Because malpractice insurance is a significant component of doctors' costs, especially for neurosurgeons and obstetricians, large variations in the legal environment and malpractice insurance costs from state to state has caused doctors to migrate away from what the American Medical Association calls "crisis" states, with adverse effects on health-care availability in those states, especially in rural areas. This, supporters argue, can cost lives;[4] rising insurance premiums emptied southern Illinois of many neurosurgeons, leaving many head injury patients more than an hour away from a hospital that can help them; nurse Lisa Kasten believes that this cost her father his life when he had to be driven by ambulance to St. Louis to find a doctor when he slipped and fell.[5]
The Association of Trial Lawyers of America argues that there is no shortage of doctors.[6] Nationwide, there has been a 20% increase in the number of physicians since 1970, according to statistics maintained by the United States Department of Health and Human Services. [7] But a recent study by Jonathan Klick confirmed that damages caps increase the supply of doctors in "high-risk" disciplines such as neurosurgery and obstetrics.[8] Moreover, a study by the government Agency for Healthcare Research and Quality linked higher physician supply to non-economic damages caps.[9]
There is further dispute over whether caps would reduce overall medical costs for patients. 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." The CBO further found that proposed malpractice reforms would reduce those costs 25-30%. Some studies have suggested that the costs of defensive medicine induced by malpractice liability fears are as much as 10% of total medical costs; others dispute this notion.
Opponents of caps on damages argue that measures to place caps on the amount of damages jurors can award are an unconstitutional invasion of the right to a trial by jury and other fundamental rights.[10]. Because tort law has historically been a question of state law, states have the power to establish their own rules under their constitutions and by statute governing citizen's rights to a trial by jury. Opponents of damage caps contend that the right to trial by jury is violated when a legislature places an arbitrary cap on the amount of damages that a jury can award, regardless of the facts involved in the case. 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 under their interpretation of state constitutions.[11] Some states, such as Texas, have responded to these court decisions by amending their state constitution. In cases decided under federal law, federal courts have not found that caps on damage awards violate plaintiffs' right to a jury trial under the Seventh Amendment to the United States Constitution.
Tort reform supporters have criticized such decisions as a violation of the concept of separation of powers.[12] Opponents of damage caps contend 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; supporters argue the imposition of a legislative cap on damages does not constitute a re-examination of a fact found by a jury, but rather represented a reasonable legislative decision to cap damage awards in order to rein in an expensive and unpredictable civil justice system.