Tort reform has ushered in legislation imposing caps on damages in jurisdictions across the country. Unsurprisingly, these statutory caps on damages have faced numerous challenges, leading to a hodgepodge set of rules across jurisdictions. Statutes capping the amount of recoverable non-economic damages are customarily challenged on six grounds: (1) equal protection, (2) due process, (3) separation of powers, (4) access to courts, (5) right to trial by jury, and (6) privileges and immunities. The success of attempts to challenge damage caps has varied widely across jurisdictions, and the United States Supreme Court has yet to rule on the constitutionality of these provisions.
Similarly, there is wide discrepancy in the application of the collateral source rule across jurisdictions. Generally, the rule precludes a tortfeasor from offsetting his liability based upon payments made to an injured party by a collateral source. See Restatement (Second) of Torts § 920A (“Payments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor’s liability, although they cover all or a part of the harm for which the tortfeasor is liable.”). When the collateral source rule applies, evidence of collateral payments to or coverage of a plaintiff by any other source, including insurance, Medicare, Social Security, pension or retirement funds, and employee benefit accounts are generally not admissible. It should also be noted that in some jurisdictions such as Mississippi, a plaintiff can waiver the collateral source doctrine or at least open the door to cross-examination if the plaintiff testifies, “I couldn’t afford to keep going back to the doctor,” when in fact the plaintiff had health insurance that would have paid.
In every jurisdiction, case analysis and settlement evaluation necessitate a timely and clear understanding of these provisions. The following survey discusses each state’s damages cap provisions and the applicability of the collateral source rule.
ALABAMA
In Alabama, punitive damages are capped at three times compensatory damages or $500,000, whichever is greater. Ala. Code § 6-11-21. Awards of punitive damages against small businesses (defined as having $2 million or less in net worth at the time of the occurrence) are capped at $50,000, or 10 percent of the business’ net worth, whichever is greater. Ala. Code § 6-11-21(b)–(c). In cases involving physical injury, state law limits punitive damages to no more than three times the compensatory damages of the party claiming punitive damages or $1.5 million, whichever is greater. Ala. Code § 6-11-21(d). These caps are removed altogether in actions for wrongful death or intentional infliction of physical injury. Ala. Code § 6-11-21(j). There is no corresponding cap on compensatory damages.
In product liability actions, when evidence of collateral source payments is admitted, the plaintiff is entitled to introduce evidence of the cost of obtaining those payments, which are considered recoverable as damages. Ala. Code § 6-5-522.
ALASKA
Alaska caps punitive damages at three times compensatory damages or $500,000, whichever is greater. Alaska Stat. § 09.17.020(f). If the conduct is “motivated by financial gain and the adverse consequences of the conduct were actually known by the defendant,” the cap is raised to four times compensatory damages, four times the aggregate amount of financial gain received by the defendant as a result of the misconduct, or $7 million, whichever is greater. Alaska Stat. § 09.17.020(g). Fifty percent of all punitive damage awards are deposited into the state’s general fund. Alaska Stat. § 09.17.020(j). Non-economic damages are capped at the greater of $400,000 or the injured party’s life expectancy in years multiplied by $8,000. Alaska Stat. § 09.17.010(b). This cap is raised to the greater of $1 million or $25,000 multiplied by the plaintiff’s life expectancy in the event of “severe permanent physical impairment or severe disfigurement.” Alaska Stat. § 09.17.010(c).
Alaska allows a post-verdict reduction in damages by the amounts received or to be received by the claimant as compensation for the same injury from collateral sources that do not have a right of subrogation by law or contract. Alaska Stat. § 09.17.070.
ARIZONA
While there is no stated cap on punitive damages, and the Arizona Constitution prohibits passing a law that would limit the amount of damages in personal injury or wrongful death actions, Arizona case law has interpreted the Due Process Clause to prohibit grossly excessive or arbitrary awards. See Ariz. Const., art. II, § 31; Security Title Agency, Inc. v. Pope, 200 P.3d 977, 997–98 (Ariz. Ct. App. 2008). There is no cap on compensatory damages.
Arizona generally applies the collateral source rule to allow a plaintiff to recover damages even if they were not actually sustained. See Lopez v. Safeway Stores, Inc., 129 P.3d 487, 496 (Ariz. 2006).
ARKANSAS
The Arkansas Supreme Court declared unconstitutional a previously enacted statute capping punitive damages. See Bayer CropScience LP v. Schafer, 385 S.W.3d 822, 829–32 (Ark. 2011). There is no cap on compensatory damages.
The collateral source rule applies in Arkansas. In fact, a statute limiting the recovery of certain medical expenses was declared unconstitutional in contravention of separation of powers, though it was also challenged on collateral source grounds. Johnson v. Rockwell Automation, Inc., 308 S.W.3d 135 (Ark. 2009).
CALIFORNIA
In California, caps on non-economic damages apply only to medical malpractice cases. Cal. Civ. Code § 3333.2(b). Otherwise, California has no cap on either punitive or compensatory damages.
The collateral source rule applies. See Howell v. Hamilton Meats & Provisions, Inc., 257 P.3d 1130 (Cal. 2011).
COLORADO
In Colorado, punitive damages cannot exceed the amount of compensatory damages awarded. Colo. Rev. Stat. § 13-21-102(1)(a). Though economic damages are not capped, non-economic damages in any civil action other than medical malpractice cannot exceed $613,760, which may be increased by the court upon clear and convincing evidence to a maximum of $1,227,530. Colo. Rev. Stat. § 13-21-102.5(3)(a). Colorado adjusts the caps every two years, with the next adjustment set for January 1, 2022. The current caps apply to claims for relief that accrue on and after January 1, 2020 and before January 1, 2022. Non-economic damages for medical malpractice claims are controlled separately and capped at $300,000. Colo. Rev. Stat. § 13-64-302(c).
Colorado reduces the verdict award by the amount paid by a collateral source; however, no reduction is allowed where the collateral payment arises from contractual obligations intended to benefit the injured party, such as private insurance or social security payments. Colo. Rev. Stat. § 13-21-111.6.
CONNECTICUT
Connecticut does not cap compensatory damages, but in product liability actions, punitive damages cannot exceed two times the amount of compensatory damages awarded and can only be awarded “if the claimant proves that the harm suffered was the result of the product seller’s reckless disregard for the safety of product users, consumers or others who were injured by the product.” Conn. Gen. Stat. 52-240b.
Connecticut reduces the verdict award by the amount paid by a collateral source. Conn. Gen. Stat. § 52-225a(a)–(b).
There are no caps on either compensatory or punitive damages in Delaware.
In terms of collateral source, Delaware allows for the recovery of the reasonable value of medical expenses. See Mitchell v. Hunter, 883 A.2d 32 (Del. 2005); Onusko v. Kerr, 880 A.2d 1022 (Del. 2005).
DISTRICT OF COLUMBIA
The District of Columbia does not cap either compensatory or punitive damages, and the collateral source rule applies. See Hardi v. Mezzanotte, 818 A.2d 974, 984 (D.C. 2003).
FLORIDA
There are no caps on compensatory or punitive damages in Florida.
In negligence cases, a court must reduce an award of economic damages by “all amounts that have been paid for the benefit of the claimant, or which are otherwise available to the claimant, from all collateral sources.” Fla. Stat. § 768.76(1). However, there is no reduction for collateral source payments for which there is a right of subrogation. Id. Any reduction is also offset by any amount paid by the claimant or a family member in order to secure the collateral payment. Id.
GEORGIA
Compensatory and punitive damages are not capped in Georgia.
The collateral source rule applies to bar admission of any evidence as to payments of medical, hospital, disability income, or other expenses of a tortious injury paid for by a plaintiff, governmental entity, or third party and taking credit towards the defendant’s liability in damages for such payments. Candler Hosp. v. Dent, 491 S.E.2d 868 (1997).
HAWAII
Hawaii does not place a cap on punitive damages, but non-economic damages are capped at $375,000, with certain exceptions. Haw. Rev. Stat. Ann. § 663-8.7.
Hawaii law also provides for the recovery of the “reasonable value” of medical expenses. See Bynum v. Magno, 101 P.3d 1149, 1155–57 (2004). Discounted amounts paid by Medicare/Medicaid are inadmissible pursuant to the collateral source rule. See Id. at 1157.
IDAHO
Idaho caps non-economic damages at $250,000, but the cap is subject to increase or decrease in accordance with the average annual wage. Idaho Code Ann. § 6-1603(1). Punitive damages are capped up to three times compensatory damages or $250,000, whichever is greater. Idaho Code Ann. § 6-1604(3).
Idaho prevents double recovery due to collateral source payments. Although the plaintiff is allowed to present evidence of incurred medical expenses, the damages plaintiff is entitled to recover should be reduced by the amount actually paid by sources such as Medicare and Medicaid, and for which plaintiff is not obligated. Collateral sources shall not include: (1) “benefits paid under federal...
