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Dwindling Damage Caps

As we have previously addressed on the blog, legislatively adopted caps on damages in civil lawsuits can have a devastating impact when a victim of negligence seeks to obtain fair compensation for their harms and losses. Although for many years these types of caps were considered unconstitutional by the Ohio Supreme Court, the most recent wave of “tort reform” legislation pushed through by the General Assembly in the early- to mid-2000’s has, for the most part, been upheld when challenged in the Ohio court system. The role of the “trier of fact” has been undermined, and in many cases the amount of damages required to compensate a plaintiff for the noneconomic damages arising from an injury (such as pain and suffering, mental anguish, disability, stress, frustration, emotional distress and loss of enjoyment of life) is no longer determined by a jury of one’s peers. Instead, the amount has been arbitrarily predetermined by state legislators who never heard the particular facts of a given case, years before the tortious conduct or injuries involved even took place. These limitations can be especially problematic in cases that demand a significant financial investment, such as product liability cases and some complex medical negligence matters, that can require numerous retained experts and a prolonged discovery process. In many of these situations, the expenses and risk involved are likely to outweigh the benefit of pursuing litigation due to the diminished potential recovery.

Damages caps were initially proposed as a means to curb “frivolous” lawsuits, but are an improper and unfair vehicle to address such concerns. After all, these noneconomic damage caps only factor in to cases involving the most seriously injured victims when a jury of Ohio citizens, after hearing all of the evidence and testimony, finds a defendant liable and deems it proper to award noneconomic damages in excess of the predetermined amount. These situations, almost by definition, do not constitute “frivolous” lawsuits. These are cases where a jury’s involvement is of utmost importance, and its collective judgment should not be disturbed.

Although we believe that these caps are categorically inequitable, the time value of money significantly adds to the inherent unfairness that they create. For instance, one such “noneconomic” damage cap that applies to tort actions against state universities and their employees (such as medical providers at OSU Wexner Medical Center or University of Cincinnati Medical Center, or negligent drivers in the course of their job duties with a university, etc.) provides that a plaintiff is limited to $250,000 in damages for pain and suffering, mental anguish, stress, anxiety, etc. in all non-death cases, regardless of the extent of the person’s injuries. (See Revised Code Section 3345.40). These caps were made effective in 1987, when the minimum wage was $3.35 an hour and the average salary was $18,426, yet they have remained unchanged for almost three decades since that time. Of course, it would be offensive to any victim who has suffered paralysis, a loss of limb, or a debilitating head injury to state that they can be compensated and “made whole” for their pain, suffering, and distress via an award of $250,000. It makes less sense, however, considering that an individual suffering the same injuryin the same manneralmost thirty years ago was entitled to this cap amount as well, despite the fact that $250,000 in 2015 would be equivalent to less than half of the amount (approximately $119,823) in 1987 dollars. Indeed, Ohio State University has increased its in-state tuition by more than five hundred percent during this time span, yet the university’s liability exposure for these kind of damages has remained stagnant.

Similarly, in claims against private defendants in medical negligence and other tort actions, permitting the most grievously injured plaintiffs to be compensated at 2003 and 2005 levels, in effect, allows inflation and economic trends to discount their awards by 20-25% when compared to those in the past. It is an elementary concept that as years and decades go by, daily costs of living go up, and the extent to which a dollar can be stretched goes down. Salaries have increased. Insurance rates have increased, as have insurance company profits. Medical costs have skyrocketed. Why should victims of negligence in Ohio remain stuck in the past?