Non-Economic Damages

A gavel resting beside two books, pictured to reference the recent rulings in Horton v OHSU and Rains v Stayton Builders Mart, Inc. regarding caps on non-economic damages in the state of Oregon.

What are “non-economic damages”?

When a person or corporation negligently injures a someone in Oregon, a jury may find them liable to pay for medical bills, lost wages and other injury-related expenses.  Those are called “economic damages.”  The jury can also find an injured Oregonian entitled to “non-economic damages”, which are damages for pain, suffering, and the loss of enjoyment of life.

There’s a lot more to life than your paycheck and medical benefits. What about your ability to take your kids to a ball game, teach them to hunt or fish, volunteer at their school, go to the beach for the weekend with your spouse, work in your garden, cook a meal or build something with your own hands?  What about your right to eat breakfast without help, walk without crutches or a wheelchair, use the bathroom by yourself in a few minutes, turn a doorknob, go up and down stairs, and live without suffering pain every day? How about your ability to think clearly, to understand what goes on in the world, remember what happened last week, to know what you believe in? The loss of these intangibles – the things that, for most of us, make life worth living – is what non-economic damages are intended to compensate for. The law recognizes that when someone injures you seriously, they take away more than your medical expenses and monthly paycheck.  Non-economic damages are compensation for the loss of the things economic damages don’t cover.  Money cannot truly compensate for the loss of basic human functions, and no one would make that trade willingly, but there is no question, and the law provides, that someone who causes injury through carelessness should compensate the injured person for all of the losses he suffers.

Nevertheless, it is common for certain insurance and business interests to argue that injured people should not be fully compensated for non-economic losses, that there should be legal limits on what juries can award injured parties for non-economic damages.

Arguments to limit non-economic damages by law

It is difficult to find a principled argument, that’s supported by the facts, for limiting non-economic damages.  Insurance companies and medical associations will argue that, if non-economic damages for medical malpractice are not limited, doctors will go elsewhere, and medical care will be in short supply.  The fact is that the availability of doctors is determined by overall population trends, lifestyle choices, and demand – which usually means the number of patients who have medical insurance.  For example, there are twice as many doctors in relatively wealthy White Plains, New York (where there is no non-economic damages limitation, ) as there are in relatively poor Bakersfield, California (where the statewide non-economic damages cap is $250,000).

Insurers and product manufacturers argue that they need “predictability” and “stability” and that high damage awards shake things up, so they’re bad for business.  Of course those injured by the carelessness of others have no predictability or stability at all.  The seriously injured have their lives turned inside out suddenly and without warning.  For insurers and business interests, this is a financial matter.  They want politicians to tip the scales of justice in their favor so that they will not have to pay full value for injury they cause in the future.  For the seriously injured, it is a matter of justice meted out by trial juries of their peers.

Non-economic damages caps are decided without the facts

Damages caps are enacted as legislation by elected politicians.  They are one-size-fits-all; they apply to everyone, in every case, no matter how serious the injury, no matter the fault of the wrongdoer, no matter what the facts of any particular case may be.  Damages caps are decisions made without knowing the relevant facts.   Of course the future parties and the facts of future fault or future injury are unknown when a cap is decided on in the legislature.  Even the fairest of legislators, even the least affected by campaign contributions or other means of personal influence, have no idea what injuries, what workers, what families, will be affected by the decision they have made to limit damages in all future cases.  By definition, there can be no individual fairness in a cap on damages.

The facts on which damages caps are based are statistics and arguments made by lobbyists whose access to legislators is often defined by the size of election campaign contributions made by those lobbyists and their organizations.  Insurance companies and professional associations, of course, maintain regular, full time lobbying presences in state and federal legislatures.  They are sources of large campaign contributions, and they foster long-term personal relationships with legislators.  That’s their job, but it doesn’t make for fairness in a particular case.  Only a trial jury can give us that.

Trust juries, not politicians

The trial jury is the keystone in our justice system. Thomas Jefferson considered the jury “the only anchor yet imagined by man” by which the people could hold the government to the principles of the constitution.  In both criminal and civil cases, we rely on twelve citizens, chosen at random and screened for conflicts of interest, to make a fair and impartial decision about what happened in the case and, in a civil injury case, what should be done about it.  Jurors have not been paid by the parties, do not know them before the case begins, and must answer questions from the lawyers for both sides about any prejudices they may bring to the issues in the case.  They are carefully instructed by the court to base their decisions only on the evidence they see in the courtroom, not to do their own research on the internet or in any other way.  They are the fairest, most impartial decision makers we can bring together to make important decisions that have powerful effects on the parties in a case.  They make a decision that is tailored to the specific facts of the case.  No legislative damages limitation can do that.

Limits on non-economic compensation discriminate against the poor

The highest earners among us can recover very substantial sums for lost earnings, including future earning capacity if they are injured and unable to work.  The same is not true for the young, the old, the poor, parents who care for children at home and those who, because of racial or gender inequities, earn less for their work.  When President Clinton vetoed a federal products liability bill that would have limited non-economic damages in 1996, he said:

“The legislation would make it impossible for some people to recover fully for non-economic damages. This is especially unfair to senior citizens, women, children, who have few economic damages, and poor people, who may suffer grievously but, because their incomes are low, have few economic damages.”

Those who have little or no regular income suffer most when their ability to recover non-economic damages is restricted by law. 

The politics of non-economic damages limits

Non-economic damages have no direct political constituency because no one knows, before it happens, that he is going to suffer a life-altering injury.   After it happens, it is a rare injury survivor who has the time, energy and ability to become an effective advocate for the seriously injured.  The principal advocates for the future seriously injured are therefore trial lawyers, whose credibility on the issue is attacked because they have a financial interest in winning large verdicts for future clients.  Of course, on the other side of the question, advocacy comes from insurance companies and professional associations, whose  interest is financial as well.

Arguments by insurance companies and medical associations for limits on non-economic damages in the interest of “stability,” “predictability” and lower insurance premiums all mean two things: (1) we should not trust a jury to reach a reasonable result on the facts of a particular case; and (2) the most severely injured should not receive full compensation for what they have lost.  Neither of those should be acceptable to a society that claims to compensate fairly those who have been injured by the fault of others.

Conservative politicians also tend to favor limitations on non-economic damages because most injury cases are handled by plaintiffs’ lawyers on a contingent fee basis, with the lawyer earning a percentage of the amount the injured client recovers.  So limited damages mean limited attorney fees.  Most plaintiff’s lawyers are politically progressive, and conservatives want to limit the money those lawyers have to support progressive politicians and political causes, so they try to limit the damages injured people can recover.  Injured citizens suffer because conservative politicians are trying to limit the political power of their lawyers. The most seriously injured suffer most.

Of course the most obvious consequence of non-economic damages limitations is that a jury may fully compensate those with more moderate injuries, but those with very serious, permanent loss of the intangibles most of us consider most valuable in life get the short straw.  Under a $500,000 limitation on non-economic damages, a plaintiff with a broken leg that heals normally will get full compensation; a plaintiff with a life-altering brain injury will not.

A note on Workers’ Compensation

There are no non-economic damages in workers’ compensation.  An injured worker is entitled to medical treatment and lost earnings caused by the injury on the job, but no compensation for the loss of ability to live the rest of his life, pursue other interests, enjoy time with his family and live pain free.  What injured workers got in return for giving up non-economic damages is that they don’t have to prove anyone was at fault for their work injury.  If they were hurt on the job, they get medical and wage loss compensation, no matter whose fault the injury was.  Outside the workers’ compensation system, however, injured parties must prove that the person who injured them failed to use reasonable care.  If they prove that, the law says they are entitled to full compensation.  A cap on non-economic damages takes away that right.

Limits on non-economic damages declared unconstitutional

In the 1980s, during the Reagan administration, some state legislatures around the country enacted limits on non-economic damages.  The argument was that big jury verdicts were driving insurance rates up.  Later studies have shown that wasn’t true, but the argument worked.  The Oregon Legislature decided it didn’t trust juries to be reasonable in injury cases, and it imposed a $500,000 limit on non-economic damages.  No matter how seriously an injured person’s life was changed by the negligence of another, no compensation for non-economic damages beyond $500,000 would have to be paid. In 1999, in Lakin v. Senco Products, the Oregon Supreme Court found the $500,000 cap on non-economic damages to violate the state constitution.  The Oregon Constitution provides that every injured party has a right to a jury trial, and the court held that the right to a jury trial includes a right to a jury’s full verdict, not a verdict limited by the legislature.  For the next 19 years, there was no cap on non-economic damages for injury in Oregon, though a $500,000 cap on damages for causing death remained in effect.

The Supreme Court reverses itself

In 2016, the Oregon Supreme Court considered the case of medical negligence causing severe injury to a six month old child.  In Horton v. OHSU, the hospital admitted its doctors had been negligent and a jury found their negligence had caused $12 million in damages to the child, $6 million economic and $6 million non-economic damages.  A special statute for public defendants like the state and its employees limits all damages to $3 million.  The supreme court ruled that the limitation should be applied to limit the childs’ damages.  In the course of reaching that result, the court overruled the Lakin case, which had struck down the $500,000 limitation on non-economic damages, leaving the strong impression that the limitation on non-economic damages may apply, at least in some cases.  Which cases?  That remains to be seen.