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Economic vs. Non-Economic Damages: Why Caps Happen

Money and GavelIf one sustains an injury due to someone else’s negligence, it is reasonable to expect to have the ability to recover monetarily for one’s time, trouble and trauma. However, many states have made this substantially more difficult, citing concerns about frivolous lawsuits and tort reform in support of caps on non-economic damages in negligence cases. Many do not understand why caps on damages exist at all. It is important to not only understand why caps exist, but also where and when they apply.

Economic Damages

California jury instructions separate economic and non-economic damages by a simple definition. Economic damages are defined as “objectively verifiable monetary losses” such as lost wages, medical expenses and money spent on additional requirements such as services or modifications to one’s home (for example, if someone newly rendered paraplegic required the construction of wheelchair ramps). Non-economic damages are described as “subjective, non-monetary losses.”

Economic damages may never be capped for the simple reason of public policy. In other words, to cap economic damages would grievously harm the public because an injured person could conceivably have no way to pay their bills if the liable party was not required to redress all the hardships stemming from the injury. This could lead to higher unemployment and homelessness, which are obviously things that society in general wishes to curb.

Non-Economic Damages

Non-economic damages have been capped in California since 1975, with the passage of the Medical Injury Compensation Reform Act. The original intent of the legislation was to stop the rise of malpractice premiums for California doctors. However, there are two critical issues with the Act that has rendered it vulnerable to repeal in many different election years.

The first is that the Act caps non-economic damages at all. Many states have adopted such caps, arguing that these measures help to deter frivolous lawsuits and those trying to ‘get rich’ from an injury that may not have been very severe to begin with. However, critics of this type of tort reform point to the disabled and elderly, as the people who suffer the most, being denied sufficient payment for injuries that can be extremely deleterious to quality of life.

The second issue is that the cap is set at $250,000. This number has not been adjusted for inflation since 1975, which has lent credence to the myriad of critics urging reform. In today’s society, with a significantly higher rate of inflation than that of 40 years ago, $250,000 simply does not go far enough for many injured people. If you are injured, and even if you are able to show that your non-economic damages go far beyond this figure, you will not receive anything further. This may leave many bills half-paid or unpaid. Even many who are in favor of the cap argue that it ought to be raised simply out of concern for the inflation rate.

Seek Experienced Guidance

If you still have questions regarding California’s damages caps and whether or not they would apply to your case, enlisting the help of a professional can be a smart move. The zealous San Jose medical malpractice attorneys at Corsiglia, McMahon & Allard, L.L.P. understand that the law can be very complex, and we are happy to help guide you through the details toward an appropriate outcome for you and yours. Contact our office today at (408) 289-1417 to discuss your options. We serve San Jose, the Bay Area, and the counties of Alameda, Monterey, Santa Clara, San Benito and San Mateo.

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Client Reviews
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My experience with Attorney Brad Corsiglia during my recent medical malpractice case was nothing short of amazing given the very stressful circumstances. I was fortunate to find Brad highly recommended from a mutual contact and from the very beginning of the process, Brad was truly engaged and knowledgeable in understanding my case and providing input on what avenues were available to me. Michelle M.