Sky's The Limit? A 50-State Survey Of Damages Caps And The Collateral Source Rule

Author:Mr W. McDonald Plosser
Profession:Butler Snow LLP

Many state legislatures across the country have enacted statutory measures to limit the amount of compensatory and/or punitive damages recoverable by plaintiffs in a civil lawsuit. These limitations and the rationale behind them vary, sometimes widely and sometimes fractionally, from state to state. Similarly, many states have created varying rules regarding the scope and applicability of the collateral source rule, which states generally that "[p]ayments 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." Restatement (Second) of Torts § 920A. In states where damages caps and/or the collateral source rule apply, early case analysis and even settlement evaluation will necessarily require an examination of these provisions. To assist in this examination, the following is a survey detailing each state's damages cap provisions and the applicability of the collateral source rule.


In Alabama, state statute limits punitive damages to up to three times compensatory damages or $500,000, whichever is greater. Ala. Code § 6-11- 21(a). Punitive damages awards 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, the cap is raised to $1.5 million. 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 law 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 damages 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.


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).


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 California has no cap on either punitive or compensatory damages, and the collateral source rule applies. See Howell v. Hamilton Meats & Provisions, Inc., 257 P.3d 1130 (Cal. 2011).


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 cannot exceed $468,000, which may be increased by the court upon clear and convincing evidence to a maximum of $936,030. Colo. Rev. Stat. § 13- 21-102.5(3)(a). Colorado statute also 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 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 statutory law 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 law allows for the recovery of the reasonable value of medical expenses, not only the amount actually paId. See Mitchell v. Hunter, 883 A.2d 32 (Del. 2005); Onusko v. Kerr, 880 A.2d 1022 (Del. 2005).


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).


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.


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 does not place a cap on punitive damages, but non-economic damages...

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