Are personal injury lawsuits, as many business groups contend, often frivolous and damaging to the nation’s economy? And are juries apt to side with plaintiffs and give them huge, unwarranted punitive damage awards?
Quite the contrary, says a report by the Center for Justice & Democracy, a New York-based non-profit consumer group.
The center’s analysis, based on Department of Justice data and other research, makes the case that juries seldom award punitive damages on top of compensatory awards, and when they do the punitive damages tend to be modest–a median of $64,000 in 2005. What’s more, the report said, punitive damages serve a critical purpose in deterring wrongdoing .
The paper comes as tort reform is being championed as a way to fix the economy and reduce the nation’s health care costs. Two years ago the non-partisan Congressional Budget Office estimated that the federal government could save $54 billion over the next decade by imposing new limits on medical malpractice lawsuits. Business and trade organizations also argue that big damage awards create financial uncertainty that discourages economic growth.
Thirty-eight states now limit punitive damages, and New Hampshire and Louisiana have banned them altogether.
According to the report, Justice Department data from civil trials in the nation’s 75 most populous counties show that:
- Winning plaintiffs received punitive damages 6 percent of the time in 2001, and 5 percent of the time in 2005.
- From 2001 to 2005, the percentage of successful medical malpractice plaintiffs awarded punitive damages dropped from 4.9 percent to 2.6 percent.
- From 2001 to 2005, the share of winning plaintiffs awarded punitive damages in product liability trials dropped from 4.2 percent to 1.3 percent.
Joanne Doroshow, the center’s executive director, said in a news release that the report dispels conventional wisdom about punitive damages. “Their social importance lies not in their frequency,” she said, “but in signaling to big companies that the financial consequences of acting recklessly can be severe.”