Are Damages Caps Regressive? A Study of Malpractice Jury Verdicts

Abstract

Caps on damages have emerged as the most common legislative response to the new malpractice crisis; they are also the most controversial. Critics decry caps as unfair, yet surprisingly little is known about the specific circumstances in which they are applied. We analyzed a sample of high-end jury verdicts in California that were subjected to the state's $250,000 cap on noneconomic damages. We found strong evidence that the cap's fiscal impact was distributed inequitably across different types of injuries. Considering the average impact of the cap in absolute dollar terms, the reductions imposed on grave injury were seven times larger than those for minor injury. In proportional terms, the largest reductions occurred for injuries in which the harm centered on pain and disfigurement. We found no evidence that women or the elderly were disparately impacted by the cap. Use of sliding scales of damages instead of or in conjunction with caps would mitigate their adverse impacts on fairness.