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Abstract

During the 1970s and 1980s, the insurance industry experienced high losses from “deep-pocket defendants” with disproportionately high jury awards. These “deep-pocket defendants” were often medical doctors and big businesses. The industry responded to the losses by increasing premiums or refusing to renew existing high-risk premiums. The industry feared it would go under as a result of closing businesses and the relocation of doctors to areas with lower premiums. In response to this self-labeled “crisis,” laws were implemented which restricted a plaintiff’s rights to a full recovery in hopes of reducing insurance premiums; however, this result has not always been achieved. The enactment of these laws began the wave of what is most commonly referred to as “Tort Reform.”

The threat of limitations on a plaintiff’s opportunity to be fully compensated for injuries caused through no fault of their own has been widespread over the years. For decades, both state and federal governments have proposed and adopted laws that limit the amount of money a plaintiff can recover. Generally, the caps are placed on noneconomic and punitive damages. Noneconomic damages are those awarded to compensate the plaintiff for damages such as pain and suffering and loss of enjoyment. They are more speculative in nature due to the uncertainty in how they can be calculated. Punitive damages are those awarded to punish a defendant for wrongdoing and deter others from acting in the same manner.

In regards to the caps on noneconomic and punitive damages, states are split not only on what actual cap should be applied but also to the constitutionality of such caps. Section II will discuss how Tennessee, Georgia, and Alabama courts have handled the caps and the challenges that have been made.

Section III will address how the states have attempted to limit economic damages. Economic damages are damages awarded to cover medical bills, lost wages, and other calculatable damages and have not, up to this point, been susceptible to caps. While no statutory caps have been placed on economic damages, proponents for such limitations have attempted to restrict economic damages in other ways. Some states have limited or completely abrogated the Collateral Source Rule, while others have attempted to expand narrowly tailored state laws. The Collateral Source rule prevents evidence of collateral payments from affecting a plaintiff’s right to recover damages. Tennessee, Georgia, and Alabama have all taken different approaches to the collateral source rule, ranging from strict adherence to complete abrogation.

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