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Mark Bello
Mark Bello
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BP Disaster Highlights the Disaster Known As “Damage Caps”

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Have you been injured by a hospital’s, doctor’s or nurse’s negligence? Or, for that matter, have you been injured by any type or health care provider or, perhaps, by a defective machine? Would it surprise you if I told you that even if you won your case and proved significant damages, you may never recover your damages in full?

Across the country, powerful insurance and pro-business (primarily tobacco and pharmaceutical) interests have been successful in passing “caps” on the non-economic portion of your recoveries in many types of personal injury cases. These caps unfairly restrict the rights of seriously injured American citizens to receive full and fair compensation for the consequences of their injuries.

You may not be aware that there are two categories of personal injury case damages. Economic damages are your monetary or out-of-pocket losses; they are usually lost wages (past and future) and medical expenses. There are no caps (that I know of) on the amounts of out-of-pocket or economic damages that may be awarded in a personal injury case. There is, of course, a practicable cap; the injured person’s recovery is ‘capped’ at the amount he/she is out of pocket; thus, damages in this category are clearly definable.

It is in the category of non-economic damages, non-monetary damages like mental anguish, living with or accepting unsightly disfigurement, loss of consortium, effect on the quality or enjoyment of life, degrees of physical or mental impairment, or, for lack of a better description, the serious life-changing inconveniences caused by the serious injuries, that a damage cap has the greatest impact. In many States, these damage caps are as low as $250,000. If you or a loved one was left with a serious permanent disability or disfigurement; if you or a loved one was left in a permanent vegetative state as the result of of malpractice or a defective/dangerous product, would you want your non-economic damages capped at $250,000? For the loss of your limbs? For blindness? For the loss of your ability to have children? For brain damage? For extensive and unsightly 3rd degree burns? For paraplegia or quadriplegia? Seriously, $250,000 for these?

During the Bush years, the President and other Republicans in Congress pushed for federal or national caps on these damages. Urged by pro-business lobbyists and the U.S. Chamber of Commerce, there is one, common, justification for these State or federal proposals: The suggestion that caps will result in a reduction of insurance premiums for the perpetrators and other health care providers. Using terms like “frivolous lawsuits” or “junk lawsuits” (President Bush’s favorite), “lawsuit abuse”, the Chamber has been fairly successful in creating the perception that personal injury litigation is bad for business in America. Insurance companies argue that huge pain and suffering awards have caused sharp increases in the cost of professional liability insurance. Some physicians have left certain States because, they say, insurance premiums are too high. And some insurance companies have refused to cover physicians and other health care providers because, they say, it is too expensive for them to provide the coverage. So, who’s telling the truth?

There is, absolutely, no independent data that supports the contention that infrequent, high damage awards cause a sharp increase in insurance premiums. Conversely stated, there is, absolutely, no independent, reliable data to support a connection between damages caps and insurance premium decreases. If you don’t wish to take a trial lawyer’s word for it, ask the American Bar Association, the association that represents all attorneys, not just those that represent the rights of consumers in personal injury litigation. The ABA has been an outspoken opponent of caps; the Association bases its position on the lack of data that shows that caps result in lower insurance rates. In fact, says the ABA, insurance practices reforms, in states that have implemented them, have proved to be far better insurance premium cost reducers than damage caps alone. In plain language, then, the plaintiff gets screwed, the doctors’ premiums do not decrease, and the insurance companies pocket the difference in record profits. God bless America!

There are other problems with caps. One obvious problem is that they serve to protect the person or insurer responsible for committing the tort (the wrong or harm). If the system removes or limits financial responsibility; if it fails to hold the wrong-doer accountable, it increases the chances that the conduct will be repeated. Public safety, in general, takes a serious hit and the public, overall, is at serious risk for repetitive conduct. Financial responsibility for wrong-doing as an incentive to improve safety is the bedrock of the tort system. Simply stated, caps provide a disincentive to protect members of the public from receiving the same brand of negligent care that the capped victim received.

Further, even though the argument goes that caps and ‘tort reform’ are needed to prevent “frivolous lawsuits”, the reality is the damage caps cause a failure fail to protect (another bedrock of the tort system) those who suffer serious, even catastrophic, injuries. Those whose life-altering injuries and damages significantly exceed their out-of-pocket damages are penalized the most by a system that was designed for their protection. If the injured person is a child or a retiree, the inequity is even greater because there is no wage loss. A child’s life, loss of limb or paralysis is worth only $250,000 for a lifetime of suffering?

Several States that originally passed damage caps have repealed them; most of those have declared them unconstitutional. Ohio, Alabama, Illinois, New Mexico, Kansas, Wisconsin are a few examples. The constitutional argument is, typically, a due process and equal protection argument, because a “one size fits all” remedy treats all injured people the same, without regard to severity, and access to the civil justice system and the right to trial by jury is restricted.

Today, in the Gulf of Mexico, another type of damages cap has emerged and is receiving criticism. It seems, that under the federal Oil Pollution Act, there is a provision, 33 U.S.C. Section 2704, which states, in relevant part, the following:

“Except as otherwise provided in this section, the total of the liability of a responsible party under Section 2702 of this title and any removal costs incurred by, or on behalf of, the responsible party, with respect to each incident shall not exceed … for an offshore facility except a deep water port, the number of all removal costs plus $75,000,000.”

Do you think it is fair to limit BP’s responsibilty of the clean-up to this arbitrary number? Would you, the taxpayer, support using your tax dollars to make up the difference? Or, do you think that BPresponsibility and the insurance company (companies) that accepted the risk of these types of occurences should foot the bill? Of course it should be BPoccurrences and its insurance companies! I am certain that you have no doubt in your mind that BP should be held fully responsible and not a dime of taxpayer dollars should be used to assist them.

Well, should the same be true in the operating room or in the use of everyday products? If we fail to hold the person or entity fully responsible for the damages it/he/she causes, the taxpayer must pick up the difference. Caps may save insurance companies money, but they will always cost the consumer money in higher taxes and higher medical costs. And the cost to the innocent victim, in America, the greatest country in the world, is just not acceptable. Why is the Republican Party on the wrong side of this issue? Isn’t this the "personal responsibility" Party?

So, who will fight this battle in the Gulf? Who will continue to fight for victims everywhere? When BP stops running its “feel good” commercials and victims start to feel that the system is failing them, compensation offered is too low, or their businesses are not coming back like they expected to, who will they turn to? They will turn to a person who has always fought against these types of injustices. They will turn to a person who has always stood up to the big corporations on behalf of the little guy. They will turn to a person who has always championed the rights of individual citizens. They will turn to a person who will fight for their rights in a system that is increasingly stacked against them. They will turn to and thank a trial lawyer.

Mark Bello has thirty-three years experience as a trial lawyer and twelve years as an underwriter and situational analyst in the lawsuit funding industry. He is the owner and founder of Lawsuit Financial Corporation which helps provide legal finance cash flow solutions and consulting when necessities of life litigation funding is needed by plaintiffs involved in pending, personal injury litigation. Bello is a Justice Pac member of the American Association for Justice, Sustaining and Justice Pac member of the Michigan Association for Justice, Business Associate of the Florida, Tennessee, and Colorado Associations for Justice, a member of the American Bar Association, the State Bar of Michigan and the Injury Board.