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What does "Non-Economic Damages" Mean?

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  • Written By: Mona D. Rigdon
  • Edited By: A. Joseph
  • Last Modified Date: 02 December 2016
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In law, the term "non-economic damages" refers to damages that cannot be quantified monetarily. For example, in a car accident, it is easy to define the value of a totaled vehicle and of related medical costs. It is more difficult to put a value on the premature loss of a limb, the ability to work or the life of a loved one. These types of damages, along with physical distress, pain, suffering, impairment, emotional distress and disfigurement are referred to as non-economic damages.

Non-economic damages play a very important role in the legal system because they are the only means a jury has to compensate an injured party financially for many types of losses. Certain losses are so difficult to value that the awarding of these damages is very subjective and is based on the whims and judgment of the empaneled jury. Jury selection, for this reason, is taken very seriously by attorneys in cases involving non-economic damages.

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In order for the jury to be able to put a fair value on a loss, it is helpful for the jury panel to have a point of reference from which to judge. A single factory worker might have an easy time understanding the lost wages of an injured laborer but a more difficult time placing a fair value on the loss of a housewife's ability to care for the needs of her children and husband. Careful questioning of the pool of potential jurors can give attorneys insight into the minds and priorities of those likely to judge the case at hand.

There has been a lot of controversy that surrounds these types of damages, and many jurisdictions have initiated caps on them through tort reform measures. Some places in the United States, such as Texas, have low damage caps. In Texas, non-economic damages for medical malpractice suits are capped at $250,000 US Dollars (USD) unless there are two or more hospitals involved. Other states have higher limits, ranging up to $500,000 USD.

Supporters of these caps argue that juries cannot fairly assign values to these damages, and they posit that awarding them violates equitable principles of justice in that they are inherently random. Without guides and bounds, amounts awarded vary wildly, citing the case of Ernst v. Merck, in which a Texas jury awarded $24 million USD in non-economic damages to the widow for the death of a man who had died from side effects of taking Vioxx. The two were not married long, and the man was 59. Accordingly, many people felt that the award was excessive. Further arguments for these caps are more industry specific and include the position that the caps would lower the cost of medical malpractice insurance for doctors and help to stabilize rising costs.

Opponents argue that caps on damages interfere with the rights of a jury to determine damages on a case-by-case basis, as afforded under the U.S. Constitution. Further, they argue that many difficult-to-quantify damages deserve compensation, and these caps unfairly limit compensation that is just and equitable. Some acts cause such immeasurable loss, and others are so egregious, that they deserve higher awards. These opponents to tort reform and damage caps argue that bureaucrats in the federal government should not arbitrarily limit a jury's ability to fairly compensate the injured in such a broad, sweeping and inflexible manner.

The argument is not likely to be settled soon. Clashing sides have argued all the way up to the State Supreme Court in many jurisdictions in the U.S. Some state high courts have overturned these laws as unconstitutional. The fate of non-economic damages in the U.S. likely will rest with the Supreme Court of the United States at some point.

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Logicfest
Post 2

@Markerrag -- The trend over the past couple of decades has been toward tort reform in various attempts to cap damages. Want proof? Most of the lawmakers voting for those caps are lawyers themselves. If a bunch of lawyers think tort reform is a good idea, that is not a good sign for those who think caps should not be in place.

Also, the American Trial Lawyers Association (ATLA) is a pretty powerful lobby that has fought against those caps. That group has logged a number of defeats. When a lobbying group can't get what it wants by throwing money around, it is safe to say that trends are running against that group.

Markerrag
Post 1

No, the argument over damage caps will not be resolved anytime soon. On one had, there is little doubt that excessive jury awards have had a very negative impact on businesses. Why should one person benefit from a huge settlement if that means higher prices for goods and services and, possibly, layoffs by businesses trying to bear up under the weight of huge settlements? And, yes, those huge settlements do raise the amount of the insurance premiums you are paying.

On the other hand, if someone has suffered a horrible injury or lost his life due to the neglect of an individual or another person, why limit how much can be recovered? Don't those huge judgments deter people and

organizations from being negligent?

The arguments from both sides on this issue are great and that usually means the debate will last for decades if not longer. That particular debate started before any of us was born, in fact. Expect to keep reading about this issue for a long, long time.

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