The Pros and Cons of Caps in Punitive Damage Suits

Legal Research and Application

Should there be caps on legal awards against organizations or practitioners? What are the pros and cons of limiting civil monetary awards?

There are a number of tort reforms that are being promoted among the fifty states regarding caps on punitive damages. The purpose of these caps is to ensure that "defendants will be held liable for no more than their fair share of responsibility for a plaintiff's injuries" and putting the rest of damages sought by plaintiffs on the "collateral sources such as health insurance" (Cohen, 2006, p. 1). Such reform would reduce the treatment provider's risk of being completely ruined by a plaintiff's lawsuit and provide that some of the risk of malpractice be assumed by other agencies connected to health care provision. This would be a pro-for defendants (health care providers) but a con for patient plaintiffs who would be required to seek damages from multiple sources, potentially elongating the process of being recompensed.

At the same time, one of the cons for health care providers would be that caps might "mute incentives for physicians to reduce the risk of negligent injuires" -- i.e., they may not be as a principled or careful about providing adequate service and care, knowing that there is only so much that a patient can sue for damages (Svorny, 2011, p. 1). This scenario does not seem as likely, however, considering that just because there is a cap does not mean that doctors will be more willing to act negligently. No one wants to be sued no matter how low the likely cost will be.

The main pro-in the case of caps, according to those who support it, is that it would inevitably bring health care costs down. The reason costs are so high is because of the protection that care providers must afford themselves in case they are sued. Caps would help to reduce this risk and thus providers could therefore bring costs down. This idea, however, is also questionable, as insurance agencies who would be responsible for assuming risk would then by responsible for raising costs, which would be passed on to the customer as well.

4.Should an organization be held liable for board member actions or representations outside the facility? Does it make a difference if the issues are related to the organization? Does it make a difference if the board members are compensated by the organization? Why or why not?

An organization should be held liable for board member actions or representations outside the facility, as the board member represents the organization at all times. Even if the issues are not related to the organization, the board member still reflects on the organization and his or her actions and activities are impactful on how people perceive the organization in terms of character and ethics. If a board member for instance is actively campaigning for a terrorist organization (to give an extreme example), this would cause stakeholders to panic -- even though his actions are not directly related to the organization itself and do not weigh on decisions that pertain directly to the company. His public persona and activity, however, do weigh on the way that the organization is perceived by the public and could cause the public to lose trust in the company and its operations as a result.

Thus, board members should always be aware of how they represent the organization and should always take care to do nothing that the public could view as harmful to the interests of the organization's reputation and not just its business practices or accounting, etc.