Government tort caps are statutory limits on the amount of damages that can be awarded in lawsuits against government entities, including states, cities, counties and districts. These caps are designed to protect government entities from large financial liabilities, ensure predictable budgeting and encourage settlements. This article explores the importance of understanding tort caps, the role of insurance, the risk of tort caps being defeated and strategies for effective risk management.
Purpose and impact of tort caps
Financial protection
Tort caps limit financial exposure, helping government entities manage risk and allocate resources effectively. This protection is crucial for maintaining essential public services without the threat of overwhelming financial liabilities.
Predictable budgeting
By capping damages, government entities can better predict potential liabilities and plan their budgets accordingly. This predictability helps ensure that funds are available for public projects and services.
Encouraging settlements
Tort caps encourage parties to settle disputes out of court, reducing the time and expense associated with lengthy litigation. Settlements provide a more efficient resolution and can be more satisfactory for both parties.
The risk of tort caps being defeated
Tort caps can face legal challenges and may be struck down by the courts. In some states, caps on non-economic damages in medical malpractice cases and other tort claims have been declared unconstitutional. This risk highlights the need for a robust risk management strategy.
The role of insurance
Insurance plays a vital role in managing the risks associated with tort claims, especially when tort caps are defeated.
Ensure insurance policies have coverage limits that align with your state’s tort caps. This alignment provides a safety net, ensuring that insurance will cover potential liabilities up to the cap amount.
Consider purchasing excess liability insurance to cover amounts exceeding the tort cap. This additional coverage becomes particularly important if the tort cap is defeated, as it provides a secondary backstop of protection.
Insurance providers often offer risk management services that can help identify, assess and mitigate potential risks. These services can be invaluable in preventing incidents that could lead to tort claims.
Types of claims covered
- General personal injury
- Automobile accidents
- Law enforcement misconduct (Note: Federal civil rights claims under Section 1983 are not subject to state tort caps)
- Medical malpractice
- Public officials' actions
State-specific tort caps examples
- California: $250,000 cap on non-economic damages in medical malpractice cases. The cap will increase incrementally, reaching $750,000 in non-death cases and $1 million in wrongful death cases by 2033.
- Colorado: Cap on non-economic damages in personal injury cases will be $1.5 million starting January 1, 2025. Cap on non-economic damages in medical malpractice cases will be $875,000, increasing incrementally over five years.
- Florida: Cap on non-economic damages in medical malpractice cases was previously set at $500,000 per claimant but was declared unconstitutional in 2017.
- Texas: Cap on non-economic damages in medical malpractice cases is $250,000 per claimant against individual practitioners and $500,000 per claimant against healthcare institutions. Total cap for all defendants is $750,000.
- Nevada: Cap on damages for lawsuits against state and local government employees is $200,000. In medical malpractice cases, non-economic damages are capped at $350,000.
- Minnesota: Cap on non-economic damages in personal injury cases is $500,000 per claimant and $1.5 million per incident.
- Georgia: No caps on economic or non-economic damages in general personal injury cases. However, specific limits exist for certain claims:
- Motor vehicle claims: Plaintiffs can pursue motor vehicle claims against municipalities for damages up to $500,000 for bodily injury or death of one person in one occurrence, $700,000 for bodily injury or death of two or more people in one occurrence, and $50,000 for injury to or destruction of property in one occurrence (O.C.G.A. § 36-92-2(a)).
- Punitive damages: Generally capped at $250,000 in most personal injury cases, with exceptions for cases involving specific intent to harm or DUI.
- Government claims: Limited to $1 million per individual for a single wrongful act and $3 million aggregate liability per wrongful act under the Georgia Tort Claims Act.
Notable legal challenges
- Florida: McCall v. United States (2014) - State's cap on non-economic damages in medical malpractice cases struck down
- Illinois: LeBron v. Gottlieb Memorial Hospital (2010) - State's cap on non-economic damages in medical malpractice cases struck down
- Missouri: Watts v. Lester E. Cox Medical Centers (2012) - State's cap on non-economic damages in medical malpractice cases ruled unconstitutional
Strategies for effective management
Effective risk management is essential for government entities to safeguard against financial vulnerabilities and ensure the smooth operation of public services. By adopting a strategic and proactive approach, these entities can better address the complexities of tort caps and insurance requirements.
- Conduct risk assessments: Regularly evaluate potential financial exposure to understand where the greatest risks lie.
- Establish self-insurance funds: Setting aside funds specifically for covering potential liabilities can provide an additional layer of financial protection.
- Ensure policy clarity: Make sure insurance policies explicitly address the relationship between tort caps and coverage to avoid any confusion during claims.
Conclusion
Understanding your state's tort caps and effectively leveraging insurance are crucial for managing the financial risks faced by government entities. This approach not only protects taxpayer funds but also ensures the continued provision of essential public services. Additionally, having a solid insurance strategy in place provides a secondary backstop of protection if tort caps are ever defeated, safeguarding your entity's financial stability.
Disclaimer
WTW hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
