What Are Punitive Damages and When Do They Apply?
If you have been injured by someone else’s negligence, obtaining the compensation to which you are entitled is very likely critical to your ability to pursue your most complete recovery. These damages are known as compensatory damages because they are intended to compensate you for the physical, financial, and emotional losses you have suffered. In some personal injury claims, however, the at-fault party’s negligence (or worse) in the matter is so egregious – or otherwise reprehensible – that punitive damages, which are meant to punish him or her and to deter others from engaging in similar practices, are employed. If you have been injured by another party’s gross negligence, reach out to an experienced personal injury attorney today.
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Compensatory Damages Explained
In order to understand punitive damages (sometimes called exemplary damages), it is helpful to understand compensatory damages. If you are injured by a speeding motorist in a car accident, for example, the injuries you suffer are likely to cause physical, financial, and emotional damages that generally fall into three basic categories (in addition to the property damage to your vehicle).
Medical Expenses
Some of the most obvious damages you will incur in a car accident are your medical costs, and attaching a monetary value to these expenses tends to be quite straightforward. It is important to note, however, that serious injuries often require ongoing medical care and attention and can develop into dangerous secondary health concerns. In other words, it is important to understand the full extent of your injuries before signing off on a settlement that is meant to cover them in their entirety. Common medical expenses include:
Emergency treatment at the scene of the accident
Emergency transportation from the scene of the accident
Surgical care and follow-up care
Hospital stays
Medical treatment and care from doctors, specialists, therapists, and other medical professionals
Rehabilitation
Physical therapy
Pain management
Prescription medications
Home health care
Lost Earnings
After being seriously injured, you will almost certainly be required to stay off the job while you navigate the path toward recovery. Along with this downtime comes lost earnings, and if your ability to do your job or to continue advancing your career are affected, you may be looking at a slowdown in your earning potential, which can translate to considerable financial losses over time. The damages related to your lost wages are not likely to be difficult to calculate in relation to a total price, but it is important to have an accurate assessment before moving forward with accepting a settlement.
Physical and Emotional Pain and Suffering
While your medical expenses and lost wages are concrete financial losses, your physical pain and suffering are less so and, as such, are known as non-economic damages. This category of damage, however, is important to address. The fact is that your pain and suffering can be one of the most difficult challenges you face on your journey toward recovery. The psychic pain you experience can take many painful forms that are difficult to master and overcome. Consider the following common emotional consequences:
Increased anxiety which can include anxiety attacks
Bouts of depression
Sleep disturbances that can include nightmares and night terrors
Severe mood swings
Emotional lability
Difficulty concentrating
A tendency to self-isolate and to hold others at bay
Accident flashbacks
One of the saddest features of this pain and suffering is that it can put up a wall between you and your friends, family members, and loved ones – just when you need their support the most. Putting a price on your pain and suffering is not as cut and dry as it is for your medical expenses and lost earnings. In fact, it typically involves assigning a multiplier number from 1.5 to 5 (based on the severity of your pain and suffering) and multiplying the total amount of your other compensatory damages by this number.
Punitive Damages
While compensatory damages are at the heart of every personal injury claim – and are intended (in legal terms) to make the claimant whole – punitive damages are a very different animal. The intent of punitive damages is not to provide you with something you have lost as a result of the other party’s negligence but, instead, is meant to accomplish both of the following:
To punish the at-fault party for his or her egregious conduct
To deter society at large from engaging in similar conduct
The subtext of punitive damages is – Let that be a lesson to you. The intent is to signify that behavior like the defendant’s will not be tolerated, and the price tag attached makes the matter quite clear.
When Punitive Damages Are Awarded
In order for punitive damages to be awarded, the at-fault party’s actions must have been especially reckless or negligent. First, the elements necessary for a personal injury claim must apply.
Duty of Care Owed
To begin, the at-fault party must owe you a duty of care, which means he or she must bear responsibility for your safety in some capacity. In the example of the car accident, the duty of care owed is straightforward. Every motorist who takes to the road owes everyone else on the road a duty of care that includes driving safely, adhering to the rules of the road, and allowing the safe passage of others. If you are injured in a car accident that was caused by someone else’s negligence, the element related to the duty of care owed is established.
Negligence
The next element in your personal injury claim involves negligence, which is the lynchpin of personal injury law. In order to bring a personal injury claim, the at-fault party must have breached the duty of care that he or she owed you (via his or her negligence). In the car accident example, if the at-fault driver sped through a red light and T-boned you in the process, his or her negligence is clear. While this is the standard for compensatory damages, the degree of negligence must be next-level in order for punitive damages to apply.
Injury
In order to bring a personal injury claim, you must have been injured in the precipitating accident. Continuing with the car accident example, it is rare for even a relatively minor car accident not to cause some form of injury, and the injuries associated with serious accidents tend to be very serious.
Damages
The final element in your personal injury claim is legal damages, which means that the injuries you suffered must translate to compensatory legal damages (as outlined above). If you have been injured in a car accident, however, you are very likely to face mounting medical bills, lost earnings, and considerable pain and suffering – which complete the elements necessary to bring a successful personal injury claim.
In order for the matter to involve punitive damages, the at-fault party’s actions must have been grossly negligent, which means the following:
The at-fault party acted in a manner that a reasonable person in a similar situation would have known involved an extreme degree of risk.
The at-fault party understood the risk involved but proceeded to act with disregard anyway.
Once compensatory damages are demonstrated, and gross negligence is established in your claim, you can move forward in pursuit of punitive damages.
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When Are Compensatory Damages Awarded?
While every personal injury case is unique to the circumstances involved, there are some practices that are commonly associated with punitive damages. A prime example is an accident that is caused by a drunk driver. It is not exceptionally challenging to demonstrate that reasonable people recognize the extreme danger associated with getting behind the wheel while under the influence of alcohol. Yet, the motorist in question was not bothered by the risk involved, and he or she proceeded to drive drunk. The higher the at-fault party’s blood alcohol concentration (BAC) and the more careless his or her driving behavior, the more likely it is that punitive damages will be awarded. Other practices that can lead to punitive damages in traffic accident claims include:
Severe distraction behind the wheel, such as texting while driving
Street racing
Road rage
In order to be awarded punitive damages, you must have received compensatory damages (as described above).
Texas Has a Cap on Exemplary Damages
Punitive damages are called exemplary damages because they are meant to serve as an example for society at large – an example of why they should not engage in grossly negligent practices in the first place. When exemplary damages are awarded in Texas, there are caps imposed. In Texas, the punitive damages you receive cannot exceed the greater of the following:
$200,000
Two times the amount of your economic damages plus an amount equal to your non-economic damages (your pain and suffering) – up to a total of $200,000 in non-economic damages
$750,000 (unless your economic damages reach the total of $200,000, which can elevate the total)
It is worth noting that there are situations in which these punitive damage caps (or limitations) are waived.
Factors the Court Considers
The factors the court instructs the jury to consider in the determination of punitive damages include the following:
The nature of the at-fault party’s negligence
The character of the conduct involved
The wrongdoer’s degree of culpability
The circumstances involved and the sensibilities of the parties concerned
The extent to which the at-fault party’s negligence offends the sense of propriety and justice held by the public
The at-fault party’s net worth
In other words, the jury will be instructed to examine the personal injury case from all angles and to address the matter in terms of what is fair – given the unique circumstances involved.
The Insurance Company
The insurance company handling your personal injury claim may exclude punitive damages altogether, which means you will have to go to court in order to obtain them. As such, the at-fault party will need to have the financial means to cover any punitive damages assessed, and sometimes, this simply is not the case. This is one reason that the at-fault party’s net worth is taken into consideration when punitive damages are calculated. Because you can't squeeze blood out of a turnip – as the saying goes – going to court for punitive damages (if they are not covered by the at-fault party’s insurance provider) can be more costly than it is worth.
Litigation is expensive, and if there is no payoff, it can do more harm than good. Some defendants, however, do have the resources necessary to adequately cover punitive damages, and requiring them to address their own gross negligence head-on can be cathartic. Your personal injury claim will not be exactly like anyone else’s, and only you and your dedicated personal injury attorney can decide what the best path forward for you is.