There are limits to your financial recovery in the Volunteer State
The term “damage cap” refers to a law that limits the amount of compensation an injured person can recover in a lawsuit.
The purpose of a damage cap is to prevent juries from awarding excessive amounts of money and to prevent the costs of transacting business from becoming unreasonable.
Tennessee has damage caps but only on certain types of damages. Let’s take a closer look at the role of damage caps in Tennessee personal injury cases.
Types of damages available in Tennessee
In order to understand damage caps, it’s important to understand the types of damages that are available to accident victims in Tennessee.
Tennesseans can recover the following types of damages in a personal injury lawsuit:
- Economic damages. Economic damages are intended to compensate plaintiffs for the monetary losses caused by their accident. Common economic damages include medical expenses (hospital visits, surgeries, medications, etc.), lost income (past and future income lost as a result of the accident), and property damage.
- Non-economic damages. Non-economic damages are intended to compensate plaintiffs for the non-monetary consequences of your accident. Common non-economic damages include pain and suffering, emotional distress, and loss of consortium.
- Punitive damages. Punitive damages are intended to punish the defendant and are only available in cases where the defendant acted maliciously, fraudulently, or recklessly.
Tennessee damage caps
Tennessee does not cap economic damages. However, Tennessee does place a cap on non-economic damages in the amount of $750,000.
In cases where the plaintiff suffers “catastrophic injuries,” the $750,000 cap is increased to $1 million. Catastrophic injuries include:
- Spinal cord injuries
- Amputation of 2 hands, 2 feet, or 1 of each
- Third-degree burns over 40% or more of the body
- Wrongful death of the parent of a minor child
Jodi McClay v. Airport Management Services LLC (Tennessee Supreme Court 2020)
Jodi McClay filed suit against Airport Management Services LLC seeking damages for injuries she sustained in a store in the Nashville International Airport.
A jury returned a verdict for Ms. McClay in the amount of $445,500 for economic damages. Additionally, the jury awarded $930,000 for non-economic damages (including pain and suffering and loss of enjoyment of life).
The court applied the statutory damage cap, which reduced the $930,000 non-economic damage award to $750,000. Airport Management Services LLC appealed the case to the Tennessee Supreme Court, arguing that the cap on non-economic damages was unconstitutional.
The Tennessee Supreme Court heard the case and ruled that Tennessee’s statutory cap on non-economic damages is not unconstitutional. In other words, the damage cap was upheld and Ms. McClay’s non-economic damage award was reduced to $750,000.
Additionally, Tennessee places a cap on punitive damages in the amount of $500,000—or twice the amount of the compensatory damages awarded, whichever is greater.
Workers’ compensation claims
Workers’ compensation claims are different from civil lawsuits. Tennessee’s damage cap applies to civil lawsuits, not workers’ compensation claims.
In a workers’ compensation claim, an injured employee is entitled to lifetime medical and compensation benefits, but the total compensation that can be awarded is capped by law depending on the date of the injury.
Comparative fault in Tennessee
Tennessee follows a “modified comparative fault rule,” which reduces the amount of damages a plaintiff can recover by their degree of fault. What’s more, if the plaintiff is determined to be 50% or more at fault, the plaintiff is barred from recovery ANY damages.
Let’s look at an example:
Under Tennessee’s modified comparative fault rule, Matt is only allowed to recover 80% of his damages ($80,000).
While the modified comparative fault rule isn’t technically a “damage cap,” it does represent a potential limitation to the amount of damages you can recover in a personal injury lawsuit.
Challenges to Tennessee’s damage cap laws
Tennessee, like most states, faces frequent challenges to its damage cap laws. In addition to the challenge to its non-economic damages cap discussed above, the Sixth Circuit Court of Appeals found that Tennessee’s statutory cap on punitive damages violated Tennessee’s constitution in 2018. However, Tennessee state courts are not required to abide by the federal court’s decision.
Such challenges to Tennessee’s damage cap laws underscore the fact that the law can change at any moment. Consequently, it’s important to talk to a lawyer before you file your lawsuit to see if any changes have occurred.