Changing State Liability Laws

Not only do states have widely varying laws dealing with liability claims, but these are in flux: some 30 states have made changes in just the past year. Three issues dominate the state debates.

 

JOINT AND SEVERAL LIABILITY. When joint and several liability is the law, a person who is only slightly responsible for harm that stems from an accident may be held liable for the entire amount of whatever damages a court awards if other defendants also found liable can't pay their share. State modifications of that law have been complex. In California, for example, a defendant may now be held liable only for the percentage of "pain and suffering" (see below) he or she caused, instead of for the entire award. However, a single defendant can still be liable for the full amount of actual damages, such as out-of-pocket costs of lost wages and doctors' bills, even if others are also found liable. New York, by contrast, limits a defendant's liability for noneconomic damages only if that defendant is found to be liable for 50% or less of the total award. If you're 51% liable, you can still be forced to pay the entire award.

PAIN AND SUFFERING. Pain and suffering awards, called noneconomic damages in some states, are highly controversial because they can be so subjective. State laws vary widely in how they define noneconomic damage, how they limit such damages, and who they entitle to collect. West Virginia's $1-million cap, for instance, applies only to medical-malpractice suit, and a $500,000 cap applies to municipal liability actions. Maryland, on the other hand, was the first state to cap pain-and-suffering awards (at $350,000) in negligence suits against all kinds of businesses and professionals.

PUNITIVE DAMAGES. Punitive damages are those awarded on top of actual damages to punish someone for a serious wrong and, theoretically, to deter similar wrongs in the future. Some states that have passed laws making it harder to collect punitive damages have limited the plaintiffs only in their claims against the government. Others have passed laws encompassing all suits. In South Dakota, for example, plaintiffs must prove that a defendant was malicious before they can ask for punitive damages, and a separate trial is required.

The likely impact of the new laws is uncertain. Kansas, for instance, repealed joint and several liability in 1976, Iowa in 1983. Both states have nonetheless seen sharp increases in the premiums for liability insurance.

And plaintiffs often have several choices of where to file suit: where they live, where a product was manufactured, where it was sold, where the accident happened, or in a federal court (and while federal courts are supposed to apply state law in liability cases, some seem to add their own twists). Some consumer advocates, meanwhile, are settling in for a long battle against these new laws that limit what injured plaintiffs can recover.