Maryland Court Upholds State Cap on Lawsuit Payouts

By | September 28, 2010

Maryland’s highest court has upheld a state law that limits the amount of money people can receive for suffering in lawsuits.

Judges on the Court of Appeals ruled against the parents of a 5-year-old boy who drowned at a Crofton swimming pool in 2006 when they upheld the cap on certain payouts in a 6-1 opinion on that issue.

Thomas Freed and Debbie Neagle-Freed were awarded roughly $4 million by a jury in a lawsuit filed after their son’s death that alleged DRD Pool Service Inc. had been negligent in maintaining the pool. But that payment was reduced to about $1 million under Maryland’s limit on non-economic damages in such cases.

The Maryland state legislature first set the cap at $350,000 roughly 25 years ago and lawmakers increased it to $500,000 in 1994, stipulating the cap should grow by $15,000 every October. The cap is currently $725,000 or $1,087,500 in a wrongful death claim such as the Freeds’ case with two or more beneficiaries.

The Freeds argued the cap was unconstitutional because it does not equally protect all people since individuals with more serious injuries are less likely to be able to keep entire lawsuit payouts than those with less-serious injuries whose damages don’t exceed the cap.

The court ruled, however, that there was a rational basis for the cap because it was meant to keep liability insurance affordable.

“In our view, the Cap continues to serve a legitimate government purpose,” the opinion said.

Attorney Steven Migdal, who represented DRD Pool Service Inc. in the suit, praised the court’s decision to uphold the cap saying the judges were right to maintain the “long-standing” and “valid” law.

“The way insurance companies set their rates is based on predictability,” Migdal said. “When you have no cap, the sky is the limit and it places insurance companies in a very difficult position.”

The court sided with the Freeds, however, on a separate issue in which they argued the original jury should have been allowed to consider awarding additional damages to compensate for their son’s conscious pain and suffering, without eyewitness testimony.

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