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Tennessee Approves Caps on Lawsuit Damages

By | May 25, 2011

Tennessee Governor Bill Haslam is praising lawmakers for giving final approval to a plan to cap non-economic and economic damages stemming from lawsuits.

The Tennessee General Assembly approved HB 2008 that places a cap of $750,000 on non-economic damages such as pain and emotional suffering and a $500,000 cap on economic or punitive damages. The bill also places a $1 million cap on catastrophic cases, a cap that would apply in instances where a person became paralyzed, burned, blinded, suffered an amputation or otherwise died leaving behind minor children.

The bill was Haslam’s legislative centerpiece in his first year in office and part of his campaign promise to make Tennessee more attractive to businesses.

“Tennessee has many great attributes going for it as we recruit companies interested in relocating,” said Haslam “This legislation removes one of the few advantages surrounding states had and makes our state even more desirable to businesses as we go out and sell Tennessee as the best place in the Southeast to do business.”

Tennesseans for Economic Growth, a statewide coalition of business groups, praised lawmakers for passing the bill. “This legislation will catapult Tennessee ahead of many states in terms of attractiveness to businesses looking to relocate or add operations,” said Doug Buttry, executive director for the group. “Indeed, this could be a shot heard around the world putting Tennessee on the map in terms of attracting jobs.”

The bill had been heavily lobbied against by AARP and trial lawyer groups including the Tennessee Association for Justice, which hired Fred Thompson, the state’s popular former U.S. senator. Speaking before the House Judiciary Committee, Thompson likened the bill to killing a mouse with a “bazooka.” In the end, however, both the Tennessee Senate and House of Representatives passed the bill with comfortable margins.

Key features of the bill include the following:

• Defines two components of compensatory damages; economic and non-economic damages.

• Places a cap on non-economic damages at $750,000 per plaintiff for both healthcare liability action and other personal injury cases. However, if the harm is intentional the caps would not apply.

• The bill raises the cap to $1 million in cases where a plaintiff becomes a paraplegic or quadriplegic because of a spinal cord injury, sustains third degree burns over 40 percent more of his or her body and face, suffers an amputation of a hand or foot, or wrongly dies and leaves behind one or more children.

• There is no cap, under the measure, on economic damages and any other damages that can be objectively quantified.

• Caps punitive damages, which must be proved by clear and convincing evidence, at two times compensatory damage or $500,000, whichever is greater unless the defendant intended to injury the plaintiff, was under the influence of drugs or alcohol, or intentionally falsified records to avoid liability.

• Prevents punitive damages in product liability actions unless the seller had substantial control over the design and manufacturing of the product or had actual knowledge of the defect in the product at the time it was sold.

• Limits the maximum appeal bond amount from $75 million to $25 million or 125 percent of the judgment amount.

• Takes effect on October 1, 2011.

Topics Lawsuits Legislation Tennessee

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