Exemplary Damages and Texas Personal Injury

The damages available in personal injury cases are either compensatory damages or exemplary damages. A court awards compensatory damages to put the plaintiff in the situation they would have been had the collision never occurred. Compensatory damages are to make the plaintiff whole and include economic and non-economic (not monetary) damages, such as:

  • Medical bills
  • Lost wages
  • Pain and suffering
  • Physical impairment
  • Mental impairment
  • Physical disfigurement
  • Emotional distress

In contrast, a court will award exemplary (punitive) damages in Texas to provide the claimant with recovery above and beyond compensatory damages in order to punish the wrongdoer for egregious conduct and to deter the wrongdoer and others from similar conduct in the future. Overall, economic and non-economic damages can be pursued for compensatory damages within cap limitations, exemplary damages have their own host of situational limitations, allegations of malicious conduct entitle the exemplary damage claimants to obtain information about a defendant’s financial status,Texas law establishes that it is against public policy in Texas to insure against exemplary damages yet The Hadi Law Firm is here to help you win fair compensation if have been hurt because of another’s negligent, reckless or intentional conduct.

Compensatory Damages and Caps

In Texas, when someone is injured as a direct result of another person’s (or entity) negligence or wrongful conduct, the injured party has the legal right to file a lawsuit or a personal injury claim against the at-fault party. In typical personal injury cases, the injured party may seek economic and non-economic damages to compensate them for their losses.

  • Economic damages refer to “measurable losses,” the types of losses that are easily supported by things like receipts or bills, such as medical bills, vehicle repair bills, etc. Examples of economic damages include compensation for lost income (because that’s easy to measure based on a victim’s normal pay before the injury), medical bills, property damage, and funeral bills.
  • Non-economic damages compensate people for the things that are harder to measure, such as pain and suffering, reduced quality of life, loss of love and companionship. For example, if a man died in an amusement park accident, his widow and children may be awarded non-economic damages for loss of his love, support, companionship, and guidance – these all fall under the category of non-economic damages.
Originally, there were no caps — limits to the amount of money you can recover in damages from the negligent party — for the amount of damages a plaintiff could recover from injury. Over time, caps were introduced to curb frivolous suits that were congesting the court system. These suits were filed not by people who were legitimately injured but by people with ulterior motives. Damage caps barred that. However, the caps were introduced only for certain cases:

  1. Medical malpractice suits

    For injuries resulting from medical malpractice, you can sue for the entire amount of economic damages. However, non-economic damages are capped at $250,000 against doctors and $250,000 against a healthcare provider. Furthermore, damages caps are curbed at $500,000 for all medical care providers involved. That means the maximum non-economic damages a person can recover in a medical malpractice suit are $750,000.

  2. Suits against public entities

    Government entities are majorly immune from personal injury liability in Texas. However, in the few times they are open to personal injury liability, damages are capped at $250,000 for a single person and $500,000 for a single event.

  3. Punitive damages

    Recognized in Texas statutes as exemplary damages, punitive damages are damages awarded to punish a person for injuries caused by malice or gross negligence. They are capped at the larger of:

    • $200,000 or
    • Two times the amount of economic damages plus an equal amount of non-economic damages up to a maximum of $750,000.
    For example, if the accident you were involved in was caused by the defendant’s gross negligence and it resulted in you breaking your leg, you can sue for punitive damages. If you are awarded economic damages amounting to $150,000 and non-economic damages amounting to $200,000, your punitive damages will be capped at $500,000.

Exemplary Damages Limitations

Texas has several limitations to exemplary damages. Specifically, these damages are precluded if only nominal damages are awarded (i.e. proof of actual damages is a prerequisite) or if the plaintiff elects to have their recovery multiplied under another statute. Nevertheless, the Texas Civil Practice & Remedies Code, § 41.003, outlines when a court should award Texas exemplary damages. Due to their specific nature, a court will only award exemplary damages in certain situations. The plaintiff must prove by clear and convincing evidence that the harm the defendant caused, for which the plaintiff seeks recovery, resulted from:

  • Fraud
  • Malice
  • Gross negligence
The Code states explicitly that the plaintiff will not satisfy this standard by showing that the defendant acted out of ordinary negligence, bad faith, or deceptive trade practice. In cases where the plaintiff requests exemplary damages, the jury must be unanimous about both the defendant’s liability and the amount of exemplary damages. The high standard, as well as the requirement for the jury to be unanimous, makes it very challenging for plaintiffs to obtain punitive damages in Texas.

Financial Disclosures

Because exemplary damages are assessed to punish and deter the wrongdoer, allegations of malicious conduct entitle the claimant to obtain information about the defendant’s financial status. According to the Texas Civil Practice and Remedies Code, § 41.011, in addition to the defendant’s financial position, evidence about the following factors is presented to the jury to consider in determining the amount of exemplary damages:

  1. Nature of the wrong
  2. The character of the conduct involved
  3. Degree of culpability of the wrongdoer
  4. Situation and sensibilities of the parties concerned
  5. The extent to which such conduct offends a public sense of justice and propriety
  6. The net worth of the defendant

Courts generally are sensitive and place confidentiality provisions on any disclosure of information; they are also likely to limit what needs to be produced. If a case that involves a request for exemplary damages goes to trial, the defendant is entitled to a bifurcated trial. This means that the case is first tried on the issue of liability, compensatory damages, and whether or not there was malicious conduct. Because the jury is not asked to address exemplary damages at this trial, no information is put before the jury as to the defendant’s financial position. In the event that malicious conduct is found to exist, a second trial, immediately after the first trial, is held solely to determine the appropriate amount of exemplary damages.

Public Policy

While any malpractice lawsuit can be frightening, a claim that alleges conduct was malicious and that seeks additional punitive or exemplary damages may magnify a defendant’s anxiety. This anxiety is likely to increase exponentially when upon learning that exemplary damages are not covered by insurance policies. Yet although claims for exemplary damages should certainly be respected, they are not a factor in the overwhelming majority of liability claims.

Texas law establishes that it is against public policy in Texas to insure against exemplary damages. As a result, once a defendant’s insurance company becomes aware of an allegation of exemplary damages, the defendant will receive a reservation of rights letter notifying them that a claim for exemplary damages exists, that this claim is not covered by their professional liability insurance policy, and that they have the right to retain personal counsel to defend those allegations.

In any event, the counsel assigned to their case by the insurance carrier will continue to represent them and defend all claims that are being asserted, including the claim for exemplary damages. The insurer has to send them this notification, however, for it to stand on its rights to not cover them for any exemplary damages that may be awarded.

Fair Compensation

If you have been hurt because of another’s negligent, reckless, or intentional conduct, you deserve compassionate and skilled representation from the beginning. This could be the difference in getting the compensatory or exemplary damages you are rightfully entitled to by law. The Houston personal injury lawyers at The Hadi Law Firm can help you evaluate your chances of receiving punitive vs compensatory damages and prepare the best strategy for your unique case. Our legal team has decades of experience helping accident victims secure the maximum compensation possible, including numerous multi-million dollar recoveries. We understand that your financial situation and livelihood may depend on our effective representation, and we will strive to get you the most compensation possible for your case.

September 2, 2021
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