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Are Punitive Damages Overrated?

Punitive damages intrigue people. As I’ve said before, most damages are awarded for the purpose of making the victim whole.

But punitive damage awards are different.

Most damages fall into the category of “compensatory” damages. Their only purpose is to “compensate” the victim – that is, to give him or her money equivalent to what he has lost in terms of medical bills, lost wages, and pain and suffering. Compensatory damages awards are supposed to be somehow related to these things.

But under “traditional” law, punitive damages were awarded to punish people for doing bad things, and to “make an example” of people who have done bad things. They were only available for intentional or “malicious” acts.

Theoretically, the more evil the act, the more the damages. Punitive damage awards did not have to bear any particular relationship to the compensatory damages.

And attorney fees were usually awarded when the jury awarded punitive damages.

In other words, a claim for punitive damages was often thought of as a “lottery ticket.”

In the last 10 years, that has changed. A lot.

I wrote about some of that in my last blog entry. Punitive damages usually aren’t covered by insurance – so the person or company you are suing has to be able to afford them. And the legislature has severely limited the amount of punitive damages that Ohio juries can award.

But punitive damages are no longer a “lottery ticket” for a couple other reasons.

First, compensatory damages for pain, suffering and lost wages are, for the most part, not taxable. But punitive damage awards – and awards for attorney fees – are taxable. As Yogi Berra said, you can look it up.

Second, the punitive damages awarded usually wind up being a lot less than “lottery ticket” awards. In the relatively few cases in which punitive damages are awarded, the punitive damage award is more often than not smaller than the compensatory damage award.

Finally, punitive damages are generally not covered by insurance. So collecting an award for punitive damages will be very difficult unless you’re suing a person or company with a lot of cash.

Neverthelesss, if you have a legitimate claim for punitive damages, it can still be worth going after. For a bunch of reasons.

A claim for punitive damages scares the defendant and their insurance company. Despite all the laws limiting punitive awards, they have no assurance that the jury in their case is going to reach in their pocket and award you less than the numbers they’ve been seeing in the headlines.

Requesting punitive damages puts the “bad guy” on notice that he may have to come up with money out of his own pocket. And it subjects the insurance company to a possible “bad faith” claim later if a jury decides they didn’t try hard enough to protect their own insured – that is, if they didn’t offer enough money to settle the case.

Most attorneys think a legitimate punitive damages claim has a “multiplier” effect on the award for compensatory damages in the same case; that jurors aware of the defendant’s bad conduct are going to make a higher award for compensatory damages.

(New laws in Ohio require separate trials of punitive damages and compensatory damages in the same case; but it’s very hard to keep the jury in the compensatory damages trial ignorant of the same conduct that gives rise to the claim for punitive damages.)

So, even if the government is going to take part of the punitive damage and attorney fee awards, and even if there might not be the insurance to cover the punitive damage award, making the claim (1) may scare the other side into a better settlement and (2) probably increases the award the jury will make for compensatory damages if the case does go to trial.

And – if the jury awards punitive damages – more is still more, even if the government takes some away.

And there’s not much wrong with that.

I have been a lawyer over 30 years. A legitimate claim for punitive damages will motivate the defendant to settle the case. If you have a personal injury case in Cincinnati, Ohio or if you want to know what your lawsuit is worth, talk with an experienced Cincinnati Personal Injury Attorney about the case. Call me, William Strubbe, at 513-621-4775.

Because all situations are different, and because there may be other facts pertaining to your case that I don’t know about, you should not rely on this answer for legal advice. I am not your attorney, and no lawyer client relationship has been formed.

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