Today Governor Bill Haslam signed the "Tennessee Civil Justice Act of 2011" into law. The controversial tort reform package was one of the new governor’s legislative priorities and was touted as a means to create a more attractive business climate by bringing predictability and certainty with respect to litigation risks and costs. Two key provisions of the far reaching act are the caps on non-economic damages and punitive damages. Non-economic damages are broadly defined as damages for "physical and emotional pain; suffering; inconvenience; physical impairment; disfigurement; mental anguish; emotional distress; loss of society, companionship, and consortium; injury to reputation; humiliation; non-economic effects of disability, including loss of enjoyment of normal activities, benefits and pleasures of life, and loss of mental or physical health, well-being or bodily functions; and any other non-pecuniary loss of any kind or nature."
The bill caps all non-economic damages in most civil actions at $750,000 per injured plaintiff. There are exceptions, increasing the cap to $1,000,000, in cases where the injured party sustained a catastrophic loss or injury such as paraplegia or quadriplegia due to a spinal cord injury, extensive third-degree burns, multiple amputations or a wrongful death claim where the decedent is survived by one or more minor children. Also exempt from the cap are claims for intentional injuries; cases where the defendant intentionally conceals or destroys evidence to evade liability; or injuries resulting from the defendant’s intoxication. The cap does not apply to economic damages such as medical expenses, lost earnings or earning capacity, property damage, loss of business or employment opportunities or other objectively verifiable monetary losses.
The act also limits punitive damage awards to two times the compensatory damages or $500,000, whichever is greater. The purpose of punitive damages is to punish a wrongdoer and deter similar misconduct in the future. The act codifies many aspects of the Tennessee Supreme Court’s 1992 decision in Hodges v. S.C. Toof and Co., which limits the availability of punitive damages to instances where the defendant is found, by clear and convincing evidence, to have engaged in intentional, reckless, malicious or fraudulent conduct which caused injury to the plaintiff. Exempt from the cap on punitive damages are claims where the defendant intended serious physical injury; cases where the defendant intentionally conceals or destroys evidence; and injuries resulting from the defendant’s intoxication. The act also contains provisions limiting the availability of punitive damages against product manufacturers.
The act expands the application of the existing Medical Malpractice Act, by broadly defining "health care providers" and "health care liability actions" to which the Malpractice Act applies. The tort reform bill also alters current product liability law to further limit the claims that can be brought against any seller of a product, which is not also the manufacturer, and provides additional protections for product manufacturers. Also included are several changes to the Tennessee Consumer Protection Act, limits on bonds that must be posted on appeal for losing defendants and the elimination of the need to post a bond on an award of punitive damages. The tort reform legislation will apply to actions accruing on or after October 1, 2011, the effective date of the act. Challenges to the legality of various provisions of the tort reform act are expected and many of the provisions of the act will eventually be litigated on appeal.
Dan Berexa
Nashville, Tennessee
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