Could Claim Payouts Increase with Proposed Noneconomic Damages Cap Increase for Personal Injury Claims?

May, 2024  | By Anthony Benito Blanchfield-Felice

Anthony-Blanchfield-Felice wearing a navy suit and tie.In personal injury cases, understanding the distinction between economic and noneconomic damages is crucial. In Maryland, economic damages encompass quantifiable financial losses directly attributable to the defendant’s actions or negligence. These losses typically include expenses such as medical bills, lost wages, property damage, and rehabilitation costs. See Md. Code Ann., Cts. & Jud. Pro. § 11-109. Unlike economic damages, which are relatively straightforward to calculate due to their tangible nature, noneconomic damages are more subjective. These damages aim to compensate plaintiffs for intangible losses like pain and suffering, emotional distress, loss of consortium, and the diminished quality of life resulting from the defendant’s actions.

In Maryland, noneconomic damages are defined under statute as:

[…] pain, suffering, inconvenience, physical impairment, disfigurement, loss of consortium, or other nonpecuniary injury; and […] [i]n an action for wrongful death, mental anguish, emotional pain and suffering, loss of society, companionship, comfort, protection, care, marital care, parental care, filial care, attention, advice, counsel, training, guidance, or education, or other noneconomic damages.

See Md. Code Ann., Cts & Jud. Proc. § 11-108(a)(2). There exists a maximum threshold, often referred to as a “cap,” on the amount of noneconomic damages that a plaintiff can receive following an accident or incident in a general personal injury case. Under Md. Code. Ann., Cts. & Jud. Pro. § 11-108 (b)(2), noneconomic damages in personal injury (or wrongful death) cases—filed after October 1, 1994—could not exceed $500,000. The statute allowed an annual increase of $15,000 to that cap, beginning in 1995. Following this formula, the current cap on noneconomic damages is $935,000, as of 2024.

Notably, there are different caps that affect a plaintiff’s claim based on the type of action. See, e.g., Md. Code Ann., Cts. & Jud. Pro. § 3-2A-09 (stating the caps on medical malpractice claims). Jurors in Maryland are not provided information about the noneconomic cap during trial proceedings. Instead, it is the responsibility of the court to apply the cap, if deemed necessary, after the jury’s verdict.

On January 24, 2024, Senators in the Maryland General Assembly proposed Senate Bill 538 (available here), which alters Md. Code Ann., Cts & Jud. Proc. § 11-108 titled “Noneconomic damages related to personal injury or wrongful death.” Senate Bill 538 does not include any proposed modifications to the definition of “noneconomic” damages, and the bill’s proposed language pertains to only a single alteration: the cap on noneconomic damages. The Maryland Senate’s new bill proposes an increase on the current cap to $1,750,000—almost doubling the amount available for plaintiffs in 2024. Further, the bill increases the limitation on noneconomic damages by $20,000 each year beginning on October 1, 2025, a $5,000 addition to the current annual increase. This increase to the noneconomic damages cap is only for personal injury or wrongful death claims. In other words, plaintiff claims for medical malpractice, or other actions which have damages limited by statute, are not affected.

Senator Waldstreicher stated to the House Judiciary Committee that the current cap on noneconomic damages in Maryland was restrictive. See Judicial Proceedings Committee, February 16, 2024 (available here). Proponents of the bill argue that the current cap fails to adequately compensate victims and their families for the losses they endure because of negligence or misconduct.

However, opponents of the bill express concerns about potential impacts on insurance premiums, healthcare costs, and the overall legal landscape. Mary D. Kane, president & CEO of the Maryland Chamber of Commerce, warned that the increase in the noneconomic cap would inevitably lead to higher insurance rates and increased costs on Maryland residents and businesses. Kane, along with the American Property Casualty Insurance Association, have advocated for legislators to reject SB 538. See Maryland Chamber of Commerce, Joint Statement—Caps on Lawsuit Damages Threatens Jobs, Raises Costs for Residents (available here).

What implications does this hold for future personal injury claims in Maryland? Should the bill be enacted into law, there is a likelihood of higher settlement demands from plaintiffs, alongside a heightened emphasis on proving their noneconomic damages. Senate Bill 538 is presently under deliberation within the Maryland General Assembly, prompting stakeholders across diverse sectors to articulate their viewpoints and objections. In light of these potential developments, insurance companies and adjusters may find it necessary to reallocate higher reserves for claims, directly influenced by the provisions outlined in the new senate bill.

If you have any questions or comments about the contents of this article, please contact Anthony Blanchfield-Felice at ablanchfield-felice@semmes.com or (410) 576-4795.