Why A Recent $275,000 Settlement Shows The Importance of Punitive Damage Awards
Updated: Apr 27
Many Americans think the large verdicts they hear about are frivolous. The tort reform industry has done a good job over the last twenty years of influencing public perception against these awards. The McDonald’s coffee verdict from the 90s is a prime example. Tort reformers did a great job of making sure the public knew about the outlandish verdict, but weren’t so forthcoming about the severe burns the woman sustained or that the amount was significantly lowered on appeal.
In the halls of state legislatures every year a battle rages. Unless you are a trial lawyer, it is one you do not often read about. Well funded lobbyists of insurance companies are in constant battle with trial lawyer associations to influence lawmakers to put a cap on punitive damage awards to lessen insurance company’s liabilities. The public is told that this change will benefit the public by reducing costs for businesses. The reality is much different.
It is important the public understand that punitive damages play an important function in our society. Without these awards, companies would not face consequences for making products that hurt consumers. By awarding punitive damages, juries are making the products the public uses safer. In taking them away through tort reform, the public will become exposed to more dangerous products.
In Missouri, part of every punitive damage award helps to fund the Missouri Tort Victims Compensation Fund. The Missouri legislature approves its funding every year based on the punitive damages that were awarded throughout the State. The fund has the dedicated purpose of paying victims that were undercompensated in their accident claim.
Remember, not everyone who is severely injured gets a big settlement. As judgments are nearly impossible to obtain against individuals, victims are often left to rely on the amount of bodily injury funds available to them. This is often left to chance. There is no guarantee that the person who hurts somebody has insurance, let alone a policy that can cover a severe injury. What’s more, many drivers can’t afford anything but the Missouri state minimum coverage, which only provides $25,000 of bodily injury limits for accidents caused by uninsured motorists.
The last option for someone with insufficiently compensated injuries is to apply for an award with the Missouri Tort Victims Compensation Fund. Every time a plaintiff’s lawyer obtains a punitive damages verdict, part of that award goes into the fund. The State administers all claims and pays them out once per year. Only severely injured can make a claim from this fund. Claimants are rarely paid the full amount of these awards.
The administrative law judge pays each claim a pro rata portion of the award. This percentage changes every year. It is based on the amount of punitive damages awarded in Missouri for that year divided by the number of claims that were submitted. This year there is $150,000,000 in punitive damage funds available for approximately 2,000 claims. This $150,000,000 figure is a sharp increase to previous years, when there has been as little as $1-$10 million of awards. Thanks to several large punitive damage awards last year, the public will not only have safer products, but scores of undercompensated severely injured tort victims will be provided additional compensation.
My client broke her hip in a bad accident in 2021. She was unable to work for 7-8 months after the accident and had tens of thousands of medical bills. As the primary earner for her young family of four, this accident caused her a lot of hardship, financially and emotionally. Unfortunately there was only $125,000 of bodily injury coverage available to her. In the most conservative of juries would have awarded her an amount greater than this.
Last year, I applied to the Missouri Tort Victims Compensation Fund to help get her more. Today we received notice that she was awarded $275,000 from the fund. Without punitive damages awards, she would have to gone the rest of her life with this accident serving as a setback. Now she will be able to have additional funds to compensate her and her family. Without punitive damages awards, this would not have been possible.