DAMAGES ARE MONEY
When a plaintiff sues for 'damages' he is asking for money.
The law cannot grow a new limb or restore vision for someone injured by medical negligence, but it can compensate for the loss with money insofar as money can compensate for something that may be irreplaceable.
But how much money can compensate for an iatrogenic injury?
That question brings us to the second major goal of a trial. The first goal is to prove liability, that is prove that someone is legally at fault and has to pay something. The second goal is to prove (or persuade) how much money should be awarded. How much will be awarded will depend upon many factors, but they can generally be framed by recognizing different categories of damages and the factors that come into play.
An example will serve to help. A patient is rolled into the operating arena expecting to have an appendectomy but wakes up in intensive care missing a perfectly functional right leg. Liability should be easy to prove. This is a clear case of battery and res ipsa loquitur. No expert will be needed to opine that accidentally removing a leg when one is supposed to aim for the appendix meets any reasonable standard of care. But what about the damages?
As the name suggests, compensatory damages are intended to compensate the victim for his loss. Since the award theoretically replaces something the victim previously had (in this case a leg) with money, there is theoretically no financial benefit so compensatory damages are not taxable as income.
Compensatory damages fall roughly into two categories: Economic Damages and Non-Economic Damages.
Economic Damages (compensatory damage).
At first, economic damages appear relatively easy to determine since they basically involve adding up the bills. Certainly the cost of the recovery and medical treatment needed for the lost leg can be determined by adding up hospital bills. Also, the patient can expect to have lost time and wages by being off work during recovery so that amount should also be included (and may be taxable since it replaces taxable income). Moreover, there will be additional costs for a prosthetic limb and therapy.
The victim's life circumstances may have to be fit into the jury's calculation of damages. If the victim makes her living as a ballet dancer, then there must be some calculation for lost future income. There probably isn't much of a job market for one-legged ballet dancers.
Finally, a much more subjective estimate will be made of the value of a lost limb. A wrongly severed little finger on the left hand probably will not be worth much. A lost leg probably will be costly, and the leg of a female ballet dancer is likely to be worth quite a lot to a jury. One always hopes, of course, that the jurors feel sorry for the victim and empathize with her plight and want to give her a lot of money. It will also help if they have no great prejudice against ballet. At this stage we (the jurors, actually) are making a very subjective calculation and it is not as easy as running hospital bills through a calculator.
Non-Economic Damages (compensatory damage).
Now we come to the hard part. The victim will want the jury to give her something for pain and suffering and emotional distress. There are no bills to be added up for this category of damages, hence the term 'non' economic. There is no device for actually measuring the pain and suffering someone feels. People with a paper cut may rate the pain an 8 out of 10 on the commonly used scale while a hardy person with a broken arm may boast suffering only 4 out of 10. In fact, we know that the guy with the broken arm is in a lot more pain than the wuss with the paper cut, but when we are looking at serious trauma it can be very hard to estimate the intensity of pain nor can we truly say how long is may last -- perhaps for the rest of the victim's life. Despite all that, the jury will make a subjective estimate of the value of pain and suffering and emotional distress if they can. If they truly 'feel' for the victim and like him, the verdict could be very generous.
Unfortunately, there have been many occasions when the jury gushes with sympathy for the victim and then gushes with somebody's money and compensates with outrageously high awards for 'pain and suffering'. At least with economic damages the adding machine puts some upper limit to the damage award, but non-economic damages can be enormously high. Sometimes a judge may determine that a verdict is excessively high and choose to trim the total down when entering the final judgment, but one should not count on that.
Some states have attempted to rein in excessive non-economic damages awards by passing legislation limiting them to a specific amount. For example, California's tort reform bill, the Medical Injury Compensation Reform Act (MICRA) limits non-economic damages to $250,000 so that multiple million dollar awards for those damages are a thing of the past in California. Naturally, plaintiff lawyers who are earn and are paid a percentage of the winning judgment would prefer to return to the old days and fight for the restoration of the recovery rights of victims of medical malpractice. Thirty percent of $2 mil for non-economic damages is nicer for a law firm than 30% of $250,000. The doctors, of course, have their own dog in the fight. The California Medical Association fights to keep MICRA in place.
In other states lawyers have had success in attacking tort reform. For example, the Oklahoma Supreme Court struck down tort reform as being in violation of the state's constitution. And the Illinois Supreme Court struck down that state's tort reform. Of course, the legislatures can re-write the legislature to resolve the constitutionally objectionable sections so that (maybe) it will survive another court challenge. The law changes constantly and one can only hope to keep up in the state where one practices. As for the constitution, it appears that "There are more things in the constitution, Horatio, than dreamt of in your philosophy." But apparently not more things than judges can dream of whatever the constitution actually says.
Liquidated damages belong more to the field of contract than medical malpractice, but they are included here because they are a form of compensatory damages. If you contract to provide physician services for one year to a clinic, that contract may include a 'non-competition' clause stating (for example) that you will not compete with your former employer for one year or within 5 miles of his clinic, and that if you violate that part of the contract you agree to pay liquidated damages in the amount of $1,000/day for each day you are in violation. Liquidated damages are damages agreed to as to amount in advance. If there is a violation there is no need to paw through business records to calculate the actual loss of the competition (which could be greater or smaller than the agreed amount) since both parties have already agreed to the amount of the loss. Non-competition contracts will not be enforced if they are unreasonable. For example, an amount of $1 million/day would be unreasonable and unenforceable. Also, as an aside, some states prohibit non-competition agreements.
To return to our example, what if our one-legged ballet dancer was a star of her troupe and had executed (signed) a contract in which she agreed to perform for one year and in the event of her failure to appear and perform for any reason, she agreed to pay liquidated damages of $20,000 for each missed performance. Depending on audience size and difficulty in getting another star--one with both legs--those liquidated damages might well be enforceable. Avoid liquidated damages whenever possible.
If a tort or wrong is so outrageous that the sensibilities of the jury are offended they may add punitive (punishment) damages to everything they could already think of under compensatory damages. Punitive damages are a windfall or income and are subject to taxation.
The Berthiaume case (required reading) on this site describes physician conduct so outrageous that punitive damages were certainly appropriate.
A very public case also resulted in an award of punitive damages. Football star OJ Simpson was criminally charged with the murder of his ex-wife and her friend, Ron Goldman. The state fumbled the criminal trial and Simpson was acquitted. Later, the families of the victims filed wrongful death civil suits against Simpson seeking compensatory and punitive damages. [Yes, you can be sued in civil court even if you won in criminal court.] In the civil suit, the jury awarded compensatory damages and then added $25 million in punitive damages.
Nominal damages are typically awards of about $1.00 (Yes, one dollar) and happen when the lawyer succeeds in proving liability but fails in proving damages. This is the type of award one sometimes sees in slander suits where the jury is basically saying, "Yeah, you were insulted, but be a big boy and get over it." Here is a report of a case addressing, among other things, nominal damages when no actual harm is shown or presumed.