gavelIn a personal injury case, most plaintiffs are seeking damages to compensate them for an injury caused by another party. For example, in a simple car crash an injured driver might seek money from the negligent driver to pay for his medical bills, lost wages and pain and suffering. These monetary awards are called compensatory damages as they compensate the injured party for the harm they suffered.

In some instances, courts will also award a plaintiff with punitive damages. Punitive damages are not meant to compensate the victim but rather are meant to punish the guilty party. In these instances, a plaintiff can receive a higher damage amount than the injuries they sustained in order to deter the defendant from acting in the same manner again. Punitive damages can typically be obtained only when the wrongdoer’s behavior is especially egregious and our society deems it necessary to penalize them with excess damages. To obtain a punitive damage award in Indiana, a plaintiff must show more than mere negligence on the part of the defendant and prove with “clear and convincing” evidence that he “acted with malice, fraud, gross negligence or oppressiveness.” This is a rather high standard.

However, with the growing support in the tort reform movement, many jurisdictions have shied away from awarding excess punitive damages and have even placed caps or limits on the amount of punitive damage awards. Like many states, Indiana has adopted its own punitive damage statute that limits both the amount of punitive damages that can be awarded and the amount the plaintiff can receive from the judgment.

In Indiana, punitive damages are capped at three times the amount of a compensatory damage award or $50,000, whichever is greater. The current statute also only allows the plaintiff to recover 25% of the total punitive damages award. The other 75% is deposited into the Violent Crime Victims Compensation Fund, which provides funding to assist victims or their dependents with medical expenses, funeral expenses, lost wages and counseling.

The idea behind the use of punitive damage awards to fund the Violent Crime Victims Compensation Fund makes sense in theory. As punitive damages are meant not to compensate the victim, but to punish and deter the defendant for their harm against society, the general public should receive these funds. However, the system is inherently flawed as it provides little incentive for plaintiffs to seek punitive damage awards when they know they and their attorney will receive only a small fraction of the award.

There have been several challenges regarding the constitutionality of these kinds of punitive damage limitations. In early 2009, Marion Superior Justice David Dreyer drafted an opinion in John Doe v. Father Jonathan Lovill Stewart that held Indiana’s punitive damage cap to be unconstitutional. In the case, the jury had awarded Plaintiff John Doe $5,000 in compensatory damages and $150,000 in punitive damages for several acts of sexual abuse committed by Defendant Father Stewart when Doe was a minor. The defendant appealed the damages award as a violation of the punitive damages cap as specified in Ind. Code Sec. 34-51-3-6.

In his lengthy opinion, Justice Dreyer said that the Indiana statute was invalid as it violated the Indiana Constitution with regards to the separation of powers and the right to a jury trial. Therefore, the punitive damages stood as awarded by the jury. Although Justice Dreyer’s ruling is currently on appeal, the outcome of this case will prove to have a drastic effect on the amount of punitive damage awards available for future plaintiffs.

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