The Difference Between Actual and Punitive Damages

In a personal injury case, the plaintiff’s legal team plays a pivotal role in whether or not the outcome is in the client’s favor. Lawyers typically initiate a lawsuit and, depending on the circumstances, may request both actual and punitive damages.

Actual Damages Provide Compensation Specific To The Client’s Experience

Actual damages (also known as compensatory damages) include anything the client has a bill for or a piece of paper to prove. These damages can be easily calculated using a spreadsheet. Actual damages include:

• Medical bills.
• Rehabilitation costs.
• Professional therapy or counseling to support mental/emotional well-being.
• Prescription and OTC medications.
• Durable medical equipment and mobility aids.
• Long-term care costs.
• Lost wages.
• Cumulative calculations for future financial losses resulting from things like lost retirement contributions, social security, interest on routine savings deposits, etc.
• Attendant care/in-home nursing expenses.
• Family/household expenses that are a direct consequence of the injury-producing event.
• Property damage, including damage to personal property (e.g., clothing, cell phones, computers, backpacks, shoes, jewelry, watches, etc.) and damage to vehicles.
• Wrongful death cases also include funeral expenses, burial/cremation/processing fees, and other costs associated with their death.

Pain and suffering are another type of actual or compensatory damage. Pain and suffering is a concept that is harder to quantify in dollar amounts because there is no bill, receipt or manual to reference to determine the appropriate amount to award a plaintiff for this category of damage. Calculating how much a person should receive for their pain and suffering involves a careful assessment of the physical and emotional toll the injury has taken on the client.

While personal injury lawyers can often go back in time to find the proof of actual damages incurred, the better the client documents everything, and retains bills, receipts, and creates spreadsheets of costs incurred, the easier it is to ensure the accident attorney has all of the details she needs when deciding what dollar amount to sue for in terms of actual damages. Your attorney considers current and long-term expenses in order to come up with a total sum that would sufficiently compensate the client for their expenses, as well as the damages that are harder to put on paper (e.g., pain and suffering) but are real just the same.

Limitations To Actual Damages

Generally, there is no limit to the amount a plaintiff can claim for compensatory damages - especially when factoring in pain and suffering. However, medical malpractice cases in California are the one major exception to this general rule. In a case based on medical malpractice, while there is no limit on the amount of economic damages a plaintiff can recover, for cases filed in 2023, the amount of non-economic damages (i.e., pain and suffering damages) a plaintiff can recover is no more than $350,000 for malpractice related injuries that do not involve wrongful death. If the case involves a wrongful death, the maximum a plaintiff can recover in non-economic damages in a medical malpractice case is $400,000.

However, if the plaintiff’s malpractice suit involves several different categories of defendants (e.g., (1) healthcare providers; (2) healthcare facilities; and (3) unaffiliated healthcare institutions or providers at that institution that commit a separate and independent negligent act), the plaintiff can recover up to the cap ($350,000 for medical injury cases and $400,000 for wrongful death cases) from each category of defendant.  

Beginning in 2024, the dollar amounts recoverable in medical negligence cases will bump up each year by $40,000 for personal injury cases and $50,000 for wrongful death, until 2034 when the caps reach $750,000 and $1 million, respectively. After 2034, a 2% annual adjustment for inflation will apply to the cap. 

Generally, punitive damages are not available in medical malpractice actions. However, if the plaintiff is able to prove the injury-producing incident involved malice, oppression, or fraud, by demonstrating the healthcare provider’s behavior was egregious, such as when the provider lies to the plaintiff or conceals facts, punitive damages may come into play.

Punitive Damages Are Designed To Teach The Guilty Party A Lesson

Punitive damages intend to have a greater impact on the guilty party and punish them for their actions. The monetary payout also serves to deter all persons from engaging in the same type of behavior at the risk of being hit with a large judgment.

A very basic example of actual and punitive damages is below:

Imagine you are involved in an accident while you are driving under the influence. The actual damages you would have to pay include the other person’s medical expenses and wage loss. However, depending on the facts of the accident (e.g., your level of intoxication, whether you have prior DUIs, etc.), you may also have to pay punitive damages in an undetermined amount, which will serve as a punishment for you and a deterrent for other people driving while drunk or high.

In the world of personal injury judgments, punitive damages are less common than actual damages. Most statistics show that punitive damages are only awarded about 30% of the time. This is often because the vast majority of accident cases involve basic negligence rather than egregious behavior. Additionally, California is a comparative negligence state. What this means is, the determination of damages depends on the percentage of fault of all involved, including the injured party. For example, if you are involved in a bicycle accident, but you were not wearing a helmet, even if you have no fault in causing the accident, you may be held partially responsible for your damages because your injuries could have been avoided or lessened if you had been wearing a helmet. Your percentage of responsibility will materialize as a proportional reduction of the total compensation you receive. 

However, if your attorney can prove the person who caused your injuries engaged in gross negligence or acted with malicious intent (which can include acting with a disregard for human life), punitive damages may be justified, which can total several multiples of your actual damages.

Limits To Punitive Damages

There is no cap on the amount that may be awarded for personal injury cases in California, However, The Supreme Court of the United States held in State Farm v. Campbell that “grossly excessive or arbitrary punishments” are forbidden under the Due Process Clause of the Fourteenth Amendment of the Constitution, and this governs the rulings of California judges. 

In most cases, punitive damages rarely exceed four times the amount of the actual damages. That said, in cases where the victim’s life was forever altered, they can no longer work, or in wrongful death suits, actual damages totals can be substantial, creating staggering figures for punitive damages.

One of the most famous cases of punitive damages awarded for what began as a simple claim was the notorious case against McDonald’s back in 1992. A woman was severely burned after spilling a cup of coffee after leaving the drive-thru. She sued McDonald’s for $20,000 (actual damages). However, through the discovery process, her attorneys discovered that McDonald’s had received more than 700 complaints from others who were injured as the result of similar burns in the 10 years prior to the 1992 incident.

Here is a recap of the final judgment, as reported by Investopedia (note how comparative negligence paid a part; the plaintiff was held 20% responsible):

In the end, [the plaintiff] was awarded $200,000 in compensatory damages—later cut to $160,000 after the jury determined that she was responsible for 20% of the spill—and $2.7 million in punitive damages—later reduced to $480,000 to cap Liebeck's award at three times what she won for compensatory damages. McDonald's was forced to pay and responded by lowering the temperatures of its coffees.

This case also reveals how essential it is to find the best legal team for the job. In the McDonald’s case, because the plaintiff’s attorneys put the time and effort into discovering the prior complaints that McDonald’s had received, their client was far more generously compensated than she otherwise would have been AND McDonald’s was brought to task and changed their product to create a safer experience for future customers.

Burneikis Law Firm Ensures Clients Get the Actual And Punitive Damages You Deserve

The team at Burneikis Law works tirelessly to ensure our clients understand what they are entitled to when it comes to actual and punitive damages. We will not take your case unless we know you can win, and we always perform our due diligence, uncovering every potential element of compensatory damage you are entitled to. 

Contact us to schedule a free, no-obligation consultation. We are here to listen to your story and support you every step of the way as we move towards getting you the full compensation you deserve.