Punitive Damages in Law

Punitive Damages in Law Punitive damages, which are also known as exemplary damages, are damages that are separate and in excess of the compensatory damages awarded to a plaintiff in a legal suit that is the result of some type of misconduct by the defendant. Punitive damages are intended to serve as a punishment for the defendant. Punitive damages are not based on a victim's injuries. Instead, they are a way to punish the defendant for some type of negligence.

Punitive damages are seen in cases where behavior that is so excessive that a civil court penalty is needed to deter the defendant from committing the same negligence again. For example, if a doctor practices without a license and botches an operation that disfigures a patient, the plaintiff may ask for punitive damages to penalize the doctor. It is difficult to predict how large a punitive damages award will be, and the process of arriving at it is just as subjective.

In business law, there are no maximums and no minimums -- the jury determines how large the award will be. For this reason, many problems result from punitive e damages decisions, as juries often act emotionally and with little regard to the greater implications of their decisions. While a jury initially decides the amount of damages awarded, a court can review it. In many cases where punitive damages have been awarded, the punitive damages aspect of the award seems excessive and grossly out of proportion to compensatory damages.

As a result, many of these awards are appealed by the defendant and reduced by the appeals court. One example of this was the recent Texas court decision in Ballard v. Farmers Insurance Company, involving a claim of mold damage to the plaintiff's mansion. In this case, the Texas Court of Appeals reduced a $32 million award involving bad faith and punitive damages to a mere $4 million.

If a judge feels that the amount of damages is too high, he may order remittitur, a process in which the damages are reduced without a new trial or appeal. If a judge feels that the amount of damages is too low, he may order additur, whereby damages are increased without a new trial or appeal. Punitive damages are a modern occurrence in the United States judicial system. In the U.S., punitive damages are assessed in connection with all types of commercial or personal activity.

Punitive damages have often been assessed for: Product failure Merger and acquisition disputes All types of discrimination Professional liability Unfair competition While compensatory damages are insurable, the insurability of punitive damages differs from state to state. Certain states permit insurance for punitive.