General damages

What Is General Damages?

General damages are a form of compensation awarded in legal cases, particularly within tort law, for non-monetary losses suffered by an injured party. These losses are subjective and do not have a direct financial cost, making them challenging to quantify. As a category of legal compensation, general damages aim to make the plaintiff whole by acknowledging the intangible impact of an injury or wrong. They typically include items such as pain and suffering, emotional distress, loss of enjoyment of life, and disfigurement. General damages are distinct from economic damages, which cover quantifiable financial losses like medical bills and lost wages.

History and Origin

The concept of awarding damages for wrongs dates back to ancient legal systems, including the Code of Hammurabi in Mesopotamia and Roman law, which recognized the need for recompense for harm caused. The modern understanding of general damages largely evolved within the English common law system. Early common law emphasized "restitutio in integrum," aiming to restore the injured party to their original position, and introduced "damages at large," allowing juries broad discretion in awarding amounts based on the severity of the wrong.⁵

Over centuries, as societies industrialized and legal principles became more refined, the scope of what constituted compensable harm expanded beyond direct physical injury. Significant legal developments, such as the emergence of negligence as a formal doctrine, broadened the types of losses for which plaintiffs could seek remedies. The American Law Institute's Restatement (Second) of Torts, a highly influential treatise, summarizes general principles of U.S. tort law and provides extensive discussion on the various forms of damages, including those for non-pecuniary losses. American Law Institute

Key Takeaways

• General damages compensate for non-monetary, subjective losses in legal claims, primarily in personal injury cases.
• They cover pain and suffering, emotional distress, loss of enjoyment of life, and other intangible harms.
• Calculating general damages is subjective, often relying on judicial precedent, expert testimony, and various estimation methods.
• These damages are a component of compensatory damages, distinct from economic damages (special damages).
• State laws and tort reform efforts can impose limitations, or "caps," on the amount of general damages awarded.

Formula and Calculation

Unlike economic damages, which are calculated using precise figures like medical bills or lost income, there is no universally accepted formula for calculating general damages. Their subjective nature means that their valuation is often a point of contention in a legal claim.

However, two common methods are frequently employed in practice by legal professionals and insurance adjusters to estimate general damages:

1. Multiplier Method: This is a widely used approach where the total amount of economic damages is multiplied by a factor, typically ranging from 1.5 to 5. The multiplier chosen depends on the severity and permanency of the injury, the extent of pain and suffering, and the overall impact on the plaintiff's quality of life.

   $$\text{General Damages} = \text{Economic Damages} \times \text{Multiplier (1.5 - 5)}$$

2. Per Diem Method: Less common, this method assigns a daily value to the plaintiff's pain and suffering from the date of injury until maximum medical improvement or the projected end of suffering.

   $$\text{General Damages} = \text{Daily Rate} \times \text{Number of Days Suffering}$$

   The daily rate is often tied to the plaintiff's daily earnings before the injury, reflecting the idea that the discomfort is worth at least as much as their daily income. Ultimately, the final amount of general damages is often determined through negotiation, mediation, or jury verdict, influenced by the specific facts of the case and applicable legal precedents.

Interpreting General Damages

Interpreting general damages involves understanding that they represent the legal system's attempt to quantify subjective human experience. Since there are no receipts for pain or emotional distress, the value assigned to general damages reflects societal and legal recognition of the profound, non-financial impact an injury can have on an individual's life.

When evaluating a potential settlement or jury award, the amount allocated to general damages indicates the perceived severity of the intangible losses. A higher award for general damages suggests that the court or negotiating parties acknowledge significant and long-lasting pain, suffering, or disruption to the injured party's life. Factors influencing this interpretation include the nature of the injury (e.g., permanent disfigurement versus a temporary sprain), the intensity and duration of pain, the extent of emotional or psychological harm, and how the injury has limited the individual's ability to participate in daily activities or enjoy hobbies. Legal precedents from similar cases and expert testimony, such as from medical or psychological professionals, also play a crucial role in shaping this interpretation.

Hypothetical Example

Consider a hypothetical case where a freelance graphic designer, Alex, suffers a severe arm injury due to the proven negligence of another party. The injury requires extensive surgery, physical therapy, and results in chronic pain and some loss of fine motor skills, which severely impacts Alex's ability to draw and use a computer mouse for extended periods.

Alex's quantifiable economic damages are calculated as follows:

• Medical expenses: $75,000
• Lost income during recovery: $25,000 (due to inability to work)
• Future lost earning capacity: $50,000 (due to reduced efficiency and potential for fewer clients)
  Total Economic Damages: $150,000

Beyond these financial losses, Alex experiences significant physical pain, emotional distress due to the impact on their career and hobbies, and a general loss of enjoyment of life because they can no longer engage in activities like painting or playing the guitar. These are the elements of general damages.

Using the multiplier method, Alex's legal representative argues for a multiplier of 3.0 due to the severity, permanency, and life-altering nature of the injury.

Calculation of General Damages:

In this scenario, Alex would seek a total compensation of $600,000 ($150,000 in economic damages + $450,000 in general damages). This example illustrates how general damages account for the non-financial, yet profound, impact an injury has on an individual's well-being and quality of life.

Practical Applications

General damages are primarily encountered within the realm of civil law and are a core component of personal injury lawsuits. Their practical applications span various legal scenarios:

• Personal Injury Claims: This is the most common area where general damages are awarded. They compensate victims for the subjective aspects of their suffering, such as physical pain and discomfort, mental anguish, loss of companionship or consortium, and a reduced enjoyment of life resulting from accidents, medical malpractice, or other tortious acts.⁴
• Defamation Cases: If a person's reputation is harmed, general damages can be awarded to compensate for the emotional distress, humiliation, and damage to their personal or professional standing, even if specific financial losses are difficult to prove.
• Medical Malpractice: In cases where a patient is harmed due to a healthcare professional's negligence, general damages compensate for the physical pain, disfigurement, emotional trauma, and loss of quality of life experienced.
• Product Liability: When a defective product causes injury, general damages address the non-economic suffering of the victim.
• Wrongful Death: In wrongful death lawsuits, surviving family members may seek general damages for the loss of companionship, guidance, and emotional support previously provided by the deceased.
• Insurance Settlements: General damages are a significant factor in negotiations between injured parties and insurance companies. Insurance adjusters evaluate the subjective elements of a claim to arrive at a settlement offer that includes an amount for non-economic losses.

These applications highlight the role of general damages in seeking full restitution for victims, encompassing both tangible and intangible harms.

Limitations and Criticisms

Despite their crucial role in providing comprehensive compensation, general damages face several limitations and criticisms, primarily due to their subjective nature and the challenge of objective valuation.

One significant limitation is the inherent difficulty in quantifying intangible losses like pain and suffering into a precise monetary figure. This subjectivity can lead to inconsistencies in awards, as different juries or judges may assign varying values to similar injuries. This lack of predictability can complicate settlement negotiations and contribute to litigation.

A major area of criticism revolves around "tort reform" movements, which often advocate for statutory caps on general damages. These caps limit the maximum amount of non-economic damages that can be awarded, particularly in personal injury and medical malpractice cases. Proponents of caps argue they reduce insurance premiums, lower healthcare costs, and prevent excessive or frivolous lawsuits, thereby improving overall risk management for businesses and medical professionals. National Center for State Courts

However, critics of damages caps argue that they unfairly penalize severely injured plaintiffs, especially those with significant non-economic losses such as permanent disfigurement or debilitating pain, who may not have substantial economic damages. They contend that such caps undermine the principle of full restitution and can leave victims undercompensated for life-altering harms. Additionally, some studies have questioned whether damages caps truly achieve their stated goals of reducing insurance costs or healthcare expenditures.

General Damages vs. Economic Damages

General damages and economic damages are both categories of compensatory damages awarded in civil lawsuits, particularly in tort law cases, but they differ fundamentally in what they seek to compensate.

The primary distinction lies in their measurability. Economic damages, often referred to as "special damages," are tangible and can be calculated with relative accuracy based on bills, receipts, and income statements. Conversely, general damages are "non-economic damages" (or "noneconomic damages" as defined in U.S. Code³,²), addressing the abstract aspects of suffering that lack a direct price tag. Both types of damages are crucial for providing complete compensation to an injured party, covering both the financial burden and the personal suffering endured.

FAQs

What types of losses do general damages cover?

General damages cover non-monetary losses such as physical pain and suffering, emotional distress, mental anguish, inconvenience, loss of enjoyment of life, disfigurement, and loss of companionship or consortium.¹

Are general damages taxable?

Generally, damages received on account of personal physical injuries or physical sickness are excluded from gross income for tax purposes. However, the taxation of settlement or judgment amounts can be complex and depends on the specific nature of the claim and the damages awarded. It is advisable to consult a tax professional.

Can general damages be awarded in cases other than personal injury?

While most commonly associated with personal injury cases arising from negligence or other torts, general damages can also be awarded in certain other civil actions, such as defamation or civil rights violations, where non-pecuniary harm like reputational damage or emotional distress is suffered. They are less common in breach of contract cases, which typically focus on economic damages.

How do courts or juries decide the amount of general damages?

Courts and juries determine the amount of general damages based on various factors, including the severity and permanency of the injury, the extent and duration of pain, the impact on the plaintiff's daily life and activities, and comparable awards in similar cases. They consider evidence presented, such as medical records, testimony from the injured party and witnesses, and expert opinions. Since there's no fixed formula, the assessment often involves a degree of subjective judgment.