In the continual lobby to limit awards in personal injury cases, one of the most commonly–and dramatically–reported topics is huge punitive damage awards associated with comparatively minor injuries.

The point they’re missing, or at least hoping that you’ll miss, is that the disconnect between the appropriate level of damages and the plaintiff’s actual losses is the whole point. Punitive damages aren’t intended to compensate the victim–that’s what “compensatory” or “actual” damages are for. In fact, in some states a large portion of punitive damages is paid to the state, not to the plaintiff.

Punitive damages are intended to do just exactly what the name implies–punish the defendant so as to make it unprofitable to engage in the kind of dangerous behavior that caused the problem.

Corporations make decisions based in part on a risk analysis–in essence, a determination as to whether it will cost them more to take precautions, or to pay for the harm once the damage is done. Punitive damages discourage that kind of analysis and aim to prevent decisions that put people at risk in the interest of profits.

The recent Vioxx personal injury lawsuit in Texas provides an excellent illustration. The company delayed a change in the drug’s warning labels after it knew the drug could trigger heart attacks and strokes because its executives estimated that the delay would save the company $229 million.

The Texas jury wanted to make sure the company didn’t profit from that decision, and so returned a verdict that included $229 million in punitive damages. Unfortunately, Texas law caps punitive damages, and the award will be reduced to less than $2 million, leaving the company to reap hundreds of millions of dollars in profit from its decision to go ahead and let some people die in the interests of higher profit margins.

That’s the kind of thinking that punitive damages are intended to discourage–and the kind that will become more and more routine as states cap punitive damage awards and remove the risk to corporations that knowingly put human safety at risk.

According to the National Insurance Crime Bureau, the top ten cities in the United States for staged accident claims–claims where the accident itself was manufactured purely to seek compensation from an insurance company or property owner–are:
1. Miami
2. Los Angeles
3. Houston
4. Chicago
5. Philadelphia
6. Tampa
7. Cleveland
8. Orlando
9. New York
10. Boston
That means that plaintiffs working with insurance companies in those areas may be greeted with a greater degree of skepticism and more thorough investigation of claims than they might in areas where fraud is less common–and both of those things can mean delays.

Delays work to the advantage of the insurance company: recollections fade, evidence may be misplaced, the need to pay medical and other bills create pressure on the claimant to settle for less. Discuss these issues with your personal injury lawyer before making any decisions about your cased based simply on the need to finalize your case and get bills paid–that pressure may be exactly what the insurance company is banking on.

A Chicago couple has filed a $20 million law suit against a Catskills resort where the woman sustained nearly 500 bed bug bites. Although bed bug bites are usually fairly harmless, the woman apparently suffered an allergic reaction that required medical treatment.

In at least one previous injury case, a hotel has been ordered to pay large punitive damages to a guest bitten by bed bugs. In a 2003 case, the plaintiff was awarded $5000 in compensatory damages for bed bug bites that were annoying but not harmful, and an additional $186,000 in punitive damages.

The court in that case considered the fact that, in the absence of a large punitive damage award, it might be profitable for the hotel to deceive customers rather than addressing the bed bug problem.

Insurance companies are lobbying state legislatures across the country to limit liability in civil litigation, to eliminate mandatory no-fault insurance, even to restructure jurisdiction of civil cases to move litigation to areas with traditionally lower jury verdicts.

Those activities provide a far more realistic picture of the goals and priorities of an insurance company than does the friendly voice on your telephone after you’ve been injured in an accident. When a representative of the insurance company contacts you, she’ll be looking to do some very specific things:

• Get you talking about your injury (possibly “off the record”) and lead you into making statements that can later be used to deny or minimize your claim;
• Convince you that your claim isn’t worth as much as it might be, and that you’re better off to settle quickly without talking to a lawyer;
• Get your signature on a settlement agreement before you have the opportunity to find out the full extent of your injuries, medical bills, and lost work time.