The Indiana Supreme Court recently upheld the constitutionality of Indiana’s punitive damages statutes which cap awards and require allocation of the majority of such awards to the Indiana Violent Crimes Compensation Fund.
Under Indiana Code §34-51-3-4, a punitive damage award may not exceed the greater of:
1. Three times the amount of compensatory damages awarded; or
2. $50,000.
Indiana Code §34-51-3-6 contains an allocation provision which allows plaintiffs to keep only 25% of the punitive damage award. The remaining 75% of punitive damages awarded are paid to the Victims Compensation Fund for distribution to other crime victims.
Indiana Supreme Court Upholds Punitive Damages Caps
In State of Indiana v. Doe (2013), 987 N.E.2d 1066, a childhood sexual abuse victim was awarded $150,000 in punitive damages from his former clergyman. The award exceeded the damages cap, but the trial court ruled that reduction of the award was unconstitutional; and the award need not be shared with the Victims Compensation Fund. The State of Indiana intervened to protect the constitutionality of the statue. The Indiana Supreme Court unanimously held that both the punitive damages cap and the allocation provision were constitutional. The Court ordered that the punitive damages be reduced to comply with the cap; and that 75% of the reduced award be remitted to the Compensation Fund.
The State of Indiana has other damages caps which place reasonable limits on the recovery of compensatory damages, including caps on medical malpractice actions; claims against governmental entities; and certain wrongful death awards. The decision in State of Indiana v. Doe suggests that the Indiana Supreme Court is willing to uphold damages caps as an appropriate exercise of legislative authority. Caps protect the financial soundness of Indiana’s institutions; and enable individuals and businesses to make rational decisions on the amount of insurance coverage needed to protect themselves against damages claims.
If you have any questions regarding this decision, any of Indiana’s damages caps, or matters affecting clergy/faith based institutions or other non-profit entity liability, please call on one of our Specialty Practice Group Lawyers.
