Annapolis- Today the Judicial Proceedings Committee in the Maryland State Senate will hear testimony on Senate Bill 584, cross-filed in the House of Delegates as House Bill 113, potentially raising Maryland’s cap on non-economic damages.  

A broad, diverse coalition of businesses and providers oppose removing caps on these damages, which would likely increase costs across a wide range of products and services in the state. Marylander’s household budgets are already strained after years of inflation, and the state is facing a budget deficit and potential tax hikes. It is never a good time to remove caps on non-economic damages, but it’s hard to think of a worse time than now. 

“There are over 132,000 trucking industry jobs in Maryland, and this bill would function as a fee hike for every one of them, increasing insurance costs and legal fees,” said Louis Campion, President of the Maryland Motor Truck Association. Campion noted that “96.2% of manufactured goods in this state are transported by a truck at some point in the supply chain.” 

“Marylanders can expect to see increased prices for their everyday essentials, as our small businesses struggle to operate on small margins that the legislature threatens to make even smaller if it passes this bill,” Campion said. 

Rather than hiking fees and prices for hardworking Marylanders, our leaders should try to generate more revenue by growing the economy, not shrinking it and making it harder and riskier to do business. Plaintiffs’ attorneys typically seek 30% to 40% of awards for emotional pain and inconvenience. Removing or increasing caps for non-economic damages can attract more litigation, which burdens the legal system and causes price inflation across much of the economy, due to its burden on business. 

“The transportation, construction, and materials industries in Maryland will be particularly hard hit if the Maryland General Assembly takes the drastic step of removing the cap on non-economic damages,” said Michael Sakata, President of the Maryland Transportation Builder’s Association. “It will inject more cost and more risk into our projects, shrink the pool of businesses willing to participate within the state, and make it harder for the employers to complete projects on time and on budget. Unfortunately, Maryland’s taxpayers will end up footing the bill.”  

There is no cap on civil verdict economic damages, which can be measured by medical bills and lost wages. These expenses are paid by insurers. Non-economic damages, by comparison, are damages that cannot be quantified, like emotional pain and inconvenience. 

A non-economic damages cap was first enacted in Maryland in 1986 at $350,000. The state was at risk of losing insurers at that time. This cap has been adjusted over the years by an annual escalator and now sits at $950,000. Maryland chose to cap non-economic damages because pain and inconvenience are difficult to quantify. Putting a reasonable cap on damages is the best public policy to balance a need for injury recovery with the avoidance of excessive awards. 

Some states do not have caps on non-economic damages, but according to the Maryland Chamber of Commerce, Maryland’s tort laws are broader than most states. That means removing Maryland’s caps would expand liability across a broad cross section of the business community. 

If these caps are removed, it is likely that insurance rates will rise across a wide range of business sectors. Businesses, especially small businesses operating on thin margins, may need to pass on that cost to consumers in order to protect their profit margins. Some might look to move out of the state to more conducive business climates. Out of state businesses looking to relocate to Maryland will likely reconsider. 

Maryland should say no to eliminating caps on non-economic damages. That’s the best way to protect the family budgets of taxpayers, the health of the state’s business climate, and the state budget.