The Maryland General Assembly is considering eliminating a vitally important but little-known policy protection for Marylanders: the state’s cap on non-economic damages.
From small businesses to well-known brands, advocates for a healthy business climate warn the change could raise insurance premiums, increase legal costs, and create unfair burdens for businesses and consumers.
The Maryland Alliance for Fair Liability Laws spoke with Louis Campion, President & CEO of the Maryland Motor Truck Association, to get a better understanding of the consequences of removing Maryland’s reasonable cap on non-economic damages, and how that might impact businesses and their customers across the state.
Q: What are non-economic damages, and how do they work in Maryland?
Non-economic damages are a type of financial award that can come from a lawsuit. You have punitive damages, economic damages, and non-economic damages. Unlike economic damages, which can be documented with medical bills or lost wages, for example, non-economic damages cannot be easily measured. They include things like “intangible hardships.”
Keep in mind, there is no cap on economic damages in Maryland. If you can document them, you can recover them.
According to the U.S. Chamber of Commerce, non-economic damages now make up 42% of the average nuclear verdict – those verdicts that exceed $10 million. Why? Because non-economic damages are difficult to measure, have no precise value, and can be emotionally charged for a jury.
Maryland’s cap on non-economic damages dates back to 1986. It automatically increases by $15,000 each year, and is currently at $965,000.
Q: There is a proposal before the Maryland General Assembly to eliminate the cap on non-economic damages. How would that affect the trucking industry?
The trucking industry believes that removing or drastically raising the cap would open businesses up to sky-high legal verdicts and increased costs for everyone.
In states without caps, we’ve seen verdicts as high as $280 million in Georgia, $260 million in Texas, and $165 million in New Mexico. We’ve also seen massive fraud whereby close to 100 individuals across the country have been charged in the last few years for involvement in staged accident rings that resulted in millions of dollars in bogus lawsuit settlements. These are cases where cars intentionally collide with trucks or buses in the hopes of a large jury award or insurance settlement. Removing the cap entirely could make Maryland a laboratory for similar incidents and expose the trucking industry to unlimited liability.
Even if a local trucking company is not involved in an accident or facing a large verdict against them, they still could face dramatically higher insurance premiums that they can’t afford without large rate increases – simply because the risk of a nuclear or jackpot verdict exists. In other words, being in a market where nuclear verdicts are possible can result in higher prices for companies. Of course, when costs go up for businesses, they tend to go up for consumers as well, because it changes our profit margins.
An independent actuarial analysis in 2024 found that increasing the non-economic damages cap to $1.75 million could increase personal auto insurance premiums by up to 19% and commercial auto insurance premiums by as much as 30%.
Q: How do you think that consequence would then trickle down to everyday Marylanders?
Every product you own and use in your daily life arrives on a truck. From groceries to fuel to medical supplies to clothing and entertainment products - consumers literally have nothing without trucking.
If the costs of transportation of these goods rise, companies will have no choice but to raise the prices of these goods. This would extend beyond just trucking into other industries such as building and construction – every industry that operates a fleet of trucks or who relies on trucks for its goods would be impacted.
The end result is Marylanders will see higher prices, at a time when they are already struggling with inflation. Poll after poll shows the affordability crisis is hammering Marylanders right now. This simply isn’t the time for state government to take such a step.
Q: What message would you have for Maryland residents wondering what the best path forward is?
The trucking industry wants to continue serving Maryland businesses and consumers – delivering all of the products they use in their daily lives for a reasonable cost. Scrapping the cap on non-economic damages would make that much, much harder. Marylanders should urge their lawmakers to oppose these efforts.
We know how challenging a business climate Maryland already has, with its taxes, fees, and regulatory structure. We cannot afford to be at an even greater disadvantage by adding yet another barrier to business.