Pleading the Damages Cap by Aaron Tifft
October 18, 2017
By: Aaron C. Tifft
In 2009, the Oklahoma legislature adopted Section 61.2 of Title 23, imposing a cap of $400,000 on non-economic loss in civil actions for bodily injury, except in certain cases against physicians. In 2011, Section 61.2 was amended to lower the cap and to broaden the exception to apply to any class of defendants. The exception applies upon a clear-and-convincing showing of reckless disregard, gross negligence, fraud, or malice.
Last month, the Tenth Circuit provided the first in-depth interpretation of the Section 61.2 damages cap, holding that it is an affirmative defense that must be alleged in a defendant’s answer. If the cap is not asserted as a defense, it is waived.
In Racher v. Westlake Nursing Home, the jury awarded $1.2 million in noneconomic compensatory damages on a claim of nursing home negligence. The trial court lifted the Section 61.2 cap by making the required finding of reckless disregard, gross negligence, fraud, or malice.
The Tenth Circuit affirmed the trial court on other grounds, holding that the damages cap is an affirmative defense. The Racher court considered a number of factors in reaching its decision. Neither party raised the cap as an issue until after the jury’s verdict.
Through extensive analysis, the court determined that the determination would be based on Oklahoma substantive law rather than federal procedural law. Among other things, in a diversity proceeding, federal procedural law cannot change the “measure of that right” or change the “burden that must be satisfied to assert it.”
The court then noted that “the precise parameters of the findings and procedures this statute would require in this case are not immediately clear.” But after noting the similarity between Section 2008 of the Oklahoma Pleadings Code and Rule 8 of the Federal Rules of Civil Procedure, the Racher court determined that Oklahoma courts would likely follow the majority of federal courts in determining that a statutory damages cap is an affirmative defense.
The Racher court’s decision is only binding within the Tenth Circuit. But state courts could follow the Racher court’s analysis and impose this pleading requirement on defendants in Oklahoma state courts.
After Racher, personal injury defense counsel should raise the statutory cap as an affirmative defense in every instance. By the same token, plaintiffs’ counsel should have this case at the ready to avoid the damages cap if it is not raised by the defense.