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Monetary Ceilings and Caps

One of the most common forms of limiting liability is through the application of monetary caps or ceilings to the amount recoverable in any claim for loss or harm. So widespread and successful is this practice that it is often incorporated into statutory provisions to ensure uniformity and requisite notice to third persons.

Many states have passed legislation capping the available remedies in tort cases (tort reform). Such legislation is particularly intended to address those cases in which emotion may cause “runaway juries” to award millions or billions of dollars in cases that play on their sympathy or anger.

Two broad areas of tort litigation undergoing constant reform are products liability and medical malpractice. In the area of medical malpractice, a majority of states have enacted tort reform legislation, many of which limit non-economic damages (e.g., to $250,000) as a result of lobbying from insurance companies.

Congress and state legislators have enacted many provisions over the years that serve to limit the available remedies in certain cases or controversies (e.g., the Limitation of Liability Act, 46 USC 181 et seq., regarding cargo shipments)or the Federal Tort Claims Act. Other examples in which Congress has eliminated liability for ordinary negligence, but not for intentional or willful misconduct, include the Bill Emerson Good Samaritan Food Donation Act, the Volunteer Protection Act, the Aviation Medical Assistance Act of 1998, and the Paul D. Coverdell Teacher Protection Act of 2001. These statutes grant private parties immunity from suit in many cases, or otherwise limit their exposure to liability, by declaring them federal employees for purposes of the benefit or good they are providing to the public at large. Likewise, in 2005, during a global threat of a particularly virulent form of the flu virus, the 109th Congress worked on legislation to limit the liability of pharmaceutical manufacturers of flu vaccines. This was intended to accelerate the production of new strains of flu vaccines needed to address a potential pandemic, without developers being unduly delayed by fear of liability for untoward complications or negligence in the testing, manufacturing, labeling, distribution, dispensing, prescribing, or administering of the vaccine.

Inside Monetary Ceilings and Caps