Arizona Punitive Damages Legislation

Each year various members of the Arizona legislature introduce bills concerning all aspects of “tort reform.” This year is no different. I recently learned that Arizona State Representative Jennifer Burns introduced a bill to prevent Plaintiffs from recovering punitive damges but not to outlaw puntive damages awards in their entirety. Rather than outlawing punitive damages, Representative Burns’ legislation would direct that all punitive damages awarded by a jury be placed in a state fund for the benefit of health education services.

Throughout the years I have observed our Arizona legislature attempt to cut back on the rights of victims to seek punitive damages arising out of intentional conduct by a wrongdoer. This is the first time I can recall the legislature seeking to enrich the State of Arizona anytime a jury awards punitive damages. While the concept of funding health related programs may be a good one, I am afraid that in practice, requiring that punitive damage awards be deposited with the State for the benefit of health programs presents a host of unintended consequences. For example, how would these changes affect the ability of parties to settle their lawsuit knowing that if a jury awards punitive damages, Plaintiffs will never see any of these monies? Does this mean that a Defendant would be discouraged from participating in meaningful settlement negotiations and would offer artificially low settlements? Why should the State mandate the use for punitive damages awards? What if Plaintiffs who have suffered harm have a desire to see the punitive damages award used for other socially responsible causes other than health related programs? Also, will the State have new incentives to avoid licensing and oversight responsibilities in times of fiscal shortfalls knowing that budget shortfalls in certain health-related program areas could be made up by punitive damage assessments?

Is this bill another attempt at unwarranted government interference in our jury system or is it a good start at fixing a problem with allegedly outrageous jury awards? I for one think that government should stay out of this decision making process and if anybody should benefit from a punitive damages award, it should be the victim of outrageous conduct justifying such an award and not our government. Lastly, punitive damages awards are usually lower than an initial jury award and usually take a long time to wind their way through our judicial process before a Plaintiff can recover anything. In reality, the need for punitive damages reform in my opinion is exaggerated. What do you think? Click here to see the House Bill 2862, the proposed punitive damages reform bill.