Federal Court Rules Tennessee Cap on Punitive Damages Unconstitutional

February 6, 2019

On December 21, 2018, a panel of the federal Sixth Circuit Court of Appeals ruled in Lindenberg v. Jackson National Life Insurance Company, et al that a cap on punitive damages established in Tennessee law violates the right to trial by jury provision of the Tennessee Constitution.

The case involved a breach of contract dispute over a life insurance policy and was filed in federal district court because the parties to the lawsuit were from different states. The federal jury awarded the plaintiff compensatory damages of $350,000, additional damages of $87,500 based on a Tennessee “bad faith” statute, plus $3 million in common law (case established law) punitive damages.

The defense challenged the ruling, asserting that the trial court must apply the Tennessee punitive damages cap and reduce the plaintiff’s punitive damage award. Plaintiff challenged the constitutionality of the cap and, after the Tennessee Supreme Court declined to provide an opinion, appealed the case from the district court to a panel of the Sixth Circuit Court of Appeals. The Sixth Circuit reversed the district court’s reduction of plaintiff’s punitive damage award, holding that the TCA § 29-39-104 – which caps punitive damages at two times the amount of compensatory damages awarded or $500,000, whichever is greater – was unconstitutional.

While the court’s ruling addressed the punitive damages statute and not the statute on caps on non-economic damages, and while it sets no binding precedent within the Tennessee state court system, it is concerning. TMA hopes that the Tennessee Supreme Court will ultimately weigh in on the caps question in Lindenberg or another case. No court has ruled against the constitutionality of the caps on non-economic damages that TMA and other organizations achieved in the last decade.

TMA will take every opportunity to continue protecting caps on non-economic damages that have dramatically improved Tennessee’s medical malpractice environment.