Colorado has limited non-economic and other damages by statute for a long time. This has protected businesses and individuals from runaway juries awarding damages well beyond logic. These protections are set to be reduced starting in 2025.

On June 3, 2023, Governor Polis signed House Bill 24-1472 into law.[i] This bill expands and raises damage caps in many areas, not the least of which are personal injury and wrongful death actions.

Background on Damage Caps

In Colorado, statutory limits have been placed on many categories of damages. Limitations on damages can help the economy and bring some consistency to the Wild West of Nuclear Verdicts®.

Damage caps are legally established limits on the amount of compensation that can be awarded to plaintiffs in specific types of lawsuits. These limits generally apply to non-economic damages, like pain and suffering, as well as punitive damages, which are designed to penalize the defendant rather than to provide compensation to the plaintiff.

In Colorado, damage caps have long been a subject of debate. Supporters claim these caps help curb excessive and unpredictable jury awards, which can lead to higher insurance premiums and discourage business investments. Opponents, however, argue that such caps hinder injured individuals from receiving full compensation for their losses and unfairly impact those with serious injuries or exceptional circumstances.

Statutory Approach

Colorado kept Nuclear Verdicts® at bay to some degree with the use of statutory caps. We will focus on general noneconomic loss or injury here, but there are other caps in areas like wrongful death and medical malpractice. For personal injury and general tort actions which accrued before January 1, 2020, non-economic losses were generally capped at $468,010.[ii] For claims which accrued after January 1, 2020, the cap increased to $613,760.[iii] With these rules, it is simply not possible for the plaintiff to recover massive noneconomic awards. This has caused the focus of most actions to be on the economic damages, such as medical costs and lost wages, which are not capped. Unfortunately, this is set to change. We are not completely losing the caps, but they will now be much larger and apply to many more claims.

The 2025 Changes

In just over three months, the applicable cap will increase to $1,500,000.[iv] 2025 should be a banner year for case filings from the plaintiffs’ bar and will surely keep defense attorneys busy. Unlike previous caps, where the accrual date controlled which cap would apply, the 2025 changes expressly state, “In any civil action filed on or after January 1, 2025, and before January 1, 2026, or any claim for relief that accrues on or after January 1, 2025 . . . .”[v] Starting in 2026, the new cap will only apply to claims which accrued on or after January 1, 2025.[vi] Thus, filings should be way up next year, as any claim filed in 2025 will be subject to the new cap regardless of accrual date. Starting January 1, 2026, the new cap will only apply to claims accruing after January 1, 2025.[vii] Plaintiffs will not miss this opportunity, and the defense needs to be ready.

Implications for Stakeholders

The increase in damage caps is expected to impact every potential stakeholder, albeit in different ways:

Plaintiffs: For injured individuals and their families, the new caps provide the possibility of greater compensation, which can be essential in covering long-term medical care, lost wages, and other impacts of severe injuries. This adjustment is especially important for those who experience life-changing injuries that were previously undercompensated due to the lower caps.

Defendants: Businesses and individuals facing claims will experience an increase in liability exposure. Thus, the cost of doing business is expected to increase as the higher limit could lead to higher premiums and will surely require higher limits. For example, we often see policy limits of $1,000,000 per occurrence for commercial general liability policies. These limits will no longer be sufficient to cover many claims, and an increase will be needed to ensure the business or individual is carrying adequate coverage for even routine cases.

Legal Community: Attorneys representing defendants will need to adjust their strategies in light of the new caps, as plaintiffs will surely argue for higher awards. The defense bar will need to develop more robust strategies to limit awards. One such approach is through motions in limine seeking to prohibit plaintiffs from arguing the jury should value their noneconomic damages based on some artificial metric they concoct.

Insurance Industry: To no one’s surprise, when the potential exposure goes up, the risk analysis for insurers will change as well. This will likely lead to higher premiums and require businesses to carry larger policies above what is common today.

Looking Ahead

As Colorado braces for these changes, both the legal and business communities are paying close attention to the potential effects. Many view the increased caps as a necessary modernization to ensure fair compensation in a shifting societal and economic landscape. However, balancing fair compensation with maintaining a stable economic environment continues to be a delicate matter.

The 2025 revisions to Colorado’s damage caps represent a significant step in the state’s ongoing efforts to refine its legal system. As the implementation date nears, stakeholders across the board will be preparing for the new dynamics in personal injury and wrongful death litigation.

For those impacted by these changes, staying informed and seeking experienced legal counsel will be crucial in navigating the evolving landscape of Colorado’s damage cap laws. With these increases in mind, it will be even more important to ensure Tyson & Mendes’ proven methods are utilized. These methods are particularly recognized for their effectiveness in defense litigation, including personal injury and insurance defense cases, and are extremely effective at avoiding Nuclear Verdicts® resulting from large non-economic awards. These methods have always been valuable, and their value and impact on cases will only increase with the increase in exposure.

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Sources

[i] House Bill 24-1472 (available at https://leg.colorado.gov/sites/default/files/2024a_1472_signed.pdf)

[ii] C.R.S. § 13-21-102.5; see also Sec. of State Certificate (providing inflation adjustments) (available at https://www.sos.state.co.us/pubs/info_center/files/damages_new.pdf)

[iii] Id.

[iv] See C.R.S. § 13-21-102.5 (effective Jan. 1, 2025).

[v] Id.

[vi] Id.

[vii] Id.