Press Office

April 2005

April 14, 2005

The Honorable Colorado Senate
Sixty-Fifth General Assembly
First Regular Session
State Capitol
Denver, CO 80203

Ladies and Gentlemen:

I am returning to the General Assembly Senate Bill 025, “Concerning Adjustments To Damages Limitation Statutes To Reflect The Effects Of Inflation.” I vetoed this bill as of 2:50 p.m. today and this letter sets forth my reasons for doing so.

Senate Bill 025 would index the current $366,000 cap on general non-economic damages for inflation back to 1998, raising the cap to $440,000 next year and continuing to adjust it upwards on an annual basis. Whereas economic damages may reflect the time value of money, that is not the case with non-economic damages. Since non-economic damages, by definition, do not result in the expenditure of money by an injured person, there cannot be an erosion of the value of money that has not been spent in the first place.

While these inflationary adjustments may seem benign, they are actually unwarranted and harmful.

Colorado’s cap on general non-economic damages (also referred to as pain and suffering damages) is the centerpiece of our current civil justice system, which helps limit increases in Colorado’s litigation and insurance costs. The award of non-economic damages is designed to be a supplemental form of compassionate compensation that is not related to economic damages. I believe the current cap of $366,000 represents a balance between the need to compensate the injured party and the need to protect all Coloradoans from out-of-control litigation costs.

Colorado’s existing laws with respect to economic and non-economic damages contain provisions that ensure injured parties are fairly compensated. Of significance is the fact that there is no cap on the recovery of actual economic damages (lost wages, medical, health care and other out of pocket expenses) in a general civil lawsuit. Rightfully, these costs should be recovered at 100 percent, as they are quantifiable.

Furthermore, Colorado law mandates pre-judgment interest at the rate of 9 percent for economic and non-economic damages, which, in complex litigation, can take a number of years, running from the date of injury through the course of discovery and trial. This award of pre-judgment interest is a ministerial duty of the court, and does not require argument or evidence to be presented to the court. To adjust the dollar limit for inflation, particularly if the adjustment is applied retrospectively, as is the case with Senate Bill 025, is to apply interest to inflation.

Finally, Colorado’s general non-economic damages statute also gives a judge the discretion, upon a finding of clear and convincing evidence, to double the non-economic damage cap (up to $732,000) while each defendant is liable for separate non-economic damages up to the statutory limitation.

For these reasons I vetoed Senate Bill 025.

Sincerely,

Bill Owens