Caps on Lawsuit Damages Threatens Maryland Jobs, Raises Costs for Residents

The Maryland Chamber of Commerce and the American Property Casualty Insurance Association (APCIA) voice strong opposition to Senate Bill 538, legislation that aims to drastically increase the cap on noneconomic damages in personal injury and wrongful death lawsuits in Maryland.

The current $935,000 cap, which already ranks among the highest in the nation and automatically increases each year for inflation, has provided a reasonable path to compensation for 35 years while limiting unpredictable awards that could devastate local employers. SB 538 seeks a 90 percent increase, hiking the cap to $1.75 million while also raising the annual escalator adjustment from $15,000 to $20,000.

The long-term impacts of this damaging legislation could include:

• Inevitable cost hikes for Maryland’s residents and business community.
• Higher liability risks would result in spikes in insurance rates, forcing companies to raise prices, cut costs like employee wages and benefits, or potentially move out of state altogether.
• Larger payouts in lawsuits, which increases the risk for insurance companies, would result in a riskier insurance pool and will lead insurance companies to raise premiums, passing the additional costs onto Maryland policyholders.

Mary D. Kane, President & CEO of the Maryland Chamber of Commerce, warns that the proposed changes would raise costs for Maryland residents and threaten jobs. “Nearly doubling the cap on noneconomic damages would inevitably lead to higher insurance rates and increased costs that would be passed onto Maryland residents and businesses,” said Kane. “This shortsighted legislation puts our state at a competitive disadvantage and hinders our ability to attract and retain job creators.”

“If enacted, SB 538 could increase insurance costs for consumers and businesses and lead to a significant increase in claims and lawsuit filings,” said Nancy Egan, vice president of state government relations and counsel for the American Property Casualty Insurance Association. “APCIA share’s the concerns of Maryland’s business about the potential impacts of Senate Bill 538 and are urging the legislature to vote no on this harmful bill.”

On behalf of our state’s business community, the Maryland Chamber of Commerce and APCIA urges elected leaders to reject SB 538, demonstrating their commitment to fostering a business-friendly environment and safeguarding the financial stability of all Marylanders.