I was an economics major. What that really means is I spent about 4 years of my life drawing graphs. We used these graphs to prove things like "tariffs are bad", "price controls are bad", you know, stuff like that. So why haven't I made a graph showing how dumb the idea of capping lawsuit damages would be if the stated purpose was to curb "frivolous lawsuits?
Here it is:
This thing is bulletproof.
As you can see, the savings created by capping pain and suffering damages do not begin until a jury determines that the plaintiff is in a serious amount of pain. If a jury determines a plaintiff is not entitled to an amount of money in excess of the cap, the cap does absolutely nothing.
The "savings" created by the system are represented by the crudely-shaded green region. This area on the graph represents money that would go to victims of painful injuries that insurance companies will now get to keep. I wonder how the insurance companies feel about this...
So by definition, any actual savings created by a cap on damages comes at the expense of seriously injured people with painful injuries and inures to the benefit of insurance companies.
"But what about all those frivolous cases that end up with huge jury verdicts?" I'm sorry, proving the existence of this phenomenon is up to tort reformers and it simply has never been done. If this is really happening, prove it. It shouldn't be that hard, after all, tobacco companies came up with studies that said cigarettes are safe.
In reality, to get a big verdict you have to convince a group of regular people that the sum of money would be fair. This jury pool is statistically certain to include at least a few people who watch Glen Beck every night. These people are not convinced easily and juries are not dishing out verdicts to people who don't deserve something.
On top of that, if the judge determines that the jury gave a claimant too much money, they have the power to reduce it on their own. People rarely discuss the fact that the "Hot coffee" case was an example of this. The jury came up with a number it felt was fair and the judge arbitrarily reduced it. Theoretically, even if a trial judge lets a verdict stand, it can still be reduced in appellate courts as well. This really happens and people never seem to acknowledge the availability of this "safeguard" to protect us all from runaway juries.
Non-economic vs. Economic Damages
The tort-reformers might point out that plaintiffs can still recover all of their "economic damages" under most cap proposals. Economic damages include lost earnings and medical bills. In a bad injury case, these types of harm can often get out-of-control quickly and they often can exceed any non-economic award. Why don't the insurance company special interests propose limiting those too?
The real answer is: insurance companies have a horse in that race. When someone is injured, the liability lawsuit is not resolved overnight. As time goes on, medical bills are incurred and time is missed from work. Insurance companies, bless their hearts, sell policies to people to cover these costs in case something happens. The most common coverage would be health insurance you might have through work.
When the liability case eventually resolves, guess who has their hand out? The insurer that pays out to their policy holder for harms caused by another has a subrogation right to be repaid. This subrogation right can be described as the ability to step in to the policy holder's shoes to make a claim for money that has been paid out. As such, the insurance company only has the ability to recover to the extent the injured person does. Capping economic damages for injured people is the same thing as capping economic damages for insurance companies. Strangely enough, the insurance industry is in favor of getting all their money back.
So to sum it all up:
Damages recovered for you: Bad. Damages you can recover on behalf of insurance companies: Good.
Access to courts for regular people: Bad. Access to the courts for large businesses: Good.
How the insurance companies have sold this to regular Americans is truly amazing. Corporations aren't interested in limiting their own rights. They are, however, interested in limiting your right to make them pay you.