You may have heard the term 'punitive damages' but likely do not have a full understanding of what exactly punitive damages are or when they are appropriate. In fact, punitive damages are awarded to accident and injury victims in only a small percentage of legal cases. Typically, these cases are very serious. The person responsible for the accident or injuries must have behaved in an especially negligent manner to warrant punitive damages.
Understanding Punitive Damages in Alaska
In a personal injury claim, victims typically receive compensation for medical care related to their accident, as well as for lost wages and benefits. These are known as compensatory damages, and they are fairly tangible. It is a somewhat straightforward task to add up medical costs and evaluate the wages that have been and will be lost due to the injury. In certain cases, though, punitive damages are also awarded. Punitive damages are not tied to a specific loss. Rather they are intended to punish the responsible party and to deter similar reckless or malicious behavior. Punitive damages are only awarded in cases when the behavior of the at-fault person is deemed “outrageous” under state law. This means the behavior was done with malice or a clear reckless indifference to the safety of others. For example, a driver with multiple prior DUI convictions who again drives drunk and causes a serious crash could constitute this type of behavior.
How Much Could Be Awarded in Punitive Damages?
The amount of punitive damages is left up to a jury or judge’s discretion, though many states cap the amount of punitive damages that can be awarded. Alaska law states that these damages may not exceed the greater of either three times the amount of the compensatory damages that were awarded or $500,000. State law also sets a number of considerations to determine the appropriate amount, including:
- The likelihood that harm would come to another person at the time of the act
- The degree to which the defendant understood that likelihood
- The duration of the action and any attempts to conceal it
- Any financial gain the defendant hoped to reap from the action
- The attitude and conduct of the defendant when discovered
- The financial state of the defendant
- Damages awarded to others in similar situations
- The severity of the criminal consequences the defendant may be facing related to the action
Tax Consequences of Punitive Damages
It’s important to note that any compensation awarded as punitive damages would be subject to taxation by the federal government. It must be reported on an annual tax return as “other income.” This could have a significant impact on the taxes owed by the injury victim, so it’s important to discuss these consequences with an attorney and tax advisor.
If you or someone you love has suffered serious injuries in an accident caused by a person whose behavior was especially careless or malicious, it may be possible to pursue a claim that includes punitive damages. An experienced attorney can help you understand your rights and obtain all the compensation you deserve. Anchorage-based attorney Ben Crittenden has helped many Alaska victims find the best way to move forward after a serious accident. Call Ben today or take a moment to fill out the contact form on this page to speak directly with Ben and find out how he may be able to help.