Charitable immunity is a principle that grants to non-profit, tax exempt corporations, protection from personal injury lawsuits. In a common variation on complete immunity, legislatures create limits or “caps” on judgments against the charities. While the organizations can be sued, there is a statutory limit on the amount of money that can be recovered against them. In Massachusetts, that limit is twenty thousand dollars. In other words, regardless of the enormity of the corporation’s negligence, and even if a jury awards a person injured due to that negligence, millions of dollars, the award will be automatically reduced to twenty thousand.

You may say to yourself, “isn’t it proper to shield organizations that do good deeds?” While that may sound appealing, the reality is that statutory protection for “charities” creates more harm than good. The problem is especially acute in the case of hospitals. Serious instances of medical malpractice are often caused by systemic failures. These may include poor management, which can lead to gaps in communication between medical personnel, low morale, and other dangerous circumstances, as well as inadequate staffing and other indications of poor leadership. Yet, you will never see a hospital as a defendant in a Massachusetts jury trial conducted by an experienced medical malpractice lawyer.

Massachusetts personal injury lawyers learned some years ago, the danger of leaving a charitable organization in a medical malpractice lawsuit, by learning what befell one of the state’s premiere malpractice firms, and its client. In a trial against two physicians and the hospital, the jury awarded a seven figure verdict against the hospital, and granted defendants’ verdicts to the doctors. The jury, which is not informed of the tort cap, probably felt sympathetic to both the plaintiff and the physicians, but not to the large corporation. As a result of the charitable immunity law, the verdict was automatically reduced to $20,000.

Other non-profit corporations are also shielded from tort liability by the statutory twenty thousand dollar limit. This is unfair to people injured by corporate negligence, and prevents the corrective impact that significant lawsuits often have on corporate defendants. While there are of course small non-profit corporations doing essential charitable work, there are also such organizations grossing hundreds of millions of dollars with CEOs earning six and even seven figure salaries. If the tort cap was removed for non-profit corporations, they could protect themselves easily by carrying adequate liability insurance. Insurance is and should be an essential cost of doing business for every corporation regardless of its mission. Insurance protects both the organization and victims of its negligence.

Fortunately, the charitable immunity law does not extend to individual employees. A plaintiff injured due to the negligence of a non-profit corporation will thus sue individual employees who typically will be covered by the corporation’s liability insurance. Even if the true culprit is the corporation, however, the jury will be forced to consider only the negligence of employees. Thus, a plaintiff is not deprived of a remedy, but may be deprived of a remedy against potentially the most appropriate defendant. Despite frequent attacks on personal injury lawsuits and lawyers, the truth is that serious personal injury cases are more often a search for justice than reflections of greed, and overall do far more social good than harm.