The article "Are Punitive Damage Awards Fair to Firms?" {Business, Sept. 23} explores well whether large awards are unfair or unconstitutional from the point of view of the defendant. But there is one other important consideration. Even if these awards serve their purpose and can be said to be fair, should these large excess amounts be given to plaintiffs?

Plaintiffs, assuming they win, are fully compensated for their damages by the court's basic award. The added punitive damages are nothing more than a windfall, unrelated to a plaintiff's losses or suffering.

Why not a system in which the punitive damages go to the government -- federal or state, depending on the issue? Let the government intervene if it believes punitive damages are deserved. Any punitive award would go into the public till, perhaps to be used by the agency better able to oversee the problem in the first place. Then there would be a benefit to all of us, rather than a windfall to some lucky company or individual who already is compensated for a loss.

By doing this, the punitive damages would doubly benefit society -- they would punish the wrongdoer and thereby presumably inhibit future wrongdoing, and they would provide the government with the wherewithal to monitor the activity in the first place. And relying on governmental intervention, rather than plaintiffs' greed, might moderate the number and amount of punitive damages.

RICHARD A. FRANK Washington