Short changing the injured plaintiff:What attorneys can do to prevent the underestimation of lost earnings in non-catastrophic injury cases
Plaintiffs are typically short-changed in non-catastrophic injury lawsuits.
In fact, three out of four economic damage evaluations may underestimate the true loss an injured person will suffer over his or her working life. The underestimation dilemma is particularly acute in cases resulting in physical and mental work limitations not necessarily clear to the economic expert. Economic analyses involving workers with injuries to their back or soft tissue areas of the body are particularly susceptible to this problem. Astoundingly, and unbeknownst to many attorneys, the plaintiff’s own economic expert is as likely to short change the plaintiff as the defense’s rebuttal expert.
Research by Vocational Econometrics based on U.S. Bureau of Labor Statistics data and numerous legal related studies suggest that the lifetime economic damage to the plaintiff’s earnings may be underestimated by one-third or more in a typical case. How does this short changing problem happen? The injured plaintiff gets short-changed by the seemingly innocuous assumptions used in many ‘conservative’ economic damage analyses. In a nutshell, many economic damage analyses wrongly overestimate what job, and for how long, the injured person will be able to work throughout his or her remaining working life.
Avoiding these pitfalls requires you to be proactive, thorough, and judicious in your management of the economic damage evidence in the case. In this article, we provide insights that will help attorneys better spot economic damage evaluations that short change their client.
Problem Assumption: Giving the plaintiff more work than they can handle.
The first sign the economic expert is short changing the plaintiff’s damages is when he or she assumes the plaintiff will be able to do more work than he or she will more than likely be able to do in the future. Even though there may be solid evidence that the injured worker will experience limitations on the jobs they can now perform, many evaluations ignore this evidence. Other economic damage evaluations simply do a poor job of incorporating the evidence. It is also common for ‘conservative’ economic damage analyses to put the injured plaintiff back to work earning the same wages and essentially performing the same job as they were prior to the injury.
This ‘conservative’ approach happens frequently in cases with competing medical diagnoses and vocational assessments. While this assumption may seem innocuous, it is inappropriate. In fact, the assumption that there will be no lingering post-injury related job effects for the average injured worker runs contrary to empirical data and conventional economic wisdom. Numerous studies show that even moderately injured workers can be expected to suffer a reduction in their earnings capacity. In a non-catastrophic injury case, labor market studies of injured workers strongly suggest that when there is competing medical and vocational evidence, the economic analyst should give the tie to the injured worker.
At a minimum, data and research suggest that the economic damage analyst should, based on the available injury related earnings data, estimate a range of potential post-injury effects.Why the tie should go to the injured workerAccording to studies by Vocational Econometrics, there are several reasons that a tie should go to the injured worker. First, even in the best case scenario in which the injured plaintiff does not have to change jobs, he or she will most likely still suffer an economic hit to lifetime earnings. This is because the time spent recovering from the injury while not employed will typically diminish more than just the person’s current earnings. Typically, the worker will lose valuable training and general experience when not present at the job due to the injury.
Second, because of the injury, many people will not be able to devote the same level of effort to the accumulation of new job skills as before the injury. Frequently the injured person is exerting all effort just to meet the minimum requirements of the job. If the injured person is not able to dedicate the same level of effort to pursuing career enhancing opportunities this will potentially hurt future job prospects.
Third, more likely to be the situation in an injury case, the injured plaintiff will have to change jobs. In many situations, the injured person is simply not able to do the same job after the injury and will have to find a job that accommodates the effects of the injury. Even if the job the person switches to pays more on average than the pre-injury job, the person is still likely to incur lifetime damage to their earnings potential. Theses damages are likely to occur because the injured person will usually have to start at the bottom of the earnings scale and work their way up.
However, in most situations, it is more likely that new post-injury job will result in lower lifetime earnings for the injured plaintiff. In most cases, prior to an injury, the plaintiff was doing the best they could with the knowledge and skills they possess to select the job that maximizes their individual potential. Conventional economic wisdom says an injury would tend to force the person to take a job they would not have taken had the injury not occurred.
Bottom line: Physical and mental job limitations due to injury, even moderate ones, have a potentially dramatic effect on a person’s lifetime earnings.
An example of a short changed injured plaintiff
Our economists recently worked on a case involving a 37 year-old woman who sustained a head injury. In this personal injury case, while shopping at a national discount store the plaintiff was struck on the head by a large package that fell from a shelf. Prior to the injury, the plaintiff was a manager in a high-stress sales position. After the injury, she was no longer able to handle the stress and travel associated with the job and subsequently ended her employment. In the economic damage analysis, the defense economic expert stated in his report there were conflicting medical and vocational evidence that, in his opinion, did not solidify the significant physical and mental job limitations.
Based on that, the expert deemed it appropriate to put the injured plaintiff back to work at the same earnings level as before the injury.In this case, the scientific validity of this assumption was highly questionable. The defense’s expert adopted the assumptions of the defense attorneys and did not perform a solid review of the literature on these types of injuries. While there are no studies of the exact head injury suffered by the plaintiff in the case, there are numerous studies of similar injuries that suggested that the plaintiff could expect a significant reduction of earnings capacity in the future.
The groundbreaking work of Dr. Gamboa and Vocational Econometrics was particularly insightful. Had the defense expert in this case actually performed a review of this literature, he would have seen that the earnings of similarly injured workers decrease dramatically. According to the U.S. Census Bureau, Americans with Disabilities 1991-92, non-severely disabled and severely disabled workers experience a 10% and 28% annual reduction in earnings, respectively.
For example, a 37 year old person with an approximately similar injury to a severely disabled individual, earning $87,000 per year at the time of the injury, would suffer approximately a $24,000 annual loss of earnings per year. This amounts to $600,000 over 25 years of working life. Even after discounting this amount to present value, the total lifetime loss is significant. In our case, it was clear the injured plaintiff will have to retrain for a new job.
Even if the new job paid more, she would more than likely have to start at the bottom of the pay scale. Accounting for these empirical facts resulted in an economic evaluation of the plaintiff’s economic damages nearly twice as much as defendant’s economic damage estimate of $800,000. Interestingly, the two sides settled this case at the midpoint ($1,200,000) of the range of damage estimates.
What can attorneys do to make sure they do not shortchange the injured plaintiff?
Be proactive. Begin assembling the economic damage evidence as early as possible. Watch and carefully study not only the opposing economic expert’s work but also the work of your own economic expert.
Be thorough. Make sure you provide the economic damage expert with every single piece of evidence that lays out the limitations that the injured worker now faces. Do not forget to consider soft evidence such as depositions of family members and employers in the economic damage analysis. An interview of the plaintiff can be helpful not only to the vocational expert but may also be useful to the economic damage expert.
Be judicious. In simple terms, use the right economic damage expert. Shy away from economic experts lacking the ability, qualifications, and temperament to present a sound and compelling picture of the economic damages of your client. Recognize that many times the fight over economic damages in an injury case can be as intense as the fight over liability. Make sure your economic damage expert is not afraid of a fight and will defend their methodology position thoroughly and completely.
In fact, three out of four economic damage evaluations may underestimate the true loss an injured person will suffer over his or her working life. The underestimation dilemma is particularly acute in cases resulting in physical and mental work limitations not necessarily clear to the economic expert. Economic analyses involving workers with injuries to their back or soft tissue areas of the body are particularly susceptible to this problem. Astoundingly, and unbeknownst to many attorneys, the plaintiff’s own economic expert is as likely to short change the plaintiff as the defense’s rebuttal expert.
Research by Vocational Econometrics based on U.S. Bureau of Labor Statistics data and numerous legal related studies suggest that the lifetime economic damage to the plaintiff’s earnings may be underestimated by one-third or more in a typical case. How does this short changing problem happen? The injured plaintiff gets short-changed by the seemingly innocuous assumptions used in many ‘conservative’ economic damage analyses. In a nutshell, many economic damage analyses wrongly overestimate what job, and for how long, the injured person will be able to work throughout his or her remaining working life.
Avoiding these pitfalls requires you to be proactive, thorough, and judicious in your management of the economic damage evidence in the case. In this article, we provide insights that will help attorneys better spot economic damage evaluations that short change their client.
Problem Assumption: Giving the plaintiff more work than they can handle.
The first sign the economic expert is short changing the plaintiff’s damages is when he or she assumes the plaintiff will be able to do more work than he or she will more than likely be able to do in the future. Even though there may be solid evidence that the injured worker will experience limitations on the jobs they can now perform, many evaluations ignore this evidence. Other economic damage evaluations simply do a poor job of incorporating the evidence. It is also common for ‘conservative’ economic damage analyses to put the injured plaintiff back to work earning the same wages and essentially performing the same job as they were prior to the injury.
This ‘conservative’ approach happens frequently in cases with competing medical diagnoses and vocational assessments. While this assumption may seem innocuous, it is inappropriate. In fact, the assumption that there will be no lingering post-injury related job effects for the average injured worker runs contrary to empirical data and conventional economic wisdom. Numerous studies show that even moderately injured workers can be expected to suffer a reduction in their earnings capacity. In a non-catastrophic injury case, labor market studies of injured workers strongly suggest that when there is competing medical and vocational evidence, the economic analyst should give the tie to the injured worker.
At a minimum, data and research suggest that the economic damage analyst should, based on the available injury related earnings data, estimate a range of potential post-injury effects.Why the tie should go to the injured workerAccording to studies by Vocational Econometrics, there are several reasons that a tie should go to the injured worker. First, even in the best case scenario in which the injured plaintiff does not have to change jobs, he or she will most likely still suffer an economic hit to lifetime earnings. This is because the time spent recovering from the injury while not employed will typically diminish more than just the person’s current earnings. Typically, the worker will lose valuable training and general experience when not present at the job due to the injury.
Second, because of the injury, many people will not be able to devote the same level of effort to the accumulation of new job skills as before the injury. Frequently the injured person is exerting all effort just to meet the minimum requirements of the job. If the injured person is not able to dedicate the same level of effort to pursuing career enhancing opportunities this will potentially hurt future job prospects.
Third, more likely to be the situation in an injury case, the injured plaintiff will have to change jobs. In many situations, the injured person is simply not able to do the same job after the injury and will have to find a job that accommodates the effects of the injury. Even if the job the person switches to pays more on average than the pre-injury job, the person is still likely to incur lifetime damage to their earnings potential. Theses damages are likely to occur because the injured person will usually have to start at the bottom of the earnings scale and work their way up.
However, in most situations, it is more likely that new post-injury job will result in lower lifetime earnings for the injured plaintiff. In most cases, prior to an injury, the plaintiff was doing the best they could with the knowledge and skills they possess to select the job that maximizes their individual potential. Conventional economic wisdom says an injury would tend to force the person to take a job they would not have taken had the injury not occurred.
Bottom line: Physical and mental job limitations due to injury, even moderate ones, have a potentially dramatic effect on a person’s lifetime earnings.
An example of a short changed injured plaintiff
Our economists recently worked on a case involving a 37 year-old woman who sustained a head injury. In this personal injury case, while shopping at a national discount store the plaintiff was struck on the head by a large package that fell from a shelf. Prior to the injury, the plaintiff was a manager in a high-stress sales position. After the injury, she was no longer able to handle the stress and travel associated with the job and subsequently ended her employment. In the economic damage analysis, the defense economic expert stated in his report there were conflicting medical and vocational evidence that, in his opinion, did not solidify the significant physical and mental job limitations.
Based on that, the expert deemed it appropriate to put the injured plaintiff back to work at the same earnings level as before the injury.In this case, the scientific validity of this assumption was highly questionable. The defense’s expert adopted the assumptions of the defense attorneys and did not perform a solid review of the literature on these types of injuries. While there are no studies of the exact head injury suffered by the plaintiff in the case, there are numerous studies of similar injuries that suggested that the plaintiff could expect a significant reduction of earnings capacity in the future.
The groundbreaking work of Dr. Gamboa and Vocational Econometrics was particularly insightful. Had the defense expert in this case actually performed a review of this literature, he would have seen that the earnings of similarly injured workers decrease dramatically. According to the U.S. Census Bureau, Americans with Disabilities 1991-92, non-severely disabled and severely disabled workers experience a 10% and 28% annual reduction in earnings, respectively.
For example, a 37 year old person with an approximately similar injury to a severely disabled individual, earning $87,000 per year at the time of the injury, would suffer approximately a $24,000 annual loss of earnings per year. This amounts to $600,000 over 25 years of working life. Even after discounting this amount to present value, the total lifetime loss is significant. In our case, it was clear the injured plaintiff will have to retrain for a new job.
Even if the new job paid more, she would more than likely have to start at the bottom of the pay scale. Accounting for these empirical facts resulted in an economic evaluation of the plaintiff’s economic damages nearly twice as much as defendant’s economic damage estimate of $800,000. Interestingly, the two sides settled this case at the midpoint ($1,200,000) of the range of damage estimates.
What can attorneys do to make sure they do not shortchange the injured plaintiff?
Be proactive. Begin assembling the economic damage evidence as early as possible. Watch and carefully study not only the opposing economic expert’s work but also the work of your own economic expert.
Be thorough. Make sure you provide the economic damage expert with every single piece of evidence that lays out the limitations that the injured worker now faces. Do not forget to consider soft evidence such as depositions of family members and employers in the economic damage analysis. An interview of the plaintiff can be helpful not only to the vocational expert but may also be useful to the economic damage expert.
Be judicious. In simple terms, use the right economic damage expert. Shy away from economic experts lacking the ability, qualifications, and temperament to present a sound and compelling picture of the economic damages of your client. Recognize that many times the fight over economic damages in an injury case can be as intense as the fight over liability. Make sure your economic damage expert is not afraid of a fight and will defend their methodology position thoroughly and completely.
posted by The Experts @ 10:17 PM
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