In a personal injury case, economic damages are those damages which are easily calculated and quantified. They are the losses for which compensation is available in the form of an award of money damages. The award of economic damages in a personal injury lawsuit is supposed to make the victim financially whole again.
For most personal injury claims, economic losses include the following:
- All bills for the medical treatment of the injuries that resulted from the accident at issue in the case, such as:
- Emergency room care and other urgent care costs;
- Ambulance services;
- Visits by doctors;
- Medications and prescriptions;
- Physical therapy;
- X-rays and other diagnostic tests;
- Lab work;
- The cost of traveling to medical appointments;
- Property damage that can readily be ascertained, e.g. the cost of repairing property or restoring it to the condition it was in before the accident;
- Lost earnings, i.e. salary or wages, suffered by the victim because they could not work due to their injuries or could not go to work because of appointments for medical treatment;
- Future lost earnings;
- Costs of medical care in the future, if the need for it continues beyond the date of the trial;
- The economic loss attributable to permanent disability;
- Measurable business losses, i.e., lost profits from a trade or business;
- Loss of business opportunity.
Other costs may also be involved, such as rehabilitation or therapy expenses, and the costs of medical devices. This will vary with each case, but the idea is that economic damages can be proven using documents, testimony of people with knowledge of the situation and other evidence.
How Are Economic Damages Proven?
Generally speaking, economic damages may be proven using such evidence as the following:
- Receipts and other records of payments;
- Medical records that show the extent of an injury and the care that was required to treat it;
- Estimates for the car repair to show the extent of the damage;
- Invoices, especially for mechanic’s and automobile body shop repairs, etc.
- Insurance records showing billing for medical treatment;
- The testimony of experts as to the fair market value of property lost and other issues.
In addition to documents, the testimony of people who have personal knowledge of facts at issue in the case is often used in a personal injury trial. For example, a doctor who treated the victim may be called to testify about the extent of a person’s injury.
The testimony of an expert could be required to provide proof of a number of items. For example, if a victim loses part or all of their earning capacity because of injuries sustained in an accident, an expert may be needed to address the exact nature of the loss, how it would affect the victim’s capacity to earn a living in the future and how the loss can be quantified. The expert may be an economist.
Or, a victim may have missed work because of their injuries and at the time of trial, they may not have recovered completely. They may reasonably expect to miss work in the future. So, an expert might be needed to put a dollar value on losses that may extend into the future.
In addition, other forms of evidence can be used to support the dollar amount of an award of economic damages. For example, videos and photographs of the scene of an accident can help verify the damage done in a car accident. In other cases, the testimony of an expert medical witness can help establish the extent of a physical injury, how it is treated and the cost of treatment. A victim may have a video prepared to show the impact that a severe or disabling injury has had on their life activities.
Are There Any Limits to Economic Damages?
Economic damages are usually limited to what is reasonable and proportionate to the losses actually experienced by the victim. Since economic damages are generally measurable, courts do not usually impose limits on economic damages, as long as they are proven by competent evidence.
This is in contrast to other types of damages, such as punitive damages or damages for pain and suffering. Such damages are often limited by strict formulas or caps. However, each state has different methods for calculating damages in general. Many states impose caps, or dollar limits, on damages for pain and suffering and punitive damages in medical malpractice cases.
More states impose caps on damages in medical malpractice cases than caps on damages in ordinary personal injury cases. However, some states impose caps in both types of cases. Some states still have no caps on damages in medical malpractice cases.
Often, the cap applies only to non-economic damages and not economic damages. Some states also cap attorney’s fees in medical malpractice cases.
What If I Received Compensation for My Loss from an Insurance Company?
A person contemplating a lawsuit for damages for personal injury should also keep in mind that if they have received compensation for their economic losses from a source other than the person who caused the accident, then part of their damages award may have to be used to reimburse that source. However, the amount the defendant has to pay to the victim is not reduced. The defendant should still have to pay an amount that represents the full value of the victim’s economic losses.
This is based on the collateral source rule. This rule derives from the law in many states to the effect that an award of damages made to a victim for their injury, illness, or disability is not reduced by the amount already recovered by the victim from a third party such as their health insurance company. Other sources of collateral source payments to a victim might be an employer’s workers’ compensation insurer, a state’s disability insurance system or the victim’s own disability insurer.
Technically, the collateral source rule says that evidence that a victim received money from third-party sources cannot be admitted into evidence in a personal injury trial. The effect is that any payments made by a third-party cannot be proven, so cannot be used to reduce the amount the defendant has to pay.
The status of the collateral source rule in various states has grown somewhat complicated.
Its status in each state in the U.S. can be seen below.
The following states follow the collateral source rule:
- Louisiana, with an exception for Medicaid;
- New Hampshire;
- New Mexico;
- South Carolina;
In Arkansas, Kentucky and New Hampshire, the status of the collateral source rule is unclear as it has been declared unconstitutional by a state court.
A second category of states includes those states that generally follow the collateral source rule and evidence of amounts paid by a third-party are inadmissible, but not in medical malpractice cases. This category consists of the following states:
- Maine, and evidence of third-party payments is allowed in all cases of professional negligence, not just medical malpractice;
- Nevada, and evidence of third-party payments is also allowed in workers compensation cases;
- New York;
- Rhode Island;
- South Dakota;
- West Virginia;
- Washington, except the admission of evidence of third-party payments is not allowed when the victim purchased the insurance that provided benefit to the victim;
- Wisconsin, and the admission of evidence of third-party payments applies in both medical malpractice cases and long-term care cases.
The third category is states which have mostly abandoned the collateral source rule altogether. Just to maximize the confusion, there are three subcategories here. One is made up of states that still make collateral source payments inadmissible at trial, but allow evidence to be introduced after the jury has returned its verdict to reduce the damages to the amount that the victim actually had to pay.
Some states in this category allow evidence of payments made to obtain the collateral source, e.g. insurance premiums that the victim paid in order to obtain insurance coverage. So, in effect, this would mean that an award of damages can be reduced by the amount of collateral source payments received by the victim. Then the amount of collateral source payments could, in turn, be reduced by the amount the victim paid to secure the collateral source.
The states that do this are as follows:
- California, and the law also abrogates the rule for medical malpractice cases;
- Illinois, but the reduction of the damages award is limited to 50% of the amount awarded by the jury verdict;
- New Jersey.
The next subcategory is those states that have abrogated the collateral source rule and allow evidence of both the amount billed and the amount actually paid by the victim to be presented to the jury. The jury then uses this evidence to determine the reasonable value of medical services. These states are as follows:
- Missouri, with an additional presumption that amounts paid represent the reasonable value of medical services;
Lastly come those states that have abolished the collateral source rule and only allow evidence of the amount paid by the victim to be presented to the jury to determine the reasonable value of medical services. So, in other words, if the victim did not pay a bill, then the bill would not be shown to the jury. Only amounts that a victim actually paid would be presented to the jury for the jury to use in calculating damages. These states are as follows:
- North Carolina;
Two states allow evidence of collateral source payments only if the victim did not pay for the benefit. So, for example, if the victim received insurance benefits that paid for a portion of their medical bills, but the victim paid for the insurance coverage, then evidence of the collateral source payments would not be allowed.
The rationale is that if a person paid for a benefit, such as insurance coverage, then they should reap the benefit of it and not the defendant in a lawsuit. The states that follow this rule are North Dakota and Oregon.
Do I Need a Lawyer for Help with Economic Damage Claims?
Proving economic damages can often be difficult to do, and really requires the help of a qualified legal professional. If you have suffered serious injury because of another person’s negligence, you need to consult a personal injury lawyer.
Your lawyer can analyze the facts of your case and determine the value of your economic losses. You want to be sure to get an award of damages that fully compensates you for your loss.