While the above may sound like an excerpt from a law journal, the explanation is clear in everyday language for anyone who happens to be unfamiliar with how insurance companies and the courts assess future costs in personal injury cases. It’s not as simple as adding up the number of therapy sessions and check-ups remaining on your calendar.
Past vs. Future Damages: A Fundamental Difference in Proof
When a personal injury case goes to trial, perhaps the thorniest issue is calculating damages for future medical expenses and lost earning capacity. Past costs and lost wages are already known. They’re solid numbers you can almost reach out and touch. But the future? That’s necessarily uncertain, especially when you or a loved one has suffered the kind of injury or illness that’s likely to need continuing care or will leave you unable to work at the same job you did before. The future will be different. But how different? And what will that difference cost in medical care, wages, and quality of life?
The process of estimating future losses can get deeply contentious. That’s especially true when the injured person is young and was on a high-earning career track, or if a disabling injury means she’s likely to live longer than average. But it’s also true any time people remain in relatively good health despite a catastrophic injury. Modern medicine, rehab, and support options can keep people with serious disabilities or illnesses alive and active far beyond the norm. Calculating those costs isn’t easy.
The MMI Trap: Why Timing Determines the Accuracy of Everything
Before we can give you an estimate on how much your condition will cost to treat in the future, your physician must first put it in writing that you’ve reached Maximum Medical Improvement. That’s the stage at which your condition has essentially finished changing and is as recovered as it will get, or as stabilized as it’s going to become. Working with a Beaumont Injury Lawyer ensures this timing is handled correctly, because this is the best point at which to evaluate the future costs of what you’ve been through.
Obviously, MMI is not the same as “good as new”. It’s merely the point when your medical records have cleared up enough that the attending physician can make a reasonable estimate of what your future will look like. Will you need a second surgery? Physical therapy for the rest of your life? Work out a way to manage persistent and unrelenting pain? After MMI, these become questions that can actually be answered, so it’s the right time for your attorney to make any deal.
How a Life Care Plan Gets Built
After MMI is determined, a certified life care planner (typically a nurse, doctor, or rehab specialist who develops a plan for a patient’s future care) puts together a report that lays out every likely medical and non-medical need the plaintiff will have for the rest of their life.
This is not a ballpark figure. A complete life care plan is a detailed, referenced document that outlines the costs for everything including:
- Future surgeries, and how frequently they’re likely to occur
- Annual physical therapy, and occupational therapy sessions
- Prescription medications, and how often dosages are likely to change
- Durable medical supplies like wheelchairs, braces, and hospital beds, including the replacement schedule
- Home adjustments such as ramps, widened doorways, and special bathrooms
- Attendant care, whether a providing family member or professional is used, and how many hours per week, month, or year
- Counseling/psychiatrist
Each of these line items comes paired with both the average current cost and a frequency. The life care planner will identify the numbers by looking at the medical literature, creating an average based on multiple sources, and speaking directly to the plaintiff’s treating physicians. The report will then be turned over to a forensic economist who will use these predictions to create the financial report.
Lost Earning Capacity: It’s Not About Your Last Paycheck
Many people get confused between lost earning capacity and past lost wages. These two are correlated but they quantify distinct values.
Past lost wages are essentially the money you would have earned while you were injured and unable to work. These are historical numbers that correlate with the actual earnings received.
Lost earning capacity, on the other hand, represents the loss of your ability to make a living in the future. This is applicable even if you were unemployed during the time of the accident. It’s applicable to a young student who has never worked before. It’s applicable to someone who works part-time or earns less because it’s not about what you were earning, it’s about what your potential earnings were.
A vocational expert assesses the physical, cognitive, and functional limits of the plaintiff and determines what, if any, work they could do in the open labor market. That grid is then applied against the plaintiff’s age, education, work history, and any occupational licenses or training.
A forensic economist will then translate the vocational findings into a lifetime earnings model. The difference between what the plaintiff would have made against what they will make, taking into account work-life expectancy, likely promotions, and working conditions will equal the loss of earning capacity.
Children and young people are most easily seen through this lens, as they have no job history, and while present educational level is not predictive of future income, a survey of occupational data can give a judge a rough projection.
The Math Behind Present Value Discounting
When you have to estimate future medical costs as part of a life care plan, evaluating the discount rate for arriving at a present value is just as important. Life care planners producing the court-admissible documentation used by forensic economists to arrive at those lifetime costs rely on the same baseline projections and cost estimates but generally don’t have the same degree of financial expertise.
With some healthcare costs beginning to fall or stabilize due to changes in insurance coverage and medical technology development, it’s more important than ever for your forensic economist to stay current and track both broad economic trends and industry-specific changes. As defense attorneys look at every possible angle to lower damage awards, they’re going to try to hold the discount rate as high as possible, but with the healthcare inflation rate definitely required to adjust up.
Jurisdictional Rules and the Importance of Local Expertise
How these damages are presented in court isn’t just a matter of national standards. Jury demographics, local judicial preferences, state-specific evidentiary rules, and any caps on noneconomic damages all shape how a life care plan and an economic report need to be framed. The way an expert’s qualifications are established, the format courts expect for damages evidence, and the way opposing experts are challenged can vary significantly by jurisdiction.
What the Defense is Trying to Do
Insurance carriers who are defending against a high-value injury claim are not going to proceed in good faith, look at your numbers, and write you a check. They pay their own experts to try to dismantle your damages, line item by line item. Here’s how they’ll often come after your numbers:
Pre-existing conditions. If the plaintiff had any prior history involving that body part, the defense expert will attribute as much of the future care as possible to your client’s pre-existing condition rather than the accident.
Necessity of a given surgery or treatment. A defense-retained physician will claim that a future surgery is elective, that there are cheaper alternatives, or that your doctor’s dosage/treatment frequency is excessive.
Residual earning capacity. The defense will often retain a vocational specialist who will claim that your client can perform sedentary desk work (or return to the same job) and that, based on those assumed earnings, your lost earning capacity claim should dramatically reduce, sometimes by millions of dollars.
Techniques to deflect your life care planner’s costs. If your planner used outdated cost databases or failed to tie specific items to physician recommendations, defense counsel and their expert witnesses will make it sure to bring out each of these points on direct examination at trial.
The point here isn’t to defend from those avenues of attack or shore up your case. In the end, your numbers are what your numbers are, and if those numbers are sustainable you have nothing to worry about. The point for today is this: the more your life care plan is a vague estimate that the defense can pick apart and the less your numbers tie to the ongoing recommendation of your treating doctors and specific current costs, the more damage the defense can do. They’re not going to say the check is in the mail, they’re going to fight you on what you’ve got down to a dollar.
Meeting the Legal Burden of Proof
Damages expected in the future don’t have to be 100% certain. They must be proven to be more likely than not to occur. In legal parlance, they must be proven to be “reasonably medically probable.” The same is true on the economic forecast side, lost future earnings or ongoing care costs must be proven to be mathematically more likely than not to occur. Stay with me, it’s easier than it sounds.
As you probably expect, the testimony of treating physicians plays a key role in proving that the likelihood standard is met. If your orthopedic surgeon is going to testify that a second surgery will likely be required within five years, the economist can include it, no problem. If your treating doc hedges a bit and says that it’s just kind of a possibility, you can expect the defense to try to throw that cost out. The same goes for other elements of future care and treatment, and your attorney needs to let your medical witnesses know this before they testify.
Putting the Picture Together
It is not accurate to assume that serious injury claims are not valued correctly due to a lack of care or compassion from the jury. In reality, future damages can often be underestimated, but this has nothing to do with the jury. Building the necessary data for accurate projections for settlements, or for use in a trial, requires a team effort between medical professionals, the injured person (to provide important lifestyle impact information), and expert witnesses qualified to use this information to accurately project a lifetime cost. Life care planners, vocational experts, and forensic economists are trained and experienced in using real data as projected cost and lost earnings professionals. These professionals provide the detailed analysis required to raise every projected cost and lost dollar and more accurately value the claim.
