The Different Methods to Calculate Non-Economic Losses

The medical bills and lost wages due to missed work after an accident are considered quantifiable losses (economic damages).

But the pain you endure, the emotional distress you experience, and the limitations placed on your hobbies due to the injury are more subjective. These intangible losses are referred to as non-economic damages, and assigning a monetary value to them can be a complex process.

This article explores the two main methods commonly used to calculate non-economic damages:

• The multiplier method
• The per diem method

We’ll discuss how these methods work, the factors considered, and their limitations. You’ll need the assistance of a qualified attorney to calculate the value of non-economic damages.

Understanding Non-Economic Damages

In personal injury lawsuits, economic damages refer to the tangible financial losses a victim experiences due to an injury. These can include medical bills, lost wages, and property damage. Non-economic damages, on the other hand, encompass the intangible losses associated with pain and suffering, emotional distress, loss of enjoyment of life, and any permanent scarring or disfigurement.

The challenge lies in assigning a dollar value to these subjective experiences. There’s no set price tag for pain or emotional suffering. However, the methods discussed below provide frameworks for estimating the appropriate compensation for these intangible losses.

Common Methods for Calculating Non-Economic Damages

Multiplier Method

The multiplier method is a widely used approach that takes the total amount of a victim’s economic damages and multiplies it by a factor to arrive at a non-economic damage amount. This factor typically ranges from 1.5 to 5, with the severity of the injuries and their impact on the victim’s life determining the specific multiplier chosen.

For instance, a minor injury with minimal impact on daily activities might warrant a multiplier of 1.5, while a catastrophic injury causing permanent disability could justify a multiplier closer to 5. Here’s an example to illustrate:

Scenario: John suffers a broken arm in a car accident, resulting in $10,000 in medical bills and $5,000 in lost wages (total economic damages: $15,000). The injury significantly limits his ability to participate in his favorite sport (tennis) for several months.

Calculation: Considering the pain, temporary limitations, and emotional distress, a multiplier of 2 might be applied. Therefore, John’s non-economic damages would be calculated as $15,000 (economic damages) x 2 (multiplier) = $30,000.

Per Diem Method

The per diem method assigns a daily dollar value to the pain and suffering a victim endures. Factors such as the intensity and duration of pain, emotional distress, and limitations caused by the injury all influence the assigned daily value. This daily amount is then multiplied by the total number of days the victim has suffered or is expected to suffer, resulting in a total non-economic damage amount.

Here’s an example of how the per diem method might be applied:

• Scenario: Sarah sustains a back injury from a slip and fall accident. The pain persists for six months, significantly impacting her ability to perform daily tasks and participate in social activities.
• Calculation: Let’s say a daily value of $100 is assigned for the pain and limitations caused by the injury. If Sarah endures these limitations for six months (approximately 180 days), her non-economic damages would be calculated as $100/day x 180 days = $18,000.

It’s important to remember that both the multiplier and per diem methods are simply estimation tools. The actual awarded non-economic damages can vary depending on the specifics of each case. The judge or jury presiding over the case ultimately determines the appropriate amount based on the evidence presented. Additionally, a combination of both methods might be used to arrive at a more comprehensive compensation figure.

Factors Influencing the Final Awarded Amount

Several factors beyond the chosen calculation method can influence the final amount awarded for non-economic damages. These include:

• Severity and Duration of Injury: More severe injuries with longer recovery times typically warrant higher non-economic damage awards.
• Impact on Daily Life Activities: The extent to which the injury restricts a person’s ability to perform daily tasks, work, or participate in hobbies also influences the awarded amount.
• Emotional Distress: The emotional trauma associated with the injury, such as anxiety, depression, or post-traumatic stress disorder (PTSD), is also considered.
• Loss of Enjoyment: If the injury permanently hinders a person’s ability to engage in activities they once enjoyed, it can be factored into non-economic damages.
• Scarring or Disfigurement: Permanent scarring or disfigurement, especially if it affects a person’s self-esteem or ability to socialize, can be grounds for increased compensation.
• Age of the Victim: Younger victims with a longer life expectancy may receive higher non-economic damage awards due to the potential for a lifetime of limitations.

The Role of Lawyers in Non-Economic Damage Calculations

Personal injury lawyers play a crucial role in ensuring their clients receive fair compensation for non-economic damages. Here’s how they contribute to the process:

• Evidence Gathering: Lawyers gather evidence to support the extent of your non-economic damages. This may involve collecting medical records documenting the injury, treatment, and pain levels.
• Expert Testimony: In some cases, lawyers might enlist medical experts, psychologists, or vocational rehabilitation specialists to testify on the long-term impact of the injury on the victim’s life and earning potential.
• Effective Communication: Lawyers use their skills to effectively communicate the human cost of the injury to the judge or jury. They paint a picture of how the injury has impacted the victim’s daily life, relationships, and overall well-being. This can involve presenting photographs, witness statements, and even day-in-the-life accounts to illustrate the challenges faced by the victim.

Lawyers can significantly influence the awarded amount for non-economic damages by effectively presenting evidence and communicating the human impact of the injury.

Conclusion

Non-economic damages are an important component of a personal injury case. While the multiplier and per diem methods provide frameworks for estimating these damages, the final awarded amount hinges on the specific circumstances of each case and the judge or jury’s discretion.

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