Home -> Law Blog Directory -> Personal Injury Law Blogs -> Des Moines Personal Injury Lawyer

Personal Injury Law

: Des Moines Personal Injury Lawyer

PART 3 of 10: The economics of non-economic damages. Who gets the benefit from a jury award?

By Steve Lombardi

Yesterday I asked you to read a previous post about one David Fitzgerald. I'll assume you did it otherwise you may wish to read it now.

Mr. Fitzgerald was hospitalized where he developed an infection resulting in all of his legs and arms being amputated. He sued the hospital system and his doctors for malpractice and won a large sum of money of which the award consisted partially of pain and suffering damages. By Texas law the judge will need to reduce the non-economic damages to $250,000.00. Being familiar with how these situations play out I am led to ask the question whether $250,000 will be sufficient to compensate him and in doing so I have to examine how that money would have been used to make his life better. (For the sake of this discussion on non-economic damages I'm going to ignore the effects of the contingent fee. In reality the entire $250,000 would be paid as the attorney fee, so in reducing the award for pain and suffering David is left with nothing for that specific item of damage.)

Texas Tort Reform Message – Go west young man; go east or north, but go.

Texas does everything big and it's taken on non-economic damages in cases of medical mistakes limiting them when medical mistakes cause a lot of economic damage to a person. Does Texas need the money it would normally pay to the injured? No not really. Texas boasts it has the eighth largest economy in the world. Texas is the number one exporter in America, the number one job creator, Texas has created over 1.2 million jobs in the past five years, and Texas has more Fortune 500 Corporations than any other state. The next video clip is the governor of Texas making his case for Texas as a better business climate than California. If you believe these statements then you don't have to watch the video to confirm I've correctly written what the Governor of Texas boasts about. You also should then realize taking away the right to receive damages that represent someone's quality of life is simply unnecessary and greedy. The act of taking away these damages is simply to take an already miserable life and make it more miserable. But that's Texas.

http://www.youtube.com/watch?v=kincrDwVcVQ

Let's get back to examining how the non-economic damages awarded to Mr. Fitzgerald would have likely been used had he been allowed to keep the award. What about the money he was awarded for economic damages? In Mr. Fitzgerald's reality what does it really represent?

The assumption is that economic damages are for real out-of-pocket expenses. They are which means that portion of the award is already spoken for; or spent or will be spent on earmarked expenses. Things like medical expenses and those expenses that wages normally would cover.

The next assumption is that non-economic damages are for something other than real expense; but that could not be farther from the truth. Today let's look at the first assumption: those economic damages are for actual expenses.

Because the out-of-pocket damages represent actual expenses, this portion of the award is a fund that Mr. Fitzgerald doesn't own; he simply manages it for someone else; who either has or will later present him with an invoice for basic goods and services. These are the hard damages he has or will incur.

Will this fund be sufficient to cover al l the basic necessities of life?

Nothing is ever perfect in court so chances are the amount of money in the fund will not cover all his out-of-pocket expenses. Meaning sooner or later (and long before he dies) Mr. Fitzgerald will run out of money. Inflation will also eat away at the fund's ability to meet current demands and that too will work against him. But ignoring the imperfection of a trial and inflation let's look at who benefits from the economic damages awarded and then tomorrow we'll cover what non-economic damages consist of in a person's life.

THOSE THAT BENEFIT FROM AN AWARD OF ECONOMIC DAMAGES

Question: Who are those people and organizations that will get paid out of this account? Whose hands will be extended for their share of the economic damages that were awarded Mr. Fitzgerald?

The doctors for past and future medical bills.

The insurance companies who have paid for past medical expenses will be repaid.

The insurance companies will not pay for future bills covered by the award.

The utility companies for telephone, electric, gas and water.

The mortgage company or his lender so he or his family can remain in the house.

The insurance companies that insure aspects of the family's life.

The federal government for income taxes he will have to pay for interest earned on the award.

The state government for income taxes on that portion of the award that earns interest or grows by some investment.

The county or city governments for real estate and property taxes.

The government entities that collect payroll taxes he pays to those who provide services to him in managing his health and care.

The grocer for the food his family eats.

The local convenience store for gas they buy to travel to doctor appointments.

The medical provider of medical equipment he will need.

The local auto dealership that will sell him a vehicle specially equipped for his handicap so he is able to make his doctor appointments.

The medical providers who provide him with goods and services, either at home or on an institution.

The banker who charges fees for holding the account where the money is held.

The accountants who prepare his income tax return.

The stock brokers who collect fees to invest the award.

These are all the people and companies that reap the benefit of the economic damages. Notice that not one dime has gone to Mr. Fitzgerald. Contrary to what most people would like to believe, so far our analysis shows he hasn't won the litigation lottery. Let's quit for today and tomorrow let's take a look at who doesn't benefit, when non-economic damages are either reduced or eliminated. These are the people who can not be compensated, yet provide some level of service.

That's enough for today. Let this sink in. Tomorrow let's look at what expenses non-economic damages actually do pay. This is the economics of non-economic damages.

Originally posted at InjuryBoard by Steve Lombardi

Full post as published by Des Moines Personal Injury Lawyer on May 20, 2009 (boomark / email).