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PART 1 of 10: The economics of non-economic damages.

By Steve Lombardi

It's currently popular for political leaders to side with tort reformists in limiting non-economic damages. The name alone implies that these types of damage awards have nothing to do with the economics of living but are in fact like play money. Nothing could be further from the truth.

What are economic damages? Economic damages are sometimes referred to as hard damages or special damages. Judges have been known to refer to damages generally as compensatory damages. In a personal injury case damages are damages, there are simply items of damages that require different elements of proof.

Those in favor of tort reform generally refer to a general category they call non-economic damages; a term used to create a certain impression about the type of damages they are either trying to reduce or eliminate all together.

What they all are talking about has to do with how the damages are characterized. When a person is injured they have certain damages that are out-of-pocket and those characterized as not-out-of-pocket expenses. Let talk first about out-of-pocket. Out of pocket damages cause you to make an immediate or future expenditure for some good or service. Examples include medical, utility, grocery, telephone, insurance, taxes of various kinds, the mortgage, daycare, gas and other transportation expenses. These can be further graded into immediate and future. So for instance the grocery and gas bill must be paid daily, the mortgage must be paid monthly but the insurance payments may come due in six or twelve months. All of these expenses are non-discretionary expenses. If you don't pay them you may lose the rights that go along with them. If you don't pay for groceries you can't buy them. If you don't pay the utility bill the utility company may turn off the power or gas that runs the refrigerator, lights and heats your house. If you don't pay the mortgage the lender will foreclose and eventually you'll be removed from the house. Immediate expenses have immediate and significant consequences.

With the exception of some medical malpractice legislation and the collective results of mandatory arbitration decision no one is advocating the total removal of your right to collect these types of damages. That being said, you should be aware that shortening the time to file a suit or changing the rules of evidence to make it impossible to win your case does have the effect of eliminating these types of damages. I don't want to get too caught up in discussing these types of damages being limited because this is really about those damages called 'non-economic damages'. The reality is non-economic damages are economic.

Tomorrow I'll talk about why non-economic damages are economic.

One view of McCain vs. Obama on tort reform.

Originally posted at InjuryBoard by Steve Lombardi

Full post as published by Des Moines Personal Injury Lawyer on May 18, 2009 (boomark / email).