March 16, 2011

Poor Economy Has Important Ramifications for Personal Injury Claims

Individuals who are severely or catastrophically injured must assert a one-time claim for all the economic losses they will experience over their remaining life expectancy on account of their injury. An injured person only gets one trial. The injured individual cannot go back to court in 5, 10 or 15 years because the assumptions that were used in his or her economic loss analysis proved too optimistic. This is a particularly important issue given the present economic downturn. Many statistics which economists have traditionally relied on to calculate economic loss have limited or diminished relevance today. For example, historical statistics concerning the availability of alternative work, and prevailing wages for such work, now overstate the opportunities that are actually available to an injured person in today's economy. In addition, just focusing on the most recent economic data does not necessarily solve this problem. The traditional measure of unemployment does not include discouraged workers who are no longer actively looking for work, thus substantially overstating the actual health of the labor market. A final example involves historical statistics concerning work-life expectancy. An economist will typically project a severely or catastrophically injured person's earnings over their statistical work-life expectancy. However, for numerous reasons, the historical data now underestimates the likely work-life expectancy of current workers. Work-life expectancy is now likely to be significantly longer than historical averages because of factors including (1) reduced and/or depleted retirement savings, (2) declining percentages of individuals with fixed pensions, and (3) the cost or complete unavailability of non-employer-sponsored health care coverage which causes individuals to work longer. The bottom line is that severely or catastrophically injured individuals need to hire counsel who are familiar with recent economic trends and who regularly work with economists are knowledgeable and current on issues affecting serious personal injury claims. See Employee Benefit Research Institute, 2010 Retirement Confidence Survey