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What Are Economic Damages?

What Are Economic Damages?

If you’ve been in an accident and suffered a personal injury, you’ll need a good estimate of the damages so your attorney can negotiate a reasonable settlement or litigate to obtain a fair jury award for you.

In Massachusetts, there are two general types of damages – compensatory damages and punitive damages. If you have been terribly injured in a severe accident due to someone else’s negligence, you may be able to receive fair compensation for damages. Speak with a skilled Massachusetts personal injury lawyer at Sweeney Merrigan Personal Injury Lawyers for a complimentary assessment of your case and legal guidance moving forward with your case. An award-winning personal injury lawyer is available for a consultation 24/7 at (617) 380-4014, or you can fill out our contact form today.

Types of Economic Damages

Economic Damages

Compensatory damages reimburse the plaintiff with enough compensation to replace what they have lost. The purpose is to put the plaintiff back in the same position they were in before the defendant caused the accident.

Compensatory damages are further divided into these categories:

  • Economic damages are also called specific damages. These are out-of-pocket expenses due to the injury.
  • Non-economic or general damages (such as pain and suffering; or losses of life enjoyment, consortium, or companionship). These damages are not tied to specific monetary costs.

Punitive damages are designed to penalize the defendant for their conduct. These are rare in Massachusetts personal injury law.

Economic damages are quantifiable and are the sum of the losses due to the following:

  • Medical expenses
  • Lost income

Other expenses are reimbursable if they are directly related to the injury.

Calculating Medical Expenses

Medical Expenses

There are three types of medical expenses – past, present, and future. Past and present expenses are easier to quantify because you have documentation of medical bills and procedures.

Future medical needs are harder to calculate. According to Massachusetts law, this calculation must be a “fair and reasonable charge for such services.” Getting the calculation right is critical because you can’t return to court later and ask for more once you settle or receive a judgment award.

To help with these critical calculations, your lawyer may hire a medical expert. This expert will look at many future needs in making a calculation. 

These factors may include:

  • Surgery
  • Prescription medication for pain
  • Physical therapy
  • Lab tests such as blood tests
  • X-rays and MRIs
  • Follow-up visits
  • Wheelchairs, prosthetics, or other assistive devices
  • Assisted living or other types of home health care
  • Counseling

It is crucial to capture the types of future medical expenses you will need. However, it is equally important to account for the consistent increases in the costs of medical care. To help estimate this, the medical expert reviews the anticipated expenses above and takes into account estimated rates of medical inflation. The expert will also consider your age, general state of health before the injury, and medical care quality in your geographic area.

Once the medical expert has arrived at a calculated amount, they discount the rate to reduce costs down to their approximate present value.

Calculating Lost Income

There are three types of lost income – past lost wages, future lost wages, and loss of earning capacity. 

Past Lost Wages

These can be calculated fairly accurately. For example, if you make $4,000 per month and you missed three months of work because of your injury, the past lost wages would be $12,000. 

Of course, the calculations can quickly become more difficult. Maybe you’re self-employed, and your earnings can differ from month to month. Or perhaps you’re an hourly employee, and the monthly overtime you make varies greatly. Nevertheless, a fairly accurate estimate is still usually possible. 

Future Lost Wages and Loss of Earning Capacity

Calculating future losses is more difficult because you have to factor in possible raises and other unknowns. 

The calculation depends on factors such as:

  • Age. Are you 28 in a successful business, or 64 and planning to retire next month?
  • Type of Industry. What’s the state of the industry you work in? Is it declining (like nuclear power operation, travel agencies, or watch repair)? Or does the industry you work in face a bright future (such as software development or the medical field)? Are you self-employed with a successful business model? Maybe you’re starting a business, but the chance of success is 50-50.
  • Promotional Possibilities. Are your promotional chances limited? Or are you in a booming industry ripe with future promotions (like a lawyer on track to be a partner or an app developer at Google)?
  • Limiting Effect. Is there a permanent component to your injury that will reduce your options above or otherwise limit your earnings potential?

All this guides the calculation of your future lost income or loss of earning capacity.

Future Lost Earning Capacity 

A loss of future earning capacity concerns a victim’s inability to earn as much as they did before their accident due to substantial injury. This type of loss differs from lost wages because lost wages involve income that was lost due to time off work. Additionally, in most instances, it includes a specified period of time, such as recovery time post-accident. These damages are calculated based on two factors, including time off work and the amount of income lost during that time. 

On the other hand, future lost earning capacity covers future income-earning potential you no longer have due to the severe injuries you sustained. This is difficult to calculate, as it estimates the amount of income you would have earned without your injuries. Moreover, it is essential to note that we assess this amount based on your inability to work and not specifically the loss of your future income. 

If you have suffered a substantial injury that affected your ability to work and earn wages, you may be experiencing a loss of future earning capacity. Personal injuries can impact your day-to-day life, and if these impacts restrict your ability to work, you may be able to obtain necessary compensation for this type of loss. You must meet the two following criteria: 

  • A medical professional must reasonably expect that your injuries are permanent 
  • Your injuries have a permanent impact on your employment ability 

To successfully obtain this type of compensation, you must provide proof to support your claim because not all injuries affect a victim’s loss of future earning capacity. The following documents may be able to prove this type of loss: 

  • Medical records
  • Testimony from experts, such as physicians and employment professionals
  • Proof of your age, education, health, and job outlook
  • Potential job descriptions listing tasks your injury prevents you from completing
  • Income-earning statements and past W2s
  • Documentation showing a decrease in income after your accident 

In the devastating aftermath of your accident, if you experience loss of future earning capacity, speak to an experienced Massachusetts personal injury lawyer at Sweeney Merrigan Personal Injury Lawyers for an assessment of your case. We are comprehensive investigators and will work to obtain evidence to prove the impact your accident has had on your ability to work. We understand the financial toll personal injuries can take on victims and their families. We will aggressively pursue your right to recover compensation for your losses. 

Past medical bills and lost wages can be calculated with a fair amount of accuracy. However, future medical costs, future lost wages, and loss of earning capacity are much more difficult – and can involve considerable dispute and litigation. So, not only do you need the help of experienced personal injury attorneys, but you also need your attorneys’ help in hiring the right experts to formulate a reasonable estimate of future damages. The Sweeney Merrigan Personal Injury Lawyers can be the difference in getting adequate compensation for your economic damages due to another’s negligence.

Our firm is proudly led by our trusted managing partners, J. Tucker Merrigan and Peter M. Merrigan. J. Tucker Merrigan has been a co-managing partner of the firm for over a decade. He has been recognized for his unwavering dedication to providing outstanding representation to car accident victims in Boston awards that include: 2018-2021 Rising Star, Super Lawyers; 2015-2021 Top 40; Under 40. Our other co-managing partner, Peter M. Merrigan, has been recognized for his work helping clients pursue the justice they deserve: 2018 Top 40 Under 40, National Trial Lawyers; 2018 Rising Star, Super Lawyers; 2019 Massachusetts “Super Lawyer;” 2020 Massachusetts “Super Lawyer,” 2021 Massachusetts “Super Lawyer.”

An award-winning personal injury lawyer is available for a complimentary consultation 24/7 at (617) 380-4014, or you can fill out our contact form today.

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