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The Difference Between Economic and Noneconomic Damages

There's no set figure or formula for determining the exact amount of compensation that a victim of a car or any accident will get for their injuries and losses. Some are worth a few thousand dollars, while other accidents may be worth millions. There is simply no rhyme or reason to what a judge or jury will award.

Generally, the value of a case is based on the injuries the victim sustained and the impact to their lives, short and long-term, if any. For example, a case where the accident victim suffers a sprain isn’t going to be worth the same amount as where the victim breaks bones or suffers a traumatic brain injury. We know that money can never make up for devastating injury, but monetary damages are the best we can do to compensate for a victim’s losses

Compensatory damages are a specific type of monetary damage that an injury attorney will seek in court. They are awarded to compensate someone for what they have lost, to make them “whole” again to the extent that is possible. There are two kinds of compensatory damages that a plaintiff may seek if they’ve been injured in an accident: economic and noneconomic.

Economic damages

The aftermath of an accident can quickly become costly and time-consuming. It can turn your life into chaos and disarray. From time missed from work and lost wages to costly medical bills, the impact of an accident can quickly add to thousands of dollars, not to mention pain and disability. You need an aggressive lawyer who can act immediately after your accident and take on the heavy lifting for you, so the chaos and trauma to come are kept to a minimum.

A former litigator and lead attorney for the insurance companies, Attorney Stuart L. Plotnick knows how they operate to protect their bottom line and what strategies often get his clients the compensation they deserve. Nothing will come easy, and they fight you for every penny.

Economic damages are easy to calculate. A jury who finds for a client will add up the amount of actual dollars the victim has had to pay or has lost (e.g. wages) and pay the plaintiff back essentially for those amounts.

Some of the most common economic damages plaintiffs get financially compensated for are:

  • Car repairs and rental
  • Emergency room bills
  • Medical and other doctor bills
  • Medical tests, such as X-rays and MRIs
  • Medications
  • Physical therapy
  • Long-term or future health care, if required
  • Lost income (from not working) and lost future income, if any
  • Home healthcare assistance in catastrophic cases
  • Transportation costs

Noneconomic damages

Noneconomic damages are subjective and harder to calculate, like diminished quality of life, emotional distress, and pain and suffering. How does one put a number such things? They are more difficult to predict because they aren’t numbers in a document that a jury can just add up to reach a total. They do not have a price tag. A jury must decide what the monetary value of someone’s pain and suffering is.

Insurance companies and defendants equate low economic damage costs to minimal pain and suffering.  So, goes the argument, if the victim did not have a great deal of medical treatment and/or positive test findings, then they could not possibly have suffered severe, long-term pain or suffering.  This is a false comparison because pain and/or one’s quality of life cannot be measured by a test or medical scan and can be devastating even without a record, a long medical treatment, or high bills.

Putting a value on pain and suffering

Although they are subjective, there are certain specific methods a jury can use to come up with a monetary award for noneconomic damages that a smart attorney may suggest. An aggressive personal injury attorney like Stuart Plotnick can explain to a jury the method to use to come up with damages that are fair for his client. There are various methods, and here some examples:

  • Multiplier method. A jury will consider the severity of the injuries and assign a number from 1-5 as a multiplier. They will then apply the multiplier to the economic damages, to determine the noneconomic damages. The two added together become the total award for compensation.
  • Daily rate or per diem method. A jury uses a “daily rate of suffering” as the multiplier for noneconomic damages. A jury decides this with a suggestion essentially to put daily value or cost on “what’s that injury and suffering worth each day the Plaintiff has had to suffer over the course of the last five years and/or over the rest of his/her life.”

One of the most valuable tools an attorney has is the victim’s family, friends and colleagues, who can attest to the quality of life they enjoyed before the accident compared to after. This testimony is often a powerful element to the calculation of pain and suffering.

Beware of the compensatory or damages cap

While actual or economic damages are not capped or limited, some states limit the amount of noneconomic damages, i.e. amounts for pain and suffering, that a victim can recover.  This is called a compensatory cap.

Caps limit the amount that someone is entitled to for pain and suffering to a maximum amount, often at several hundred thousand dollars, plus whatever the amount of economic damages is that has been granted for a total award.

In Maryland the cap is currently $860,000 for pain and suffering.  Therefore, if the plaintiff recovers $500,000 in economic damages, but the jury awards another $1 million in pain and suffering, that million dollars will be shaved back to the cap number, a reduction of $140,000. The cap increases by about 7.5% each year.

Insurance companies will do everything they can to avoid paying out high award amounts, no matter what damage you incurred in your accident. Attorney Stuart L. Plotnick knows how damages are calculated and how to make the best case for you to get what you deserve.

When you deal with insurance companies, you need an attorney by your side who will demand the compensation you deserve. Contact our Rockville, Maryland, personal injury law firm today to schedule your free consultation.