One of the most difficult concepts for claim adjusters and juries to apply is that of non-economic damages. In contrast, juries and insurers easily understand and can quantify economic damages because these kinds of damages are usually substantiated by pay stubs, doctor bills, and repair estimates.
But non-economic damages are unique to the injured person and do not come with a price tag.
For this reason, non-economic damages are difficult to predict and will vary widely from case to case.
Here are some of the things you should know about non-economic damages and how they are calculated in Maryland.
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To fully understand non-economic damages, it is easiest to first gain an understanding of economic damages.
Economic damages are those damages that can be quantified by a dollar amount because they have some form of direct financial measurement.
For example, economic damages can include such costs as:
Past Medical Expenses
These economic damages are quantifiable through your past medical bills for treatment, therapy, and medication.
Future Medical Expenses
These economic damages are more speculative but are based on your prognosis and your doctor’s opinion about the medical treatment, therapy, and medication you will need until your injuries have healed.
If your injuries are permanent, your age will factor into the calculation of the medical expenses you will have for the rest of your life.
Your pay stubs will document the economic damages arising from wages, tips, or salary that you lost if your injuries prevented you from working.
Diminished Earning Capacity
Testimony from an accountant or other expert, plus your medical prognosis, will be used to quantify your lost earning capacity if your injuries force you to change jobs.
Non-economic damages compensate for all those injuries that are not covered by economic damages. Some of the injuries included in non-economic damages are:
Physical pain can affect every aspect of life. It can make you miserable and reduce your enjoyment of life.
It can keep you awake at night and prevent you from engaging in activities you formerly enjoyed. It can even cause depression.
Suffering equates roughly to mental pain. The mental pain of being injured, needing assistance with daily activities, struggling financially, and losing a job can all flow out of an accident or medical error.
Mental anguish overlaps with suffering. Mental anguish can also include the grief of seeing someone injured or killed in an accident.
An accident can impose inconveniences when your injuries limit what you can do. Similarly, the loss of your vehicle may limit your ability to work and run errands.
Mental and physical injuries can prevent you from expressing love, compassion, and companionship to your family. Injuries might even prevent you from engaging in sexual relations with a spouse or partner.
Loss of Activities
An accident can deprive you of activities you enjoyed because of physical or mental limitations that result from the accident. These activities could range from playing with grandkids to maintaining your home and yard.
Diminishment in Quality of Life
When you suffer from pain, insomnia, fatigue, anxiety, depression, or grief, your quality of life is likely to drop. Likewise, losing a body part, needing constant medical treatment, or having your activities limited by your injuries can reduce your enjoyment of life.
These non-economic damages are just as real as economic damages, but they are more difficult to quantify because they are so subjective. A driver and a passenger could experience the same truck accident and suffer the same physical injuries, yet have vastly different non-economic damages.
This makes insurance companies and juries skeptical about non-economic damages. An injured person might complain of chronic, excruciating pain from a back injury or severe post-traumatic stress disorder (PTSD) from a bicycle accident. But a jury or claim adjuster has no way to verify that those symptoms exist.
Calculating Non-Economic Damages
Maryland does not prescribe a formula for non-economic damages. A jury will ultimately award what it believes is fair based on many factors including:
- The age of the injured person
- The duration of the injuries
- The severity of the injuries
- The activities that were lost
- The inconvenience imposed
Economists use a number of ways to calculate these factors into a final non-economic damage award. Two of the most popular theories for calculating non-economic damages are:
The Multiplier Method
A multiplier between 1.5 and 5.0 is assigned to the non-economic damages based on the factors above. The longer the injuries will stay with the person and the more severe the injuries are, the higher the multiplier that will be assigned.
For example, permanent paralysis could be rated at 5.0 while a broken leg could be rated at 1.5. The multiplier is applied to the economic damages to reach the total damage award. For example, a jury could apply a multiplier of 1.8 to economic damages of $10,000 to arrive at a total damage award of $18,000 ($10,000 of which is economic damage and $8,000 is non-economic damage).
The Per Diem Method
A non-economic damage award is calculated based on the daily value of the damage. The jury multiplies the daily rate by the number of days that the non-economic damages were suffered.
For example, a jury could assign a daily value of $300 for non-economic damages to someone who has severe pain, insomnia, and depression. If those symptoms were experienced for 45 days, the total non-economic damages would be $13,500. If the economic damages were $15,000, the total damage award would be $28,500.
Maryland law caps non-economic damages. This cap is based on the year the injury occurred. For injuries incurred in 2020, the cap was $815,000 for medical malpractice cases and $875,000 for all other personal injury cases.
Documenting Non-Economic Damages
- Medical records
- Pain medication prescriptions
- Opinion letters from therapists or counselors
- Testimony from family members and co-workers
- Your testimony
Your injury lawyer can use these records to convince an insurer or jury about the changes in your life resulting from the accident. The insurer or jury can then use them to arrive at a non-economic damage award.