The calculation of economic damages due to wrongful death seems straightforward. However, at second glance, the complexity of these cases becomes evident. Once the analyst understands that damages are equal to the present value of expected future financial contribution the decedent would have made to his or her family but for the defendant’s wrongful act, one starts to understand the complications associated with this calculation. Such complications become evident when consideration is given to the variety of factors used to calculate the economic loss. It is imperative the analyst ensures that none of the financial contributions the decedent would have been made are missed or double-counted.
Lost Earning Capacity or Lost Earnings
One of the areas that is vital to the expert’s calculation is the decedent’s earnings, both historic and potential. In some instances, utilizing historic earnings and extrapolating those earnings over his or her work-life expectancy is the only option available to the analyst. However, in some cases, the expert might find themselves in a situation where historic information is not available, as would be the case in the death of a minor. Absent such history, the expert must determine what method accurately predicts the future earnings of the decedent. The expert may refer to government agency studies or private sources that provide average earnings in various occupations. In addition, other factors to be considered when calculating the decedent’s future earnings are age, health, race, education, experience, geographic location, inflation and many others.
When calculating future earnings, it is imperative to understand its definition. In some jurisdictions, plaintiffs are allowed to recover damages of lost earnings capacity. This means that the damages may be based on evidence that the decedent was or would be qualified for a higher-paying position in the future.
As mentioned previously, wrongful death cases can include minors as well, and the calculations of these economic losses can be much more difficult. In these cases, a minor’s expected earnings or earning capacity is based upon their level of education. The expert is tasked with estimating the level of education the minor would have attained but for the incident causing the death. This is typically based on statistics showing average levels of educational attainment by race, sex, family income, geography and education. Another consideration is to analyze the level of education and line of work of the parents or caregivers.
Considering Employee Benefits
To calculate total damages, the expert needs to consider “base earnings” as well as the value of employer-provided benefits, such as health benefits and retirement. When analyzing employer-provided benefits, the expert needs to ensure they avoid double-counting. For example, anticipated contributions to a company 401(k) plan by the decedent is already included in their wages. If the employer also provided contributions to the plan, those contributions would be in addition to the contributions by the decedent.
For defined benefit and pension plans, the expert is tasked with projecting the decedent’s post-retirement benefit stream. This is based on salary levels, expected years of service, life expectancy and retirement date. One additional area requiring consideration is sick leave and paid vacation. Both sick leave and paid vacation are typically part of gross wages, so including them in your damage calculation may constitute double counting.
Consideration must also be given to lost benefits such as Social Security, which may also contribute to overall damages. Additional aspects such as the decedent’s marital status, age, number of children or other dependents and employment status at the time of death impact the amount of loss.
Household Services
Household services can contribute to a significant portion of the overall loss, but it is one frequently overlooked area when performing a wrongful death calculation. However, one must be careful when considering these items. Some states, such as Georgia, only consider lost earnings and do not factor in associated expenses. Understanding state case law is vitally important when performing a wrongful death calculation.
A short list of items that may be considered in household services are cooking, cleaning, childcare, lawn care, repairs, maintenance and managing finances and investments. Though often these tasks are attributed to a stay-at-home spouse (if applicable), even decedents who maintained full-time employed contribute to household services in various ways.
One complicating factor when calculating damages related to household services is that many individuals fail to track time spent on these services. To determine their value, an expert considers various methods. One such method might be to consider studies that estimate time spent on such tasks, and the associated value of those services based on a comparable average market cost. In many instances, this information will be broken down into such factors as education, age, family size and income.
Understand the Facts
Economic damages related to wrongful death involve several considerations. The facts of each case should be considered by you and your financial experts to determine how the particular circumstances of the decedent affect his or her family’s economic loss. For questions or more information, talk to your Windham Brannon advisor or contact Matt Stelzman.
