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Clik here to view.A slew of new federal taxes related to the Patient Protection Affordable Care Act (PPACA) took effect January 1, 2013.  Like most taxes, the tax imposers will try to mask the impact by aggregating them with other taxes.  Because consumers are used to paying some type of tax on practically everything, they are less likely to question or understand the now larger lump sum “Tax”.

However, Cabela’s (a retailer of hunting, fishing, camping, and related outdoor recreation merchandise), reportedly made an error by explicitly revealing one of the new taxes, the Medical Device Excise Tax (MDET), causing consumers to immediately question the tax.

The PPACA instituted a 2.3% tax on the first sale of medical devices beginning this year.  According to the legislation,

…Section 4191 of the Internal Revenue Code imposes an excise tax on the sale of certain medical devices by the manufacturer or importer of the device…Generally, the manufacturer or importer of a taxable medical device is responsible for filing Form 720, Quarterly Federal Excise Tax Return, and paying the tax to the IRS…

Like most legislation, the wording is vague.   In this case, the word “generally” would allow manufacturers and importers to pass the tax onto consumers with higher retail prices.  Although lawmakers/politicians/regulators will almost never say it, the manufacturers and importers are not likely to pay the tax themselves if they can pass it on to the consumer.

This past week, consumers of Cabela’s merchandise have been posting their purchase receipts on the internet with the itemized MDET tax.  One of these receipts is shown below.   In Cabella’s case, the additional MDET tax was likely a true error (versus an “error” that unhides the truth), because it is neither a manufacturer or an importer of medical devices.  The error reportedly was a result of failing to properly program its updated receipt software that now has the MDET as an option for businesses if applicable.

If businesses were forthcoming in each and every tax they pass onto consumers, it may very well cause more consumers to push back on government and hold lawmakers/politicians more accountable for the tax burden they impose.

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Clik here to view.Despite both Congress’ and the White House’s constant rhetoric of “maintaining current tax rates for a majority of working Americans during the “fiscal cliff” negotiations, most working Americans are now taking home less pay as a result of the new 2013 legislation.  The two-year 2011-2012 payroll tax “holiday” failed to make its way into the final legislation resulting in a 2% payroll increase (from 4.2% to 6.2%).   Less take-home pay generally translates into, among other things, less spending.  At a time when the economy is still struggling, many economists agree that this is not a good thing.   But according the New York Federal Reserve Banks’ new survey data, the expiration of the payroll tax cut may be even worse for the economy than previously thought.

The New York Federal Reserve Banks’ new survey data indicates that the 2011 payroll tax cut resulted in Americans reportedly spending between 28 and 43 percent of the savings, significantly more than for previous tax cuts.  With the payroll tax cut now expired, the typical household consumption is expected to decline by a relative amount.

The new survey data also revealed significant demographic heterogeneity on how the extra 2011 savings was used (e.g., spent on consumer items, saved, pay off debtor).   In theory, some economic thought suggests that low-income and less-educated individuals would spend the tax cuts on needed consumer items (aka “liquidity constrained” individuals).  The White House apparently was a believer in this theory back in 2010 when it signed into law the Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 that, among other things, provided the payroll tax “holiday”.  The following remains posted on the White House’s website:

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010:
Win for Women, Mothers and Working Families

The agreement announced by the President not only secures vital tax relief and investments in our workers that will create jobs and accelerate economic growth, it contains specific policies that provide targeted support for working families, particularly women and mothers…

Economic studies consistently find that lower-income households are the most likely to spend additional money, creating jobs and helping overall growth. That’s why the Congressional Budget Office has concluded that “policies aimed at lower-income households tend to have greater stimulative effects.”

Beginning in the Recovery Act, the President has demonstrated his commitment to extend benefits and tax cuts to struggling families as the right thing to do for family security and our economy…Not only do these provisions help strengthen the economy by promoting work and putting money into the pockets of working families who eventually put it back into the economy through consumption, they are also effective at improving the health of families…

The New York Fed’s new survey data contradicts this belief/theory.   Specifically, there was no evidence that low-income survey respondents spent proportionately more of their tax cut savings than higher income respondents.  Rather, it was the high-income respondents that spent proportionately more on consumer items.  Low-income respondents spent more on paying down their debt.

Recall that the new 2013 law just increased the Federal income tax rate to almost 40% for those making more than $400,000.  If these new survey data findings are applicable to the Federal income tax rates, this struggling economy may really struggle this coming year….

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Clik here to view.When a nursing home faces alleged medical malpractice, it may often be the case that the individual lawsuit is not the biggest economic problem it faces.  The Rainbow Beach Nursing Center in Chicago is currently defending itself against a wrongful death lawsuit.   Two doctors caring for Sonia Eli at the nursing home each filled out prescriptions for her resulting in an alleged lethal overdose of the prescription medication.   Sonia’s family sued the nursing home last week for medical malpractice and negligence.

Assuming the case meets its liability burden of proof that the care provided to Sonia was below the standard of care that an average doctor would have provided, any economic damages will likely be small.  Generally, in medical malpractice cases, economic damages are based on (among other things) the injured party’s or decedent’s expected lifetime earnings.   Being in a nursing home, Sonia was undoubtedly past her expected worklife, and likely had a short remaining life expectancy.  Knowing that the damages (at least the economic damages) may be relatively small, Defendant(s) may be more worried about the impact on their reputation than any direct monetary damage of the lawsuit.  Should medical malpractice be determined, lost future earning associated with reduced future business from other current and potential clients will likely have a larger economic impact on  the company.

Additional information regarding calculating personal injury and medical malpractice damages can be found here.

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Clik here to view.If Hulk Hogan successfully proves his medical malpractice lawsuit against the Laser Spine Institute, we should find out the answer.

Mr. Terry Bollea (aka Hulk Hogan) recently filed a lawsuit which alleges, among other things, that the Laser Spine Clinic performed unnecessary surgeries on Hulk Hogan over an 18-month period.  Hulk Hogan alleges these excessive surgeries injured his back harming his entertainment and athletic career.  The former pro wrestler is now 59 years and is semi-retired.  Although he is most known for his infamous pro wrestling career, he also performed (among other things) in movies, television, and music.   Thus, any economic damages may still be relatively significant despite his age and being semi-retired.

Generally, the economic damages period on personal injury cases such as this are calculated over the injured party’s expected work life.  Various independent economic studies can be used to obtain work life expectancy.  Such factors as the injured party’s (i) current age at the time of injury, (ii) gender, (ii) highest education level, and (iv) work status at the time of injury (active or not active in the workforce) may be considered in determining work life expectancy.  Assuming the injured party would have worked until the common retirement age of 65 may be inappropriate, particularly for someone like Mr. Bollea.   Similarly, given Mr. Bollea’s  unique historical earnings (e.g., multiple high income, high profile sources) an economic damages calculation will need to reflect his particular situation.

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Clik here to view.With the SuperBowl coming up next weekend and many players suffering from some sort of injury sustained during the season, the recent wrongful death lawsuit filed by the family of former pro football star Junior Seau may be getting more media coverage than usual.   Junior Seau retired from pro football in 2010 and committed suicide in May 2012.  Earlier this month, his family revealed autopsy results from the National Institute of Health allegedly concluding that the findings for Junior Seau were “were similar to autopsies of people with exposure to repetitive head injuries”.  Approximately two weeks later, Seau’s family filed a wrongful death lawsuit against the National Football League and a helmet manufacturer, Riddell.

The timing of the lawsuit against the upcoming Superbowl may be mere coincidence, but it does provide almost guaranteed chatter about what, if anything, should be done about the game’s rough physicality on players.  In a recent interview, the President had a few words to say about just that, claiming that if he had a son, he would ”have to think long and hard” before letting him play because of the physical toll the game takes.

…I think that those of us who love the sport are going to have to wrestle with the fact that it will probably change gradually to try to reduce some of the violence…In some cases, that may make it a little bit less exciting, but it will be a whole lot better for the players, and those of us who are fans maybe won’t have to examine our consciences quite as much…

…The NFL players have a union, they’re grown men, they can make some of these decisions on their own, and most of them are well-compensated for the violence they do to their bodies…You read some of these stories about college players who undergo some of these same problems with concussions and so forth and then have nothing to fall back on. That’s something that I’d like to see the NCAA think about…

If Junior Seau’s family is able to prove causation, Defendants may have to pay a hefty price on economic damages alone.  Seau was 43 years old when he committed suicide.  Although this is considered “ancient” for a football player, this is quite young from an economic standpoint, with a significant amount of his expected worklife remaining.  Even though he was retired from pro-football, his “star” status and well-known name outside the league (among other things), could allow his “but-for” earnings (i.e., earning he would have attained had he not committed suicide) to be relatively large.   And if Seau’s family is successful, you can bet the NFL will have its hands full with personal injury lawsuits from other players.

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Clik here to view.Both the business and residential climates in California versus Texas are long known to be diametrically opposed: one is a more progressive state advocating social justice at a “cost” of higher taxes and more regulations while the other espouses lower taxes and less regulations while advocating individual responsibility.   Despite this well-known, long standing difference, Governor Perry of Texas recently arranged to have a 30-second radio ad air for one week on multiple large California media markets (e.g., Los Angeles, San Diego, San Francisco, Sacramento) promoting this difference to persuade Californians to move to a more business friendly Texas.  In the ad, Perry is heard saying the following:

Building a business is tough, but I hear building a business in California is next to impossible. This is Texas Governor Rick Perry, and I have a message for California businesses: come check out Texas. There are plenty of reasons Texas has been named the best state for doing business for eight years running. Visit texaswideopenforbusiness.com, and see why our low taxes, sensible regulations and fair legal system are just the thing to get your business moving to Texas.

It is reported that the Texas state taxpayers footed the $24,000 bill to air the ad.  Admittedly, this is a relatively small amount of money given the size of the California media market.  California Governor Jerry Brown’s initial response to reporters about the ad campaign was the following:

It’s not a serious story, guys…It’s not a burp. It’s barely a fart.

Governor Brown went on  to say he would take the story seriously if the Texan were to pony up a $25 million television and radio campaign. But such as suggestion (and possibly even the smaller amount actually paid) can certainly be described as a waste of taxpayer money.  There are those that love California and those that love Texas, but spending significant funds educating anyone that might confuse the two is not a worthwhile endeavor.

More economic data supports an increasingly talked about practical career choice:  agriculture.   Most students do not even consider the study of agriculture.  Most schools/colleges do not even offer agriculture related courses even if one wanted to pursue this field of study.

The government statistics on the topic reflect this unpopularity.  The most recent available U.S. Department of Agriculture’s census data reports the average age of  U.S. farm operators increased from 55 in 2002 to 57 in 2007.  The number of operators 75 years and older grew by 20% during that same period.  Conversely, the number of operators under 25 years of age decreased 30%.

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                                                                Source:  2007 U.S. Census of Agriculture

U.S. Department of Agriculture’s census data is published every 5 years and the 2012 data is not yet available.  However, historical trends suggest that the average age of farm operators will be at or near 60 years old with a continuing decrease in the number of younger operators. These demographics alone suggest an imminent labor shortage and could result in significant fortunes for those that fill it.

In corroboration with this expectation for the growing value of agricultural labor, the Federal Reserve Bank of Kansas City’s 2013 data release indicates the value of U.S. cropland is dramatically increasing (despite the drought last year that continues to chomp away at the industry’s profits).   The following chart shows the percentage change in cropland values from last year:

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                      Source:  Kansas City Federal Reserve Bank, 2013

Unsurprisingly, the chart below shows that 7 of the 10 lowest unemployment states are those where the cropland values are increasing.   All of these more agricultural states’ unemployment rates are well below the national unemployment rate of 7.9%.  Further, even during the height of the ”Great Recession”, these states had relatively low unemployment rates.

At some point, labor supply will meet demand (assuming the government does not substantially intervene with free market forces at work).  In the interim those that took advantage of the differential will have likely prospered.  That time to take advantage has arrived.

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Clik here to view.Many people that think they have suffered from medical malpractice fail to pursue and file a legal claim because of the challenges that lie ahead (e.g., legal fees, risk of the claim not succeeding, etc.). To be successful, a medical malpractice claim generally needs to prove that (i) the treating medical professional fell below the accepted standard of care, and (ii) the alleged substandard care caused the injury. However, these hurdles are much easier to overcome when a patient experiences a surgical “never event” (a term used in the medical community to describe a preventable surgical event that is “never” suppose to occur). A “never event” includes events that you see on television and movies:

• leaving foreign objects (sponges, towels, scalpels, etc.) inside patients
• performing surgery on the wrong patient
• performing the wrong surgery

According to a recent Johns Hopkins University study, these “never events’ are not only on television and movies; they occur at a surprising rate in real life. The event of leaving a foreign object inside a patient’s body after surgery occurs approximately 39 times per week; the events of performing the wrong procedure and  performing on the wrong body site each occur 20 times per week.

This study is believed to be the first to quantify national rate “never events”.  The study was based on 20 years of historical data (1990 – 2010) maintained at the National Practitioner Data Bank (NPDB), a federal repository of medical malpractice claims.  The study identified 9,744 paid malpractice judgments and claims totaling $1.3 billion in payments.  Deaths occurred in 6.6% of patients, permanent injury in 32.9%, and temporary injury in 59.2%.  Approximately 80,000 surgical near events are estimated to have occurred in American hospitals during the 20 year period; approximately 4,000 are estimated to occur each year.

Because this study’s results are based on medical malpractice claims, many of its statistical estimates may be low.  Even though a patient that experienced a surgical “never event” may be more likely to file a medical malpractice claim than a patient that suffered from something less than a “never event” (because the claim is more likely to be successful), the “never event” patient may still not file a claim for a variety of reasons.

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Clik here to view.Lost compensation is a method of capturing economic damages in personal injury, medical malpractice, wrongful termination, failure to promote and other similar torts.  Independent damages experts are often employed to calculate lost compensation because of their unique background/skill set.  However, the desire to minimize costs means that these experts are often employed after settlement efforts failed.  This presents a difficult situation for counsel who are negotiating settlement without the benefit of the expert’s opinion regarding damages.

An interactive settlement tool, developed by independent damages experts, may provide counsel with the information necessary to provide meaningful advice to the client about appropriate damage amounts.  This knowledge may also assist with settlement discussions  by demonstrating that amounts requested/offered are based on application of defined inputs, properly applied.  The interactive settment tool calculates lost compensation based on Plaintiff specific inputs regarding dates, demographics and earnings, combined with government statistics, economic studies, and market conditions.  Read more here.

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Clik here to view.A fifth U.S. Circuit Court of Appeals recently upheld Mississippi’s $1 million cap on what Plaintiffs can recover for pain and suffering (aka non-economic damages) in personal injury cases with pharmaceutical product liability.  The jury initially awarded Plaintiff, Ms. Learmonth, a total of $4 million for injuries suffered from a car crash with a Sears company van.   The jury failed to differentiate how much was for economic versus non-economic damages.  The judge differentiated the lump sum with $2.2 million for non-economic damages, but then decreased it to $1 million based on the Mississippi’s cap.

Ms. Learmonth attempted to argue (but failed) in appeal that the cap was unconstitutional and violated her right to a jury.   The decision to uphold Mississippi’s damages cap may not only influence future similar decisions, but also the number of doctors that may flock to the state if medical malpractice premiums stay the same or fall if caps continue to be upheld.  Even though many states have caps on non-economic damages in personal injury cases as part of efforts towards tort reform, some state supreme courts fail to uphold the caps.  The economics behind imposing (and implementing) caps continues to be tested with some states implementing and others not.

Some believe the theory that large damage awards hurt the economy.  For example, in a medical malpractice case, a doctor is found liable resulting in a jury awarding Plaintiff $5 million.  The doctor (or more likely the doctor’s medical malpractice insurance carrier) must pay the $5 million.  As with most business’ costs, the business does not absorb them; rather, they get passed on to consumers.  In this case, medical malpractice insurance premiums will increase (an increased cost to doctors).  Doctors flee these costs by moving to another less burdensome state that implements damages caps or passes the costs on to patients.  Damages caps are an attempt to lower the additional cost burdens.

The counterargument is generally one similar to Ms. Learmonth’s appeal argument: damages caps are unfair to plaintiffs by letting a law dictate the amount of compensation her pain and suffering is worth rather than a jury that has heard her unique circumstances.   Some states’ supreme courts agree with the counterargument and have not upheld its states’ damages caps.  Because these tort reforms are relatively recently and continuing, it is not yet clear if the medical malpractice premiums charged to doctors and doctors’ fees charged to patients are statistically lower in states that have imposed and upheld the caps than states that have not.

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Clik here to view.Considering taxes in a lost earnings calculation related to personal injury matters may materially alter the damages amount.  In the well-known 1980 Supreme Court case, Norfolk & Western Railway Co. v. Liepelt, the Court ruled that courts should consider taxes and calculate lost earnings net of income taxes.  The Court’s rationale was that the damage award is not taxable, but had Plaintiff not been injured and actually earned the calculated “but-for” earnings, these earnings would have been taxed.  Thus, by not taxing lost earnings (nor the damage award), the Plaintiff attains a windfall.

Despite this 1980 Supreme Court ruling, many jurisdictions appear to either exclude any tax consideration on a personal injury lost earnings calculation or remain silent and/or ambiguous.  Only Hawaii, New Jersey, Oregon, and Texas provide relatively clear case law or state law essentially upholding the Supreme Court ruling.  (Note:  Alaska only considers taxes for past lost earnings, not future lost earnings.)  Some of the jurisdictions that exclude tax consideration explain their rationale for excluding taxes generally as follows:  Plaintiff’s lost earnings damages award is discounted to present value.  Plaintiff is expected to invest the award in some risk-free investment that will generate interest.   (See article here in why a risk-free investment may be inappropriate).  In many instances, the earned interest is taxable.  If taxes are ignored both on lost earnings and on interest earned, the tax effects offset each other (i.e., lost earnings (pre-tax) increases present value damages while ignoring taxes on investment income decreases Plaintiff’s investment monies actually received); thus, taxes can be ignored.

However, the tax effects do not necessarily fully offset each other.  Using net earnings (post tax earnings) may lower the damages award depending on Plaintiff’s income levels and projected real wage growth rates.  The amount of monies necessary to cover the taxes owed on interest (increase the damages award) depends on the damage period length and nominal discount rate.   In deciding whether to consider taxes in any lost earnings damages calculation, one should consider the law applicable in the jurisdiction.

Many states have laws requiring patients to file medical malpractice claims by a defined time period.  If the patient misses the defined time period, he/she may see the claim quickly tossed.   However, a recent Wyoming Supreme Court reversed a malpractice ruling citing that the District Court Judge wrongly ruled that plaintiff failed to timely file his malpractice claim against a Medical Center. Wyoming law says these claims must be brought within two years of the alleged act(s).   Although the Medical Center’s argument may have been valid on its face (i.e., the patient’s injury caused by the Medical Center’s alleged negligence occurred over two years prior to the patient filing its claim), the Supreme Court Justices ruled that this was inconsistent with the continuous treatment rule (i.e., the alleged misconduct continues until the defendant physician(s) stops continuing care for the complaint).

Medical malpractice attorneys have been seeing this issue arise more frequently the last few years.  Although judges have likely always had different interpretations of the language in the rule, more judges are vocalizing and acting on these different interpretations.  As this trend continues, the statute of limitations period will likely continue to increase.

The 2008 Supreme Court ruling in Riegel v. Medtronic held that if a medical device passed the Food and Drug Administration’s (FDA’s) safety review and received premarket approval, federal law barred common-law state claims that challenge the device’s saftey and effectiveness or whether it was being marketed consistent with FDA premarket approval.  Since this ruling, some plaintiff personal injury lawyers have successfully argued their manufacturing defect state case claims by claiming that since the state has similar requirements to the FDA’s requirements and the manufacturer failed to follow the FDA requirements, the manufacturer violated both state and federal law.  This is a type of “parallel claim”, as the state requirements are arguably similar or parallel to federal requirements.

More recently, another parallel claim that is quickly gaining popularity with personal injury lawyers is the “off-label promotion” claim.   If a medical device’s manufacturer promotes uses of the device that are not FDA approved, plaintiff personal injury lawyers argue this “off-label promotion” is a parallel claim; thus, it is not barred by federal law.  These claims are found in hundreds of recent personal injury lawsuits filed against Medtronic Inc. alleging that its Infuse Bone Graft was promoted for uses other than those approved by FDA.  These unapproved uses allegedly caused patients various personal injuries.  Because these cases are recent, it is not yet clear how these “off-label promotion” claims will turn out.  Medical device manufacturers may quickly have even more litigation worries.

Based on the sheer volume of headlines in the media, one might think that this lost earnings claim either has some extraordinary circumstances and/or involves a celebrity.  However, it appears that neither of those are true.  From a legal and economic damages standpoint, the alleged wrongful termination and gender discrimination claims are routine.  So, why all the press?  You be judge…

In sum, a 35 year-old woman claims that she was wrongfully terminated from her employer, a waxing salon, because she refused a Brazilian wax treatment.  According to the Complaint, the woman was fired on her first day at the salon in which she and her colleagues were to perform bikini wax treatments on one another as part of her training.  The woman understood that giving the treatment to clients was part of her job, but did not think receiving the treatment was part of it (even if it was just once for training).  Because only women were required to engage on this training exercise, the woman is also not only claiming wrongful termination but also gender discrimination.

Among other things, the woman is seeking lost earnings.  From the Complaint, however, these appear to be negligible based on the following:

• Her pay was $8 per hour, (75 cents above the state’s minimum wage), plus a “small commission” for clients she attains.
• She has a duty to mitigate any earnings loss and find alternative employment.  Although there are additional factors that are typically in determining alternative employment and related earnings (e.g., employment history, education, certificates/degrees), she is likely to find earnings that will almost fully compensate based on (i) her relatively young age, and (ii) the replacement job need pay not much over minimum wage.

So, why all the press…?

Damage experts don’t always agree regarding the appropriate discount rate and underlying methodology for a lost earnings claim and certain commonly applied methods actually provide a windfall to Plaintiffs.  The chosen rate can make a meaningful difference in the economic damages conclusion.  A recent article, “Lost Compensation Settlement Tool Allows You To Assess Economic Damages Accurately And Efficiently, Under Various Scenarios” demonstrates the significance of the applied rate on damages.

In some jurisdictions, a particular rate is mandated, but that is not the case in California ( for a more though discussion of California and other states’ requirements regarding discount rates in personal injury matters, see this related article).  A recent survey in the Journal of Forensic Economics (JFE) indicates that their members generally tend toward rates that are quite low and declining, possibly because of the common practice of using a risk-free rate.  Results of the 1999, 2003, 2009, and 2012 survey regarding discount rates are provided in the following table:

A low discount rate benefits the Plaintiff as it results in a higher ultimate damages result (all else equal).  The JFE survey article also reports that historically (since 1999), approximately two-thirds of survey respondents’ earnings in forensic economics were derived from Plaintiff-side work.  However, the surveys’ published results do not allow analysis of the correlation between rates employed and Plaintiff versus Defendant work.  

In many instances, a risk-free government securities method/rate may be economically irrational and would not comply with California legal instructions. In cases with longer damage periods, no competent investment advisor would invest 100% of anyone’s long-term portfolio in this way. Instead, a proper investment approach matches the time horizon for the investment with the underlying use of the moneys being invested. The use of U.S. government securities is appropriate for (but only for) damage periods that are only a few years from the date of trial.  If the lost income period is 30 years, then one should be investing moneys with a 30-year time horizon (and thereby discounting them to present value accordingly).  Application of a risk-free rate over this length of time provides an impermissable windfall to a Plaintiff. 

Based on a Johns Hopkins University study, a prior blog post provides some alarming statistics on surgical “never events” (a term used in the medical community to describe a preventable surgical event that is “never” supposed to occur) that actually do occur.  More recently from the same university, a study concluded the following:

1. Of approximately 350,000 medical malpractice claims paid in the last 25 years, medical diagnostic errors surpassed surgical or medication errors in (i) number of malpractice claims, (ii) amount of patient harm, and (iii) dollar amount of penalties paid.
2. Diagnostic errors comprised almost 30% of the 350,000 claims.
3. The approximately 100,000 diagnostic errors were more likely to lead to death or patient disability than surgical or medication errors.

Some medical experts hypothesize (with practical rationale) that diagnostic errors are under-recognized because they are hard to measure and validate with sometimes lengthy periods of time between the time the error occurs and the time it is detected.  Surgical and medication errors jump this significant hurdle since these errors are generally recognized immediately.  This hurdle may stifle diagnostic-error patients from even pursuing and filing a medical malpractice claim.  Recall that for a claim to be successful, plaintiff (the patient) needs to prove that (i) the treating medical professional fell below the accepted standard of care, and (ii) the alleged substandard care caused the injury.  Relatively large time gaps between the diagnostic error occurrence and its detection may make proving the case tough.

This study’s results was based on 25 years of paid claims maintained at the National Practitioner Data Bank (NPDB), a federal repository of medical malpractice claims.  Thus, there are undoubtedly significantly more patients that experience a medical error. These patients either (i) fail to file a claim or (ii) fail to prove the liability of their case and thus do not get paid their claim.  However, conceptually, it is unlikely that the study’s allocation statistics would change materially.  That is, even if one accounted for all patients errors (i.e., patients that do not file a claim or do not prove the liability of their case), the statistic that almost 30% of paid claims constitute diagnostic errors (and these error are the leading cause of malpractice claims) is unlikely to change significantly.

Economists and other financial experts are often hired to assess damages, assuming liability.  However liability can sometimes be established or disproven based on statistics.

For example, in a recently affirmed case involving employment discrimination, the application of a simple method failed to provide the Court with information that would likely have changed their decision.  The Federal Court (and the Sixth Circuit Court of Appeals) concluded employer discrimination against protected classes occurred based on a simple calculation commonly referred to as the “four-fifths rule” or the “80% rule”.  In contrast, more rigorous statistical methods suggest otherwise and the City of Akron, Ohio may have been unfairly penalized. Click here to read more.

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Clik here to view.Since the “Great Recession”, cost saving on litigation continues to be a grave concern for practically everyone involved.  The states’ judiciary systems are just one of the many; attempting to save costs on judicial resources, states continue to put pressure on both parties to settle.  Florida recently passed a Proposal for Settlement Statute related to alleged negligence in civil actions that, among other things, imposes sanctions on litigants who reject settlement proposals if they do not receive a larger damage award at trial than the settlement proposal. Specifically, the statue contains the following language:

In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, and the court shall set off such costs and attorney’s fees against the award. Where such costs and attorney’s fees total more than the judgment, the court shall enter judgment for the defendant against the plaintiff for the amount of the costs and fees, less the amount of the plaintiff’s award. If a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorney’s fees incurred from the date of the filing of the demand. If rejected, neither an offer nor demand is admissible in subsequent litigation, except for pursuing the penalties of this section.

An accurate and credible damages settlement tool can be an effective and less costly means to (i) assess the economic damages associated with a lost earnings claim (e.g., personal injury, medical malpractice, wrongful termination, failure to promote), and (ii) have a successful settlement.   The article, “Lost Compensation Settlement Tool Allows You to Assess Economic Damages Accurately and Efficiently, under Various Scenarios”, provides additional information on a settlement tool.

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Clik here to view.Many people that think they have suffered from medical malpractice fail to pursue and file a legal claim because of the challenges that lie ahead (e.g., legal fees, risk of the claim not succeeding, etc.). To be successful, a medical malpractice claim generally needs to prove that (i) the treating medical professional fell below the accepted standard of care, and (ii) the alleged substandard care caused the injury. However, these hurdles are much easier to overcome when a patient experiences a surgical “never event” (a term used in the medical community to describe a preventable surgical event that is “never” supposed to occur). A “never event” includes events that you see on television and movies:

• leaving foreign objects (sponges, towels, scalpels, etc.) inside patients
• performing surgery on the wrong patient
• performing the wrong surgery

According to a recent Johns Hopkins University study, these “never events” are not only on television and movies; they occur at a surprising rate in real life. The event of leaving a foreign object inside a patient’s body after surgery occurs approximately 39 times per week; the events of performing the wrong procedure and  performing on the wrong body site each occur 20 times per week.

This study is believed to be the first to quantify national rate “never events”.  The study was based on 20 years of historical data (1990 – 2010) maintained at the National Practitioner Data Bank (NPDB), a federal repository of medical malpractice claims.  The study identified 9,744 paid malpractice judgments and claims totaling $1.3 billion in payments.  Deaths occurred in 6.6% of patients, permanent injury in 32.9%, and temporary injury in 59.2%.  Approximately 80,000 surgical near events are estimated to have occurred in American hospitals during the 20 year period; approximately 4,000 are estimated to occur each year.

Because this study’s results are based on medical malpractice claims, many of its statistical estimates may be low.  Even though a patient that experienced a surgical “never event” may be more likely to file a medical malpractice claim than a patient that suffered from something less than a “never event” (because the claim is more likely to be successful), the “never event” patient may still not file a claim for a variety of reasons.

Since the “Great Recession”, cost saving on litigation continues to be a grave concern for practically everyone involved.  The states’ judiciary systems are just one of the many; attempting to save costs on judicial resources, states continue to put pressure on both parties to settle.  Florida recently passed a Proposal for Settlement Statute related to alleged negligence in civil actions that, among other things, imposes sanctions on litigants who reject settlement proposals if they do not receive a larger damage award at trial than the settlement proposal. Specifically, the statue contains the following language:

In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer, and the court shall set off such costs and attorney’s fees against the award. Where such costs and attorney’s fees total more than the judgment, the court shall enter judgment for the defendant against the plaintiff for the amount of the costs and fees, less the amount of the plaintiff’s award. If a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorney’s fees incurred from the date of the filing of the demand. If rejected, neither an offer nor demand is admissible in subsequent litigation, except for pursuing the penalties of this section.

An accurate and credible damages settlement tool can be an effective and less costly means to (i) assess the economic damages associated with a lost earnings claim (e.g., personal injury, medical malpractice, wrongful termination, failure to promote), and (ii) have a successful settlement.   The article, “Lost Compensation Settlement Tool Allows You to Assess Economic Damages Accurately and Efficiently, under Various Scenarios”, provides additional information on a settlement tool.