Surprisingly, the value of personal injury cases is not just determined by the responsible party’s insurance company. The decider of fact – either a judge or jury – is the ultimate decider of a case’s worth. The responsible party’s insurance company typically knows how much judges or juries award plaintiffs with similar cases. The responsible party’s insurance company usually offers a settlement based on this knowledge.
The most common damages in a personal injury case are loss of earning capacity, medical expenses, and pain and suffering. For this post, we will keep it simple and assume the injured party has fully recovered from his/her injuries and is no longer being treated for the injuries.
While loss of earning capacity can encompass much more, for simple personal injury cases loss of earning capacity is often measured by the amount of compensation – wages, salary, tips, bonuses – not earned as a result of the accident. Loss of earning capacity also includes time missed from work while receiving treatment for injuries. Luckily, even if the injured party was paid by his/her employer during an absence – through PTO or other employment benefits – the injured party can still recover the amount the injured party should have lost if without such benefits. Why is this? Texas law does not want to allow the responsible party to benefit solely because the injured party had employment benefits.
Medical expenses include any amounts paid by the injured party or his/her insurer towards treatment sustained as a result of the accident. Medical expenses also include any amount still expected to be paid to medical providers. Any amount written off by medical providers is usually not recoverable under Texas law. Injured parties should carefully evaluate their medical bills for amounts actually paid to the medical provider or expected to be paid by the medical provider. Medical providers often write-off a chunk of their medical bills pursuant to its contracts with health insurance plans or self-pay discounts.
“Pain and suffering” is actually one of several types of damages which are not as easily calculated as loss of earning capacity or medical expenses. Other similar types of damages include mental anguish, disfigurement, and physical impairment. At trial, all of these similar types of damages will be assigned separate monetary awards by the judge or jury. However, when pain and suffering is calculated for settlement purposes, these other types of damages are often rolled into pain and suffering. The responsible party’s insurance company typically values pain and suffering by multiplying paid medical expenses by one, two, three times or more. More severe injuries typically will typically be valued higher than less severe injuries. For example, if an injured party’s paid medical expenses total $5,000 and the injured party sustained light to moderate injuries, the responsible party’s insurance company may offer an additional $5,000 for pain and suffering. These numbers may vary depending on several other factors.
Central to the valuation of a personal injury case is how much the injured party will ultimately receive from a recovery after hiring an attorney and reimbursing his/her health insurance company. The next two topics will cover (1) how much of your recovery an attorney will charge; and (2) how much your health insurer is entitled to reimbursement from your recovery.