Introduction
Economic damages are objectively verifiable monetary losses resulting from an injury or incident, such as medical bills, lost wages, and property repair costs. These tangible, out-of-pocket expenses are designed to make a victim “whole” again by covering both past losses and future, estimated financial impacts. Unlike non-economic damages, which address intangible losses suich as pain and suffering, economic damages can be calculated using verifiable documentation such as bills, receipts, and wage records.
Common Examples of Economic Damages
- Medical Expenses: Includes all past and future costs for hospital stays, surgeries, doctor visits, medications, physical therapy, and diagnostic tests.
- Lost Wages & Earnings: Compensation for the income lost while an individual is recovering and unable to work.
- Loss of Earning Capacity: Compensation for the long-term impact on a person’s ability to earn a living in the future due to a permanent disability or career change.
- Property Damage: The cost to repair or replace property damaged during the incident, such as a vehicle or personal belongings.
- Out-of-Pocket & Replacement Services: Expenses for things like transportation to medical appointments, childcare, home modifications (e.g., wheelchair ramps), and household services (e.g., cleaning, cooking) that the victim can no longer perform.
How Economic Damages Are Calculated and Proven
- Documentation: Proving these damages requires an objective “paper trail,” including invoices, tax returns, and employment records.
- Expert Testimony: For future losses like medical care or earning potential, experts such as economists and medical professionals are often used to project costs based on life expectancy and economic factors.
- Calculation Goal: The objective is to return the victim to the financial position they would have been in if the accident had not occurred.
Factors Influencing Awards
The Plaintiff Was Partially at Fault
- Used by most states, the total award is reduced by the plaintiff’s percentage of fault. For example, if a jury or judge awarded you $50,000 in economic damages, but you were found 20% at fault, you would receive $40,000.
- Used in a minority of states, if the plaintiff is found to be even 1% at fault, he is completly barred \from receiving any compensation.
- There are two catagories of modified comparative negligence used in different jurisdictions:
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- 50% Rule: The “50% rule” lets plaintiffs recover if they are 50% or less responsible for the accident. Colorado, Georgia, and Utah follow this type of modified comparative negligence.
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- 51% Rule: The “51% rule” allows recovery up to 50% liability, but bars recovery if the plaintiff’s negligence is more than 51%. Texas, Vermont, and West Virginia use this type of modified comparative negligence.
- Tennessee’s “modified comparative fault” system adoped by the Tennessee Supreme Court in McIntyre v. Balentine, 833 S.W.2d 52 (1992) has a 50% bar rule, meaning an injured party can recover damages only if they are 49% or less at fault. If 50% or more responsible, compensation is completely barred. Damages are reduced proportionally to the percentage of fault assigned. Other states following this rule include Colorado, Georgia, and Utah.
Caps on Economic Damages
- Damage Caps: While most states do not cap economic damages, some have limits for specific cases like medical malpractice. Tennessee law imposes no caps on economic damages.
Key Details on Tennessee Damage Caps:
- Economic Damages: No cap. You can recover the full amount of documented medical care, lost income, and property damage.
- Non-Economic Damages: Generally capped at $750,000 per plaintiff.
- Catastrophic Injury Exception: The non-economic cap increases to $1,000,000 for injuries such as spinal cord injuries resulting in paraplegia, amputation of two hands/feet, third-degree burns over 40% of the body, or wrongful death of a parent of a minor child.
- Punitive Damages: Generally capped at $500,000 or two times the total compensatory damages, whichever is greater.
- Exceptions to Caps: The non-economic caps do not apply if the defendant acted with intent to harm, was intoxicated, or intentionally destroyed evidence.
Exceptions Where Caps Apply
- While standard civil actions do not cap economic damages, a combined limit applies when suing governmental entities.
- Governmental Tort Liability Act (GTLA): When suing state or local government entities, total damages (economic and non-economic combined) are typically capped at $300,000 per person and $1,000,000 per
- Aggregate Limit: The $750,000 cap is applied in the aggregate for a single personal injury action, rather than per claim.
Collateral Source Rule
In some jurisdictions, defendants cannot reduce the damages they owe even if the plaintiff’s own insurance has already paid for certain costs.
The Rule in Tennessee
Tennessee’s collateral source rule prohibits defendants in personal injury cases from reducing their liability by presenting evidence that the plaintiff received compensation from other sources, such as insurance, worker’s compensation, or benefits. This rule ensures tortfeasors cannot benefit from a victim’s financial foresight or insurance coverage.
Key Aspects of the Tennessee Rule
- Full Medical Bill Admission: Under the Tennessee Supreme Court ruling in Dedmon v. Steelman, plaintiffs can present the full, undiscounted amount of medical bills as reasonable expenses, even if insurance paid a lower, negotiated rate.
- Excluded Evidence: Defendants generally cannot inform the jury about payments from insurance, Social Security, or other third parties..
- Purpose: The rule aims to ensure victims receive full compensation and prevents wrongdoers from benefiting from the injured party’s insurance or benefits.
- Applicability: Applies broadly to personal injury cases but has distinct limitations in medical malpractice claims.
Tennessee Administrative Office of the Courts
- Exceptions: While generally applicable, the rule does not apply in all scenarios, such as certain cases where benefits are paid by a specifically contracted insurance policy, though this rarely reduces the total verdict for damages.
Frequently Asked Questions
What is included in economic damages?
- Medical Expenses: Past and future costs, including hospital stays, surgery, medication, and therapy.
- Lost Earnings: Income lost due to time off work, as well as diminished future earning capacity.
- Property Damage: Costs to repair or replace items (e.g., vehicles, electronics).
- Other Costs: Household services, transportation for care, and specialized equipment.
‘How are they calculated?
- They are calculated by summing all documented bills and expenses.
- Future losses are estimated based on expert analysis, such as medical projections or vocational assessments.
What is the difference between economic and non-economic damages?
- Economic: Tangible, quantifiable financial losses (e.g., bills).
- Non-Economic: Subjective, non-monetary losses such as pain and suffering, emotional distress, and loss of enjoyment of life.
Are there caps on economic damages?
- In most cases, there is no limit on the amount of economic damages you can recover.
How do I prove economic damages?
- Documentation is crucial, including medical records, invoices, receipts, pay stubs, and tax returns.
What if I am partly at fault?
- Depending on the jurisdiction (e.g., comparative negligence laws), your recovery may be reduced by your percentage of fault.
Conclusion
The purpose of economic damages is to make an injured party “whole” again by providing monetary compensation for quantifiable financial losses caused by another’s negligence. This legal principle aims to restore the victim to the same financial position they were in before the incident, covering tangible costs like medical bills, lost wages, and property damage.
Timothy L. Miles, Esq.
Law Offices of Timothy L. Miles
Tapestry at Brentwood Town Center
300 Centerview Dr. #247
Mailbox #1091
Brentwood,TN 37027
Phone: (855) Tim-MLaw (855-846-6529)
Email: [email protected]
Website: www.classactionlawyertn.com
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