TEA.7.0 – 2005. The Earnings Analyst 7: 109pp.
TEA.7.1 – The Net Discount Rate: Logical Relations Among Present Value Variables. Gary R. Skoog and Gerald D. Martin. Six economic variables or subsets thereof appear as sub-opinions or assumptions in forensic economists’ reports. While the net discount rate (NDR) is the key variable, it is typically not primitive; rather, it is typically derived from two or three of the other five variables, defined here as the nominal discount rate ( R ), the real discount rate ( r ), the nominal wage growth rate (G), the real wage growth rate (g), and the increase in prices, or inflation (pi). While some equations connecting these six variables are well known, this paper systematically studies all of the possible interdependencies, providing 12 binary equations in which a variable is determined by two other of the variables, and 12 tertiary equations, in which a variable requires that three of the six variables be specified. These equations permit the construction of a spreadsheet which allows the forensic economist to quickly check an opposing expert’s opinions for internal consistency, to calculate the remaining variables from the stated assumptions or opinions (if possible), and, if impossible, to understand the under specification.
TEA.7.2 – The Impact of a Reduced Life Expectancy on the Recovery of Life Care Expenses. Anthony H. Riccardi. For a profoundly injured plaintiff, a plaintiff’s lawyer may seek to effect a full recovery of the projected life-care expenses for the plaintiff’s lifetime, notwithstanding any opposing defense claim of a post-accident reduced life expectancy. The defense lawyer’s arguments are intended to convince a jury that a traumatic injury means the profoundly injured plaintiff has a reduced life expectancy and, therefore, is owed less in compensation. Although it is important for both sides to understand the potential impact of a defense-influenced verdict, the potential impact may not be fully understood unless the expected recovery is empirically analyzed. Assuming the verdict award for a plaintiff’s future life care is substantially influenced by the defense, these empirical findings demonstrate the impact on the expected recovery, generally, and actuarially under statutes which feature periodic payment laws, such as in medical-malpractice cases in New York.
TEA.7.3 – FELA Damages Calculations: Issues Relating to Benefits, Payroll Taxes, and Collateral Sources. Thomas R. Ireland. An economic expert’s projection of economic damages in a FELA (Federal Employers Liability Action) case follows the same general framework that would apply in any other type of personal injury or wrongful death calculation. A base income must be established from which projections of future income will be made. Growth rates for future income must be established. If the worker retains residual employability in another occupation, a basis for residual earnings must be established, typically with the assistance of a vocational expert. The value of lost job-related fringe benefits with both pre-injury and post-injury employments must be compared and the differentials valued. If future life care needs are claimed, experts will need to establish a foundation for such expenditures. If lost services are to be claimed, a foundation must be provided for the amount and growth rate in the value of those services. Damages in FELA cases, however, have important special features, not least among them is the fact that there are important unresolved issues in law governing how retirement benefits, Railroad Retirement Taxes and Medicare tax paid by both employers and employees must be handled and how collateral source rules apply.
TEA.7.4 – The Reasonable Certainty Rule and Implications for the Introduction of Evidence in Civil Cases. Patrick W. Fitzgerald, Michele Teeple, Gene B. Elrod, and Courtney R. Fitzgerald. The purpose of this paper is to consider the “reasonable certainty” rule as it is used in personal damages cases and to extend that analysis to contract matters by way of a discussion of a hypothetical involving the actor Sean Connery and his contract to make a movie at a time in the future when the mortality tables indicate he is unlikely to be living. Although the majority of this paper considers cases involving wrongful death, other types of cases are also included. A sizable part of this paper deals with the use of mortality tables and by courts and experts. Cases are reviewed where the courts have specifically considered deviations from such tables and the considerations for doing so as they attempted to comply with the need for reasonable certainty.
TEA.7.5 – The Standard for Valuing Lost Household Services: A Response. Joseph R. Mulhern. This paper will argue that a valid and defensible loss of household services analysis can be conducted when credibility is accorded the injured party and when standardized methods are used in the analysis as well as a statistical framework. Areas that have been seen as presenting challenges to an effective analysis such as the training and management of replacement workers are really minimal when the low skill level of most of the work is considered. Concerns about overestimation when multiple and overlapping analysis are carried out such as hedonic and/or life care in addition to household loss which can present ethical and measurement problems are discussed as well as methodology for conducting a household analysis that can be replicated and defended.
TEA.7.6 – Advantages and Disadvantages of Structured Settlements from the Claimant’s Perspective, and Recent Legislative Developments. Patrick W. Fitzgerald and Kevin S. Marshall. This article briefly surveys the historical introduction and use of structured settlements as a means of resolving litigation. Legislation that fostered a greater use of structured settlements is discussed, as well as concerns about their misuse and how this resulted in demands to alter industry practices. New legislation is then summarized.