A. To summarize and document the valuation.

[In Wrongful Death actions, future damages are treated as lump sums and the valuation does not involve application of lump sum rules, any statutory inflation or discounting. As a result, the summary document is the valuation.]

1. Valuation Summary is the basic document. It lists each element of loss, together with the future damages period. As Appropriate, it applies taxes to reduce lost or impaired earnings. It then applies the rules for determining lump sums, and reclassifies Loss of Consortium and Loss of Services to lump sums. It lists the remaining undiscounted future loss element amounts, deducts discounted collateral source offsets, and discounts each element of future loss by the applicable rate. A litigation expense rate is applied against past damages, lump sums and individual discounted future loss elements to arrive at a net discounted award. An attorney fee rate is then applied against past damages, lump sums and individual discounted loss elements net of litigation expenses to arrive at a net Award.

2. Negotiation Worksheet is really a detailed reconciliation from Gross Element Award to element Award Value, and then a reconstruction back to a total Award.

Total Element Award reduced by any taxes (if applicable to the element of loss)

• �Lump sums net of pro-rated litigation expenses
• �Pro-rated Litigation expenses applicable to lump sums
• �Pro-Rated attorney fees applicable Lump Sums

To arrive at a Net Undiscounted Element Award ( agrees with The Summary undiscounted net Award). This is then discounted by the appropriate rate to produce a discounted Award that is then

• �Pro-rated Litigation expenses applying to the discounted value
• �Pro-Rated attorney fees applying to the discounted value
• �The discounted value of the net Collateral Source Offsets (discounted at the same rate as the related loss element)

To arrive at a net element Award. Gross and Net first monthly payments are also listed.

Individual net elements are accumulated into the three major categories of Pain and Suffering, Medical Expense and Economic loss. They, in turn are totaled to an Overall Net Award.

Collateral Source offsets are then added back, together with the total allocation of expenses and fees to future damages.

The Net undiscounted amounts associated with Award elements are also totaled,expenses and fees allocable to lump sums are added, as well as lump sums. Total taxes are added back and the result is the total Gross Award.

The system then lists the cash values that with which the defense will part, and, if Award updating has been used, a complete listing of past damages an offsets.

3. Monthly Loss Element and Collateral Source Payments is a listing of individual future monthly payments by year. The monthly payments for Pain are increased by 4% each year. Collateral Source Offsets payments are increased by any COLA increase or for Social Security benefits, 3% a year.

4. Annual Loss Element and Collateral Source Payments is a listing of individual element future payments per year and part year.

5. Annual Loss Element and Collateral Source Discount Values is a listing of discounted individual element future payments per year and part year. The element total agrees the element net Award on the Valuation Summary, except for those elements to which Collateral Source Offsets apply. If expense and fee rates are applied against Collateral Source Offsets, the net will fairly closely approximate the Valuation Summary.

Command Buttons activate a series of functions associated with reports. They include

• �File Input
• �Save
• �Make an Offer
• �Receive an Offer
• �Print. It prints the report on display.
• �Alter Variables
• �Award Interest

B. To alter certain key variables primarily associated with future awards, to show the impact in the Valuation Summary and to directly compare the effects of different sets of variables.

Discount Rate Selection. Amended 50A defines the discount rate, using the 10-Year Treasury rate in effect on the date of the verdict, as the weighted average of the10-Year Treasury rate for the first 20Years and two percentage points above that rate for each year beyond 20 years. Original 50A merely provides for use of "... the discount rate in effect at the time of the award...". Without further definition or acceptance of 'rate in effect', the average daily yield on the date of the verdict has come into common use for both Amended and original 50A.

The only rates in effect are the face rates for each quarterly note issue, in other words, approximately 40 different rates at any point in time. There are also auction yields, or the rate based on the amount that the purchaser paid. As there are a number of different 10-Year Treasury rates/yields that could be selected, or different averages or weighted averages of auction rates/yields, the system offers the capability of calculating auction averages or weighted averages for the period from passage of Amended 50A to any specified auction point and weighting those auction results. Individual auction rates or yields, individual average monthly yields, or different daily yields can be selected.

If averages are employed, the averages, weighted averages and detail supporting them are incorporated in a certificate.

First Payment Date Selection. Amended 50A provides that the first payment date for future damages will the date of the verdict "...(unless some other date is specified in the verdict)...". The original statute implies that same first payment date by defining present value using the discount rate in effect at the time of the Award and specifying that payments are in advance.

In the process of reaching resolution, selection of a different first payment date will change the value of the future Awards.

If some other future date is specified in the verdict, the point of valuation for the element would presumably be that future date. If the future date is used, the discount rate would be the only one specified in Amended 50A. Any resulting value would be as of the future date, and to arrive at a value as of the verdict date, it would have to be discounted a second time. The initial system incorporates just such a facility.

Collateral Source Offsets are determined independent of the jury verdict. They apply to both past and future damages. If Collateral Source offsets were included in the Award, the various components are allocated between past and future damages. Offset payments related to Lost or Impaired Earnings can be deducted from total lost or impaired earnings for purposes of calculating taxes.

Options exist to eliminate the calculated tax impact of offsets from past and future Lost or Impaired Earnings and/or add back the tax impact to past and future taxes.

Application of Taxes. Except for Wrongful Death, taxes are determined independent of of the jury verdict. Taxes apply to both past and future Lost or Impaired Earnings, and as mentioned above can be adjusted for Collateral Source offset payments.

Options exist to eliminate taxes or to adjust calculated tax rates in 1/4 of 1% increments or decrements.

Allocation of Expenses and Fees to Collateral Source Offsets. Once expense and fee rates are determined, they are allocated against past damages, lump sums and discounted future damages. If the allocation to discounted future damages occurs before application of the discounted value of Collateral Source offsets (In effect, reducing the value of the Collateral Source offsets), the elements net future damages will agree closely with total of annual discounted values adjusted for annual Collateral Source offsets.

An option exists to apply or remove the adjustment for Collateral Source offsets.

When any or all desired changes are entered, 'Show Impact' will produce a Summary that reflects those changes. 'Compare' will appear and, when used, will yield a side-by-side comparison of the changes by iteration. 'Record' will change the data base and, if saved will record the changes to the file.

C. To apply Award Interest and show the impact on the Valuation Summary.

In Wrongful Death actions, future damages are not discounted but treated as lump sums. In these cases, the Award file is transferred directly to the Report Section for calculating and allocating expenses and fees to produce a Net Award and provide a Summary report.

Interest is applied from the event of loss (death), with somewhat different treatment for different components of loss.

Lump Sums (including future damages) are first discounted back to the date of death before pre-verdict interest is applied.

Past Damages are discounted back to the date that each payment was made or was due. In the alternative, a weighted average date for all past damages can be employed. [The Awards worksheet calculates such a date]

Pain and Suffering. A strong case can be made its treatment as a Pecuniary Loss to which pre-verdict interest is to be applied, and, since it ends with death, it should not be discounted. System options are to include or exclude in calculating pre-verdict interest, and discount or not discount before applying interest.

Pre-verdict interest of 9% is applied to the net result. Pre-judgment interest of 9% is applied to the total undiscounted Award plus pre-verdict interest. Pre-payment interest is applied to the total undiscounted Award plus pre-verdict and pre-judgment interest.

In Personal Injury actions, pre-verdict interest is applied only in bifurcated cases, or those in which the liability verdict pre-dates the Award. In that case, the total Award is discounted back to the liability verdict before interest of 9% is applied.

In the simplest version, Pre-judgment interest of 9% is applied to the total Award plus any pre-verdict interest. Pre-payment interest is applied to total Award plus pre-verdict and pre-judgment interest.

In the more complex environment where periodic payments are due from the date of the Award verdict, the interim payments between Award and judgment or Award and payment are made as cash. The remainder is then addressed through the defendants' offers and guarantees.

The application of pre-judgment and pre-payment interest would then be in two parts.

In the same manner as employed for discounting of past damages in Wrongful Death actions the interim payments should be discounted back to some average date, and interest then applied to that interim value.

The total of interim payments should also be discounted back to the Award date, and deducted from the element's Net Award. Interest is then applied to the remaining Net Award.

Using 'Interim', the system defines the number of interim payments by element, the amounts including any statutory inflation, an overall interim date, application of interest to interim payments and the application of interest on the remaining Net Award. The option is activated by selection of judgment, payment, or those events plus 1 month in the event that periodic payments would not commence for a month.

D. To produce Judgment or payment Work-ups.

This is a reprise of the Award Summary listing the allocation of expenses by element, listing Collateral Source offsets, and updating the Award for interim payments and interest. The various component amounts are detailed and allocated.

E. To evaluate use of annuities to satisfy the various periodic payment streams.

The Structured Settlement Protection Act provides that annuity costs are to be reported. This information has value only when it is compared to the remainder of the Net Award allocable to an annuity and the total payments to be made through an annuity.