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Service and Support

Terms of Use

1.) Establish damage awards, allocate damages between past and future, and generate verdict worksheets including payment details.

2.) Determine the total amount of future damages and periods over which they are to be paid. The period for future Pain and Suffering is limited to ten years. The periods for future Medical Expenses are those over which treatment or maintenance would occur. Economic Losses are limited by the period over which income would have been expected to be generated and/ or support would have been obligated or provided.

3.) Determine whether and how to apply (deduct) any Federal, state or local income taxes that would have been incurred on any expected lost or impaired earnings. Sec. 4546 specifies how taxes are to be handled in 50A cases, but makes no mention of 50B cases, though there are references to 50A and 50B in other sections of Article 45. While there are also references in case decisions to the general principle that a plaintiff should not receive a windfall, the lack of statutory reference has been interpreted to mean that taxes are not to be applied in 50B cases.

For General liability, Loss of household services should be awarded only for those services that are reasonably certain to be incurred and necessitated by plaintiff�s injuries, and the jury will set forth the period of years over which such amounts are intended to provide compensation. All references to Loss of Consortium are fairly oblique and it can be assumed that where pecuniary Loss of Consortium exists it should be treated in the same manner as Loss of Services.

4.) Allocate on a pro-rata basis the first $250,000 of future damages and deduct the resulting amount from the elements of future loss to arrive at net future awards. The $250,000 will be paid in cash.

5.) Initial Future (monthly/annual) payments are then determined by dividing the net future awards for the elements of loss by the periods over which they are to be paid. These, in turn, are factored to increase by 4% for each year or partial year after the initial year. The results are then discounted to present values. The value of elements of loss are further reduced by the value of any Collateral Source offsets. Associated annual/monthly payments are reduced by the amounts paid through the offsets.

6.) The determination of discount rates applicable to future damages was not specified until the Amendment of NY50A. Since the legislature was silent on the issue, the parties could apply any rate or rates that were appropriate and agreed to. With that Amendment of 50A, the legislature has provided guidance on the setting of discount rates and the Court may, and likely will apply that guidance to all cases independent of when they were filed and the Article to which they relate.

The discount rates applicable to future damages are now determined by using " ... the rate in effect for the 10-year United States Treasury bond on the date of the verdict." The United States issues 10-year Treasury notes, and they are of two types regular and inflation indexed. The rates for the latter are two hundred or more basis points lower than the regular notes (e.g. 7/15/03 - rate on indexed 1.875%, 08/15/03 - rate on 10-YEAR regular 4.250%). There are three rates that can be associated with any 10-year note. They are the �stated interest rate' or the face rate of the instrument, the yield at issuance (i.e. face interest X (face value/discounted price)), and the current yield. These rates can vary fairly widely. The 8/15/03 note had a stated rate of 4.25% and a yield at issuance of 4.375%. The August '03 yield on 10 year notes was 4.45%.

Since �rate in effect� does not seem to be further defined, and does not appear to be used by the US Treasury, the choice of rate may be open to question, for that matter so may reference to the type of 10-year bond.

10-year issues can be found at 'www.treasurydirect.gov/RI/OFNtebnd'.

Yields can be found at 'www.federalreserve.gov/releases/h15/data.htm'.

The rate to employ for any item of future damages is determined by applying the 10-year rate to all elements to be paid out in twenty years or less. For items to be paid out over a period longer than 20 years, determine a weighted average of the 10-year rate for the first twenty years and two percentage points above the 10 -year rate for the years beyond twenty. So if the ten year rate were 4%, a payment stream for a period of twenty years would employ a 4% discount rate, for twenty-one years a 4.0952% discount rate [((20x.04)+(1x.06))/21] and Twenty-two years a 4.1818% discount rate [((20x.04)+(2x.06))/22].

7.) Past and future economic loss may be offset by Collateral Source replacement or indemnification from insurance, Social Security Survivor benefits, Workers Compensation or employee benefits, if payment is reasonably certain. The offset against future economic loss is the current value of future payments increased by any contracted or expected increases for COLA or inflation, and reduced by any costs associated with continuing such payments. In addition, plaintiff�s or decedent�s costs associated with obtaining or maintaining the item of offset in the two years prior to the incident giving rise to the action will be applied to reduce the value of the offset. Collateral Source offsets are to be allocated between past and future damages. The resulting future offset is then discounted. It would seem that the rate to be employed would be that applied to the element of loss to which the offset relatess.

[Cost of care, cost of custodial care or cost of rehabilitation services can be offset against related awards, in whole or in part, to the extent that there is reasonable certainty of collection, and as long as they are not sources entitled by law to liens against any recovery. The Court has imposed a requirement of direct correspondence between items of loss and the collateral reimbursement. "The Court must also find that the plaintiff is legally entitled to the continued receipt of such collateral source, pursuant to a contract or otherwise enforceable agreement, subject only to the continued payment of a premium and such other financial obligations as may be required by such agreement." It is difficult to envision a care, custodial care or rehabilitative care contract for future services whose sole condition on the rendering of services is the payment of premium, or that does result in a statutory lien in favor of the care provider.]

There is no specific provision for application of taxes in 50B cases, but, if applied to the loss element, offset payments should be deducted from lost or impaired earnings for purposes of determining application of taxes. The net economic loss would then be the original economic loss less taxes.

8.) Litigation expenses and disbursements are then applied to reduce the total of past damages, the first $250,000 of future damages and the value of all future damage elements on a pro rata basis.

9.) Contingent attorney fees are then determined by applying a rate to the total of past damages, the first $250,000 of future damages and the value of all future damage elements after reduction for litigation expenses and disbursements.

10.) The Net Award is then determined by deducting attorney fees on a pro-rata basis from past damages, the first $250,000 of future damages and the value of future damage elements to yield a net value of damages. Initial monthly and annual payments are similarly adjusted.