The calculation of economic damages involved in personal injury and wrongful death cases differs depending on the state in which the case is filed. In this article, we review Kentucky's laws and their effects on economic damages.
In Kentucky, economic damages are defined as the direct or monetary losses the injured party and family have incurred due to the injury. Economic damages in Kentucky include:
There are no limits on economic damages or non-economic damages in any type of injury case in Kentucky.
Lost wages and income are calculated as the lost earnings capacity of the injured individual. That is, the value of what they were capable of earning over their lifetime. Reviewing a person's historical earnings is often useful when estimating their earnings capacity, but it may not be the only piece of the puzzle. To demonstrate this, let’s think of a few examples.
Consider a factory worker who has been employed with the same company for a decade. They may have been in line to receive a promotion to supervisor, or there may be other employers in the area who pay higher wages for similar jobs to the one they held at the time of their injury. In these cases, their historical earnings would not represent the future earnings they could have reasonably been expected to receive had the injury not occurred.
As a second example, imagine a worker who recently graduated high school or college. Workers who enter the labor market and obtain entry level positions generally earn significantly less than what they will receive throughout their career. Therefore, the historical entry level earnings likely do not represent what they could have earned in the future, had the injury not occurred.
Kentucky requires that plaintiffs attempt to mitigate their losses. This may include going back to work part-time or finding a new job. This may also include going to a hospital so that the injury does not become more serious.
In addition to the earnings an injured individual is expected to have received, benefits must be included in the calculation of losses. The benefits may include insurance premiums, contributions to retirement, and Social Security contributions. In some cases, other benefits such as meals, day care incentives, and car payments may need to be included.
Taxes are not included in the calculation of economic damages in Kentucky.
In wrongful death cases, economic damages are based on what the decedent would have earned, not what the family would have received. Personal consumption is not included in the calculation of economic damages.
Injured persons may recover medical expenses, both those that have already occurred and those expected to occur. These expenses must be related to a current physical injury - not based on the fear of a future harm.
Generally, future expenses are detailed in life care plans or medical cost projections produced by doctors and nurses. The future expected costs for these expenses must first be projected, and then discounted to present value.
Economic damages include the contributions an injured individual would make to their family had the injury or death not occurred. The chores and tasks performed for one’s family and around one’s house are referred to as household services and may include past and future time periods.
Collateral sources refer to benefits received due to the injury from independent third parties, such as insurance or worker’s compensation. In Kentucky, collateral sources do not offset or reduce the economic damages.
In Kentucky, an injured party may only recover damages if they are found to have less than 50 percent of the negligence which led to the injury. If the injured party is found to have some negligence, then their percentage of negligence is removed from the recoverable damages. For example, if the injured party is found to be 20 percent at fault, then the estimated economic damages would be reduced by 20 percent.
A common practice in Kentucky is to utilize a "total offset rule", which assumes the growth rate of the related loss is equal to the interest rate the plaintiff would receive from their assumed award. By assuming these two rates are equal, it effectively ignores any present valuation of the losses.
Often economists in Kentucky will utilize the offset rule, but also include real growth in earnings or expenses as their growth rates may be significantly higher than interest rates.
As interest rates are at historic lows, the use of a 0% "total offset rule" may understate the damages.