When someone suffers a traumatic brain injury (TBI) due to another party’s negligence, such as in a car accident, they may be eligible to seek financial compensation. Two major areas of compensation in brain injury lawsuits are lost wages and diminished earning capacity. Here’s how these damages are typically calculated in brain injury cases:
Lost Wages
Lost wages are intended to compensate the injury victim for the actual income they were not able to earn due to their brain injury and recovery process. The calculations involve several factors:
- Pre-injury Income – Attorneys will gather tax returns, pay stubs, W-2s, and other wage verification to establish the victim’s earnings history. The goal is determining their baseline wage and earnings trajectory pre-injury.
- Inability to Work Post-Injury – Next, documentation is gathered showing the dates and duration of time the victim was medically unable to work after their brain injury. This may span their hospital stay, rehabilitation, medical appointments, etc.
- Expected Work Life – The victim’s age, health, occupation type, education level, and other factors prior to the injury are used to estimate how many more years they could have reasonably expected to work and earn an income, if not for their disabling injury.
- Growth Rate – An estimated growth rate accounts for any likely pay increases over the victim’s career, such as 3% per year. This adjusts lost wage calculations for inflation and earning trajectory.
All the above is used to project total lost income the victim will sustain over their remaining working years due to their inability or reduced ability to earn wages post-injury.
Diminished Earning Capacity
Diminished earning capacity looks beyond just the immediate income losses from missing work during recovery. It attempts to compensate victims whose future earning potential will remain permanently reduced due to lingering physical or mental impairments from their brain injury.
The calculation involves comparing their likely earnings before versus after the injury over the remainder of their working life. The differential in projected earnings equals their diminished earning capacity.
Some factors looked at when trying to predict and quantify losses to future earning potential:
- Medical Evaluations – Doctors are asked to give opinions about the victim’s residual symptoms, cognitive deficits, and permanent functional impairments that may impact their ability to work. This establishes the medical basis for projected career impacts.
- Vocational Assessment – Similarly, vocational experts will evaluate the brain injured victim’s current condition compared to their pre-injury capabilities. They will give opinions about how their deficits may necessitate a career change, part-time work rather than full-time, more accommodations, lower skilled work, early retirement, or facing higher absenteeism.
- Economic Analysis – Finally, labor market data, education level, occupational projections, earnings figures, and actuarial tables are utilized to assign a dollar amount to the brain injury victim’s decrease in earning potential over remaining years. The economic loss is reduced to present cash value.
In many cases, the diminished earning capacity ends up being a more substantial component of compensation versus just immediate lost income while out of work. This element of damages looks farther into the future at the victim’s permanent impairment and lasting economic harm from their disabling brain injury.
Why These Damage Elements Matter
It’s extremely difficult for victims and families following a traumatic brain injury, as their lives are suddenly upended emotionally and economically. Not only are they trying desperately to achieve maximum medical improvement and recovery, but they face enormous financial pressures. Lost income may impact their homes, savings, healthcare access, debts, education plans, retirement savings and more.
Full and fair compensation for all past and future wage loss is necessary to help the injured person regain stability and continue on their recovery journey post-accident. Victims should seek experienced legal representation to pursue their complete entitlement under the law.
A California brain injury lawyer with expertise in documenting and calculating both lost wages and diminished earning capacity can demonstrate the true financial costs, today and into the future. When substantiated fully, the losses add justification for securing a favorable settlement or court award.
