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Posted by on Nov 7, 2016 in Publications |

Court of Appeals Sets Standard For Loss Of Earning Capacity Claim

Court of Appeals Sets Standard For Loss Of Earning Capacity Claim

It will come as no surprise that injuries affect our lives in a wide variety of different ways, including the impact an injury can have on our ability to work. When it comes to recovering damages in a lawsuit for the impact an injury has on our ability to work, the damages generally fall into two categories: what a person would have earned – i.e. loss of earnings – and what a person could have earned in the future – i.e. loss of earning capacity.

An actual truck driver gets injured…

To better understand the difference between these two categories, consider two different situations. First, let’s say you are working as a truck driver but, due to a back injury, are unable to drive for a month. If you filed a lawsuit seeking damages for this injury it would likely be a loss of earnings claim, as what you’d be trying to recover (ignoring workers’ compensation claims for purposes of this example) is the wages you would have earned but for the injury. In this situation, we say “would” have earned because we can establish, to a reasonable degree of certainty, what you would have earned based on evidence such as past job performance, length of employment, and your salary or hourly wages.

…and then an “almost” truck driver gets injured

Now, let’s say you instead just successfully completed truck driver training and immediately have several job offers but, before you can accept a position, you permanently injure your back and are no longer able to to drive. If you filed a lawsuit seeking damages for this injury it would likely be a loss of earning capacity claim, as what you’d be trying to recover is the wages you could have earned but for the injury. In this situation, we say “could” have earned because there’s a significant element of uncertainty – that is, while it’s certainly possible you could have gone on to be a great truck driver and be employed for the next thirty years, it’s also possible you would have been a terrible truck driver and wouldn’t be able to keep a job.

The Court of Appeals sets loss of earning capacity standard

Given this uncertainty, how is a jury supposed to calculate loss of earning capacity when the plaintiff has yet to actually start a career? This is the question that the Court of Appeals recently answered in Licudine v. Cedars-Sinai Medical Center, stating that a jury “must look to the earning capacity of the career choices that the plaintiff had a reasonable probability of achieving.” As such, a plaintiff cannot simply claim that he or she would have become a “world-class athlete, neuroscientist, or best-selling author just by testifying that is what she wanted to do.” Instead, a claim can only be based on “the career choices the plaintiff stood a realistic chance of accomplishing.” In short, the sky is not the limit and you can only claim losses for a career that you can prove you could have achieved.

With this in mind, let’s turn back to our second example. There, although there is still some uncertainty, the evidence would probably support a loss of earning capacity claim based on a career as a truck driver because you not only successfully completed truck driver training but also demonstrated a high degree of skill so as to have immediately had several job offers. On the other hand, that same evidence would not support a loss of earning capacity claim for becoming, say, an astronaut or a chef, no matter how much you may have dreamed about becoming one or the other.

The new standard has consequences for young injured parties

So what is the practical effect of this? Generally speaking, the younger the plaintiff, the more difficult it will be to support a claim for loss of earning capacity – a junior high student, for example, will have an extremely difficult time reasonably proving that 10+ years down the road she would have completed medical school and gone on to become a successful doctor. While this was, arguably, already the case before Licudine, the Court of Appeals left no question that this is the new normal. As such, it is critical that an attorney representing such a plaintiff looks elsewhere to obtain compensation for long-term injuries and an attorney representing the defendant ensures that a loss of earning capacity claim does not go forward on mere speculation.

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If you’re involved in a lawsuit or risk management and have any questions regarding current or potential legal issues, we would urge you to contact an attorney as soon as possible to obtain advice, guidance and representation. At Baker, Keener & Nahra, we have the experience, skill, and drive to get the best possible results for our clients, no matter the size of the case or the scope of the problem. So if we can be of any assistance to you, please contact us and let us know how we can help.