Damages In New York Personal Injury Cases– CPLR Article 50-A and 50-B: A Primer for Clients and Lawyers

When someone is injured by the negligence or misconduct of another, they are entitled to recover monetary damages from the wrongdoer to compensate them for the harm that was caused. In New York, by law, specifically Articles 50-A and 50-B of the Civil Practice Law and Rules, damages are computed in a manner that is unique in the United States. In many ways these rules can be highly favorable to the injured party but only if they are understood and properly applied by the attorney representing the injured person.

Elements of Personal Injury Damages in New York

In general, personal injury damages are broken into two categories: Economic and non-economic. Different rules will apply to determining how much will be paid depending on whether the injury results from medical malpractice or other types of negligence such as an automobile accident.

Economic damages consist of money to compensate for (a) lost earnings or diminished earning capacity and fringe benefits; (b) the cost of any past and future medical and other care made necessary by the injury; and (c) the cost of replacing those household services that the injured person can no longer perform and now must either pay for someone else to do them or do without them. It may also include the value of extraordinary nursing services provided by a spouse or parent. These economic damages can be calculated and presented by the use of appropriate expert witnesses, including physicians, economists, life care planners, vocational rehabilitation specialists, and others. However, as explained in more detail below, proper understanding and application of Article 50-A and 50-B by an attorney well versed in this aspect of law is critical and can make an enormous difference in the amount of damages that are paid.

The second category of loss in an injury case is “non-economic” in nature. It consists of compensation for the pain, suffering and loss of enjoyment of life. It can also include the loss of services–“consortium” provided by a spouse– or other services to family member. Although these damages cannot be mathematically computed, they can be a very significant amount of money, and, depending on the case can exceed economic damages. The skill and experience of an attorney in evaluating and presenting element of damages is critical in maximizing the recovery for “pain and suffering.”

Articles 50-A and 50-B

Damages in cases involving medical malpractice are governed by CPLR Article 50-A. Personal injury damages in all other cases are determined pursuant to Article 50-B. Although there are significant differences between these two statutes, each of them, if properly understood and applied, are highly beneficial to the injured person. It is therefore critical for any attorney handling a personal injury case to understand and know how to utilize these statutes in order to obtain a judgment for the full amount damages to which a victim of negligence is entitled under these very favorable laws.

It is beyond the scope of this page to detail all of the intricacies of these complicated statutes, so only the bare bones will be discussed below. The impact of CPLR Articles 50-A and 50-B on the actual damages that should be paid is not well understood by most personal injury attorneys or insurance companies. Defendants and their insurance carriers continue to mistakenly assume that these statutes reduce damages. In fact, however, when properly applied by knowledgeable counsel, particularly in a low interest rate environment as exists currently and for the foreseeable future, these statutes will always increase the amount of damages that will be paid.

Article 50-A

As noted, Article 50-A applies to medical malpractice cases. Article 50-A requires the jury to find among other things an annual cost for each item of future economic loss and a growth rate applicable to that element of loss. The growth rate for lost earnings would include not only inflation, but other factors such as longevity increases and promotions. For items such as future care costs, medical inflation has significantly outpaced general inflation. Each of these considerations have enormous implications when computing damages under Article 50-A.

Most people are familiar with the concept of the present value of money–the fact that $100 today is worth more that $100 paid twenty years from now, because the money today will earn some interest over that period. Conversely, $100 payable twenty years from now is worth less then $100 today. Under Article 50-A the annual payments are increased by the growth rate determined by the jury and then “discounted” to present value by the Court. By law the discount rate that must be utilized is the Ten Year Treasury Bill rate for all future damages in the first twenty years, and the Ten year T-Bill rate plus two percent for all future damages beyond twenty years.

Currently, the Ten Year T-Bill rate is .68 percent. Thus, the current discount rate for all items of future damage periodic payments is .68 percent for the first twenty years and 2.68 percent for damages thereafter. Since the rate of medical inflation is currently about 3.5%, in determining present cash value of future damages for judgment and payment purposes, damages are increased by a negative discount rate – in effect compound interest rates– of 2.82 percent for the first twenty years of all economic loss and a negative discount rate of .82 percent thereafter. As a result, the net effect of the damages due to an injured person under Article 50-A will be much higher than that the actual discounted present value of the plaintiff’s economic loss as determined by the jury. Over a period of 20 years, for example, instead of being $87.32 (the actual present value of $100 payable in twenty years) the injured party must be paid $174.40 – almost twice as much!

Article 50-B

Article 50-B applies to all personal injury cases except medical malpractice. Properly understood and applied, this Article is even more favorable to increasing damages than is Article 50-A. This is because, for technical reasons, in addition to the negative discount rate described above, the starting point for the calculation is much, much higher.

Unlike Article 50-A, instead of finding the annual current cost of future care for example, and then applying inflation before the amount is discounted, under Article 50-B, the jury is required to find the entire cost of care undiscounted to present value. Thus, a service which costs $100 today, applying the 3.5% medical inflation rate, will cost $198.97 twenty years from now. Pursuant to Article 50-B, however the court will essentially average those undiscounted costs over twenty years, and the payment in the first year will be roughly $149.49. Then, by statute the Court applies an additional 4% annual growth factor, and it is that amount which will be reduced by .68%. This again creates a negative discount rate (or compound interest rate) of 3.32%. Thus, under Article 50-B, the first year payment for an item that actually costs $100 today, will be paid today at $149.49. The same item which will cost $198.97 in twenty years, will be paid at $280.68–more than 70% more than the actual cost at that time. Obviously when care costs can exceed $100,000 a year or more, proper application of Article 50-B can be enormously beneficial to an injured client. The longer the period, the bigger discrepancy between the actual cost and the damages paid to the plaintiff.

Summary

This is complicated material, and therefore it is hardly surprising that even most experienced trial attorneys fail to grasp the enormous consequences of these statutes. Two things are clear: (1) Properly understood and applied, Article 50-A and Article 50-B significantly increase the amount of money which an injured person is entitled to recover, and; (2) Unless an attorney understands the mechanics of these provisions and knows how to apply them, the injured person will not get the full damages to which he or she is entitled under the law. Not only are these computations critical at trial, but one can not properly evaluate a case for settlement without knowing the implications of Article 50-A and 50-B.