Personal Injury Evaluation Formulas

Personal Injury Evaluation

Formulas are an old-fashioned way to evaluate cases. While many attorneys and claim professionals say they use data analysis and other sophisticated techniques to evaluate, they probably are still using formulas some of the time. Maybe it’s habit; maybe it’s unconscious. Formulas are most likely to be helpful in evaluating soft tissue injuries (sprains, strains, bruises) resulting from collisions or trip and falls. They are generally not used for fractures, dog bites or complex cases.

Formulas assume that a plaintiff’s general damages can be compensated as a multiple of special damages, specifically medical expense. To arrive at the case value, multiply the plaintiff’s past and future medical expenses by the specified multiple and then add in the actual lost earnings (loss of earnings is abbreviated LOE).

A simple case might be evaluated in a formula like this. The plaintiff incurred $4,000 in medical bills and lost a week of work. In this example we’ll assume there are no liens. If we use a multiplier of 2 to calculate the combined medical expense and general damages, we come up with a case value of $9,000.

MULTIPLE OF 2 (specials x 2 + LOE)
Medical expense $4,000
Pain and suffering $4,000
Lost earnings (one week) $1,000

Using a multiplier of three results in a case value of $13,000.

MULTIPLE OF 3 (specials x 3 +LOE)
Medical expense $4,000
Pain and suffering $8,000
Lost earnings (one week) $1,000

If plaintiff has an attorney, the attorney’s fees come out of the bottom line number.

Traditionally, personal injury professionals calculated the medical expense by totaling the bills from medical providers such as doctors and hospitals even if a health insurer paid less and the medical provider wrote off the difference. The “collateral source rule” provided that the defendant shouldn’t get the benefit of the health insurance when it was the plaintiff or the plaintiff’s employer who paid the premiums. Now the tide is turning, and in some states a plaintiff can only show evidence of what was actually paid. In those states, the medical expense figure in the formula is the actual payment number, not the bill amount.

Sometimes defendants challenge the reasonableness and necessity of the medical expenses. Let’s say the defense claims that the plaintiff over-treated with unnecessary physical therapy treatments long after the minor injury had healed. If the defense takes the position that the reasonable and necessary medical expense was not $4,000, but $2,000 and it is proper to use a multiplier of two, defense would evaluate the case this way:

Adjusted medical expense $2,000
Pain and suffering $2,000
Lost earnings (one week) $1,000

Plaintiffs regularly argue that multipliers should be much higher. Reasons for a higher multiplier might include:

  • Plaintiff treated conservatively and the bills were low
  • The injury was serious
  • The recovery period was lengthy
  • The injury is permanent

Formulas are most helpful in simple cases with simple injuries. All information is helpful, so parties can always consider a formula result. But if the case is complex, the parties will want to turn to other evaluation methods.