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Thursday, February 22, 2007

Discounting Future Pain

There's an interesting Note in a recent Virginia Law Review issue challenging part of the fundamental idea of the per diem approach to future pain and suffering.  The summary:

Outside the legal academy, the debate over tort reform rages on. In the political arena, advocates on both sides of the aisle often use empty rhetoric in an attempt to persuade voters that tort reform as a whole is “good” or “bad.” Of course, this over-simplistic view of tort reform does not take into account the multifaceted nature of tort law. This Note examines one method of calculating noneconomic damages and attempts to provide a theoretical justification for why a plaintiff’s use of the per diem (or time-unit) method to compute future pain and suffering damages cannot be justified under any reasonable theory. The debate over the per diem method to calculate these damages has largely stagnated in the past forty years. During this same time period, nothing less than a revolution has occurred in the understanding of pain and pain management therapy in medical and psychological fields. However, these advances have not been incorporated into the per diem discussion. This Note analyzes and introduces the “cognitive-behavioral treatment” (CBT) model of pain to the legal literature with the hope of supplying a theoretical foundation for why the per diem argument should be impermissible in the many jurisdictions that allow such a method. The basic flaw of the time-unit perspective is that it improperly assumes a constant dollar unit for future pain and suffering without discounting for either future advances in pain management therapy or an individual’s future and likely ability to psychologically and physically cope with chronic pain.

The full PDF is here.

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I didn't read all 37 pages of the Note, but I didn't find anything in there that would warrant the abolition of the per diem argument. The author really doesn't understand it's just an argument --- a tool to try and put some value on otherwise hard to value pain and suffering. If the defendant wants to put on evidence of pain theory, etc and argue that the plaintiff will eventually get over it, he should be free to do so. That's an argument the defendant can make that the tool isn't accurate. It's not an argument to abolish the rule in its entirety.

Posted by: Brooks Schuelke | Feb 22, 2007 1:21:10 PM

The per diem argument should be abolished because it serves no legitimate purpose. Pain and suffering awards are inherently imprecise because of the subjective nature of pain. The fatal flaw with the per diem argument is that it recasts these noneconomic damages in an objective light. When a jury awards these damages in lump sums, without the benefit of the per diem method, it recognizes the subjective nature of pain and suffering and decides on a figure accordingly. Awards based on the per diem method, however, do not contain this transparency. Rather than acknowledging the necessarily speculative nature of this determination, the per diem method imputes a false sense of principled and objective reasoning toward a calculation of pain and suffering damages. It is in this sense that the per diem argument is unreasonable. Another reason why the argument should be abolished is because, as Joseph King argues, the arbitrary number that a plaintiff suggests to a jury acts as an “anchor” that a defendant must respond to. This anchor functions as a heuristic device that provides a baseline from which the jury may or may not depart from, even though this baseline does not derive from any objective basis. Permitting the per diem argument and then allowing a defendant to respond does not address these concerns. Like the “Golden Rule” argument, which is almost universally prohibited, there is a serious risk of arousing the jury’s passion and prejudice by putting the burden on a defendant to show that an injured plaintiff will eventually be able to physically and psychologically cope with the pain and suffering that has resulted from the defendant’s tortious conduct—even if the most current research tells us that a plaintiff’s current level of pain and suffering likely will not maintain at a constant rate throughout the plaintiff’s lifetime.

Posted by: Martin Totaro | Feb 22, 2007 6:05:57 PM

Interesting comment.

There's no doubt you're correct that per diem is used to put a value on a pain and suffering and impairment awards that are difficult to value. But there is nothing inherently wrong with that. Trial lawyers on both sides of the bar have numerous tools designed to do precisely that --- the per diem argument, the "business" method of valuation, etc. There are literally hundreds of tools that can be used for this. Surely you don't suggest that any argument that helps the jury put a meaningful number into the pain and suffering and impairment blanks should be forbidden.

You also assume that only plaintiffs' attorneys use the per diem argument. It can be used very effectively by defense attorneys to show the absurdity of some requests.

As far as providing an anchor, that happens regardless. The plaintiffs' attorneys ought to start setting that anchor of what they expect to ask for in voir dire and continue through until argument, when the plaintiff's lawyer stands up and asks for X amount (regardless of whether the per diem unit is used). This isn't an issue unique to the per diem argument.

I also think you give far too little credit to jurors. If the argument was able to inflame them then you would hear it in every pi case; but the fact is, you don't. And if it was as inflammatory as you insinuate, there would likely be a groundswell of opposition to it from the insurance defense bar. Again, there's no such movement indicating it's not really a problem.

The most intriguing part of your post to me is the argument that pain may decrease over time. But instead of assuming that the research is correct and eliminating the per diem argument, I think the better option is to let the defendant introduce evidence of that fact or cross-examine plaintiff's medical providers with the research, and then let the parties make whatever arguments they choose.

Posted by: Brooks Schuelke | Feb 23, 2007 10:05:03 AM

As I have attempted to show in the note, the per diem method should be abolished rather than permitted with the possibility of rebuttal because it is not relevant in the evidentiary sense. Put simply, placing a daily dollar value on pain and suffering multiplied out into the future first assumes that pain and suffering can be quantified in an objective sense and, second, assumes that this figure stays constant throughout the time period used to calculate the cumulative award. This process differs from other types of estimation because its purpose is to translate an arbitrary computation into a mathematically-certain award, and does not permit a jury to make an inference warranted by actual evidence.

The revolution in pain theory over the past three or so decades reinforces the evidentiary irrelevance of the per diem method. Advances in cognitive-behavioral treatments (CBT) for pain are ignored by a damage estimation technique based on a constant figure multiplied out into the future. We know from the CBT model that a plaintiff’s perception of pain changes as time passes, but the extent of this change is essentially unknowable at the time of trial. Taking this factor into account, I am unclear as to what purpose is served by allowing attorneys to argue over how a plaintiff’s perception will change in the future.

Related to this point about evidentiary relevance is that the per diem method confuses the issue about the jury’s role in the pain and suffering context. This method misleads a jury by conflating an inherently speculative process of determining damages with a façade of certainty. Asking for an award to compensate or even suggesting a lump sum avoids these problems because these types of argument are presented to the jury with this properly built-in recognition of the subjective nature of the awards.

Because the per diem method has been around for at least a half century, many (most?) state supreme courts have spoken on the issue. A groundswell of opposition might be viewed as fruitless at the trial level because these courts are bound by the decisions of state supreme courts. Further, the arguments for and against the per diem method have remained largely unchanged since the initial debate in the 1950s and 1960s. What has been missing from the debate, and what could be argued at state supreme courts or in state legislatures is the new scientific, medical, and psychological knowledge that we now have about pain theory.

Of course, I do not believe that a defendant should be allowed to use the per diem method either.

Posted by: Martin Totaro | Feb 23, 2007 6:26:20 PM

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