A black female school teacher facing multiple surgeries after a car accident and a four-year-old Hispanic boy with brain damage from lead paint in a rented apartment.
Both lives forever changed by the carelessness of others.
And both lives valued less than a white male’s when it came time to calculate their projected future earnings in personal injury claims.
Because 95% of personal injury claims result in confidential settlements, it is difficult to measure how often insurance companies and juries award females and minorities less than white males, or how great the disparity is nationwide. However, some trial lawyers, academics and policy makers argue that the practice is prevalent and unjust.
The role of forensic economists
Forensic economists estimate the potential income a victim could have made had they not been injured. They then provide recommendations to insurance companies in pre-trial settlements and testify in cases that go to trial.
A 2009 survey by the National Association of Forensic Economics (NAFE) showed that 43.6% percent of the respondents would use both race and gender data when projecting lost wages and 48.1% would use only gender-specific data.
For most cases forensic economists rely on the income potential of the individual based on his or her education level and salary history. For cases involving children, or someone without a work history, they rely on statistics to predict potential lifetime earnings. Because women and persons of color continue to earn less income in our society, they may end up with less compensation in a personal injury case under either scenario.
“Many forensic economists base their actuary calculations on a discriminatory past and biased present. But the law should not insist to replicate social injustice,” Professor Ronen Avraham of Texas University’s School of Law said. Avraham studies the damages that courts award in personal injury cases and in other settings.
Replicating social injustice
Avraham argues that personal injury victims should be factored by the compensation a person should earn in an equal society, whether or not that is the current economic situation.
“Just like when courts determine the reasonable person standard in torts, they do not perform a poll seeking to know what most people are likely to do, but rather what as a normative matter most people should do in a just society,” Avraham said. “So should be the case with respect to damages: not what minority victims are most likely to earn, but what as a normative matter they should earn in a just society.”
However, some forensic economists argue that their methodology does take into account societal trends, including improvements in wages for women and minorities.
“Forensic economic research is thoroughly vetted and published in peer-reviewed journals,” Michael Nieswiadomy, president of NAFE said. “As economists we are trying to make the best, most accurate, projections that we can. We look at structural changes in the economy and try to rely on good, solid data.”
“As economists we are trying to make the best, most accurate, projections that we can. We look at structural changes in the economy and try to rely on good, solid data.”
Forensic economists should also factor in the victim’s education level, or in the case of children, their parents’ education level, in determining potential earnings, he added.
One juror can make the difference
However, personal injury attorneys and some academics say that under the current system minorities and women, even those with advanced degrees, are still offered less compensation than white males by both insurance companies and juries.
George Lorenzo, a personal injury attorney based in Tampa, FL, has seen this discrimination first-hand in pre-litigation settlement offers.
He says, “Unfortunately, insurance adjusters know that juries often value the case of minorities at a lower number than they do for non-minorities in our society. This causes them, in many instances, to make pre-litigation offers that are low.”
Lorenzo was involved in a case where an African American teacher with a master’s degree was initially offered only $12,000 to settle after a serious accident. Four years and multiple surgeries later, she was offered $300,000, which Lorenzo still felt devalued her injuries. It took a three-week trial and a stroke of luck before the jury awarded her $1.57 million.
“In an amazing turn of events,” Lorenzo recounts, “the only black juror on the panel, who was originally the alternate juror, became the foreperson of the jury.” The jury only deliberated four hours before providing her the award.
“Often times the economic damages are less for black victims because of the lower wages baseline. The same holds true for women who are working in jobs that pay less than their male counterparts,” Lorenzo said.
“In the case of African-American injury victims, if one is fortunate enough to sit a black juror, the race issue is occasionally diminished because non-minority jurors will not overtly discriminate in the presence of a member of the black minority group.”
In this case the forensic economists had provided a fair settlement estimate, and did not use race and gender as a factor to Lorenzo’s knowledge. But existing bias in the system and in society still influenced the insurance company to give a low-ball offer to his client. Had there not been an African American jury member, the case could have gone much differently.
Juries not bound by estimates
It is important to remember that juries are looking at factors other than income projections, Nieswiadomy said, including liability. Juries can ultimately ignore the recommendations of the forensic economists and come up with their own numbers.
Juries can ultimately ignore the recommendations of the forensic economists and come up with their own numbers.
David Rosenbaum, professor of economics at the University of Nebraska, agrees. “I’ve been involved in 200 cases, about 10% of which have gone to trial. It is very hard to predict what a jury will do. Our professional opinion is what we present to the jury or judge and they are free to give it the weight it is warranted.”
Cases with underage victims offer window
When cases involve an underage plaintiff we get a rare public glimpse into how race and gender are used in determining settlements.
A recent Washington Post article outlined the story of a four-year-old boy who became mentally disabled as a result of lead paint in his parents’ apartment. The jury in the personal injury case against the family’s landlord had to determine how much more the boy would have earned over his lifetime without such an injury.
Attorneys representing the boy sought $3.4 million since the boy’s parents were college graduates and his mother had a master’s degree. The landlord’s defense countered that because the boy is Hispanic, he was unlikely to attain higher education. The defense estimated damages at $1.5 million. Ethnicity was included in calculations provided to the jury, and they awarded the boy only $2 million. After the landlord appealed, the case settled for $1.9 million.
Gender plays a role
Gender is also often a determining factor in awards in personal injury claims.
In another case highlighted by the Washington Post, a six year old girl and an unborn male baby were killed in the same car crash. The settlement for the fetus was calculated to be 84% higher than that of the girl. This conclusion was reached despite testimony that the girl “exhibited a level of intellectual ability and behavior that surpassed that of most other students.”
Martha Chamallas, a law professor at Ohio State who co-wrote The Measure of Injury: Race, Gender, and Tort Law, does not believe that this is an equitable way of determining fair compensation in a personal injury case. “The use of race-based and gender-based tables yields estimates that are based on the past experiences of women and minorities.”
“The use of race-based and gender-based tables yields estimates that are based on the past experiences of women and minorities.”
For example, if in the past, women took an average of five years out of the workplace to raise children, an estimate of lifetime earnings might be reduced by those five years. But labor force participation of mothers has changed considerably over the years and many do not take significant time off after having a baby, Chamallas said.
There is one instance in which women can receive higher verdicts and settlements than men, however. Colleen M. Quinn, who runs the Women’s Injury Law Center out of the firm Locke & Quinn in Richmond, VA, has noted that women can actually receive higher verdicts and settlements for scars and disfigurements.
“For men, scars and disfigurement are almost viewed in some cases as battle wounds or badges of honor,” Quinn explains. “And in other cases, guys are just not as concerned about appearances or can cover scars more easily. As women, we want our hands and faces to look perfect and we want to be able to show our chest, legs, back, and shoulders without defect.” Quinn tells of a case where a male client suffered from a raised bump on his shoulder from a broken clavicle in a motorcycle accident. “We ran it past mock juries who gave out far less when they knew the injured was a man as opposed to a woman. He insisted on going to trial and the outcome was as we expected – way less than a woman would have recovered.”
Projections of average earnings sometimes factor in the race of the injured. The use of race yields a projection that “builds in the lower salaries of minorities due to employment discrimination and lack of opportunities in the past, even though we are taking steps to ensure that discrimination will lessen in the future,” Chamallas told us.
“We should not replicate the discriminatory patterns of the past by projecting them into the future. Indeed, for many other identities (notably, religion), no economist, court or jury would reason that because certain religious groups have higher incomes than others, we should take a plaintiff’s religion into account when calculating damages.”
Potential legislative remedies
On December 1, 2016, a bipartisan group of legislators tried to remedy the disparate compensation issue through the Fair Calculations in Civil Damages Bill. The Act would have precluded federal courts from awarding damages based on race, ethnicity, gender, religion, or actual or perceived sexual orientation.
“Measuring a person’s potential by their color, creed, gender or sexual orientation is the definition of institutional bias,” said co-sponsor Rep. Joe Kennedy (D-Mass.) “Systemic inequities that limit opportunity, create pay gaps and impact everything from health care to education should not extend into our justice system. The Fair Calculations in Civil Damages Act will end that practice and make good on the promise of equal justice under law.”
“Measuring a person’s potential by their color, creed, gender or sexual orientation is the definition of institutional bias,” said co-sponsor Rep. Joe Kennedy (D-Mass.)
It would also have directed the U.S. departments of Justice and Labor to make similar, but nonbinding, guidelines for state courts and forensic economists.
However, if the bill created a “gender-neutral” method of measuring earning potential, it could also hurt women in some cases, Nieswiadomy said. In a case involving a traumatic injury that required life-long care, a female plaintiff may end up with a larger award than a man because women have a longer life-expectancy. In that scenario this bill would unintentionally result in under-compensating women.
The bill did not move forward in the 114th congress, which concluded in January 2017.
While there may not be a legislative fix for now, personal injury victims working with forensic economists can advance their cause and argue that they would have had more earning potential than current aggregate data suggests.
“If you think that the information is not reflective of you as an individual, explain that. Forensic economists need the foundation for saying here is why I believe this number is appropriate.”
“Give the forensic economist a good foundation for making a different decision,” Rosenbaum said. “If you think that the information is not reflective of you as an individual, explain that. Forensic economists need the foundation for saying here is why I believe this number is appropriate.”
The practice of valuing a person less because of race or gender can have an impact on the personal injury victim far beyond just the financial burden of receiving less compensation than their white peer, some experts say.
“Devaluing a personal injury is a particularly harsh way of signaling that a person is of less value in society and may even cause emotional distress in severe cases,” Chamallas said. “Discrimination is an injury that can cause a person to lose faith in the system, may dampen aspirations, and in extreme cases can produce depression and anxiety.”
What do you think? Should race and gender be reflected in income projections when calculating personal injury damages? Share your thoughts below.