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Loss of Earnings/Diminished Earning Capacity

Loss of Earnings/Diminished Earning Capacity

Loss of earnings and diminished earning capacity are two elements of a personal injury claim that can justify personal injury compensation. Loss of earnings refers to earnings you have already lost. Diminished earning capacity refers to future lost earnings caused by long-term or permanent injuries.

Maximum Medical Improvement (MMI): A Critical Legal Concept

Maximum Medical Improvement (MMI): A Critical Legal Concept

MMI is the point in time, certified by your doctor, where your medical condition is unlikely to improve. If MMI means a full recovery, you need to reach MMI before you can accurately calculate your medical bills and lost earnings.

For some people, however, MMI doesn’t mean a full recovery. Instead, it means long-term or even lifetime disability. Circumstances like these will force you to estimate your future losses, perhaps for decades into the future.

Loss of Earnings

To calculate most earnings, you wait until you reach MMI and then look to the past. Consider the following factors that may apply to your situation:

  • How much money have you already failed to earn because of your injuries?
  • How much work did you miss while you were in the hospital?
  • How much work did you miss while you were recuperating at home?
  • How much sick leave and vacation time did you use? Even if you were paid for these days, you still have fewer paid leave days going forward.
  • How much work time did you miss attending doctor’s appointments and receiving outpatient medical treatment?
  • After you returned to work, did you have to work part-time for a while?
  • If you are self-employed, how many business opportunities did you miss? Did you have to drop any clients? Your losses could be more difficult to calculate.

A typical example of lost earnings is a car accident that cost you two weeks of work time due to whiplash.

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Diminished Earning Capacity

To calculate diminished earning capacity, you look to the future. How much work do you think you will miss in the future due to your injuries? If you can return to your previous position at the same pay immediately after reaching MMI, you did not suffer diminished earning capacity. If you have to settle for lower pay (or not pay at all) in the future, you suffer from diminished earning capacity.

A typical example of an accident that might generate a diminished earning capacity claim is a slip and fall accident that leaves you with permanent brain damage. Three factors will maximize the amount of money you should demand:

  • How much money you were making before your injury;
  • The seriousness of your disability; and
  • The length of your disability.

If your disability is permanent, your age is critical. You will lose a lot more money if you must retire at 30 than if you must retire at 62.

Why You Have To Get Diminished Earning Capacity Right the First Time

Any private settlement agreement will include a clause that requires you to permanently abandon your claim for compensation once the defendant has met the terms of the settlement agreement. If your settlement is $120,000, for example, you cannot claim any further payment at any point in the future.

Likewise, if you win a court judgment, once appeals are exhausted, the principle of res judicata takes over. Your case is then permanently closed, for better or for worse.

Either way, if you underestimate your future needs and come up short ten years from now, you will be out of luck. The only way to make sure this doesn’t happen to you is to calculate and claim the appropriate amount the first time around. Realistically, you might need expert testimony to prove your claim.

Workers’ Compensation: A Completely Different System

If your injury occurred at work or was work-related, the workers’ compensation system will probably apply. In one sense, that is good—under workers’ comp you don’t have to prove fault to win. You can even win compensation if the accident was your fault.

On the other hand, damages can be greatly diminished if you rely on workers’ compensation. You can receive all of your medical expenses and about 70% to 75% of your lost earnings.

You cannot receive compensation for pain and suffering or other non-economic damages, however. This is a major limitation, since non-economic damages often add up to more than half of your total award. You can work around this limitation if you can find an at-fault party other than your employer.

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Contact a Seasoned Austin Personal Injury Lawyer

An experienced Austin personal injury lawyer should have many years of experience calculating and proving lost earnings and diminished earning capacity. You can definitiely affrord to hire a personal injury lawyer if your claim is strong. Most personal injury lawyers will not charge you legal fees unless they win or settle your case.

Contact FVF Law to seek legal assistance on your personal injury case at (512) 982-9328.

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