MEDICAL NEGLIGENCE CLAIMS: THE NEGATIVES, POSSIBLE SOLUTIONS THERETO AND THE POSITIVES - WHAT IT MEANS FOR THE DEVELOPMENT OF OUR LAW AND HUMAN RIGHTS

MEDICAL NEGLIGENCE CLAIMS: THE NEGATIVES, POSSIBLE SOLUTIONS THERETO AND THE POSITIVES - WHAT IT MEANS FOR THE DEVELOPMENT OF OUR LAW AND HUMAN RIGHTS

First Published on January 24, 2017 on LinkedIn

The negatives

In the last decade, medical negligence claims have absolutely skyrocketed. Not many reasons are proffered for this as it has been solely a blame game by the Department of Health ("DOH") and insurers such as the Medical Protection Society ("MPS") covering the claims of the private medical and allied health professions. Instead of finding a solution through training and better facilities as it relates to public health and fighting the spurious claims on the side of both public and private, a plaster is offered to treat a weeping sore so to speak.

MPS (and I'm sure others) keep increasing their premiums to the extent that many specialists are no longer prepared to continue practicing to foot the insurance bill and junior doctors choose less risky specialties to train in causing a brain drain in those very specialities. The blame for the enormous increase in claims in the private sector is, similarly to the public sector, put before the door of the attorneys who make it their business to seek out such claimants. The current Minister of Health, Dr Aaron Motsoaledi, ("the Minister") has been particularly scathing towards the medical negligence legal fraternity and many a journalist has jumped on the band wagon without properly considering the issue.

As in the private sector, the Minister tries to stem the flow of claims by simply putting a plaster on the festering sore in that talks are already afoot to limit claims (as with claims against the Road Accident Fund - "RAF") and provide an undertaking for medical expenses i.e paying for the treatment yourself before claiming the money back from what would have to be a dedicated claims department at the DOH. The impact of this, as in RAF claims, would be that those who cannot afford to pay first (e.g. indigent parents of children diagnosed with cerebral palsy after suffering from birth asphyxia) would be severely prejudiced as state health facilities only provide the most basic treatment for these kids (especially in poor areas), the parents often having to travel some distance to get to a treating facility and a family member giving up their own employment to act as caregiver. The child's chance of making a meaningful contribution to society through continuous treatment and skills training is forever lost.

Is there a solution?

So, how do to we treat the avalanche of claims? The DOH firstly would have to admit that their services to the public at large fall well short of a reasonable standard of care. (Please note that there are dedicated and hardworking medical personnel all over the health industry and their efforts should not be overlooked). Hospital buildings, equipment and ambulance services are either in a state of disrepair, non-existent or stuck with some committee or department that needs to make a decision. Medical personnel are in short supply and the predicted shortage in certain areas of expertise would have an impact on both the public and private sectors. An urgent need exists to involve the private sector in public health services in joint partnerships to assist in the overflow of patients and in particular in specialised fields. This would be especially helpful in the smaller communities. The establishment of non-profit organisations that can place medical personnel from across the world (in a GAP year) in mobile treatment units can also be explored. Last mentioned has been successful in the wild life industry in particular. The fact that medicine requires specialised skill cannot be ignored but it should not be impossible to extend such working visitors visas to doctors, nurses and the like.

One solution proffered to the private sector is to fight the ambulance chasers with all the might of the law in instances where there is no or little merit in the claim. Too many matters are settled that genuinely had a chance of success in a court of law. One just has to request statistics from insurers on how many matters are settled and how many proceed to trial to realise that the scales weigh heavily in favour of settlement. This has three negative outcomes, the lawyers become more motivated to institute action as they almost always get paid their fee up to 25% of the capital amount paid (see the Contingency Fee Act 66 of 1997 - "The Act")) at no or very little risk to themselves. Unscrupulous medical professionals become hired guns and the medical fraternity lose faith in the legal system and their own ability to perform up to standard affecting morale and by extension productivity and performance.

Defending worthwhile cases would not prevent the institution of litigation at the outset but would curb pay outs to non-deserving claimants and slowly but surely the legal fraternity would stop fighting claims with no or little merit as they stand to make substantial losses due to the capital input required to fight a medical negligence claim at their own cost (see The Act) thereby reducing the number of claims and the negative consequences thereof.

The second option, and probably the best option for both public and private, would be to ensure that the medical doctors and the medical facility subject all legal action to mandatory mediation prior to the matter proceeding to trial. The pre-trial courts already in place in all courts in RSA can simply refuse parties certification for trial (See Practice Directives available on https://johannesburgbar.co.za/ in re: certification) if meaningful mediation was not undertaken. The emphasis is important as matrimonial mediation has been failing divorcees for many years due to a lack of understanding of what mediation should be i.e guidance and not decision making for the parties and a general misunderstanding from both the public and the legal fraternity on what mediation is.

Legal costs would be substantially reduced and matters can be finalised much sooner if one considers that new trial dates are already being allocated into the end of 2018 and beyond in most divisions. The presence of legal representatives and experts should be encouraged due to the complexities of medical negligence disputes and the disparity in power between doctor/hospital and patient with their role reduced to giving guidance rather than fighting the fight for the patient as the decision to settle remains that of the parties and can't be forced upon them. Last mentioned would still be cheaper than full blown litigation. The very important underlying maxim of total confidentiality in mediation encourages honesty between the parties as nothing said in mediation (bar the final settlement agreement) can be used in a court of law.

The positives

It would be impossible to find something positive in this one would think, but that would be incorrect. The law is and always would be the tool to apply checks and balances and medical negligence litigation should certainly force the DOH to take a hard look at the manner in which their institutions are run, find inventive ways in which to solve their staffing, space and equipment problems so as to ensure that the poor in this country has adequate health care, a basic human right underlying all other human rights as it is a necessity for a life itself (See section 27 (1)(a & b) of the South African Constitution). Currently the-plaster-over-oozing-sore view of medical negligence litigation is hampering this positive and one could only hope that the DOH realises that they shouldn't blame the lawyers for what is clearly a disaster in public health care. One just has to look at the number of legitimate birth asphyxia matters in court on a daily basis and increasing exponentially to know that there is something seriously wrong in perinatal and neonatal care in the public sector at an estimated cost of R20 million per claim.

Placing the blame at the foot of the lawyers also loses sight of the right of the patient to defend those rights, another right protected by the South African Constitution (Access to Courts - Section 34) and to do so with legal representation. This is equally true for both public and private sector disputes, although privately insured doctors and hospitals may have those rights curtailed by an overzealous insurance provider with settlement fever.

Over-compensation in patient treatment is seen as a negative by the medical aid schemes in that it is one of the many things that is blamed for the higher than average medical inflation. I for one would prefer my doctor to rather overcompensate than just doing the basics to appease the medical aids and I would like to surmise that this very "problem" has probably led to many a diagnosis that may have been missed at first bat.

Medical Negligence litigation has contributed hugely in the last decade but in particular in the last year, to the development of the common law. Age old cases on the duty of care have been revisited and refreshed. The Consumer Protection Act (68 of 2008) (See my article in De Rebus June 2012 p22-25 "The Law of Contract, the Consumer Protection Act and medical malpractice law") has added a whole new dimension (albeit seriously underutilised in my opinion) to services and goods provided by medical health professionals and the like. The South African Constitution recently found in favour of cases arguing the provisions of the Prescription Act (68 of 1969) as it related to when knowledge is acquired of harm done and then there is now a veritable smorgasbord of case law on medical negligence that was once in short supply.

As such, from a legal standpoint, we should thank the personal injury practitioners for developing our law and protecting human rights, both from a plaintiff and defendant perspective and the public and private sectors should join hands to seek a solution to the problem that lies at the heart of the very healthcare provided.

CONTINGENCY DEDUCTIONS IN ACTUARIAL CALCULATIONS 101

INTRODUCTION

On 1 August 2008, the new RAF Act changed the lives of many people in that there was no longer an automatic right to general damages for inter alia pain and suffering. This meant that clients whom had suffered a loss of earning capacity was suddenly left without compensation and many a matter was settled on the basis that the plaintiff was only entitled to an undertaking. The right to an undertaking and the admission that an undertaking is needed for future medical expenses can be a basis for an argument on loss of earning capacity as the plaintiff wouldn’t need cover for future medical expenses if there was nothing wrong with her and would further need time off work to attend to such treatment which would translate into a loss of earning capacity.

The traditional view of damages is that you cannot separate the different heads of damages in such a manner as to decide one before the other, this essentially comes from the point of view that a loss of earning capacity should be bundled under general damages. The now infamous Deysel v RAF matter (unreported Bizos AJ) was and still is widely used in SGHC by RAF counsel (and some Judges) to force a postponement until general damages is decided (where these have been referred to the HPCSA) or to state that a loss of earning capacity should only increase the amount of general damages as the plaintiff will ‘struggle’ to do their job and an actual loss of earnings cannot be demonstrated.

It is however not that simple, a loss of earning capacity goes to the heart of the client’s ability to earn a living and in particular to the possibility of future loss of earnings due to time of work for treatment or losing out on a promotion. As much of last mentioned is often a possibility as opposed to a probability which would show a direct loss based on the evidence at hand, it cannot be ignored for various reasons. The court in Southern Insurance v Bailey (SCA) clearly stated that one cannot adopt a non-possumus attitude to loss simply because it cannot be quantified in general terms. A loss of earning capacity can also not be ignored because of the maxim of the ‘once and for all rule’ which does not allow a claimant to return for another slice of damages at a later stage.

This means that any possibility of a future loss must be taken into consideration over and above normal contingencies which an actuary would already be applying. These ordinary contingencies would not be visible in a calculation to an untrained eye as it is normally done by means of various algorithms that are automatically applied. Robert Koch in his book, The Quantum of Damages has various tables for longevity which are implemented automatically by actuaries based on the earnings and economic circumstances as well as for instance HIV status of a plaintiff (last mentioned can be more complicated though as the CD 4 count is taken into consideration) Koch also refers to normal contingencies being 5% (but for the accident on past loss) and 15% (now that the accident has happened on future loss). There is a myriad of case law on this aspect and in particular an old argument that a ½% per year should be allowed till date of retirement from date of calculation as a normal contingency) There is also a school of thought that feels that there should be no pre-morbid deduction of 5% (I’m one of them) as there is no possibility of anything unforeseen happening as it’s already in the past.

The above 5% and 15% is deducted from what the plaintiff would have earned if the accident did not happen for future possibilities such as death. The deduction is found in the first column of an actuarial calculation (depending on the actuary’s style) and is referred to as a negative contingency as it reduces your loss (explained below in more detail). The amount to be deducted from the second column is called a positive contingency as it increases the loss and this deduction is based on possibilities for a future loss of earning capacity including the prospect of early retirement. If one starts on Koch’s 15% as a normal contingency it would mean that one can never go lower than 15% on the positive deduction as that would mean that the plaintiff now has a better chance of survival than before the accident. One also cannot simply manipulate the contingencies where the plaintiff’s earnings is subject to the RAF CAP (Sweatman v RAF – SCA) without getting another calculation done unless the plaintiff falls far below the CAP. Simply lobbing off an amount from the total and calling it a contingency is also incorrect as the loss lies in the percentage difference between the negative and positive contingency and as such without a negative contingency being applied a positive contingency would skew the loss in favour of the defendant (see below).

A negative contingency can also be applied if the plaintiff is placed in a very high pre-earnings scenario, but for the accident, which scenario is for the most part only a possibility.

THE CALCULATION SIMPLIFIED

The easiest way to look at how the loss is calculated is to use an amount of R1000 in earnings for a client that could show no probability of loss, only a possibility and as such his earnings is calculated as also being a R1000 after the accident in question. We will ignore past loss.

BUT FOR THE ACCIDENT                                               NOW THAT

Earnings                    R1000                                                R1000

Less Contingency    15%                                                    25%

Equals                       R150                                                  R250

Loss                           R850                          minus            R750              = R100          

Without contingencies, no loss.

The calculation of the loss is based on what is referred to as a contingency differential i.e. the 10% difference between the 15% and the 25% and because the positive contingency is higher than the negative contingency you show a loss.

If the scenario was the other way around, say for instance where you reflect a loss based on a loss of a promotion (which was only ever a possibility) you can apply a negative contingency which would looks as follows.

BUT FOR THE ACCIDENT                                               NOW THAT

Earnings                    R10 000                                             R1000                       

Less Contingency    20%                                                    25%

Equals                       R 2 000                                              R 250

Loss                           R8 000                       minus            R 750             = R7 250      

Without contingencies, the loss would be R 9000, hence the application of the higher but for contingency being referred to as a negative contingency as stated before, it reduces the loss.

CONCLUSION

An actuarial calculation can be manipulated in several different ways to ensure that client has the best and most reasonable outcome in any claim for damages. Aspects such as retirement age as well as the date on which a client will stop getting salary increases and the discount rate applied for capitalisation can all have an impact on the loss and will explain why on the same facts two actuaries with different instructions can come to a completely different conclusion.

Appointing a curator ad litem – are we applying the law correctly?

DE REBUS June 1st, 2014

By Maud Letzler and Viviana Vergano

The appointment of curators is a daily occurrence in our courts and in particular in the North and South Gauteng High Courts where the proliferation of personal injury matters has made such appointments common place. On the other hand, in matrimonial matters it is not utilised enough to safeguard the interests of minor children, where such interests form the very dispute between parents (by inference we refer to any lawful guardian as well) and require that an independent person takes cognisance of the child’s wishes, which interests, however, may not always be sufficiently protected by an overworked family advocate.

A short summary of the different bases for the appointment of curators is detailed herein, together with an exposition of the law regulating the appointment of curators and the duties and responsibilities that rest on such curators by law or by inference.

The law

A number of writers who contributed to the Roman Dutch law from which curators originate are referred to in Ex Parte Hill 1970 (3) 411 (SA) by Van Winsen J such as Kaser Roman Private Law (Dannenburg’s trans) 2nd ed para 64 (iii); Gaius Elements of Roman Law (Poste’s trans) 3rd ed p 138; and de Groot Introduction 1.11.2.

The common law relating to curators was preserved by the Mental Disorders Act 38 of 1916 repealed twice and currently regulated by the Administration of Estates Act 66 of 1965. The latter Act of 1965, makes provision for the appointment of various types of curators inter alia a curator ad litem and would not be repeated here.

Rule 57 of the Uniform Rules of Court, deals specifically with the inherent power of the court to appoint curators and in particular, curators to people who are mentally incapacitated. A person who is not mentally incapacitated but still personally or through an interested party, feels the need to appoint a curator to manage his or her property may be declared a prodigal and a curator bonis may be appointed without the need for a curator ad litem. This is particularly useful in awards for damages where the amount awarded needs to be protected but the plaintiff is not of unsound mind (see Delius v Delius 1960 1 SA 270 (N)).

It may be useful in preparation for your duties as curator or in drafting such an application to have sight of not only Erasmus Superior Court Practice Uniform Rule 57 but also of LAWSA vol 3 ‘Civil Procedure’ Para 425 to 431; AC Cillier, C Loots and HC Nel Herbstein and van Winsen: The Civil Practice of the High Courts and Supreme Court of Appeal of South Africa 5th ed (Cape Town: Juta) p 164 – 174 and Chapter 48, which deals with this in detail; and the Administration of Estates Act and the Mental Health Act supra.

The duties

According to r 57 (5) ‘Upon his appointment the curator ad litem … shall without delay interview the patient, and shall also inform him of the purpose and nature of the application. … He shall further make such inquiries as the case appears to require and thereafter prepare and file with the registrar his report on the matter to the court, at the same time furnishing the applicant with a copy thereof.’

The Gauteng High Courts very seldom implement the procedure set out in r 57 (5) and it is maybe time that the courts crack down on the current and very common practice of appointing curators on the day of trial. A recent unreported judgment of Bertelsman J in the matter of Modiba obo Ruca v Road Accident Fund (GP) (unreported case no 73012/13, 27-1-2014) questions this practice by stating at para 1 ‘By avoiding or circumventing the provisions of the Rule and the common law principles established over decades, these matters are prevented from coming to the Master’s attention, avoiding the latter’s supervision and scrutiny while the potential need to appoint a curator bonis or curator bonis et personae to the individual concerned is not considered properly or at all.’

It is noteworthy to reflect on the commentary set out in Erasmus (B1-395), relating to the importance of the duties of a curator and the fact that because the court relies heavily on the curator’s report that he or she is to fulfil his or her duties with efficiency and fully with great responsibility, and in order for the court to exercise a proper discretion in a particular case. It is the duty of the curator ad litem, by making such inquiries as he deems necessary, to see that the existence and extent of the patient’s mental illness are properly investigated, and to ensure that the proprietary and other interests of the patient are adequately protected by the terms of the order made by the court.

The courts have mentioned that the curator ad litem may in certain circumstances function rather as an amicus curiae, and his or her primary function in the present context is to ensure that the proprietary and other interests of the patient are adequately protected (Steyn v Steyn 1972 (4) SA 151 (NC) at 151).

According to F du Bois (ed) Wille’s Principles of South African Law 9th ed (Cape Town: Juta), a curator ad litem has no power over the person or property of the person whom he or she is appointed to represent, and his or her authority extends no further than the proceedings to which his or her appointment relates. He or she is responsible only to the court for the proper discharge of his or her functions. See also Ex Parte Campher 1951 (3) SA 248 (C).

In the matter of Ex Parte Glendale Sugar Millers (Pty) Ltd 1973 (2) SA 653 (N), it was said that ‘… the duties of a curator ad litem are clearly not to be confined to, or delayed until, an appearance in Court; the curator must investigate the relevant facts and circumstances and apply his judgment extra forensically in deciding what attitude he should adopt and the precise contents of his report to the Court.’ The Sugar Millers case states further that ‘[C]urators must make such investigations and judgments in regard to the appointment of curatores bonis in terms of the Uniform Rules of Court.’

In the matter of Ex Parte Campher above at p 252, the following was said: ‘The curator will ordinarily appear on the return day of the rule if he be counsel: in the case of other curators, appearance in person, or a written communication addressed to the Registrar, will, in straightforward cases, normally suffice.’ Furthermore, the above case sets out that circumstances can easily be envisaged where the services of independent experts may also be required in addition to the services of an independent attorney. Thus, for example, it may be necessary to test an essential link in the claim that comprises documentary evidence of doubtful authenticity requiring the assistance of an expert in questioned documents. In such circumstances the curator ad litem would normally make a request to the applicant for such assistance and the applicant would, in the majority of cases, no doubt afford all reasonable assistance. In case of a difference of opinion regarding the necessity of such assistance, a curator ad litem would be at liberty to apply to the court for directions in regard to such matter.

In the Campher matter, it was also noted by Harcourt J that an over-enthusiastic curator ad litem may well incur criticism. The judge regarded this as an occupational hazard of curator’s ad litem who, being responsible persons discharging important functions to assist the court, are expected to act responsibly.

Furthermore, with regard the question as to whether investigations that were made, well before a court appearance would suffer from the demerit of not being on oath, if a curator ad litem were to have grounds to believe that this imperfection in his ability to investigate might prejudice his ability to assist the court, he should report this belief to the court which would, if convinced of the disadvantage, no doubt either send the matter to trial or direct that oral testimony should be offered. It is the duty of the curator ad litem to see that the existence and extent of the prospective defendant’s mental illness are properly investigated at the trial and – assuming that the plaintiff succeeds on the merits – to do his best to ensure that the proprietary, and other incidental, interests of the patient are adequately protected by the terms of the order made by the court. Such functions can only be discharged by responsible persons.

In the case of Du Plessis NO V Strauss 1988 (2) SA 105 (A), the court commented on the conduct of the curator ad litem, the curator’s attitude was that arguments against the appeal had been fully advanced by the respondent and that the Appellate Division would benefit if he adopted a ‘more objective’ approach. Van Heerden JA held that this attitude was clearly in conflict with the duties of the curator ad litem, and it was furthermore expected of him to advance all possible arguments in favour of his charges.

In Dickinson v Dickinson 1981 (3) SA 856 (W) at 857G, it was stated that the only duty that a curator ad litem has, after his or her appointment, is to inform himself or herself properly of the patient’s condition. He or she is clothed with no powers whatever to represent him or her on any other basis and in any event he or she has no power to enter into contracts on his or her behalf. He or she can only represent him or her during such proceedings.

In the matter of Ex Parte Comins 1951 (2) SA 249 (W), which application for the appointment of a curator bonis was heard before Murray J, the court was asked to stabilise the practice regarding the admissibility in such applications of evidence by way of affidavit without the necessity of viva voce evidence in open court to establish the inability of the person in question to manage his or her own affairs. In the great majority of cases full evidence on this point has already been given on affidavit by the medical practitioners at the stage when the appointment of the curator ad litem is asked for his or her opinion. In open court, they merely repeat such evidence and there is, normally, no necessity for the court or the curator ad litem to examine or cross-examine these medical practitioners further. In fact the curator ad litem, in the proper discharge of his duty, has previously interrogated these medical practitioners for the purpose of his report to the court.

Lastly in a more recent judgment by Van Zyl J, in the matter of Ex parte: Futter, In re: Walter v Road Accident Fund and Another (ECP) (unreported case no 2422/2008, 17-8-2012) it was stated by Van Zyl J that: ‘The person appointed as curator ad litem as envisaged in Rule 57, is not appointed to simply act as amicus curiae to assist the court in determining whether the patient is capable or incapable of managing his own affairs, and whether the proposed curator bonis is a fit and proper person to administer the estate of the patient. He is appointed as curator ad litem to the patient, to act on his [or her] behalf and to represent his [or her] interests in the litigation pertaining to the appointment of a curator bonis to manage his [or her] estate. The appointment itself reflects negatively on the status of the patient and his [or her] legal capacity, not only to manage his own affairs, but also to litigate on his own’ (para 19).

Conclusion

It is above all clear that the best interest of the patient, minor or prodigal is what should be uppermost in the mind of the curators and it is doubtful that a curator appointed on the day of a trial could execute his or her function properly. Such matters should be postponed to allow the curator to properly investigate the matter. It is also doubtful that the appointment of a curator ad litem without the appointment of a curator bonis and/or curator ad personae would stand the scrutiny of the court in future in light of the Modiba judgement. In the cases of prodigals, it may be prudent to appoint a curator bonis as well as a trustee if they cannot function as one and the same, as the appointment will ensure that the scrutiny of the Master safeguards their interests.

A curator should furthermore never be a creature of instructions but should always remain independent and fiercely protective of their client’s rights without fear of reprisal. The position is after all based on that of great trust

Maud Letzler LLB (Unisa) and Viviana Vergano LLM (Banking Law) (UJ) are advocates in Johannesburg.

This article was first published in De Rebus in 2014 (June) DR 30.

Actuarial calculations

How to instruct your actuary and read your actuarial calculation - The most important consideration when instructing your actuary is not to simply forward the industrial psychologists report but to give due consideration to the past and future loss of income you want to claim for on behalf of your client.

The most important first step is getting the remuneration correct. A self employed individual would need to provide you with bank statements, tax returns and any info on additional part time income they might earn, last mentioned is very important as this is the first income that goes out the window when plaintiffs are injured. As per self employed individuals see my previous post for some advice in this regard

 

Make sure that you have a list of all benefits that a plaintiff receives from the company if this is not in his employment contract or reflected on his payslip, e.g. a paid lunch, transport or any daily cash allowance. Domestic workers and gardeners are a good example of this. Taxi drivers are a tricky one, make sure you contact the taxi association to determine the name and number of the owner of the taxi so as to enable you to confirm income and terms and conditions as taxi drivers actually pay the owner of the taxi and keep the rest for themselves, as such their income may fluctuate and not be in line with Patterson levels.

 

Make sure to inform the actuary if you want to use a different basis for calculation in terms of promotional prospects or future salary increases as per the industrial psychologists report. Even without an IP report you can adequately brief a actuary in an MVA matter but briefing an actuary in a medical negligence claim would require the quantification of all hospital and medical expenses and for that you will need to present the actuary with ALL your expert reports so as to allow him to do a schedule to the calculations.

 

Remember to tell your actuary which contingencies you would like him to apply and please consider these carefully and discuss them with your counsel as they can add or subtract to your calculation exponentially. If you are appearing for the defendant make sure you do not double discount. Look at employability versus a large contingency deduction and see which option would be the best.

 

Advise your actuary on any accelerated benefits received and/or disability benefits and remember not to include sympathetic employment as an income. Read your case law about this.

 

How do you read a calculation? First off you need to check that the info you provided the actuary with is in actual fact correct i.e. is all the factual information used by the actuary correct as provided by you.

 

Check the inflation rates and the discount rates used by the actuary and see if you are happy with them or if they differ substantially from the other sides calculation and ask why those were used. Make sure you are satisfied with the life tables used and that you find them applicable to your client as these may be very important not so much in MVA matters as in Med Neg matters where benefits are lifelong.

 

The calculation would be divided into various columns and tables. One for past loss before and after accident and up to date of trial. Then one for prospective earnings before and after accident. It is often referred to in case law as the "now then" and "but for" scenarios. Contingencies in these two scenarios differ markedly and you should know the difference between the two. Contingencies on the past loss should also differ on the but for and now that scenarios and should not be a globular deduction.

 

Contingencies can be deducted at the end of the matter as a lump sum but make sure you take the amount pre-contingencies on your calculation otherwise you will double discount the plaintiff. Again make sure that the discount is fair and reasonable taking into consideration all the relevant case law.

 

Actuarial calculations are not complicated but very important, don't ignore them and learn to use them in your favour.

Capacity v Productivity - An application to proceed to trial in personal injury matters?

PETER WILLIAM AGNEW v C.E BARTLETT [2009] VCC 0110

 

I came across a matter from Australia, Victoria whilst doing capacity research and found it interesting to note that in terms of the Australian Accident Compensation Act a plaintiff shall not claim compensation for personal injury for pain and suffering and/or loss of earning capacity if the injury is not "very considerable" It further needs to be permanent and likely to persists in the foreseeable future and will last and not mend or repair or at least not to any significant extent. The plaintiff has to further establish a loss of earning capacity of more than 40% by comparing after injury earning with before scenario after suitable training (being hardening or retraining).

 

It is only once this has been established on an application procedure that the plaintiff is then allowed to proceed to trial to proof the quantum. It seems to be a very good way in which to reduce legal costs overall and to weed out claims early on that are not worth the disbursements that would be expended on it. It would certainly free up time in the courts.

 

What I found interesting though was the difference that is clearly present in that of a loss of productivity versus a loss of earning capacity which is often used interchangeably in our case law and day to day dealings with each other in negotiations. I have always maintained that their is a difference between not having the capacity to do the work and not being productive to do the work and feels that their should be such a distinction and that a lack of capacity should translate into compensation which could conveniently be correlated with a contingency deduction that should be in line with the amount of loss of capacity rather than looking at a pure economic loss in terms of hours in the day or increasing the general damages as per the much reviled Deysel case.

 

The Collins Thesaurus Dictionary definition of productivity is "output" but also productions, capacity, work rate, yield and efficiency whereas the definition for capacity is "ability" and also gift, genius, capability, aptitude, aptness, competence and competency. If one looks at it in terms of this meaning then my interpretation would be that productivity requires expending energy (of a physical nature) so to speak whereas capacity requires capability (both physical and psychological).

 

As such you would have a lack of productivity if it requires more energy to do it but a lack of capacity if you simply do not have the ability to do it. Practically this would mean that in the more common injuries, say a rotator cuff injury, that if a plaintiff is simply slower at doing something and has to expend more energy to do it but you can still perform the function, I would suggest a lack of productivity but if you are not capable of lifting your arm above your head 70 times a day you no longer have the capacity to do so and the question is then if you can retrain yourself to do so in future in terms of the Australian model.

 

This seems a more fair and reasonable way in determining a loss in personal injury matters  if one keeps in mind the "once and for all" rule as the long term consequences of not having the capacity to do something would certainly have an impact on one's life. It would be worthwhile arguing and may translate into a fairer way to estimate compensation than on pure pecuniary loss alone and would take the guess work out of matters (Bailey) if a particular percentage loss of capacity is determined.

 

The AMA guidelines may be a good starting point, if a plaintiff has a certain percentage of whole person impairment and this translates directly into a physical impediment in his field of work and as such his capacity to perform such work then this may be a useful tool. An 8% WPI on a arm injury may indicate a 8% loss of capacity to use that arm in future and as such and 8% loss of ability to perform the work translating into an 8% pecuniary loss but alas that would be too easy and would not take into consideration the view of many other experts on the matter. The WPI of a person is however a good starting point to determine capacity.

 

The distinction between capacity and productivity should be considered and duly dealt with by our practitioners and our courts to ensure fair and reasonable compensation for personal injury victims and it would be worthwhile to get experts to utilise the guidelines for a determination on all personal injury matters so as to give defendants a clear picture of the plaintiff's loss.

QUANTIFICATION OF LOSS OF INCOME IN SELF EMPLOYED INDIVIDUALS

QUANTIFICATION OF LOSS OF INCOME IN SELF EMPLOYED INDIVIDUALS

 

As we calculate loss for individuals on a payslip for the most part, bank statements and further collateral information, we should not loose sight of the fact that self employed individuals may in their tax returns list legitimate company expenses but the benefits that the individual derive from his business would include such company expenses. Trying to predict the business growth of an individual in a self employed capacity versus that of a salaried employee whose wages are stable and have a clear history, for the most part, statistically in any event, is in itself problematic.

 

To compensate the individual adequately the fraction of individual or family benefit that the plaintiff derived from such a benefit should be taken into consideration when estimations on income is done.

 

A benefit to the individual and family could be salaries paid to the spouse and children and thereby inflating the tax burden of a company and reducing the income of the individual which may be real or may be at a level much higher than the norm. It is advisable to compare this income with that of the standard levels of income as determined by PE Corporate services alternatively by the Patterson levels commonly used and any unnaturally inflated income should be attributed to the individual (plaintiff)

 

Many types of such business expenses that add benefit exist. A good example is a business premises that is also the home of the business owner. The business expenses deducted for power, bond, telephone etc. may all directly benefit the home owner and would dissipate or disappear should the business fail or no longer perform at sub optimum level after the incident.

 

The amount of benefit that an individual derives from after tax benefits should also be taken into consideration for e.g. the purchase of a business computer that is taxable but used for personal use as well. A telephone or Wi Fi service to name but a few and not to mention the company car. Depreciation of assets on a balance sheet can also proof to be problematic as the real market value may differ.

 

It also needs to be taken into consideration that an individual who can no longer perform the work of a sole proprietor may be capable of selling some of the assets of the business after the incident and derive a interest bearing benefit from it. This point of view would certainly have to be argued as the plaintiff is unlikely to accept such a scenario in settlement negotiations.

 

In estimating the individual business owners profits and as such his income it may be easier to calculate the loss by placing the individual in a position of another salaried employee doing the same job and deriving the same benefits rather than trying to decipher complicated accounting statements. This can however be problematic in instances where the individual is reliant on his goodwill or the special business skill he may have derive from his years of being in the industry and a replacement may not be possible. 

 

All in all, determining earning capacity for a self employed individual needs to take place only after careful consultation with the client, forensic auditor and the actuary.

 

economica - Issues in Loss of income calculations for self employed individuals by Scott Beesley

 

 

Elective surgery and "informed consent"

A contradiction in terms one would say, right? As lawyers we look at a lack of informed consent as a basis for negligence. In cases where the patient approaches the medical practitioner for an elective procedure this becomes obscured. Informed consent essentially in laymen's terms is an agreement between a doctor and a patient as what harm would be allowed and will be acceptable. Should a doctor neglect to inform the patient of all the harm that may befall them then the patient may feel that they lacked informed consent. This in itself is an anomaly as the human body is too dynamic to predict all the dangers but that's a topic for another time.

 

Why is it then that in an elective procedure, and I have a natural vaginal delivery in mind here, are the patient not informed of the harm that may befall  them in their choice of delivery? Statistically the dangers involved in both procedures are equal, not similar but equal. Having been through both an elective natural birth and an elective C-section, it astounds me that I was not informed of the dangers involved in particularly the natural birth such as episiotomies, fentonplasty, cystocoele, rectoceles,  anal sphincter repairs, fistulas and many many more side effects that may be experienced by a woman during a "natural" vaginal delivery. Have any of you ever been told that? Did your partner know, where you informed of the risks of a C-section versus a vaginal delivery and told to think about it and decide which is best for you? I bet you weren't.

 

So now my question is if you undergo an elective procedure, can we argue that there is an ethical obligation on the doctor to inform you, irrespective of it being your choice, of the dangers you, and your child, may face? (I still have to encounter a matter in which the health of a child was compromised during a C-section). In my opinion the answer has to be yes. If you approach a financial advisor, a lawyer or any other professional for advice, they will discourage you from going in a direction which may loose you money or cost you a court battle, as such I would argue that you should request a detailed Q & A session with your doctor before any surgery.

 

Would that prevent things from going wrong? No, but at least you will be prepared.