Lost earnings analysis applied to workers' compensation litigation: methodology, deliverables, and case-specific considerations.
Workers' compensation matters ask the lost earnings question in more than one setting: the wage loss or reduced earning capacity that the benefit is meant to replace, the present value of future indemnity payments at issue in a settlement, and the full earnings loss in a third-party action arising from the same injury. The economist assembles the pre-injury wage base from the employer's records and tax documents, establishes the post-injury earnings path from actual earnings or the work-capacity opinions, and measures the loss over the applicable worklife with wage growth. The report separates what the compensation system pays from what a civil claim adds so the same facts support both.
Past and future lost earnings and fringe benefits for a person whose injury has removed them from work or reduced what they can earn. The analysis builds from the earnings history, projects the but-for path over the person's expected worklife with wage growth, and discounts the future stream to present value. When the person can still work in a reduced capacity, the loss is framed as diminished earning capacity, with the post-injury path drawn from a vocational opinion or the treating record and offset against the but-for projection.
Depending on the setting, the claim consists of the present value of future indemnity payments under the schedule that applies, the wage loss or reduced earning capacity that benefits are meant to replace, the lost fringe benefits and household services that the compensation system does not pay but a third-party claim may, and the present value of future medical treatment where a settlement closes future medical liability. The drivers are the pre-injury wage records, the carrier's payment history, the post-injury earnings if any, the work-capacity opinions in the record, and the treatment projection when future medical is being valued.
We issue the final report in disclosure-ready form and provide deposition and trial testimony, rebuttal of opposing economic opinions, and updated calculations as new records arrive.
Yes, where the jurisdiction measures the benefit that way. The economist compares the pre-injury wage with the earnings the person can achieve given the work-capacity opinions in the record and expresses the reduction as a percentage or a dollar amount as the system requires, with the assumptions stated.
The report identifies the indemnity payments made by the carrier and presents them separately from the gross loss so counsel can address lien, offset, and collateral source questions under the governing framework. Netting is done only when counsel asks for a net presentation.
Request a consultation on Lost Earnings or call (201) 343-0700. Plaintiff and defense counsel.