Damages Under New York Wrongful Death Statute
JUNE 2006 - Under
our system of laws, wrongful death is a civil wrong (tort),
which is remedied by the courts with payment of compensation
(damages). The intention of the guilty party’s payment
to the decedent’s distributees is to right the wrong
New York State Constitution Article 1, S16, has made pecuniary
recovery inviolate as follows: “The right of action
now existing to recover damages for injuries resulting;
and the amount recoverable shall not be subject to any statutory
limitation” (Constitutional Convention, November 8,
1938; effective January 1, 1938).
Estate Powers and Trust Law (EPTL), Article 5, Part 4, EPTL
213-217, is New York’s wrongful death statute. The
law provides that the personal representative of the estate
has the right to sue for pecuniary loss on behalf of the
distributees. Damages are determined by the court in an
amount it deems to be fair and just compensation for pecuniary
injuries resulting from the decedent’s death. It calls
attention to reasonable expenses for medical aid, nursing,
and funeral expenses, “in addition to every other
lawful element.” Punitive damages, designed to punish
the defendant in cases of recklessness or depravity, are
of personal income taxes that the decedent would have been
required to pay must be considered by both the court and
the jury. In Norfolk & Western Co. v. Liepelt [444
US 490 (1980)], the Supreme Court went a step further by
holding that lost earnings in a wrongful death action can
be estimated on an after-tax basis.
by David D. Siegel in McKinney’s Consolidated
Laws of New York (Thomson-West) note that New York
State courts have expanded the narrow statutory language
of the EPTL to include:
Benefits that the distributee had a reasonable right to
expect if the decedent had lived, including loss of support,
voluntary assistance, and possible inheritance (Parrilis
v. Feldman, 1980).
Factual situations that take into account “decedent’s
working habits, her job and her income at the time of
death, the likelihood of further advancement and increased
earnings capacity” (Matter of Reynolds,
Surrogate Court of Erie County, 1952).
age and life expectancy of the decedent and the distributees
she was supporting (Brown v. Horn, 1992; Tenczar
v. Milligan, 1975).
the event that the distributees are minor children, damages
include loss of a parent’s “nurture, intellectual
and physical training and such instruction as only can
proceed from a parent” (Tilley v. Hudson Railroad
Co., 1862). Damages may include the loss of similar
attributes provided by grandparents and may include the
difficult question of lost inheritance (Sternfels
v. Metropolitan Street Railroad Co., 1903).
value the tort claim, one must hypothesize what would have
happened had the decedent lived; accordingly, pre-injury
life expectancy must be determined. Collaterally, data is
required as to the wage base at death and projected expected
wage increases. As mandated by the statute, earnings projections
are reduced by mandatory related federal and state tax liabilities.
Consideration of fringe benefits is also necessary, as are
reductions for the personal expenditures of the decedent.
expectancy estimates project lost earnings capacity. Worklife
expectancy takes into account time during working years
when the individual was not in the labor market. If the
decedent was not gainfully employed, the court must consider
the value of a student, a homemaker, or a child’s
future gainful employment.
expectancy is defined as the number of years of earnings
an individual was expected to have before natural death
or retirement. It is the starting point for the valuation
process. Differences exist by education and occupation.
Based on data compiled in 1979 (the Department of Labor
last published tables in 1986), these “increment-decrement
tables” include an allowance for interim periods of
separation from the labor force. Updated data prepared by
economists are commercially available and are accepted by
the courts. As in the use of any statistical data, the case-specific
data required must be extracted.
earnings represent the decedent’s earnings capacity
(the option to work) for the period of worklife expectancy
(i.e., what would have been the lifetime earnings “but
for” the wrongful death). If the decedent had an employment
history, projections could be based upon past earnings,
past earnings growth, anticipated promotions, or industry-specific
U.S. Bureau of Labor Statistics (BLS; www.bls.gov) publishes
an annual compensation survey compiled by the Census Bureau.
Data are available by occupation, geographic area, age,
sex, and education level. For individuals who have not yet
entered the labor force, projections can be made using information
from college placement offices or other sources. Nominal
wage increases are estimated on a historical basis. If a
decedent was an infant or the survivor of deceased parents,
the courts require projections in terms of probabilities.
Direct correlations exist with the parents’ educational
information must also be determined with regard to fringe
benefits. The starting point is pay stubs and an employer’s
human resources department. Labor unions are particularly
helpful, and a union contract always contains specifics.
An attorney may subpoena needed information.
case-specific information, current statistical data can
be found at the BLS website. The U.S. Chamber of Commerce
also collects and publishes data annually on the growth
of employee fringe benefits. Value is determined in the
year of death, and a growth rate is applied over the remaining
continuing care, medical, and funeral expenses represent
past losses (i.e., incurred before the claim), they are
easily documented and included in the claim. A wrongful
death claim differs from a bodily injury case in that the
latter requires careful projections as to future damages,
and reports from vocational rehabilitation experts.
inevitably contribute varied nonpaid services to family
life. Specific services can be uncovered through a questionnaire
and interviews with family members.
work should be assigned a value. There have been several
surveys by economists and government agencies to determine
time spent on household work. Among the most helpful was
a study by Kurt V. Krueger and John O. Ward, “Dollar
Value of a Day.” The Department of Labor’s blended
rates were integrated into occupations to determine hourly
rates in 1999. Consideration should be given to self-consumption
of the household services rendered by the decedent, as well
as task reductions at latter stages of the life cycle. Based
on McKee v. Colt Electronics Co. Inc. (849 F.2d
46, 50, 2nd Circuit, 1988), case law does not preclude calculation
of past services based on after-tax figures.
than award lump-sum damages, the Civil Practice Law Rules
(CPLR) require juries that award for pain and suffering
to itemize awards. Pain and suffering can exist with regard
to the deceased prior to death; some academics indicate
a direct correlation of cognitive awareness until death
with the amount awarded. Plaintiff distributees are not
allowed to recover compensation for their own grief or sorrow.
New York Court of Appeals case, McDougal v. Gerber,
concluded that the award of money damages for loss of enjoyment
of life to a totally comatose patient “has no meaning
or utility to the injured person.” It further proscribed
a hedonic award as evaluated by some vague deferential standard.
Accordingly, courts preclude expert testimony as to enjoyment
noneconomic damages. Compensation can also
include loss of love, companionship, comfort, affection,
society, solace, moral support, protection, advice, and
training. Accordingly, substantial awards are common for
children who have lost one or both parents. Juries must
itemize awards, analogous to awards for pain and suffering.
The valuation of noneconomic damages generally falls outside
the scope of a CPA’s litigation support.
consumption. Because the purpose of the pecuniary
award is to make the survivors whole, one must subtract
from the amount what the decedent would have personally
consumed. Conversely, what was the decrease in the family
support factor resulting from the wrongful death?
principles refer to fixed and variable expenses. The BLS
tables refer to individual expense items and consumption
factors. Line-item information is available for specific
expenditures. Further refinements in the report of “Consumer
Expenditures in 2002” provide income, family size,
education, occupation, and demographic refinements. Note
that fixed expenses, such as mortgage payments, rents, utilities,
and home insurance, do not decrease with the loss of one
tax. Both the New York State Consolidated
Laws and the courts require the deduction of income taxes
that the decedents would have paid during their lifetime.
The Court of Claims, in Pellegrino v. State of New York,
citing Liepelt, expressly stated that tax liabilities were
deducted in its decision. Pellegrino had faithfully and
constantly understated both income and related tax liabilities.
after-tax earnings must be considered to determine the amount
of a damage award, the income tax consequences of an actual
award fall under IRC section 104 (a)(2), which specifies
that “gross income does not include the amount of
any damages (other than punitive damages) received (whether
by suit or agreement and whether as lump sums or as periodic
payments) on account of personal physical injuries or physical
sickness.” Punitive damages, as discussed above, will
be fully taxable to the decedent’s estate or devisees.
Lee Erickson, professor of economics, wrote that, “depending
upon the applicable law,” there can be no reduction
for taxes, or a reduction for all taxes, including Social
Security and Medicare. Erickson pointed out that “if
earnings have been reduced for taxes, the discount rate
(required for present value computations) should also be
reduced for taxes.”
reform. In a New York State Court of Appeals
decision, Desiderio v. Ochs (April 8, 2003), the
court invited the legislature to “revisit existing
law to determine whether, in actual operation, it is achieving
its intended purposes, or is overcompensating plaintiffs.”
existing law, the future value was paid annually over the
plaintiff’s life expectancy, a 4% annual addition
to the remaining liability. In Desiderio, the jury
determined damages for $42 million. By double-counting inflation,
the court upheld an ultimate verdict compounded to almost
$140 million. On June 24, 2003, apparently in deference
to the invitation, the New York State Senate and Assembly
passed a law that would require juries to award future economic
damages in current dollars rather than gross future damages.
Present values are to be determined by reference to U.S.
Treasury Bonds on the date of the verdict. While the original
legislation was applicable to CPLR Article 50-A (Medical
Malpractice), the statute was quickly extended to Article
50-B, which includes wrongful death actions.
50-B distinguishes between past and future damages (i.e.,
those occurring prior and subsequent to the trial date).
The law requires that past damages be paid in a lump sum
to the plaintiff after a payment of one-third for attorney
fees. The future lost stream awarded by the jury is divided
into two parts. The court is directed to enter judgment
in a lump sum for future damages not in excess of $250,000.
This lump sum is subtracted from the nominal future loss
in proportion to each category of loss (e.g., household
services; pain and suffering; loss of earnings). The balance
is then divided by the number of years as specified by the
jury, annual payments are averaged, and each installment
is increased by 4% for the entire loss period. Awards for
pain and suffering, however, must be paid over eight years
(10 years under prior law). The judge, not the jury, reduces
future damages to present value (an expert witness testifies
only to the nominal value of the future loss stream). Attorney
fees and lien holders “related to nominal values of
the future periodically paid damages shall be paid in lump
sum based on present value of the annuity contract purchased
to provide payment of such periodically paid damages.”
The effective discount rate to present value is the market
rate at the time of the award. The 4% annual addition still
applies, as under the old law. Security is provided by an
annuity contract executed by a qualified insurer and approved
by the superintendent of insurance. The court determines
the period of time for these installments, such amounts
to be paid in accordance with generally accepted actuarial
New York Collateral-Source Rule
Law Dictionary defines the collateral-source rule as “The
doctrine [that] if an injured party receives compensation
from his injuries from a source independent of the tortfeasor,
the payment should not be deducted from the damages that
the tortfeasor must pay.” To achieve the underlying
purpose of “tort reform,” CPLR 4545(c) is applicable
to wrongful death actions after June 28, 1986. “If
the court finds that any such cost or expense was or will,
with reasonable certainty, be replaced or indemnified from
any collateral source, it shall reduce the amount of the
award by such finding.”
York State Court of Appeals case, Oden v. Chemung County,
opined that “[T]he reduction is authorized only when
the collateral source payment represents reimbursement for
a particular category of loss for which damages were awarded.”
The court continued: “We now adopt the narrower construction
of the statute.”
a checklist. Given a basic knowledge of applicable
statutes, engagements by litigation attorneys require individuals
to determine what was lost and to place a value on it. Thomas
R. Ireland, an economics professor, suggests preparing a
list of questions when working for either a personal injury
or a wrongful death action. Most of Ireland’s questions
are applicable to New York statutes and judiciary law. The
checklist covers taxes applicable to a wrongful death, deduction
for personal consumption, personal consumption applicable
to a spouse’s income, child support, discount rates,
collateral source subtractions, periodic payment provisions,
Daubert expert-witness requirements, and more. For more
information, visit Ireland’s website at www.umsl.edu/~ireland/.
Schechter, CFE, CPA, works extensively with economic
damages. He can be contacted at firstname.lastname@example.org.