'Estimating Pain and Suffering Damages - Paths are Many, Loss is One' by Ronen Avraham in
Oxford Handbook of Law and Economics (Forthcoming)
comments -
Opponents of pain and suffering damages argue that, unlike pecuniary damages, pain and suffering damages are hard to quantify accurately. They argue that victims exaggerate their losses to receive higher damage awards, so that awarding pain and suffering damages may frustrate the function of tort law by compensating the victims too highly and arbitrarily. Another argument against pain and suffering damages is that the difficulty in objective measurement leaves the potential for enormous variance in awards at the discretion of individual judges and juries. This individual discretion may create a lack of horizontal equity and thus impede consistency among awards for like victims.
In a recent paper I argued that from a law and economics perspective pain and suffering damages should be fully compensated and should receive the same “respect” that economic damages receive (Avraham, 2015). I provided several arguments for that view. In this chapter I survey a number of solutions discussed in the literature on how to simplify the estimation of pain and suffering damages to cut administrative costs. My goal is to demonstrate the feasibility of the task of estimating the loss more than to recommend any specific path to it.
Avraham argues -
When a person is injured, tort law recognizes several types of losses: the
victims’ economic loss (actual medical costs and diminished earning capacity) and
non-economic loss, which serves as a catch-all for many losses, such as pain-andsuffering,
mental anguish, emotional distress, and loss of enjoyment of life.
Historically, the common law recognized pain and suffering losses only in
intentional torts. In negligence claims, by contrast, the common law implicitly, and
sometimes explicitly, expected the plaintiff to get over it. Over the years as courts
have started to award pain and suffering damages in negligence cases, courts have
struggled to clearly define and distinguish different aspects of these damages
(Whaley, 1992).
One of the consequences of this struggle is the emergence of a confusing array
of terms which are meant to elucidate the content and scope of pain and suffering
damages. Courts refer, among other terms, to “mental anguish”, “emotional losses”,
“emotional distress”, “loss of consortium”, “hedonic damages”, and “psychic
damages” (Croley & Hanson, 1995). With so many different terms, it is no wonder
that confusion has been rampant. For example, damages for loss of enjoyment of
life, alternatively known as “hedonic damages,” are intended to compensate for the
loss of quality of life (Schwartz, 2004). Some courts have had significant difficulties
interpreting this term, and have even expressed doubts about “whether loss of
enjoyment of life is compensable at all, and if so, whether it is part of pain and
suffering, mental anguish, or physical impairment, or is a separate, independent
category of damages.” Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 768
(Tex. 2003); (Schwartz and Silverman, 2004).
While most jurisdictions treat loss of enjoyment of life, or hedonic loss, as a
part of pain and suffering, other jurisdictions allow recovery of hedonic damages as a
separate category of damages. In yet other states there is either no clear ruling or
hedonic damages are allowed in some instances and not in others (Schwartz and
Silverman, 2004).
With respect to their content, some courts have indicated that these awards
compensate for “the inability to perform activities which had given pleasure to this
particular plaintiff.” McGarry v. Horlacher, 775 N.E.2d 865, 877-78 (Ohio Ct. App.
2002). Other courts have treated hedonic damages not as affirmative distress or
suffering, but forgone gains, such as being unable to engage in activities that the
victim valued, such as athletics or sex. Day v. Ouachita Parish School Bd., 823 So.
2d 1039, 1044 (La ct. App. 2002); Allen v. Wal-Mart Stores, Inc., 241 F.3d 1293,
1297 (10th Cir. 2001); Varnell v. Louisiana Tech University, 709 So. 2d 890, 896 (La.
Ct. App. 1998). Some court have anchored them in the loss of something recognizable
such as a limb or mental capacity. Pierce v. N.Y. Cent.R.R.Co., 409 F.2d 1392 (Mich.
1969); Matos v. Clarendon Nat. Ins. Co., 808 So. 2d 841, 849 (La. Ct. App. 2002);
Kirk v. Wash. State Univ., 746 P.2d 285, 292 (Wash. 1987); Nemmers v. United
States, 681 F. supp 567 (C.D. Ill. 1988).
With so much inconsistency and indeterminacy, one should not wonder that pain and suffering damages are under constant attack and are a major component of every tort reform.
Opponents of pain and suffering damages argue that, unlike pecuniary damages, pain and suffering damages are hard to quantify accurately (King, 2004). They argue that victims exaggerate their losses to receive higher damage awards, so that awarding pain and suffering damages may frustrate the function of tort law by compensating the victims too highly and arbitrarily.
Another argument against pain and suffering damages is that the difficulty in objective measurement leaves the potential for enormous variance in awards at the discretion of individual judges and juries (Diamond, 1998). This individual discretion may create a lack of horizontal equity and thus impede consistency among awards for like victims (Bovbjerg, 1989).
In a recent paper I argued that from a law and economics perspective pain and suffering damages should be fully compensated and should receive the same “respect” that economic damages receive (Avraham, 2015). I provided several arguments for that view.
First, I argued that the lack of horizontal equity might not represent a problem with damage calculations. Factfinders may treat like cases differently, but there is another possible explanation for heterogeneity in awards for injuries that, on the surface, appear to be “the same.” Judges and juries may be aware that there is great variation in how individuals subjectively experience pain and suffering (Chamallas & Wriggins, 2010). In other words, factfinders in individual cases are aware of facts that are not available to researchers afterward. Moreover, empirical evidence shows that observable seriousness of the injury is a reliable predictor of the size of award (Sloan & Hsieh, 1990; Vidmar, 1999; Diamond, 1998). Another indication that pain and suffering awards are not as wildly variant as some critics claim is that even though European countries have implemented rules to minimize horizontal inequity in damage awards, European pain and suffering awards are similar to those in the U.S. (Sugarman, 2005). Still, even if there is real horizontal inequity in pain and suffering awards, the conclusion that they should be abolished does not follow. Rather, the inequity merely indicates the need for a more determinate process for factfinders to follow. Just because damages are difficult to quantify does not mean they should be ignored. Tort damages have traditionally been understood to contemplate individualized pain and suffering, at least in intentional torts. The difficulty of quantification and the lack of horizontal equity it might cause does not justify setting them all at zero.
Second, pain and suffering damages are not the only kind that proves difficult to quantify. Economic damages are often equally difficult (Rabin, 1993). Lost wages and future medical expenses, for instance, have been drastically miscalculated by courts, showing that even these pecuniary losses are difficult to estimate precisely. Seffert v. Los Angeles Transit Lines, 364 P.2d 337 (Cal. 1961). There is no justification to single out for elimination pain and suffering damages from among all the difficult-to-quantify categories of damages.
Third, the mere fact that some plaintiffs may exaggerate their symptoms provides no justification to eliminate pain and suffering damages. Courts have developed methods of correcting for this possibility. They have been estimating pain and suffering losses in intentional tort cases for centuries.
Fourth and perhaps most importantly, scientific developments in the field of neuroimaging are creating the possibility of understanding and even verifying both pain and some emotional conditions (Kolber, 2007). One recent study successfully used fMRI processes to identify specific neurologic signatures that identified pain sensation with very high accuracy levels (Wager, Atlas, Linquist, Roy, Woo & Kross, 2013). It is possible that science will soon be able to verify an accident victim’s subjective level of pain. Exaggeration may soon be impossible because judges and juries may have access to objective, scientific methods of quantifying pain and suffering as accurately as the quantification methods available for physical damages.
Already, depression can by objectively determined by neurobiological data. A summary of key literature in the area of Major Depressive Disorder (MDD) found that MDD is an “illness with significant neurobiological consequences involving structural, functional and molecular alterations in several areas of the brain” (Maletic, Robinson, Oakes, Lyengar, Ball & Russell, 2007). Similar strides are being made in the context of Post-Traumatic Stress Disorder (PTSD). The American Psychiatric Association has established guidelines for verifying the existence of PTSD. These include direct trauma, intrusion symptoms such as dreams or memories, avoidance symptoms, mood and cognition changes, and irritable behavior or startled responses (American Psychiatric Association, 2013). These symptoms must persist for longer than a month and cause significant personal problems. Even though diagnosis depends partly on self-reporting, the scientific progress in the area does provide an objectively verifiable method for assessing pain and suffering related to PTSD.
This kind of scientific progress is especially important as a potential response to the problem of malingering, which is when an individual continues to report pain even after it has stopped for the purpose of extending disability benefits or inflating a damage award (Cunnien, 1997). It is hard to estimate malingering, but it may be a factor in 34% to 40% of chronic pain cases (Mittenberg, 2002; Gervais, 2001; Kolber, 2007). Further, studies show that treatment outcomes are worse for people involved in personal injury litigation than for those who do not seek compensation (Mendelson, 1997). Even if the litigation is a cause of malingering, it could be because the stressors and delays of the tort system retard the healing process. Or, people who are prone to poor treatment may also be more likely to file a lawsuit. Recent scientific advances may obviate the need for this type of speculation by creating objectively verifiable pain metrics.
In sum, the best solution for dealing with the high cost of administrating pain and suffering damages and the alleged variation in horizontal quality is to reduce the cost of administration and increasing uniformity, not limit plaintiffs’ recoveries. The best way to accomplish this is via simplifying ways to estimate pain and suffering losses. In this chapter I survey a number of solutions discussed in the literature on how to simplify the estimation of pain and suffering damages to cut administrative costs. My goal is to demonstrate the feasibility of the task of estimating the loss more than to recommend any specific path to it.
