Calculating Damages (Payment) for Future Loss of Income in Medical Malpractice Cases

A patient injured by medical error or malpractice (and their family) is entitled to full compensation for their injury, including payment for financial losses or expenses resulting from the injury. One of the largest financial losses caused by an injury, particularly a serious injury that will affect the patient for their lifetime, is for future loss of income.

For example, in the case study below (Butler v. Royal Victoria Hospital), we won over $1.8 million for future income loss for a little girl with cerebral palsy.

What Are Damages for Future Loss of Income?

Damages for future loss of income are intended to compensate an injured individual (or their family) for the money and income they could have earned had their injury not occurred. Meaning, a person is entitled to repayment for their income loss due to an injury. Outside of money spent on medical equipment and future care services, this can be one of the most significant damages for an injured patient.

Someone who was already working prior to their injury would be entitled to income loss based on their past and future earning potential. If a baby or child was injured, they are entitled to income loss based on their projected future earnings.

Family members who take off work or lose potential income due to someone else’s injury may also be entitled to an income loss claim in additional to a claim for vocational rehabilitation and vocational supports.

How Are These Damages Calculated?

Financial experts, including accountants, economists and actuaries, medical experts, vocational experts and therapists, are retained by lawyers to assist in determining the amount of these losses. These experts will assess the person’s injuries and future employment capabilities, (their past employment and income) potential career trajectory, prospect of retirement, earning capability, and trends across industries and will provide an expert opinion on what an injured patient may have expected to earn over the course of their lifetime.

The Law on Damages for Future Loss of Income

The Supreme Court of Canada discussed loss of future income damages in Athey v. Leonati, where the court elaborated on how to address hypothetical or future losses:

Hypothetical events (such as how the plaintiff’s life would have proceeded without the tortious injury) or future events need not be proven on a balance of probabilities.  Instead, they are simply given weight according to their relative likelihood….A future or hypothetical possibility will be taken into consideration as long as it is a real and substantial possibility and not mere speculation. [Citations Omitted.]

It is now settled law in Ontario that, in order to obtain damages for future loss of income, an injured patient must show a real and substantial possibility or risk of a particular future monetary loss.

Damages for Future Loss of income: A Case Study

Damages for future loss of income were discussed by the court in Butler v. Royal Victoria Hospital an important recent medical malpractice case in which we represented the family of a child whose life was completely changed by a birth injury (cerebral palsy).

We were able to secure more than $5.8 million in damages, including over $1.8 million in damages for loss of future income, to ensure that the injured child (Sarah) would be able to live a long and fulfilling life.

Medical Malpractice Established

The judge in Butler found that Sarah had suffered a severe brain injury caused by a hypoxic ischemic event (HIE, Hypoxic Ischemic encephalopathy, neonatal encephalopathy) at birth, meaning her brain did not get enough oxygenated blood.  This was caused by an artificial rupture of membranes during labour and delivery– meaning someone broke the mother’s waters or amniotic sac, The HIE was the sole cause of Sarah’s cerebral palsy and related behavioural and cognitive defects.

Arguments for and Against Future Loss of Income

Sarah suffered from many serious and permanent impairments that affected her both physically and mentally including her gross and fine motor skills, speech, cognition, learning, and behavior. We argued that, as a result of these impairments, Sarah would not be able to attend college and is competitively unemployable, therefore she is entitled to damages for future loss of income.

The defendant hospital argued that Sarah only has mild gross motor limitations which can be functionally addressed by occupational therapy. The hospital also argued that no expert had been able to provide an opinion as to whether Sarah would be capable of post-secondary education or employment.

Assessing Future Loss of Income

In discussing future income damages, the judge was satisfied that Sarah would “not be competitively employable at any time in her life”. Even with therapies and vocational rehabilitation and supports, Sarah’s injuries meant she would not be employable or competitive in the workforce. The judge assessed her future employment income as being $0.00 and therefore awarded Sarah $1.8 million for her future loss of income.

The judge accepted the evidence of an expert in neonatology who argued that 71% of those impacted by HIE had severe developmental delay and that many of those, who were “not as badly off as Sarah”, were unemployed or unemployable.

The judge also attached great weight to the opinion of an expert Psychologist who had testified that it was highly unlikely that Sarah would be able to succeed at gainful employment as the “constellation of neurocognitive and physical deficits in Sarah is simply too great to allow for any kind of optimism on the vocational front” and that “there has been no suggestion that any of these deficits can be reversed”. The judge made specific note of the fact that the real and substantial likelihood of Sarah remaining unemployable had not been seriously challenged by any defense expert.

The judge found that the many therapies that Sarah would have to go through to treat her condition would only affect her potential in non-work-related functions, namely “recreational, social, daily living and avocational endeavours”, but that:

Sarah’s adaptive and intellectual functioning are significantly delayed; her memory skills are extremely compromised. Sarah’s academic skills are minimal; a large gap has formed between Sarah and her peers. Weak language and phonological skills compound the problems. Her attention and self-regulation limitations hamper her ability to learn. Those deficits will also limit her options for education that any academic endeavours undertaken will be applied and not designed for entry into the workforce… Sarah’s deficits in executive functioning and her neurocognitive weaknesses will become more evident with time, creating further challenges to academic learning.

The judge concluded that:

Sarah will remain competitively unemployable during her lifetime and…her earning capacity is effectively nil.

The judge further found that any treatments or therapies that Sarah has engaged in to date, or will engage in going forward, would be able to “alter the fundamental and overriding problems that have plagued her young life so as to make her a suitable candidate for the workforce” and that, when her prospects are looked at in context, she will not be able to “make up the gap between her permanent deficits and what would constitute the lower end of performance expectations of an average arms-length employer.”

The judge accepted that had Sarah not suffered her birth injury her earning capacity would have been that of an average college graduate. This conclusion was based on an assessment by an economist who forecasted that given the education and work history of Sarah’s parents, (including Sarah’s father who was an undercarriage builder at Tormont Caterpillar and Sarah’s mother who was a homemaker and waitress),Sarah would have been able to attain a college diploma and enter the workforce at age 21. The economist relied on reliable productivity, employee fringe benefits, and historical trends to determine what Sarah earnings would have been had she not been injured.

The judge ultimately concluded that Sarah will suffer a future loss of income in the amount of $1,881,846 and awarded her that amount.

If you believe your child suffered an injury at birth that is now significantly impacting their life, we can help. Contact the knowledgeable and highly experienced lawyers at Sommers Roth & Elmaleh to learn about your options. We have represented parents, children, and their families in a number of ground-breaking medical malpractice lawsuits and have obtained significant compensation for thousands clients in Ontario and across Canada.  Call us at 1-844-777-7372 or contact us online for a free, no obligation consultation.