More people are fully vaccinated.  There are fewer COVID cases.  The economy continues to reopen.

Labor and commodities are getting more expensive.  Those price increases are passed on to the consumer.  Inflation, which has been relatively dormant for years, is back

Does that affect the value of personal injury claims?  Should it affect the value of personal injury claims?

Most people connect the amount of treatment expenses to the severity of injury/value of the claim.  If treatment expenses increase so should the value of claims.

That model—where treatment expenses are used as a basis for determining claim value—works well for some kinds of cases.  (Particularly cases with relatively modest injuries that resolve in several months.)

But it doesn’t work very well for injuries that don’t really respond to treatment and are going to be permanent.  Here’s an example:

A worker is pressure washing some stairs.  The worker is distracted and looks away from the area he’s cleaning.  The spray hits a pedestrian in the eyes.  The pedestrian loses his sight.  

There isn’t very much doctors can do for someone who has had their eyeballs torn out of their heads by water shot at 3,000 PSI.  So the treatment expenses are low but the loss is huge.

How is a non-economic loss like that affected by inflation?  Money is the tool—in our system of justice—used to offset losses suffered because of someone else’s negligence.

So, if inflation causes money to be worth less, shouldn’t the amount awarded for both economic and non-economic losses increase?  It seems like the value of both economic and non-economic losses should increase with inflation.  But we haven’t really had inflation (at least double-digit inflation) since 1980.  A lot has changed in the last 40 years.

It’s impossible to predict whether insurers are going to start paying more money and/or jurors are going to enter larger verdicts.  But it’s important to start thinking about and watching the issue now.

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