How is compensation for catastrophic injuries calculated?

Damages fall into two broad categories, which lawyers call general damages and special damages.

General damages for catastrophic injury

General damages compensate someone for non-financial damage caused by their injuries. These damages, by definition, cannot be calculated exactly. Instead, they are assessed after considering the relevant evidence.

The most common head of general damages is the award for pain, suffering and loss of amenity, or 'PSLA'.  In England & Wales, PSLA is assessed by reviewing all of the medical evidence and the claimant's own testimony, then comparing it to recent court awards involving similar injuries. There is no single correct amount of PSLA, as no two cases are identical, so we assess a likely range of what a judge may award if the case were to be heard in court.

More recently, the Judicial College has prepared guidelines (based on court judgments) which categorise bands of PSLA awards for various types of injury, depending on the severity.  These guidelines now provide a starting point when assessing PSLA, but it is still important to review the recent court judgments.  This is especially so when someone has multiple injuries which overlap in their impact; the law does not simply aggregate the separate PSLA amounts for each injury.  Instead, you must discount the PSLA awards for the lesser injuries before arriving at a total range to avoid overcompensation.

Very often, the term general damages is used as if it only means PSLA.  However, this is incorrect.  There are some other heads of general damage which may be claimed, if there is supporting evidence of the loss.  For example, if your injuries do not meet the legal definition of a 'disability', then, depending on medical opinion, you may still be at a handicap on the open labour market – sometimes called a Smith v Manchester claim.  This means that you have a real risk of losing your job, and that you will likely take longer to find a replacement job because of your injury.

Another head of general damage is a loss of congenial employment.  This applies if you have a particular passion for your work that you are unable to return to because of your injury.  This was originally awarded for more vocational roles, such as nursing or teaching, but the courts now award these damages more widely.

A loss of enjoyment of a holiday is also a type of general damage.  It is usually claimed when you were unable to enjoy or participate in a pre-arranged holiday because of your injury.  The loss is not the cost of the holiday, as you still went; the award is based on the assessment of the impact of your injury on your enjoyment of the holiday.  It is more often claimed for more active or ‘once in a lifetime’ holidays. 

Special damages for catastrophic injury

Special damages compensate for someone’s financial losses caused by their injury, or the incident which caused it.  This can be for damaged items; travel expenses; lost income and pension; the costs of case management, medication, treatment and therapies; aids and equipment; suitable accommodation and adaptions etc.  These losses can be calculated exactly and are intended to put an injured person back in the position that they would have been, but for the injury.  So far as monetary compensation can achieve that aim.  What can be recovered will vary from case to case, depending on the individual circumstances, and the evidence.  In catastrophic injury claims, the special damages claim is bigger than the general damages award.

Assessing future care costs and support in catastrophic injury cases

In a catastrophic injury claim, there is often a need for significant care.  If this care is provided by family members or friends, it can be recovered as part of the claim based on a so-called gratuitous rate, which is a discount of the professional care rate of pay.  If your carer had to give up work to look after you, then we can sometimes assess their help based on their lost income instead; it all depends on the circumstances. 

However, in catastrophic injury claims the care is most often provided on a professional basis by trained carers, sometimes with nursing provision.  Historically, the law used a mechanism for assessing the value of any ongoing loss and calculating its value as a single capital sum.  This sum was intended to be invested in safe assets and, in theory, to cover all of the future needs.  So, for a lifetime loss, it was not intended to run out before the claimant died, nor for there to be any money left when they did.  Of course, in reality, this is what happens.  This can be very serious, if a person runs of money to pay for their own care.

So, when there is a large future loss claim such as for care or income, the law provides an alternative called a Periodical Payment Order, or ‘PPO’ for short.  In simple terms, a court using this approach will still assess which damages are paid in a lump sum, and which losses will be paid by a PPO.  The PPO will state the annual amounts to be paid, when those may change (such as if your care needs are expected to increase), and the relevant inflation index to increase the annual payments.  This approach gives the claimant certainty that the money will not run out to pay for their care, even if carer pay rises unexpectedly or they live longer than anticipated. 

Real-life example of high value claims

In every catastrophic injury claim, we prepare an extensive schedule of the loss. This document is used when we negotiate a settlement, or if we have to start court proceedings. This schedule of loss is a key document in every case; it provides a snapshot (albeit over many pages) of the physical and financial impact of the catastrophic injury, past and future.

Each schedule is bespoke, as everyone has different circumstances.  However, the schedule will always include an assessment for the PSLA general damages, and a calculation of past and future financial losses for items such as loss of earnings, transport costs, case management fees, therapies, aids and equipment, care and assistance, and accommodation costs.