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V for Vendetta
Towards a Better Assessment of Pain and Suffering Damages for Personal Injury Litigation
A Proposal Based on Quality Adjusted Life Years899
The assessment of non-economic damages associated with personal injury remains a daunting task for courts. It is the subject of a longstanding and unresolved debate in legal scholarship, as it involves an evaluation of the impact of the immaterial loss incurred, for which a satisfactory instrument is currently lacking. Pain and suffering damages are important for compensating the victim, acknowledging the harm suffered and restoring the disturbed peace, and they can also create incentives that have significant economic implications for the decisions of many actors including victims, injurers, insurers, product manufacturers, employers, medical doctors etc. Towards a better assessment of pain and suffering damages for personal injuries proposes a novel way to assess pain and suffering damages based on specialised scientific information regarding the impact of different types of injuries. Relevant insights from law and economics literature regarding the minimisation of total accident costs are thoroughly discussed and health economics literature is explored in detail with respect to how different types of injuries and other health conditions affect individuals. Attention is also paid to relevant insights from behavioural economics. The book thus provides a comprehensive analysis with respect to current legal rules on pain and suffering damages and assessment approaches in England, Germany, Greece, Italy and the Netherlands, and compares the positive legal and economic implications that would result from the implementation of the proposed framework. The book contributes to the ongoing discussions on tort reform among legal scholars, economists, medical doctors, insurers and legislators. To demonstrate how the proposed framework can be used in practice, pain and suffering damages are assessed for five cases of personal injury and illness (deafness, loss of sight in one eye, paralysis, leg amputation and contraction of HIV-AIDS) and are juxtaposed with the amounts that have actually been awarded by courts for the same type of injuries in England, Germany, Greece, Italy and the Netherlands. By giving straightforward examples of how the proposed framework could be implemented to assess pain and suffering damages based on actual personal injury case law, the book is also of practical value for the judiciary, legal practitioners and policy makers alike.
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Vaia Karapanou is a lawyer and a Law and Economics scholar specializing in economic analysis of tort law and insurance, regulation and law enforcement, comparative law and economics, health economics and regulatory impact assessment. Dr. Karapanou has consulting experience with both public and private sector. She has worked as an external scientific advisor for consultancies and international organizations. She holds a Bachelor of Laws (University of Athens, Greece), an LLM in Law and Economics (Erasmus University Rotterdam, the Netherlands - University of Hamburg, Germany - University of California, Berkeley, USA) and a PhD in Law and Economics (Erasmus University Rotterdam, the Netherlands - University of Bologna, Italy). She won the Greek Law and Economics Association's Dimitris Karantonis Award in 2013 and the Latin American and Caribbean Law and Economics Association's Robert D. Cooter Microsoft Award in 2009. Dr. Karapanou has published in accredited journals and edited volumes.
CONTENTS Acknowledgements Table of Cases List of Abbreviations List of Tables and Figures Chapter 1. Introduction 1.1. Aim of the Research 1.2. Research Questions 1.3. Methodology 1.4. Scientific and Societal Relevance 1.5. Content Structure Chapter 2. How Should Pain and Suffering Damages be Assessed? A Legal Perspective 2.1. Goals of Tort Law regarding Pain and Suffering Damages 2.1.1. Compensation 2.1.2. Satisfaction 2.1.3. Deterrence 2.1.4. Loss Distribution 2.1.5. Punishment 2.2. Pain and Suffering Damages in Cases of Personal Injuries 2.2.1. 'Pain and Suffering Damages' in Different Countries 2.2.2. The Interplay between Tort Law and the Law of Damages 2.3. Current Court Practice in Personal Injury Cases 2.3.1. How do Courts Assess Pain and Suffering Damages? 2.3.2. Can the Goals of the Law of Torts (and Damages) be Reached? Chapter 3. How Should Pain and Suffering Damages be Assessed? A Law and Economics Perspective 3.1. Goals of Tort Law according to Law and Economics: Minimization of Total Accident Costs 3.1.1. The Goal of Deterrence 3.1.2. The Goal of Insurance/Loss Spreading 3.1.3. The Goal of Reducing Tertiary (Administrative) Costs 3.2. Damages for Immaterial Losses: How Should they be Treated? 3.2.1. Dealing with the Discrepancy: Proposals So Far 3.2.2. Striking a Balance between Deterrence and Insurance: Ex Ante Determined Pain and Suffering Damages 3.2.3. The Value of Statistical Life (Year) for Fatalities Chapter 4.Quality Adjusted Life Years. A Measure for the Economic Evaluation of Health Care 4.1. Context and Origin of the QALY 4.1.1. Cost-Effectiveness Analysis for the Economic Evaluation of Health Care 4.1.2. Theoretical Foundations of QALY-Based CEA 4.2. What is the Quality Adjusted Life Year? 4.3. Calculation of QALY-Weights 4.3.1. Single Question Format Valuation Techniques 4.3.2. Generic Measures 4.4. Who Should Value Health? 4.5. QALYs and Fairness Considerations 4.6. Monetization: Cost or WTP per QALY? 4.6.1. Cost per QALY 4.6.2. WTP per QALY 4.7. Discounting 4.8. Disability Adjusted Life Years: an Alternative to QALYs? Chapter 5. Using QALYs in a Tort Law Context. Assessing Pain and Suffering Damages 5.1. Exploiting Existing QALY Research 5.1.1. Utilizing Available QALY-Weights 5.1.2. Deciding the Monetary Value of a QALY 5.1.3. Applying a Discount Factor to Reflect Present Value 5.2. Synthesis 5.2.1. A Graphical Representation of the Proposed Framework 5.2.2. The Case of Deafness 5.3. Can the Goals of Tort Law with respect to Pain and Suffering Damages be Reached? 5.3.1. Implications for Compensation and Satisfaction 5.3.2. Implications for Deterrence and Loss Spreading: Striking a Balance between the Goals 5.3.3. Economizing on Administrative Costs of the Legal System 5.4. Benefits Extending beyond the Goals of Tort Law 5.4.1. Dealing with Strategic Behavior 5.4.2. Inducing Victim Mitigation of Losses 5.5. Challenges 5.5.1. Using the Appropriate Research Results 5.5.2. How to Deal with Multiple Injuries? Chapter 6. Pain and Suffering Damages Based on QALYs. Circumventing Victims' (and Judges') Hedonic Misperceptions 6.1. Relevance of Psychological Insights for Pain and Suffering Damages 6.1.1. Hedonic Adaptation Neglect 6.1.2. Focalism/Focusing Illusion 6.1.3. A Counterintuitive Empirical Result or just a Preference for being Healthy? 6.2. Pain and Suffering Damages Incorporating Insights from Cognitive Psychology: Proposals So Far 6.3. QALYs and Hedonic Adaptation: Pain and Suffering Damages Based on the QALY Framework 6.4. Should Psychological Insights Influence the Assessment of Pain and Suffering Damages? Chapter 7. The QALY Framework Applied. Practical Examples and Implementation Recommendations 7.1. Personal Injury Cases 7.1.1. The Case of Paralysis/Severe Spinal Cord Injury 7.1.2. The Case of Lower Leg Amputation 7.1.3. The Case of Vision Loss in One Eye 7.1.4. The Case of HIV Contraction 7.2. Discussion of the Resulting Amounts 7.3. Implementation Recommendations Chapter 8. Epilog