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Forensic Economics - Areas of Specialization

The following subject areas reflect the company's specialization in providing forensic economic evidence in civil litigation.  BEC's experts have testified on each topic. Papers related to each topic are listed under the subject heading, and are detailed in the Research and Publications menu.

• Personal Injury - Adults
• Personal Injury - Children & Young Adults
• Wrongful Death
• "Duncan" Estate Claims
• Loss of HouseKeeping
• Cost Of Care
• Tax Gross-Up
• Loss Of Disability Income
• Wrongful Dismissal
• Loss of pension benefits
• Loss of insurability
• Research Profiles on:
  • discount rates
  • agricultural commodity markets
  • evaluating shareholder compensation

Personal Injury - Adults

These assessments involve identifying career paths before and after an accident or medical mishap and attempting to discern the impact of disability or health setback on earnings and/or earning capacity. Some of the more complicated issues arising in such evaluations include:

Personal Injury - Children & Young Adults

Evaluating the impact of injury or illness on children or young adults in future careers is done without the benefit of work history in the labour market. Parental and sibling education levels are used to predict earnings by general educational attainment, in addition to other factors . A Family Profile Form is a helpful aid.

Wrongful Death (Fatal Accidents Act)

• Brown, C.L. (2005) "Personal Consumption Rates for Canada: Differentiated by Family Size and Income Level using Survey of Household Spending (SHS) 2000 data" Vol. 17, No.2 Spring/Summer 2004(2005) Journal of Forensic Economics
• Brown, C.L. (2001) "Calculating Damages in Personal Injury & Wrongful Death Claims" Newfoundland Law Society & CLE held in St. John's NFLD, May 2001
• Brown, C.L. (1999) "Wrongful Death Claims: Dependency Loss Calculations" The Advocates' Quarterly 22 (1) 1-67
• Brown, C.L. (1999) "Loss of Income and Dependency Claims"; "Pension Loss Entitlements", Lexpert - How Much Is It Worth? State of the Art Personal Injury Damages held in Halifax NS, September 1999
• Brown, C.L. (1999) "Loss of Income and Dependency Claims"; "Pension Loss Entitlements", Lexpert - How Much Is It Worth? State of the Art Personal Injury Damages held in Calgary AB, April 1999
• Brown, C.L. (1997) "Estimation of Damages in Personal Injury, Wrongful Death and Housekeeping Claims"; Lexpert - "Personal Injury Claim Damages" held in Calgary AB, June 1997

Although predicting the deceased's income profile is similar to the work done by economists in personal injury cases involving adults, several facets are unique to wrongful death cases. The aspects of a wrongful death case requiring particular attention include:

• Deducting income taxes and other payments (EI, CPP and union dues, etc.) to estimate disposable income;
• Reviewing the surviving adult's earning capacity;
• Calculating the personal consumption rate for the deceased and dependency rates for the surviving family members;
• Estimating the span of the children's dependency losses; and
• Considering divorce probabilities (in the absence of the death) and remarriage probabilities (for the surviving spouse).

In addition, cases where orphaned children survive the death of a single parent or when both parents' lives are claimed in an accident or misfortune, the costs of raising children must be considered instead of the usual methodologies for dependency loss approach.

"Duncan" Estate Claims (Survival of Actions Act)

• Brown, C.L. (1999) "Duncan v. Baddeley: A Case Comment" Alberta Law Review 37 (3) 772-822
• Brown, C.L. (1999) "Housekeeping and 'Duncan' Claims", Canadian Bar Association (Northern Alberta Branch), Insurance Sub-Section held in Edmonton AB, December 1999
• Brown, C.L. (1998) (interviewed for): "Claims for Loss of Future Earnings in Fatal Accident Cases" Canadian Lawyer 40-43
• Brown, C.L. (1997) "Duncan v. Baddeley: Reconciling the 'Lost Years' Deduction with Fatal Accident Cases Alberta Law Review 35 (4) 1108-1128
• Brown, C.L. (1997) "Implications to an Economist of the Alberta Court of Appeal decision in Duncan v. Baddeley" (debate paper authored by Don McGarvey), Canadian Bar Association (Northern Alberta Branch), Insurance Sub-Section held in Edmonton AB, October 1997

The Court of Appeal decision in Duncan v. Baddeley in 2000 means that the claim by an estate for the deceased's earning capacity survives the deceased and is to be made without regard to the beneficiaries (if any). This involves a hybrid calculation whereby taxes and other deductions are taken into account (as in wrongful death claims under the Fatal Accidents Act) but a "lost years" deduction is employed instead of personal consumption rates for the deceased and dependency rates for the survivor(s). This calculation survives only to accidents until Nov. 1 2002, at which time Alberta legislation barred it. Most other provinces and territories bar this claim, either by explicit legislation or common law.

Loss of Housekeeping Capacity

• Brown, C.L. (2003) "Valuable Services Trends in Housekeeping Quantum across Canada, 1990-2001" The Advocates' Quarterly 27(1) 71-109
• Brown, C.L. (2002) "Valuable Services - East Coast Trends"; "Use & Abuse of Economic Data to Support Economic Capacity Loss", APTLA - Soft Tissue Under Siege held in St. John's NFLD, June 2002
• Brown, C.L. (1999) "Housekeeping and 'Duncan' Claims", Canadian Bar Association (Northern Alberta Branch), Insurance Sub-Section held in Edmonton AB, December 1999
• Brown, C.L. (1999) "Loss of Housekeeping Capacity - An Economist's View"; "Personal Injury" (panelist), CBA Alberta Mid-winter Conference held in Edmonton AB, January 1999
• Brown, C.L. (1997) "Exposing and Remedying Vexing Problems in Housekeeping Cases for Personal Injury and Wrongful Death Claims: An Economist's View" The Advocates' Quarterly 19(1) 83-119
• Brown, C.L. (1996) "Valuing Housekeeping Claims: An Economist's View" The Barrister 42 24-31
• Brown, C.L. (1996) "Loss of housekeeping capacity"; "1991 HALS", Canadian Bar Association (Southern Alberta Branch), Personal Injury Sub-Section held in Calgary AB, May 1996
• Brown, C.L. (1996) "Loss of housekeeping capacity", Alberta Civil Trial Lawyers Association (ACTLA) - "Damages: Building & Proving Your Case" held in Lethbridge AB, March 1996
• Brown, C.L. (1996) "Loss of housekeeping capacity", Alberta Association of Insurance Adjusters (Northern Chapter) held in Edmonton AB, February 1996

When an injury prevents a claimant from doing his/her job, or prompts retraining, there may be a permanent partial disability that prevents him or her from doing household work as well. Alternatively, if the plaintiff can resume work full-time, then it can be the case that he/she invests all of his/her time and energy into paid work, and cannot resume pre-accident household chores. In these cases, BEC relies upon a form completed by the plaintiff (Diary of Household Activities ([personal injury] or [fatal accident]) or a report from an occupational therapist on cost of care to assess the value of time he/she can no longer devote to chores done before the accident.

Cost of Care

• Brown, C.L. (1999) "Rehabilitation, Wage Loss and Future Care Costs", Lexpert - Difficult Spinal Cord & Nerve Damage Injury Claims held in Calgary AB, October 1999
• Brown, C.L. (1998) "Present Value of Loss of Income & Future Cost of Care with an Emphasis on Contingencies", Alberta Civil Trial Lawyers Association (ACTLA) - "Damages: Building & Proving Your Case" held in Calgary and Edmonton AB, October 1998

In some cases, an occupational therapist will recommend items or services for a plaintiff for their health care or living standards. We have no opinion as to the necessity of these items; our role is simply translating the occupational therapist's recommendations (which deal only with first-time costs or annual costs) into lifetime costs for the plaintiff, discounted to present value. To do so, we provide a table that lists all of the assumptions underlying the calculations (frequency of duration, starting age, etc.) and which allows easy negotiation if the cost of an item is changed or deleted.

Tax Gross-up

Claimants will have to pay tax on the investment income they may earn on a loss of dependency award or cost of care/household services award (because we assume they will invest these awards at the interest rate(s) equal to the discount rate assumed). To ensure that the claimant's award is not eroded by the amount of tax on the investment income generated by the cost of care/household services award, a tax gross-up is calculated. To do so, the claimant's income sources post-accident are taken into account, as is the investment income on the loss of income award (though no gross-up is calculated on the tax accruing to this portion of investment income because we use gross, before-tax figures to calculate loss of income awards, which implicitly includes a "gross-up"). Tax gross-up on loss of income claims can also be calculated in jurisdictions which use after-tax income as the basis - in Ontario, from 1996 to 2003; and in Alberta after Jan 26, 2004.

Loss of Disability Income

In many cases involving claimants on long-term disability, disputes arise as to the payment of disability income. BEC has done many assessments that quantify lump-sum payments based on the stream of monthly disability benefits, depending on COLA clauses and the interpretation of offsetting income sources.

Wrongful Dismissal

Quantifying lost wages during various severance periods is less complicated than evaluating the out-of-pocket costs for benefits purchased when unemployed without the advantage of a group plan. Assessing reduced pension entitlements upon retirement can be important as well. In addition, BEC has provided many statistics related to the possibility of mitigating employment during severance terms.

Loss of pension benefits

• Brown, C.L. (1999) "Loss of Income and Dependency Claims"; "Pension Loss Entitlements", Lexpert - How Much Is It Worth? State of the Art Personal Injury Damages held in Halifax NS, September 1999
• Brown, C.L. (1999) "Loss of Income and Dependency Claims"; "Pension Loss Entitlements", Lexpert - How Much Is It Worth? State of the Art Personal Injury Damages held in Calgary AB, April 1999
• Brown, C.L. (1996) "Pension benefits" Calgary District Labour Council held in Calgary AB, February 1996

When claimants are near retirement age, and belonged to a specific pension plan from which a certain pension income stream would be paid upon retirement, forensic economists can value the loss of this benefit separately by estimating the annual pension (taking into account actuarial reductions); potential retirement ages on an unreduced basis or at full pension; cost-of-living increases, which affect the discount rate used (based on Canadian Institute of Actuary recommendations on interest rates); and saved contributions.

Loss of Insurability

• Brown, C.L (2005) "Loss of insurability - it's a new kind of damage" CBA - National Civil Litigation CLE Conference held in Toronto ON, April 2005
• Brown, C.L. (2003) "Unusual Economic Claims", CBA Alberta Law Conference held in Edmonton AB, March 2003

A claim for "loss of insurability" involves proving that the impairment in question makes it more difficult (or impossible) for the claimant to obtain disability or life insurance, and as such invites statistics regarding the enhanced possibility of re-injury that justifies the need for insurance after the incident in question. Calculating the loss would involve comparing the difference between the group and individual policy premiums and calculating the present value of the monthly premiums over the person's working life expectancy. The premiums are already discounted for the probability that the insurer will have to pay out the face value of the policy, i.e., that the insured would have become disabled and would have collected the benefits. Return of premium riders have to be considered if inherent in the policy.