The Difference: Economic vs. Noneconomic Damages
When a healthcare provider faces a claim or lawsuit following a patient injury or adverse event, that defendant provider’s medical professional liability (MPL) insurance becomes very important. If that provider is found liable for the patient’s injury and coverage is available, the MPL insurance policy could compensate the patient for the damage.
These compensatory damages include economic and noneconomic damages.
Economic Damages
Economic damages, sometimes called actual compensatory damages, refer to quantifiable financial losses resulting from the harm caused by a defendant. In a healthcare context, these typically include:
- Past and future medical expenses
- Lost wages
- Loss of earning capacity
- Out-of-pocket expenses
The hallmark of economic damages is that they can be supported by documentation such as medical bills, pay stubs, employment records, and expert testimony regarding projected future costs.
Noneconomic Damages
Noneconomic damages, sometimes called general compensatory damages, compensate for intangible, subjective losses that significantly impact quality of life but cannot be precisely quantified. These include:
- Pain and suffering
- Loss of enjoyment of life
- Mental anguish
- Injury to reputation
- Physical impairment and disfigurement
Unlike economic damages, noneconomic damages cannot be calculated using receipts or invoices. They require subjective assessment of how the injury has impacted the patient’s daily life.
Note: Coverage under a policy depends on the terms of the policy and the circumstances of the claim.
References
“Ending the Confusion: Economic, Non-Economic, and Punitive Damages,” American College of Surgeons, https://www.facs.org/advocacy/federal-legislation/liability/guide-to-liability-reform/ending-the-confusion/.
Legal Information Institute, 42 USC § 247d-6d(e)(8), https://www.law.cornell.edu/uscode/text/42/247d-6d#e_8.
“Compensatory Damages: Definition, Types, and Examples,” Investopedia, https://www.investopedia.com/terms/c/compensatory-damages.asp.
The Difference
The Difference is an ongoing educational series from ProAssurance designed to compare common terms in medical professional liability insurance.