The Total Offset Method of Calculating Future Damages
In Kaczkowski v. Bolubasz, 491 Pa. 561, 567, 421 A.2d 1027, 1031 (1980), our Supreme Court held that future lost wages should not be discounted, that "both a productivity factor and an inflation factor should be reflected in an award of lost future earnings," id. at 566, 421 A.2d at 1029, to obviate the necessity for an adjustment of the verdict on the basis of these factors.
The Court adopted the total offset method of calculating damages which requires that information concerning both inflation and productivity be presented to the jury rather than merely discounting a damage award by 6% simple interest to reach present value.
Although the Court specifically declined to expand its ruling to contexts other than future lost earnings, opining that these should be resolved on a case by case basis, it noted principles long settled in Pennsylvania law that "damages are to be compensatory to the full extent of the injury sustained," and that actual compensation is given "by graduating the amount of damages exactly to the extent of the loss." id.
These rules were clearly considered by the trial court in denying Appellees' request.
The court observed that "the inflation that the Supreme Court found to be a fact of life in Kaczkowski is even greater in the field of medical services, where inflation is running at a rate greater than the average for all goods and services." (Trial Ct. Op. at 11).
Appellees have offered no authority to contradict the information relied upon by the trial court in reaching its conclusion; instead they advocate abandonment in this case of the rule for future damages calculation enunciated in Kaczkowski.
Given the potential for unfairness posed by such a reduction and the permanency of Ashley's loss, Appellees' suggestion is unpersuasive.
As the Supreme Court noted, the total offset method, which assumes that "in the long run, future inflation and the discount rate will offset each other," Id. at 580, 421 A.2d at 1037, assures that "when there is a variance, between interest rates and inflation, it will be in favor of the innocent victim and not the tortfeasor who caused the loss." id. at 582, 421 A.2d at 1038.