Structured Settlements Under Section 116.1 of the CJA: Getting It Right

Introduction.

I am concerned about how lawyers are preparing and presenting their claims for damages in serious medical malpractice cases when section 116.1 of the Courts of Justice Act is invoked to require periodic payments of future care costs. To be clear, it is a serious mistake to calculate future care costs based on a present value calculation and then take the resulting sum as the premium available to purchase an annuity. This is, as I hope to demonstrate, mixing apples and oranges. Such an approach will usually result in a shortfall for the plaintiff.

Where the evidence supports a lifetime of payments, plaintiff’s counsel should never agree to a fixed term structure. Where an annuity is appropriate for the payment of future care costs, predictions about life expectancy and the discount rate are irrelevant.

There is virtually no caselaw setting out the approach to implementing section 116.1. The few available cases suggest that insufficient thought has been given to the proper and principled application of section 116.1. All plaintiff lawyers must agree to how section 116.1 is to be used and approach every case in a uniform way. The failure to do so risks developing some bad law.

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