Lump Sums and Valuations
Original 50A
An amount of $250,000 is allocated across the elements of future damages and that amount is paid as a lump sum. The $250,000 is spread across the elements in line with the relation the element amount (net of Taxes, if any) bears to the total future Award (Net of Taxes). The system does this on a dynamic basis as elements are totaled using 'Add' and 'Apply' or 'Calculate'
Future Pain and Suffering is limited to 10 years. Other elements of future loss are not limited.
Initial monthly payment amounts are determined by dividing the undiscounted future Award less lump sums by the period over which the payments are to be made. The result is then factored up by 4% for each year after the first year, and those amounts are discounted to produce initial element values.
Amended 50A provides a new scheme for calculating and applying lump sums. The valuation process is
Future Pain and Suffering is limited to 8 years. The first $500,000 or 35% of future Pain and Suffering, whichever is greater, is applied as a lump sum, and deducted from future damages. Initial monthly payment amounts are determined by dividing the undiscounted future Award less lump sums by the period over which the payments are to be made. The result is then factored up by 4% for each year after the first year, and those amounts are discounted to produce initial element values.
Other elements of Future damages are not limited as to payment period. Each element of future damages is discounted by the appropriate rate, and 35% of that amount is applied as a lump sum. 65% of the original element undiscounted future damages becomes the net future damages. Initial monthly payment amounts are determined by dividing this amount by the period over which the payments are to be made. The result is not factored up for each year after the first year. The net future damages amounts are discounted to produce initial element values.
Collateral Source Offsets are calculated using the first monthly payment amount (net of ongoing monthly maintenance) and any COLA to be used after the first year of payment. This is then discounted by the rate used for the element of loss to which the offset relates.