Compensation and Damages Flashcards

Are personal injury settlement proceeds generally taxable as income in the US?

Answer: No, compensatory damages for physical injuries are generally not taxable

Under IRS rules, compensatory damages received for physical injuries or sickness are generally excluded from taxable income.

What is 'hedonic damages' in an accident claim?

Answer: Compensation for the loss of enjoyment of life and the inability to pursue hobbies and pleasures

Hedonic damages compensate for the reduction in quality and enjoyment of life experienced by the victim as a result of their injuries.

What is 'wrongful death' in the context of accident law?

Answer: A civil claim brought by the family of someone killed due to another's negligence

Wrongful death claims allow surviving family members to recover compensation for financial and emotional losses caused by a negligently inflicted death.

What damages can be recovered in a wrongful death claim?

Answer: Medical bills, funeral costs, lost future earnings, and family members' loss of companionship

Wrongful death damages compensate the family for funeral costs, lost financial support, lost services, and loss of the relationship with the deceased.

What is the 'mitigation of damages' duty after an accident?

Answer: The injured party's legal duty to take reasonable steps to minimize their own losses

Plaintiffs must take reasonable steps to limit their losses, such as following medical advice, or risk having their damages reduced for failure to mitigate.

What does 'maximum medical improvement' (MMI) mean and why does it matter?

Answer: The point at which a patient's condition has stabilized and is unlikely to improve further

MMI is the medical benchmark indicating that further significant improvement is not expected, which is the optimal time to evaluate and settle a claim.