Legal Question in Medical Malpractice in Missouri

Re: Taxes

There is no limit to the amount of economic damages you can recover in a malpractice case currently, however, non-economic losses (pain and suffering, lost enjoyment of life, etc) are limited, around $540,000.00 this year. However, the Missouri Legislature is hard at work to roll this number back to 250-300,000, depending on how things work out. Call your legislator immediately and voice your view on this important issue.

As for taxes, the IRS has so far treated judgments and settlements in personal injury cases as a return of capital, rather than income, and as such, it is not an income taxable event. Punitive damages and damages for lost wages do not fall in this category, and could be taxed.

Re: Taxes/medical negligence cases

1. Only non-economic damages are currently capped in Missouri; these represent compensation for intangible losses such as your time, pain, disability, loss of enjoyment of life, etc; this cap is adjusted the first of February each year and is currently at $557,000 per defendant per occurrence; just because there is a cap does mean you will be awarded that amount; the jury is prohibited from being informed about the cap; there is no cap to your actual economic losses such as wages and medical bills, past and future

2. Generally, personal injury awards are not taxable as income as long as any otherwise taxable portion is not separately designated as such; if you lose wages and the amount of those lost wages are specified in the settlement, you risk being taxed, but if there is a single settlement amount which is made up of both taxable and nontaxable items, the IRS will generally never attempt to sort it out; however, punitive damages are taxable, but only after 50% is taken by the state; but also understand, punitive damages are almost unheard of in medical cases.

3. Currently, on both the state level and the federal level, very radical legislation is being passed to limit non-economic damage compensation in a "one size fits all" fashion generally to $250,000, and in some cases as low as $50,000; this is patently unfair as only those who are hurt the most severely and who are the most deserving will be capped; in other words, in a totally arbitrary fashion, those who can tolerate caps the least will be the most denied justice; call you state and federal representatives and senators immediately if you feel this is unfair.

Good questions, and thanks for asking.