STATES IN WHICH DAMAGES ARE REQUIRED TO BE FORMULATED IN PRESENT VALUE

What is Present Value, and Why are Damages Required to be formulated in Present Value in Most States?

The present value of damages is the amount of money a person would need to receive and invest today, to be able to afford specified future expenditures (e.g. future medical expenditures, household services, etc.), at their inflationary adjusted values.  

Most states require damages to be formulated in present value because present value formulations account for two real-world considerations:

1. The impact of inflation on future good and services.
2. The amount of interest a person can receive between the time of an award, and the time at which their future expenditures are forecast to occur.

Present Value Requirements by State

Alabama requires damages to be formulated in present value. “If the jury decides the plaintiff lost future income or earning ability, it then decides what amount the plaintiff is reasonably certain to lose and reduce that amount to its present cash value.” APJI 11.17.

Alaska requires damages to be formulated in present value. “The fact finder shall reduce future economic damages to present value.” §09.17.040(b))10,11

Arizona requires damages to be formulated in present value. “If future damages are ordered to be paid in advance of the period to which they apply, the court shall compute the present value of the future payments…” Ariz. Rev. Stat. § 12-589

Arkansas requires damages to be formulated in present value. Arkansas Model Jury Instructions-Civil: The jury must calculate the “the present value of such expense [damages] reasonably certain to be required [incurred] in the future.” 

California requires damages to be formulated in present value. “To recover for future harm, [name of plaintiff] must prove that the harm is reasonably certain to occur and must prove the amount of those future damages. The amount of damages for future harm must be reduced to present cash value.” California Jury Instruction CACI 359

Colorado requires damages to be formulated in present value. Section 13-64-205(1)(d), C.R.S.1999, provides in pertinent part that “after hearing relevant expert testimony, the jury shall determine the present value of future damages…”

Connecticut requires damages to be formulated in present value but does not specify a specific method. “Further, we recognize that economics is an inexact science and we hesitate to adopt any particular method for computing the present value of lost compensation and future costs” Mather v. Griffin Hospital, 207 Conn. 125, 147 (Conn. 1988) 

Delaware requires damages to be formulated in present value. “The jury’s estimate of the present money value…” Cann v. Mann Const. Co. 93 A.2d 741 (1952) Delaware Superior Court Decisions.

The District of Columbia requires damages to be formulated in present value. “Damages are limited to compensation to the estate itself for the loss of prospective economic benefit in the form of the decedent’s prospective net lifetime earnings discounted to present worth.” Hughes v. Pender, 391 A.2d 259

Florida requires damages to be formulated in present value. Florida has not adopted a particular method of discounting; they leave it up to the economist. “The fact-finder then discounts that income stream to present value…” Delta Air Lines v. Ageloff 552 So. 2d 1089 (1989)

Georgia requires damages to be formulated in present value. “In determining the present value of future medical expenses, living expenses, lost wages, or other economic damages, the trier of fact may reduce the same to the present value based on a discount rate of 5 percent or any other discount rate as the trier of fact may deem appropriate.” Georgia Code § 51-12-13 (2020) 

In Hawaii, there is no statute or case law mandating that future damages must be reduced to present value in personal injury cases. Hawaii law is primarily governed by its tort statutes, such as HRS 663-1, which addresses general rules about tort actions and damages, but it does not explicitly require the reduction of future damages to present value in personal injury cases​.

Idaho requires damages to be formulated in present value. “Economic damages in personal injury cases include lost past earnings, fringe benefits, medical expenses, and household services plus the present value future earnings, fringe benefits, medical expenses, and household services less any mitigation of damages” (p. 425) Tyler J. Bowles, W. Cris Lewis, & Gary R. Wells, Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Idaho, 17(3) J. FORENSIC ECON. 415 (2004). Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Idaho 

Illinois requires damages to be formulated in present value. “In computing the damages arising in the future [because of future (medical) (caretaking) expenses] [or] [because of the loss of (future earnings) (benefits) (or) (services)] you must determine their present cash value.” IPI 34.02

Indiana requires damages to be formulated in present value. “Which advised the jury that in computing any damages arising in the future, present value must be utilized.” Eversole v. Consolidated Rail Corp., 551 N.E.2d 846

Iowa requires damages to be formulated in present value. “Iowa law requires an award for future damages in a personal injury action be reduced to present value.” Gleason v. Kueker, 641 N.W.2d 553 624.18

Kansas requires damages to be formulated in present value. “A defendant in any action is entitled to have amounts provided or future damages reduced to present worth when there are reasonable grounds to expect the amount awarded may be safely and profitably invested.” GANNAWAY v. MISSOURI-KANSAS-TEXAS RLD. CO, 1978 

Kentucky requires damages to be formulated in present value. “The jury is instructed that their award shall be in present worth, but the present worth rule does not apply to any award for pain and suffering.” Paducah Area Public Library v. Terry, 655 S.W.2d 19 

Louisiana requires damages to be formulated in present value. “Factors which should be weighed in determining the amount due for loss include… the effects of inflation and the need to discount future earnings to a present day amount.” STREET v. LOUISIANA PACIFIC CORP, 36,352 (La. App. 2 Cir. 9/18/02); 829 So. 2d 450

Maine requires damages to be formulated in present value. “Because of the capacity of money to earn money, the authorities are almost unanimous in holding an award for loss of future earnings must represent the present value of those earnings” Ginn v. Penobscot Co., 334 A.2d 874 (Me. 1975)

Maryland requires damages to be formulated in present value. “Accordingly, we hold that, in a simple and straightforward case, in which the trial court ascertains that it is within the ordinary knowledge of laypeople to reduce an award of future lost earning capacity to present value, the trial court must instruct the jury to reduce the award to present value when requested to do so.” Lewin Realty III, Inc. v.  Brooks, 771 A.2d 446 (Md.  Ct. App. 2001)

Massachusetts requires damages to be formulated in present value. “if you award future damages, you must reduce that portion of the damages to its present value as of [year], when PLF filed this case. Griffin v. General Motors Corp.

Michigan requires damages to be formulated in present value. Revised Judicature Act 236 of 1961 requires “All future medical and other health care costs, reduced to gross present cash value.” 600.6306a

Minnesota requires damages to be formulated in present value. “Therefore, you must reduce any award of such damages to compensate for the reasonable earning power of the money.” COX v. CROWN COCO, INC, 544 N.W.2d 490 (Minn. Ct. App. 1996)

Mississippi requires damages to be formulated in present value. “Damages should therefore be reduced to reflect only the present value of the plaintiff’s decreased earning capacity.” Jesco, Inc. v. Whitehead, 1984

Missouri requires damages to be formulated in present value in FELA cases.  “An award of damages for future monetary loss under the FELA must be adjusted to present value.” St. Louis Southwestern Ry. Co. v. Dickerson, 470 U.S. 409, 105 S. Ct. 1347, 84 L. Ed. 2d 303 (1985)

Montana requires damages to be formulated in present value. “The only amounts to be adjusted to present cash value are future earnings and future medical costs.” Newville v. State, Dept. of Family Services, 883 P.2d 793, 267 Mont. 237, 51 State Rptr. 758

Nebraska requires damages to be formulated in present value. “The court’s instruction on damages did require the jury to reduce any verdict to its present worth…” Cassio v. Creighton University, 1989, Nebraska Supreme Court Decisions 

Nevada requires damages to be formulated in present value. “The proper measure of damages is the present worth of the amount…” Christensen v. Floriston Pulp and Paper Co., Nevada Supreme Court, 12-31-1907

New Hampshire requires damages to be formulated in present value. “And so of an instruction that only the present worth may be recovered of any damages to be suffered in the future.” Humphreys v. Ash, 90 N.H. 223, 6 A.2d 436 (1939)

New Jersey requires damages to be formulated in present value. “Therefore, requiring that an award for these damages be discounted to present value is neither artificial nor unrealistic.” 108 N.J. at 78, 527 A.2d 871. DeHanes v. Rothman, 158 N.J. 90 

New Mexico requires damages to be formulated in present value. “The annuity tables were admissible in evidence to show present values of wages that might have been earned over a period of time, equal to plaintiff’s life expectancy.” Turrietta v. Wyche, 54 N.M. 5, 212 P.2d 1041 (1949)

New York requires damages to be formulated in present value.  New York requires damages in wrongful death cases to be computed in conformity with CPLR Article 50-A in wrongful death cases, and in conformity with CPLR Article 50-B in personal injury cases. “If a lump sum payment is ordered by the court, such lump sum shall be calculated on the basis of the present value  of  remaining  periodic payments,  or  portions  thereof,  that  are  converted  into a lump sum  payment.” NY CPLR § 5046 (2012)

North Carolina requires damages to be formulated in present value. “Any amount you allow as the future damages must be reduced to its present value, because a smaller sum received now is equal to a larger sum received in the future. NCPI – 810.16

North Dakota requires damages to be formulated in present value. “Under North Dakota law, future damages are discounted to present value — an award to be paid today for future damages is less than the amount which would be paid in the future when the damages are actually incurred.” Gonzalez v. Tounjian, 665 N.W.2d 705

Ohio requires damages to be formulated in present value. “…the jury should take into consideration the loss of future earnings which it finds with reasonable certainty will result from the injury and also the earning power of money; and the amount awarded for future earnings should be reduced to its present value as a lump sum payable at the time of the verdict.” Maus v. New York, Chicago & St. Louis Rd., 165 Ohio St. 281 

Oklahoma requires damages to be formulated in present value. “The rate of interest to be used in computing present value of future damages is ordinarily a question of fact which is to be determined by a jury upon the basis of evidence presented.” Middlebrook v. Imler, Tenny Kugler M.D.’S, 713 P.2d 572 (Okla. 1985)

Oregon requires damages to be formulated in present value. “Damages should therefore be reduced to reflect only the present value of the plaintiff’s decreased earning capacity.” Osborne v. Bessonette/Medford Mtrs., 265 Or. 224, 508 P.2d 185 (1973)

In Pennsylvania, future damages in personal injury cases are typically required to be reduced to present value. This is supported by case law such as Kaczkowski v. Bolubasz (1980), where the Supreme Court of Pennsylvania upheld the principle that future pecuniary losses should be discounted to their present value. The rationale behind this approach is that plaintiffs will likely invest any lump-sum awards and earn interest, which will contribute to their future support. To avoid overcompensation, the award must be adjusted to reflect the present value of future damages, taking into account the potential interest earnings on the award.

Rhode Island requires damages to be formulated in present value. “Reduce the remainder thus ascertained to its present value as of the date of the award. In determining the award, evidence shall be admissible concerning economic trends, including but not limited to projected purchasing power of money, inflation, and projected increase or decrease in the costs of living.” General Laws of Rhode Island Section 10-7-1.1 (2021)

South Carolina requires damages to be formulated in present value. “In arriving at the verdict the jury could consider the loss of future earning power which requires a consideration  of all matters which relate to the issue of the disability, the effect which that disability will have on plaintiff’s capacity to work, the extent to which the disability will impair the plaintiff’s earning capacity, the present value of all losses due to his impaired earning power.” Matthews v. Porter, 239 S.C. 620, 635 (S.C. 1962) 

South Dakota requires damages to be formulated in present value.  “… the court shall reduce the remaining amounts for future damages to present value…” 21-3A-5

Tennessee requires damages to be formulated in present value. “The calculation of all future medical care and other costs of health care and future noneconomic losses must reflect the costs and losses during the period of time the claimant will sustain those costs and losses. The calculation for other economic loss must be based on the losses during the period of time the claimant would have lived but for the injury upon which the claim is based. All such calculations of future losses shall be adjusted to reflect net present value.” § 29-39-103

Texas requires damages to be formulated in present value. “In personal-injury actions, the trier of fact must assess damages to accrue in the future on the basis of their dollar amount if they were presently paid in cash. See Mo. Pac. R.R. Co. v. Kimbrell, 334 S.W.2d 283, 286 (Tex. 1960). Texas law does not require specific evidence of the discount rate.” No. 01-05-00318-CV

Utah requires damages to be formulated in present value. “If you find the issues in favor of the plaintiff, and award him damages, then, with respect to the plaintiff’s alleged loss of earning power he would not be entitled to recover as a lump sum at present the total accumulations of such loss of earnings over the entire period of such disability, but such sum, if any, awarded, must be reduced or discounted on the basis of a fair rate of interest or return on such sum. 213 P.2d 325

Vermont requires damages to be formulated in present value. “In estimating prospective damages, jury should reduce future losses to their present worth…” Parker v. Roberts, 99 Vt. 219, 224, 131 A. 21, 23 (1925).

Virginia requires damages to be formulated in present value. “Discounted present value” means the present value of future payments determined by discounting such payments to the present using the most recently published Applicable Federal Rate for determining the present value of an annuity, as issued by the United States Internal Revenue Service.” § 59.1-475

Washington requires damages to be formulated in present value. “In calculating the amount of the lump sum judgment, the court shall total the remaining periodic payments due and owing to the judgment creditor converted to present value.” Revised Code of Washington § 4.56.260 (2017)

West Virginia requires damages to be formulated in present value. “Although expert economic evidence may not be necessary in every case, an instruction regarding appropriate reduction of an award to present value should be presented to the jury both in cases where expert economic evidence is presented as well as in cases where no such evidence is presented.” Adkins v. Foster, 21 S.E.2d 271 (W. Va. 1992)

Wisconsin “The defendant has the burden of producing evidence to show the fact-finder how to reduce future losses to present value.” Hall v. American Alliance Insurance Co., 545 N.W.2d 520 (Wis. Ct. App. 1995).

Wyoming requires damages to be formulated in present value. “…instructs the jury that it “. . . must determine the present worth in dollars of… future damages.” Bowles, Tyler J., and W. Cris Lewis. “Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Wyoming.” Journal of Forensic Economics, vol. 16, no. 1, 2003, pp. 87–99. JSTOR, http://www.jstor.org/stable/42755933. Accessed 13 Sep. 2022

Assessing Economic Damages in Personal Injury and Wrongful Death Litigation: The State of Wyoming on JSTOR

At Physician Life Care Planning, all Present Value Assessments of Life Care Plans, Present Value Loss of Earnings Assessments, and Present Value Loss of Household Services Assessments are formulated by qualified financial analysts and forensic economists employing fundamental, highly transparent, discounted cash flow analysis.