Compensation and a Consequential Model of Loss

Abstract:     
Outside the tort system, a vast compensation landscape exists. State workers’ compensation, federal social security and civil service disability, and veterans’ disability pay out benefits that constitute a large percentage of the tort payments made by all compensation programs, including tort. This paper proposes a consequential model of loss that compensation programs should employ when evaluating and measuring the losses resulting from compensable injury or disease. As to any loss that a compensation program might claim to compensate – such as lost wage earning capacity or disfigurement – a consequential model should be the basis for identifying and measuring the existence and degree of this loss. The consequential model discussed in the paper draws heavily from the insights of the medical and rehabilitative communities in understanding the spectrum of losses and methods for evaluating them.

Keywords: workers' compensation, social security disability, disability

JEL Classification: J33

Accepted Paper Series