Jeffrey T. Willoughby, CPA, CFF, CFE, Forensic Accounting Consultant ::::
Description: A physician operating a specialty medical practice was allegedly forced to reduce the number of hours he spent working in his practice as a result of injuring himself at a local health club. The plaintiff argued a fall at a health club caused injuries which resulted in physical limitations requiring him to scale back his medical practice. Plaintiff claimed lost profits for a period of up to 20 years with calculated loss amounts ranging from $4,000,000 to $25,000,000.
Expert Analysis: An analysis of the Plaintiff’s calculation of lost earnings was presented in 30 different scenarios indicating lower gross sales and, by default, lower salary and business income. Calculations also included provisions for full and part-time losses as the doctor was currently working but was expected to be required to cut back hours and eventually close the practice.
Tax returns for the practice indicated a decrease in gross revenue in the year in which the accident occurred and subsequent decreases in the months following. Comparing the revenues pre- and post-injury, there was a definite decrease in gross revenue and the resulting net profit available to pay to the owner. It appears to be clear cut; injury occurs, revenues drop, lower profits result, one causes the other. The loss of net income or earnings is the difference between pre- and post-injury net income calculated out to a worklife expectancy.
Stephen M Timko, Railroad Safety Consultant ::::
Case Synopsis: An employee of a Class 1 railroad system sustained two on-duty injuries within a few miles of each other. The two injuries addressed herein were properly reported to the employee’s supervisor as required; in fact his supervisor was a witness to one of the injuries. The employee was harassed and intimidated for “failing to report personal injuries in a timely manner.”
Injury #1 occurred when the employee was descending a set of steps near an active railroad track. As the employee descended the steps to clean our snow from switch pints, he came to a landing where he had to make a 90-degree turn to the left and descend five more steps to track level. He was holding onto the handrail as he descended. When he reached the bottom step, the handrail support broke and the employee fell to the ground injuring his back.