Calculating Using the Per Diem Method

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Calculating Using the Per Diem Method

Alternative Approach to Pain and Suffering Damages in Florida

Understanding the Multiplier Method

The per diem method offers a different approach to calculating pain and suffering damages. Instead of multiplying your economic damages, you assign a daily value to your suffering and multiply by the number of days you suffered. This method can be more favorable than the multiplier method in certain situations. Let’s explore how it works and when to use it.

How the Per Diem Method Works

Per Diem Formula
Daily Pain and Suffering Rate × Number of Recovery Days = Total Pain and Suffering
Simple Example:
Daily Rate: $300
Recovery Days: 90 days
Calculation: $300 × 90 = $27,000 pain and suffering
Total Settlement: $8,000 + $10,000 = $18,000
Example 2: Serious Injury
Economic Damages: $85,000
Multiplier: 3.5
Calculation: $85,000 × 3.5 = $297,500 pain and suffering
Total Settlement: $85,000 + $297,500 = $382,500

Step 1: Determine Your Daily Rate

The first crucial decision in the per diem method is establishing an appropriate daily rate. This is typically based on your actual daily income, but can be adjusted for injury severity.

Calculating Your Base Daily Rate

If you’re employed, divide your annual salary by the number of work days per year. Most people work approximately 250 days per year (52 weeks minus vacation and holidays).

Example: If you make $80,000 per year and work 250 days per year, your daily rate is $80,000 ÷ 250 = $320 per day.

Adjusting the Daily Rate for Injury Severity

Your actual pain and suffering daily rate might be equal to your daily wage, higher than your daily wage (for more severe injuries), or lower (for minor injuries). The logic is that your suffering deserves compensation at least equal to your daily earning capacity, but potentially more for serious injuries.

Minor injuries: 50-100% of daily wage
Moderate injuries: 100-150% of daily wage
Serious injuries: 150-250% of daily wage
Severe injuries: 250-400% of daily wage
Catastrophic injuries: 400%+ of daily wage

Step 2: Determine Your Recovery Period

The second crucial decision is determining how many days you suffered. This is measured from your injury date until you reached maximum medical improvement (MMI).

Maximum medical improvement is when your condition stops improving and stabilizes. For temporary injuries, this is when you fully recovered. For permanent injuries, there is no “recovery”—the condition stabilizes but doesn’t fully resolve.

Calculating Recovery Days

Count the number of days from your injury date to your maximum medical improvement date. If you were injured January 1 and reached MMI on May 1, that’s 120 days (if counting continuous days) or 5 months.

Medical records establish these dates. Your doctor’s notes should indicate when your condition stabilized. For permanent injuries, you might calculate through your life expectancy or use a reasonable estimated timeframe the defense won’t dispute.

💡 Documentation Tip: Get clear documentation from your treating physician about when you reached maximum medical improvement. This is crucial for the per diem method. If your doctor says, "The patient reached maximum medical improvement on June 15th," you have a clear, defensible endpoint for your per diem calculation.

Per Diem Method Examples

Example 1: Minor Temporary Injury
Facts: Minor sprain, 3-week recovery period
Daily wage: $200/day
Daily pain/suffering rate: $200 (equal to daily wage for minor injury)
Recovery days: 21 days
Calculation: $200 × 21 = $4,200 pain and suffering
Total settlement (with $3,000 medical bills): $7,200

Example 2: Moderate Injury
Facts: Fractured arm requiring surgery, 4-month recovery
Daily wage: $240/day
Daily pain/suffering rate: $360 (150% of daily wage for moderate injury)
Recovery days: 120 days
Calculation: $360 × 120 = $43,200 pain and suffering
Total settlement (with $35,000 medical bills and $12,000 lost wages): $90,200

Example 3: Serious Injury
Facts: Spinal fracture with permanent nerve damage, 6-month recovery period, permanent chronic pain continues
Daily wage: $280/day
Daily pain/suffering rate: $700 (250% of daily wage for serious permanent injury)
Recovery days: 180 days to MMI, plus 20 years of permanent chronic pain = 7,380 days total
Calculation: $700 × 7,380 = $5,166,000 pain and suffering
Note: This calculation shows why per diem can be controversial for permanent injuries—the amounts can become very large

When to Use the Per Diem Method

The per diem method works best when:

Your recovery period is clearly defined and well-documented
Your suffering was significant but your economic damages were relatively modest
You want to emphasize the daily reality of your suffering to a jury
The multiplier method produces a lower result than per diem
Your injury is temporary with a clear endpoint

Comparing Multiplier vs. Per Diem in the Same Case

The Same Injury, Two Different Methods
Injury: Fractured leg requiring surgery, 5-month recovery
Medical bills: $45,000
Lost wages: $25,000
Total economic damages: $70,000
Daily wage: $240
Multiplier Method:
Injury severity: Serious
Multiplier: 3.5
Pain and suffering: $70,000 × 3.5 = $245,000
Per Diem Method:
Daily rate: $360 (150% of $240)
Recovery days: 150 days
Pain and suffering: $360 × 150 = $54,000
Winner: Multiplier method ($245,000 vs. $54,000)
Lesson: This is why you calculate both methods and use whichever is higher!

Defending Your Per Diem Rate

Insurance companies will often challenge your per diem rate as being too high. Be prepared to defend it:

Show your actual daily wage calculation
Explain why the adjustment percentage is appropriate for your injury severity
Reference comparable cases with similar injury types and daily rates
Provide medical expert testimony about the typical pain and suffering associated with your type of injury
Document your actual suffering throughout the recovery period

Challenges with the Per Diem Method for Permanent Injuries

The per diem method can produce extremely large numbers when applied to permanent injuries lasting many years. A $500/day rate for 30 years equals $5.5 million, which insurance companies will heavily dispute. This is why per diem works better for temporary injuries with defined recovery periods.

For permanent injuries, you might use a combination approach: per diem for the acute recovery period plus a different method for ongoing permanent suffering.

🎯 Smart Strategy: Combine Both Methods
Calculate the pain and suffering for your acute recovery period using per diem (high daily rate over a defined period). Calculate the pain and suffering for ongoing permanent effects using the multiplier method or a conservative daily rate. This combination often produces more defensible and higher results than using either method alone.

Conclusion: When Per Diem Makes Sense

The per diem method provides an alternative calculation approach that can produce higher pain and suffering damages than the multiplier method in certain situations. It works particularly well for temporary injuries with clearly defined recovery periods. Always calculate both methods and use whichever produces the higher reasonable result.

For permanent injuries, you might use a combination approach: per diem for the acute recovery period plus a different method for ongoing permanent suffering.