Boehm, R. v. Riversource Life Insurance

Opinion

J-A27014-14

2015 PA Super 120

ROBERT J. BOEHM AND BEVERLY LYNN IN THE SUPERIOR COURT OF BOEHM, PENNSYLVANIA

Appellees

v.

RIVERSOURCE LIFE INSURANCE COMPANY AND JAMES DAY, II,

Appellants No. 1999 WDA 2013

Appeal from the Judgment Entered December 13, 2013 In the Court of Common Pleas of Allegheny County Civil Division at No(s): G.D. 01-008289

BEFORE: FORD ELLIOTT, P.J.E., SHOGAN, and MUSMANNO, JJ.

CONCURRING AND DISSENTING OPINION BY SHOGAN, J.:FILED MAY 19, 2015

I join the Majority’s analysis and disposition of issues one through four

and six. However, because I do not believe this case presents the

appropriate context for application of the total offset method, I respectfully

dissent on issue five.

Our Supreme Court adopted the total offset method of calculating

damages in the limited context of lost future income resulting from an

automobile accident. Kaczkowski v. Bolubasz, 421 A.2d 1027 (Pa. 1980).

The Kaczkowski Court addressed, inter alia, the existing law on damages,

which discounted the loss of future wages to its present value by using the

six percent simple interest figure. Striving to obtain a damage award

formula that is “efficient, predictable as well as accurate,” the Kaczkowski J-A27014-14

Court concluded that “both a productivity factor and inflation should be

reflected in an award of lost future earnings.” Id. at 1029. As described by

the Kaczkowski Court:

[t]he total offset method assumes that in the long run, future inflation and the discount rate will offset each other. . . . Since over the long run interest rates, and, therefore, the discount rates, will rise and fall with inflation, we shall exploit this natural adjustment by offsetting the two factors in computing lost future earning capacity.

* * *

An additional feature of the total offset method is that where there is a variance, it will be in favor of the innocent victim and not the tortfeasor who caused the loss.

Id. at 1037–1038.

Twenty years later, this Court expanded the Kaczkowski ruling to

damages caused by medical malpractice. In Sonlin v. Abington Memorial

Hospital, 748 A.2d 213 (Pa. Super. 2000), we noted that:

[a]lthough the [Kaczkowski] Court specifically declined to expand its ruling to contexts other than future lost earnings, opining that these should be resolved on a case by case basis, it noted principles long settled in Pennsylvania law that “damages are to be compensatory to the full extent of the injury sustained,” and that actual compensation is given by graduating the amount of damages exactly to the extent of the loss.”

Id., at 218–219 (quoting Kaczkowski, 421 A.2d at 1029). Rejecting the

defendant hospital’s argument that a jury award of $2,185,960 should be

discounted to its present value, we observed that “the inflation that the

Supreme Court found to be a fact of life in Kaczkowski is even greater in

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the field of medical services, where inflation is running at a rate greater than

the average for all goods and services.” Sonlin, 748 A.2d at 219 (quoting

trial court opinion). More recently, our Supreme Court expanded application

of the total offset method to future lost profits claimed as damages in an

action for breach of contract and constructive discharge. Helpin v.

Trustees of Univ. of Penn., 10 A.3d 267 (Pa. 2010). In doing so,

however, our Supreme Court cautioned that Kaczkowski was decided

narrowly, and that “with respect to the calculation of future damages, ‘in

other contexts,’ [it] did not wish to disturb the requirement that an award be

discounted to present value.” Id. at 274 (quoting Kaczkowski, 421 A.2d at

1037 n.21). The Helpin Court further indicated that, if properly presented

to it in the future, the Supreme Court would consider whether Kaczkowski

was wrongly decided. Id. at 277 n.6.

Here, the majority extends application of the total offset method to

damages arising out of insurance fraud. However, unlike future earnings,

medical services, and future profits, inflation will not impact the amount of

future premium payments in this case, which amount, according to the

plaintiffs’ credible witness, is fixed at $2,881.26 per year, or approximately

$240.00 per month. Findings of Fact and Conclusions of Law, 7/12/13, at ¶

36; N.T., 5/22–23/13, at 190–191; Trial Court Opinion, 2/24/14 at

unnumbered 2. Accord Lowery v. Lowery, 544 A.2d 972 (Pa. Super.

1988) (“[T]he holding of Kaczkowski is simply inapplicable to present

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valuation of pensions which do not by their own terms account for

inflation.”). Thus, application of the total offset method to the underlying

$125,000.00 damage award in this case contradicts the rationale of

Kaczkowski by compensating the plaintiffs beyond “the full extent of the

injury sustained,” Kaczkowski, 421 A.2d at 1029 (citations omitted), and,

in my view, impermissibly expands upon Supreme Court precedent.

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