Tag: newsletter (volume 2 issue 3)

Using Male Earnings Data to Forecast the Future Income of Females

Posted on By economica

by Derek Aldridge

This article first appeared in the autumn 1997 issue of the Expert Witness.

In two recent British Columbia judgments ([B.I.Z.] v. Sams, [1997] B.C.J. No. 793; and Terracciano v. Etheridge and Fujii, [1997] B.C.S.C. B943125), the court accepted use of average earnings statistics for males to estimate the future earnings of female plaintiffs. In this article, I investigate the reasoning behind the court’s decision, and the circumstances in which it might be appropriate for us to use male data when estimating female earnings.

As an introduction, I first consider some statistical evidence regarding the “wage gap” between men and women. How much of this gap is due to discrimination, and how much can be explained by other factors? Second, I examine how the wage gap has diminished somewhat over time. Finally, I consider the implication of the economic evidence, together with the recent court decisions.

The Wage Gap

As we know, women, on average, tend to earn less money than men. In fact, in 1991, average income for women was only 61.5 percent of that for men. However, part of this gap is because a higher proportion of women workers are part-time. If we compare women working full-time to men working full-time, we find that (in 1991), women earned about 70 percent as much as men.

However, a wage gap of about 30 percentage points remains. Can this gap be explained by educational differences – are women earning less than men simply because they do not invest in as much education? The answer is no. Even when researchers compare men and women with the same level of education, the wage gap remains. For example, statistics indicate that Canadian women with university degrees earn only 72 percent as much as Canadian men with degrees. Some, but not all, of this wage gap is due to discrimination in the labour market.

In fact, it appears that much of the wage gap is due to factors other than labour market discrimination. One source is that women tend to work fewer years in total, over their careers, than do men – they have a greater tendency to interrupt their careers and withdraw from the labour force (especially to raise children), and they are also more likely than men to work part-time. These factors are reflected in labour force statistics which indicate that while 95 percent of 25-44 year old male workers are employed full-time, only 77 percent of women workers of the same age are full-time. These factors effectively reduce the average amount of work experience that women accumulate over their careers (part of what economists call human capital). So because women, on average, bring less experience to their jobs, they also tend to earn lower incomes at any given age.

Based on this, we might expect that if we compared men and women in the same jobs, with the same education, and the same amount of work experience, the wage gap would disappear. However, that is not the case. A Canadian study examined this question by surveying men and women who graduated from Canadian universities in 1982 and comparing their annual incomes two years and five years after graduation. The study compared men and women who had completed the same type of degree in university and who had worked continuously over the study period. The conclusion was that, even when controlling for education and experience factors, women still earned less than men – after two years the study found that the women graduates were earning 88 percent as much as men, and after five years they were earning about 82 percent. This trend was visible even for women with master’s and doctoral degrees (though women with doctorates in medical and health sciences were earning more than their male counterparts after two and five years). A particularly notable result is that, on average, the gap between men’s and women’s earnings actually increased as their careers progressed.

This leaves an unexplained wage gap of at least 10 percent – it is this portion of the gap which is generally attributed to discrimination. However, not all of this “discrimination wage gap” is due to discrimination in the labour market. Some of it seems to be due to the type of career paths that women tend to choose within occupations – perhaps they are positioning themselves somewhat for a future point at which they expect to temporarily withdraw from the labour force or drop to part-time status. It also seems that, to some extent, women tend to be socialized – within their families, in school, and culturally – to choose different sorts of career paths than men. The portion of the wage gap that remains after accounting for these factors is due to labour market discrimination – maybe 3-5 percent.

Note however, that the tendency for women to be socialized toward lower-paying careers may result from systemic discrimination – discrimination between boys and girls in the way that they are raised. It is also sometimes argued that traditional women’s occupations are lower-paid because women predominate in these professions (to the extent that this is true, the labour market is responsible). If we include these forms of discrimination, then the total wage gap due to discrimination is more like 10-15 percent.

The Wage Gap: Changes Over Time

When deciding whether to rely on historical income statistics to forecast future earnings, it is important to consider whether the historical relationships of the past can be expected to apply in the future. Examination of historical average earnings statistics for men and women working full-time reveals that the average wage gap has shown a clear decreasing trend over time. Specifically, the ratio of average female earnings to average male earnings increased from 59.7 percent in 1971 to 73.1 percent in 1995. This trend is illustrated in Figure 1 below.

Figure 1: Ratio of Average Earnings of Females to Average Earnings of Males

Figure 1

If we adjust average earnings statistics for the effects of inflation (so that, for example, earnings in 1971, 1981, and 1991 are all expressed in 1996 dollars), we discover that average male earnings only benefited from slight real increases over the last 25 years. (Specifically, average male earnings grew at approximately 0.10 percent per year over 1971-95.) The average earnings of women, on the other hand, experienced noticeable real growth – approximately 1.28 percent annually over 1971-95. This suggests that the male-female wage gap is decreasing over time because women are experiencing significant real wage gains, while men are not. We suspect that this trend is largely due to women spending more time in the labour force (increasing participation rates), pursuing higher paying occupations (including many “traditional male occupations”), and facing less discrimination than in the past. The annual real wage gains of men and women over this period are shown in Figure 2 below.

Figure 2: Real Changes in Earnings of Males and Females

Figure 2

We noted above that women tend to participate less in the labour market than men – they interrupt their careers more often, and for longer periods of time. The tendency toward work interruptions among women is changing though – recent information from Statistics Canada indicates that women’s labour force interruptions are now significantly shorter than they were in the past: over half of all Canadian women now return to work within two years of an interruption, compared with only an eighth in the 1950s. As it continues, this trend will further narrow the wage gap. We also know that women with more education tend to return earlier to the labour force.

Given these trends, past earnings averages for women will not accurately reflect what the average woman will earn in the future. Women are catching up to men, and it seems reasonable that today’s young women can expect to earn approximately the same lifetime income as today’s young men, if they follow similar career paths.

Implications

What do these findings tell us about when we should use earnings statistics for men to forecast the future earnings of a woman? It seems that this would be appropriate if we have reason to believe that the woman involved would have followed a career path more typical of men than of women (historically). For example, if it is believed that a young woman would have worked full-time (or very nearly so), and without interruption, throughout her career, then it would appear to be appropriate to use earnings data for males in her occupation.

Of the two BC judgments noted at the beginning of this article, one involved a woman who had already established her career path at the time of the accident, while the other involved a young girl who had not completed high school. In the former, it was apparently reasonably clear that she was following the sort of career path that has been typical of males, rather than females. In the latter, it was argued that the girl would have followed a typical male career path. In either of these types of situations it seems that using average male earnings statistics will better predict what a woman’s future earnings will be (or would have been, but for an injury or death).

However, what if a plaintiff has not established a career path at the time of her injury, and it is unclear whether she would have followed a typical male or a typical female career path?

In these cases, economists have typically chosen to forecast a young woman’s income based on her expected level of education – using statistics representing average earnings for women with a certain level of education. Our discussion so far may seem to suggest that average earnings for males of the given education level might be a better choice than using that for females. However, there are some difficulties with this approach. As noted, on average, women tend to enter different careers than men, even when they are working full-time (that is, we still observe a trend of “typical male occupations” and “typical female occupations”). And the typical female occupations tend to pay less. Given this, we would expect that the average income for women of a given education will continue to be less than the average for men of the same education – even if the women are working full-time without interruption. This holds even if we believe that labour market discrimination will end.

This suggests that using male earnings data to forecast the earnings of a young woman might overstate the woman’s true earning potential if we are basing our income estimates solely on a given education level, rather than on a given education and a given occupation. (Though, using earnings data for females will almost certainly underestimate the earnings potential of a young woman.)

Alternatively, if one is calculating the young woman’s potential income by assuming that she would have worked at a specific occupation (as an economist, for example), then it would probably be more accurate to rely on male earnings data, and then explicitly apply contingencies reflecting the impact of possible labour force absences and part-time employment. By using historical data for males, we can hopefully correct for the errors introduced when we use historical data for women (which reflects women who followed different career paths and faced greater discrimination than women today and in the future). By directly applying the appropriate contingencies for non-participation and part-time employment, based on our knowledge of the particular plaintiff, we will adjust for the probability that the woman may or may not have followed a “traditional” woman’s career path. These two adjustments will allow us to determine a reasonable forecast of a woman’s earnings, knowing that even if she follows a “traditional” career path, she will likely not face the same degree of discrimination as faced by past women whose earnings formed the basis for current statistical averages.

We should emphasize, however, that these generalizations can always be overridden by the facts of a particular case. If it is reasonable to assume that a young girl would have followed a career path more typical of men than of women (even if we do not know what that career would have been), then it is also reasonable to use male earnings data to forecast her income.

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Derek Aldridge is a consultant with Economica and has a Master of Arts degree (in economics) from the University of Victoria.

Structured Settlement Assignments

Posted on By economica

by Heber G. Smith

This article first appeared in the autumn 1997 issue of the Expert Witness.

Unlike their American counterparts, property and casualty insurers in Canada typically (in compliance with Revenue Canada’s Information Bulletin, IT-365R2 dated May 8, 1987) remain liable to pay the periodic payments payable under terms outlined in the settlement agreement. They, effectively, become a guarantor of the life insurance company that underwrites the annuity contract(s) issued in support of the agreement.

The ownership obligations transcend its simple performance as a back-stop to the annuity contract. The property/casualty insurer, as owner and annuitant (beneficiary), must deal with the accrual tax ramifications of the internal interest component of the annuity contract. As an insurance company, however, it has access to the right to take a reserve under Section 1400(e) of the Rules and Regulations in the Income Tax Act (Canada). Since the interest build-up in the annuity contract is approximately equal to the increasing obligations of the defendant insurer to make future payments to the claimant, the two become a virtual wash and the tax cost to the insurer virtually disappears.

What options exist for the non-insured defendant to a personal injury action? Are such entities simply denied access to the structured settlement option as a method of resolving a personal injury or wrongful death action? The problems faced by such a defendant are twofold; the first is that, because it is not an insurer, it may lack the internal expertise to assess the risk that may be involved with the continuing obligations under the terms of the settlement agreement; and secondly, without access to Section 1400(e), it would be responsible for the tax liability arising out of the annuity and unable to take a write-off for the obligations to make future payments to the claimant.

Revenue Canada now permits a defendant to “assign” it’s contingent ownership rights and obligations inherent with the annuity contract and the performance requirements contained in the settlement agreement to a qualified assignee. Under the terms of such an assignment the defendant shall agree to absolutely assign to the assignee and the assignee shall agree to absolutely assume and to substitute its performance in respect of the obligation to make the required payments to the claimant. The plaintiff must agree to consent to the absolute assignment and assumption and agree to the substitution of the performance of the defendant for that of the assignee. The plaintiff may then absolutely release the defendant in respect of the liability of the defendant for damages resulting from the injuries or wrongful death.

The result is that self insured defendants now have access to the tax-free periodic payment option to remediate a claim with respect to personal injuries or wrongful death. In addition to the traditional self insured defendants, the beneficiaries of such an arrangement include defendants of product liability actions where aggregate claims exceed available insurance limits. Foreign insurers defending actions in Canada may avail themselves of such arrangements without modification to traditional structured settlement administration wherein they assign their obligations on all such transactions. Most insurers are not prepared to change their internal systems to accommodate the small number of potential claims that they may be required to defend in Canada. Another opportunity to use structured settlements, where without assignments it would be impossible, include criminal assault or abuse situations under which a victim has a right to initiate a civil action.

Plaintiff’s counsel may wish to lean on the structured settlement broker to ascertain the financial covenant afforded by the arrangement. The financial covenant may be better or worse than it would have been were the defendant insurer to remain as owner and guarantor under the terms of settlement. A report delineating the risks versus the benefits may be beneficial. For the comfort of the claimant, counsel may wish to be provided with a precedent Revenue Canada advance tax ruling of the scheme or alternately make application to Revenue Canada for such a ruling.

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Heber Smith is the principal of Smith Structured Settlements Inc. a structured settlement and annuity brokerage with offices in Calgary and Vancouver. He is also a partner in Structured Settlement Software, a firm that provides tax driven software to the American structured settlement industry.

Notable Judgments in the Valuation of Household Services

Posted on By economica

by Therese Brown

This article first appeared in the autumn 1997 issue of the Expert Witness.

This is the third in a series of articles on the loss of household services in personal injury or wrongful death actions. The previous two articles dealt with the approach to the calculation of household services (The Expert Witness, Winter 1996), and the method used to estimate the number of hours lost (The Expert Witness, Spring 1997). The purpose of this article is to provide a view of the law as revealed in a number of recent court decisions.

Establishing General Principles

Two cases in particular, Daly v. General Steam Navigation Co., (1980) 3 All E.R. 696, an English Court of Appeal decision, and Fobel v. Dean (1991), 6 W.W.R. 408, a Saskatchewan Court of Appeal decision, provided precedent-setting judgments involving a claim for household services. Two main principles which are set out in Daly deal with the pre-trial and future loss of household services. First, a future loss was allowed, regardless of the intent, or lack of it, on the part of the plaintiff to hire replacement household labour to compensate for the lost capacity to undertake household work (see Daly at 701),

It is really quite immaterial, in my judgment, whether having received those damages the plaintiff chooses to alleviate her own housekeeping burden … or whether she chooses to continue to struggle with the housekeeping on her own and to spend the damages which have been awarded to her on other luxuries…

This reasoning was later advocated by Justice Vancise in Fobel and subsequently in recent Alberta cases (for instance see, McLaren v. Schwalbe (1994) 16 Alta. L.R. 108 at 138).

In Daly, it was deemed appropriate, to utilise the cost of hiring replacement domestic help to measure the damages, at least in terms of the future loss. In reference to the pre-trial period, however, Bridge, L.J. stated that the cost of replacement services was not an appropriate measure of the loss of housekeeping ability, which in that case was the additional difficulty experienced by the plaintiff in carrying out household duties. The loss, rather, should have been assessed as a part of the plaintiff’s general damages, and the additional pain, suffering and loss of amenity experienced by the plaintiff should be the measure of that loss. Despite this finding, the appeal court concurred with the trial judge regarding the amount of compensation, although the compensation in the lower court was based on the cost of replacement help.

In Fobel, at 423, Vancise J.A. commends the approach to the impairment of housekeeping ability taken in Daly, which awards the plaintiff for her loss of ability rather than relying on the prior “antiquated if not sexist” approach which compensated a third party for the loss of services previously provided to them by the victim. Also recognised, at 424, is the need to consider and define the notion of housekeeping capacity. Vancise J.A. notes that Daly provides a basis for this type of consideration when two major roles are delineated: first, “ordinary housework”; and second, “proper supervision of children”. Vancise J.A. takes this concept further, classifying the former type of duty as “direct labour”, the loss of which can be replaced quite readily by employing household labour, and the latter as “management or indirect labour” which encompasses the duties of a homemaker which are less tangible, such as household management and those aspects of the care of children which extend beyond physical care. The point is made that the latter is much more difficult to replace, and that it is up to the trial judge to ascertain to what extent ability has been impaired, in the case of either component. Despite this clearly enunciated view, the award did not incorporate a separate amount for the loss of “management” as evidence had not been brought forward on which to base a loss for that component.

Substantiating the Loss

While there seems to be consensus that the loss of household services is compensable, there is less agreement concerning the evidence that should be brought forward to substantiate the extent of the loss. As aptly stated by the Court of Appeal in Mason v. Peters (1982), 139 D.L.R. (3d) 104 at 110, “Precise proof is manifestly impossible, but if a basis for reasonable ascertainment of the amount of damages has been established, the court will make the assessment as best it can with what it has.”

There are instances in which the court relies on the plaintiff and/or the plaintiff’s family as the primary source of information in the estimation of the loss of household services. In one such case, Gilchrist v. Oatway (1995), 168 A.R. 56, at 66, the court based the loss on information from family members who estimated the additional household work which they had undertaken due to the plaintiff’s injury, even though they were unable to provide a detailed record of that additional contribution. In that case the evidence was taken at face value but then discounted to reflect a possible decrease in required household services, based on projected changes in family circumstances. In many cases, however, additional evidence as well as documentation has been required.

In Simmie v. Parker and Unger (1994), 164 A.R. 178, Rawlins J., at 182, ruled that the court’s minimum requirements for household services claims included: statistical data on time spent on household services by the average individual with characteristics similar to the plaintiff; specific information regarding tasks previously undertaken by the plaintiff and her/his ability to complete those tasks, post-accident, in the time available for those tasks; and time spent by paid help or family members in replacement of the plaintiff’s duties.

Concern regarding a lack of evidence on a household services claim was also expressed in Acheson v. Dory (1993) 8 Alta. L.R. (3d), at 145, when Picard J. stated that additional evidence that could have been provided would have included “the length of time she was totally and then partially incapacitated and the quantum and nature of the assistance required.” Further, at 146, Justice Picard listed other information pertinent to the establishment of the loss:

…the specific tasks the plaintiff can no longer accomplish or only with assistance, the standard of housekeeping she has maintained and seeks to continue, the modifications she can make to allow her to achieve her standards, the number of hours she and her husband worked in her home prior to the accident and the number she now works, the number of hours she believes she will need assistance.

Experts’ Evidence as to Loss of Hours

Another important factor in the determination of damages for the loss of household services is the acceptance of evidence offered by experts. In Grimard v. Berry et al., (1992), 102 Sask. R. 137, Maurice J., at 152, states that it must be understood that, as expert witnesses are partisan witnesses, it is imperative that their conclusions be supported by the evidence. In this case, the court determined that the estimated requirement for household services according to the plaintiff’s experts ran contrary to medical evidence that the plaintiff was still able to undertake light housekeeping duties. As a result, damages were calculated only on the inability to complete heavier housework. In other cases, the loss of household services may be adjusted in light of other factors in the plaintiff’s life. In Mackie v. Wolfe (1994), 153 A.R. 81, at 146, the claim for a loss of household services was reduced by the court on the basis of the employment circumstances of the plaintiff, as well as her active social and family life.

Reference to average statistics to support the information solicited from the plaintiff or the plaintiff’s family, as to her/his household contribution, increases the validity of that information. This was the case in Brouwer v. Grewal, (1995) 168 A.R. 1 (Q.B.), at 354, when evidence as to the plaintiff’s weekly pre-trial contribution to household services was shown to be less than the average statistics for a woman with her socioeconomic statistics, with an accompanying explanation for this discrepancy.

Similarly, there have been instances in which average statistics have formed the basis of the evidence as to household contribution, supported by testimony from the deceased’s family. In O’Hara et al. v. Belanger (1989) 98 A.R. 86, at 87, counsel for the defence argued that the employment characteristics of the deceased (extensive job-related travel) would have made it difficult for him to actively participate in household duties. Berger, J. affirmed that average statistics were, nevertheless, an appropriate basis for the estimation of the loss of services as evidence had not been brought forward to show that the deceased had not made “average” contributions.

Other approaches have also been used to support the estimated weekly requirement of household assistance. In Fobel, at 432, an estimate of the plaintiff’s level of disability, expressed as a percentage, (in that case 70 percent) was applied to the number of hours spent at household activities by the plaintiff pre-accident.

Are Household Services Replaceable and at What Cost?

In some instances, the household services which were performed by a plaintiff or the deceased cannot be replicated by replacement labour. The extent to which household services are replaceable was an issue in Taguchi v. Stuparyk (1994) 16 Alta. L.R. (3d) 72, at 84-5, when the husband of the deceased testified that a replacement worker he had hired did not actually replace his wife’s household contribution, in terms of quality. Counsel for the defendant argued to have the loss of services valued at $7 per hour, the rate paid to the teenage worker, whereas, evidence from expert witnesses valued such services as high as $23 per hour. The defendant argued that the higher commercial rates were not applicable as they incorporate overhead, profit, and additional building costs. Matheson J., stated that while commercial rates were not determinative, they were, nevertheless, “important and relevant” in this type of valuation. On that basis, the award for the future loss of household services was calculated according to an hourly rate of $12 which was described as being representative of the middle ground.

A related subject, regarding the adequacy of compensation, refers back to the discussion in Fobel with regards to the two components of the loss of household services: direct labour, including most general housekeeping duties; and management or indirect labour. Various judgments have considered a loss in either one or of both components in an award for a loss of household services. Marshall J. noted, in Brouwer v. Grewal and Edmonton (City), (1995), 168 A.R. 342, at 353-4, that the assessment of the plaintiff’s loss must consider not only her loss of ability to perform manual tasks but her ability to perform the management function of homemaking, remarking particularly on her difficulty with decision-making on basic decisions such as meal-planning. A rate of $13.31 per hour was relied on to calculate the award for the loss based on a survey of companies and individuals who provide housekeeping services.

The difficulty posed by the assessment of loss in regards to the management component of housekeeping services is made apparent by Matheson J., referring to Fobel, in Taguchi, at 86, “commercial rates in evidence here still only compensate the plaintiffs for the ‘direct labour’ aspect of housekeeping loss while the ‘management’ aspect discussed by Vancise J.A. … remains as a loss which is difficult to quantify and therefore compensate.”

Assumptions

There have been judgments, in which household services awards have reflected various assumptions about family circumstances, the division of labour in the family, or the assigning of responsibility. In Mayes v. Ferguson and Stettner (1992) 102 Sask. R. 250, at 258, Barclay J., decreased the potential award by 50 percent on the assumption that as the plaintiff and her husband were both working full-time and had no children they would have hired a part-time housekeeper even had the accident not occurred. Alternatively, in the case of DeMarco v. Toronto Transit Commission, (1978) 19 O.R. (2d) 691, at 694, the reduction of the award was based on the assumption that the plaintiff’s husband and sons should have assisted her when injury from the accident prevented her from fulfilling her household duties, thereby reducing the burden that was left to the plaintiff’s daughter.

There is danger inherent in basing an award on an assumption about what “should be” rather than what “is”, as pointed out in McLaren, at 136, when various non-traditional household arrangements are noted. Picard J. makes two points in regard to the use of potentially erroneous assumptions: first, that there is need for caution when relying on such assumptions; and second, that this issue once again highlights the importance of bringing forth sufficient evidence in these types of claims.

The Dependency Argument

In a fatal accident claim for loss of household services, the claim may or not be adjusted to reflect that the loss of services is offset to the extent that family members no longer have to provide household services solely for the benefit of the deceased. In Labee v. Peters and Thompson (1997) Action No. 9404-00110, at 23, the defendant’s expert argued that the household services provided to the deceased exceeded the contributions which the deceased made in this regard, so that until the deceased would have retired, there was not a loss of household services. While the loss being claimed by the defendant’s experts was reduced somewhat, the court ruled that the deceased’s spouse did suffer a loss of household services as she would have to pay for particular specialised work which her husband would have done.

Conclusion

The various judgments noted above suggest that the determination of the award for the loss of household services is not a straightforward matter. Thorough documentation, specific to the plaintiff or deceased in question, which details the loss of household services is essential. In the case of an injured plaintiff, the level of disability may differ according to different time periods. If such is the case, the number of hours requiring replacement and the type of replacement required must be clearly stated for the respective periods. Average statistical evidence can provide further support to the claim. In terms of the replacement cost for the loss of household services, it is prudent to rely on the cost of employing household labour in the locale where the plaintiff resides. As the loss of household services may be comprised of a “management” as well as a “direct labour” component, the loss of both aspects of household services should be considered. Since the loss of household services is not straightforward, the extent of the loss may be difficult to prove. It is crucial, therefore, to ensure that a claim for this loss is supported by thorough documentation and statistical evidence.

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From 1996 through February 1998, Therese Brown was a consultant at Economica.

The Role of the Occupational Therapist in Personal Injury Litigation – Part 1

Posted on By economica

by Lorian Kennedy

This article first appeared in the autumn 1997 issue of the Expert Witness.

For more than a decade occupational therapists have been establishing their role in the field of personal injury litigation. The steady growth of that role as their contributions gain recognition is discussed by Irene Harris et al. in their article, “The occupational therapist as an expert analyst on the cost of future health care in legal cases” (Canadian Journal of Occupational Therapy, 61(3), 1994, 136-148). In particular, changes in the law regarding compensation for loss of capacity to perform household services has led to increased demand for occupational therapists’ assessment skills to determine the impact of impairment on individuals’ abilities to perform unpaid labour such as housekeeping, child care or yard work and the cost of replacing this labour. Judges now require detailed information on functional abilities. Individuals such as entrepreneurs or farm wives, whose work is multi-dimensional, can benefit from the occupational therapist’s ability to analyze and describe their jobs and relate this to their past, present and potential function. It is a positive sign that occasionally both sides in a dispute will agree to share the cost of an occupational therapy assessment and analysis of costs of future care.

What is an occupational therapist?

Occupational therapists’ education includes knowledge of biological, behavioral, social and occupational sciences. This provides them with a unique perspective and set of skills that are particularly well suited to the questions to be answered in personal injury cases. The Canadian Association of Occupational Therapists notes in “Profile of occupational therapy practice in Canada” (Canadian Journal of Occupational Therapy, 63(2), 1996, 81) that “The impact of the disease process, physical and mental health as well as methods of adaptive functioning are underpinned by the acquisition and application of knowledge from such areas as occupational therapy theory and practice, anatomy, physiology, psychology, psychiatry, medical conditions, neuroanatomy, neuropsychology, human development, human occupation, pathology, sociology, economics, management, political science and ergonomics.” Alberta occupational therapists complete four years of university education, a minimum of 1,000 hours of supervised clinical training and a national certification examination before becoming eligible to enter basic practice. Occupational therapy is a regulated profession so practitioners must be registered with the provincial professional association. Considerable experience is usually advisable prior to practising in the area of personal injury litigation and some occupational therapists have postgraduate degrees with relevant specializations.

The “occupation” in occupational therapy refers to more than just paid employment. It encompasses everything that “occupies” a person’s time, in other words all the activities (including thinking) that are part of our engagement with living. Canadian occupational therapists use a model of practice that focuses on occupational performance. E. Townsend in Enabling occupation: An occupational therapy perspective (1994) refers to the ability “to choose, organize, and satisfactorily perform meaningful occupations that are culturally defined and age appropriate for looking after oneself, enjoying life, and contributing to the social and economic fabric of the community.” Physical and mental occupation is a fundamental human need and health depends on people having meaningful occupations. This perspective takes into account the dynamic relationship between persons, the social, cultural and physical environment and occupation. Also central to the practice of occupational therapy is the recognition that people are unique spiritual beings whose personal experience of meaning in everyday existence nurtures them through life events and choices.

The evaluation

At the time of referral the occupational therapist establishes the suitability of the referral with the referring lawyer. It is important to clarify what questions are to be answered. Both parties need to ensure that the evaluation process is mutually understood and that deadlines can be met. It must also be an appropriate time for evaluating the individual.

Once the referral is accepted the occupational therapist reviews relevant background material which usually includes the individual’s history, reports from physicians, psychologists, therapists, vocational evaluators, resumes, work history, school marks and portions of hospital records. In some cases the occupational therapist may request clearance from the individual’s physician before proceeding with physical components of the assessment. In cases where the individual has sustained severe or catastrophic impairments the physical component of assessment may be restricted to observing and evaluating the individual as they are cared for and interviewing the caregivers.

A detailed interview and completion of questionnaires provide information on medical, work, education, leisure and psychosocial aspects of the individual’s situation. The interview is usually conducted in the home. This helps to put the individual at ease and provides additional information on lifestyle, family and leisure interests, housekeeping roles, and cultural and social contexts. The individual’s perceptions of their abilities and information on their attempts to adapt to reduced function or to pain are an important part of the evaluation. This self-report provides a context for planning further evaluation. The occupational therapist looks for consistency and compatibility between the diagnosis, reported activities and performance during the next stage of the assessment.

Standardized testing and functional performance assessment (functional capacity evaluation) is usually performed in a clinical setting. Objective testing and skilled observation are used to measure factors such as work aptitudes, strength, flexibility, motor skills, perception, activity tolerance, ability to remember and follow directions, and work behaviors. Ability to stand, walk, sit, kneel, squat, reach, lift, and manual dexterity, or other factors specific to the individual situation are measured. In some cases the occupational therapist performs a work site job analysis or sets up simulated work. The occupational therapist may obtain consent to interview other family members, work associates, or teachers particularly in cases of brain injury where individuals may lack the ability to evaluate their own occupational performance.

There are numerous names for functional capacity evaluations and many variations on techniques. Some approaches use “high tech” equipment and computer generated reports. Despite manufacturer’s claims there is little evidence that these machines meet requirements for reliability and validity or that they are any better than simpler methods. Focusing too much on strictly physical components can blind the assessor to important psychosocial, environmental and other factors that are critical for the individual.

The report

The assessment results are summarized in a clear report which describes the individual’s functional abilities as they relate to self-care, leisure and productivity (including paid and unpaid work), nature of impairment and the impact on their capacity to carry out specific life tasks. The report also comments on the impacts on other family members. Where appropriate, the occupational therapist makes recommendations regarding training, treatment, modified or adapted work, ergonomic alterations, housing or care needs, assistive devices, equipment or techniques. The occupational therapist can also prepare a cost of future care report detailing the need for equipment, medical services, support services, adapted housing, transportation, clothing, education or other needs and their associated costs.

Next issue

In the next issue of The Expert Witness, Part II of this article will discuss the specific relevance of the occupational therapist’s expertise in a litigation setting and compare it to the role of other experts. A case study will provide an example.

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Lorian Kennedy has an M.Sc. degree from the University of Alberta, is a registered occupational therapist and the principal of Lorian Kennedy Consulting. She is an adjunct assistant professor in the Occupational Therapy Departments of the University of Alberta.