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Abstract: 

In September 2009, the Department of the Treasury and the Internal Revenue Service issued a proposed regulation that would modify a longstanding definition of “personal injuries” under Code Section 104(a)(2). (In its present form, that section provides an exclusion for “damages received . . . on account of personal physical injuries or physical sickness.” This regulation project is important, and not just to plaintiffs and the plaintiffs’ bar. What constitutes a personal injury also affects potential payors of damages (tortfeasors, insurance companies, and the like). The less favorable the tax consequences are going to be for an aggrieved plaintiff, the more damages that he or she will insist on, and the more that the payor is likely to have to disgorge to settle a claim.

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Affiliations:  1: Case Western Reserve University.