Death from unintentional injury ranks as the third leading cause of death in the United States. Forensic CPAs are frequently tasked with calculating the future earnings of these individuals for the purpose of litigation. This task is complicated when the person in question is an undocumented immigrant. In this episode of CPA Conversations, Marion Wickersham of Forensic Resolutions Inc. discusses this topic, which is derived from the Forensic Accounting column in the spring 2019 Pennsylvania CPA Journal.
By: Bill Hayes, Pennsylvania CPA Journal Managing Editor
Death from unintentional injury ranks as the third-leading cause of death in the United States. Calculating the future damages owed to these individuals for matters of litigation is a tricky assignment for forensic accountants. Imagine how much more difficult that task becomes when the plaintiff in question is an undocumented immigrant. To walk us through this topic, which is the subject of the Forensic Accounting column in the upcoming spring 2019 Pennsylvania CPA Journal, today we are with Marion Wickersham, a senior associate with Forensic Resolutions, Inc.
According to your column, death from unintentional injury is the third-leading cause of death in the United States. What does it mean for the state of personal injury litigation and CPA experts?
[Wickersham] To the extent that these injuries involve a third party, such as a motor vehicle accident, a workplace incident, or anything along those lines, this increases the likelihood of litigation, necessitating the need for CPAs to estimate economic damages for these individuals. These damages could be future lost earning capacity and fringe benefits, lost pension benefits, and future medical care costs.
When an individual is killed due to one of these accidents, what are some of the factors that need to be considered when deciding on future earning capacity?
[Wickersham] There are many different factors that really need to be considered when estimating someone's future earning capacity because there's not one straightforward formula. Some of these things that need to be considered would be the person's current earnings at the time of the incident, their educational attainment, their health, and even their historical earnings, which we can derive from their tax returns, pay stubs, and employment records to the extent that they are actually available.
How is the situation further complicated when the person in question is an undocumented immigrant?
[Wickersham] From my experience, many undocumented immigrants have very few records to substantiate their earnings. When we come across an individual who doesn't have any earnings records, we have to utilize other things such as their testimony as well as the testimony of their employer, to the extent that either one of those things are available, to determine what this person's actual working efforts and abilities were in the workforce. In these cases, it's also appropriate to utilize statistics when actual records are not available.
What sort of case law and other resources are out there for forensic CPAs that are making these estimations, and how do these documents tell them that they should conduct themselves?
[Wickersham] As in any case, we work with counsel to guide us as to the relevant case law in each particular matter. With respect to undocumented immigrants, there are many cases across the country and articles that have been written that discuss the ability to calculate damages in an individual's country of origin. When you calculate a loss based on the loss in the U.S., it is also appropriate in many cases to calculate a loss based on the assumption this person may be subject to return to their country of origin.
An interesting part of the column talks about when you're deciding earning capacity. It's customary to look at salaries in the United States versus the undocumented plaintiff's country of origin and a determination can be made from there. Can you tell us a bit about that process and how it works?
[Wickersham] There are many resources found online that we can utilize, such as the CIA Factbook, which provides us a country's occupational salaries, fringe benefits, even retirement ages that we can use to calculate damages for this individual in their country of origin, if they're subject to return and to the extent that we don't actually have their particular individual records from this country.
What challenges do you run into when an employer of an undocumented worker doesn't keep good records and you find yourself depending on someone's word, or even independent statistics in some cases? How do you work around that?
[Wickersham] Even though it is appropriate to utilize statistics in an individual's testimony, the issue is that using these alternative bases are not always certain, so these statistics may not actually be representative of this individual's work history or their individual work efforts. Each expert has to use their own judgment in determining whether these alternative bases are appropriate and consistent with the relevant facts of the case.
It seems that the forensic CPA is going to be doing the bulk of the research here, but the representing attorney is going to be making the final call on damages sought. Is my understanding correct on how that works?
[Wickersham] Correct. We're not attorneys and we have to work with counsel to guide us as to the relevant case law in each of these cases. Based on that, we conduct our own research and analyze the available documents to calculate damages that we feel are most appropriate and consistent with the relevant facts of the case. This is also why it's so important to get your expert early because it increases the likelihood of us actually receiving these records.