In the 1996 case of Kevin M. O'Gilvie and Stephanie L. O'Gilvie, Minors v. United States, the U.S Supreme Court ruled that a federal tax law applied to all personal injury awards, including those given to minors for loss of parental consortium (the companionship and care provided by a parent). The plaintiffs were two minor children who had received such an award after their father was killed in a car accident while on active duty with the U.S military overseas. They argued that their award should be exempt from taxation under Section 104(a)(2) of the Internal Revenue Code because it was "on account of personal injuries." However, the court disagreed stating that Congress intended for this section to apply only when damages are received due to physical injury or sickness directly suffered by taxpayer himself/herself rather than emotional distress caused by another's physical injury or death.

In the dissenting opinion for Kevin M. O'Gilvie and Stephanie L. O'Gilvie, Minors v. United States (1996), Justice Ginsburg disagreed with the majority's interpretation of tax code provisions regarding punitive damages awarded in personal injury lawsuits. She argued that Congress intended to exclude all compensatory damages from taxable income, regardless of whether they were received as a lump sum or periodic payments; this would include punitive damages related to physical injuries or sicknesses which are traditionally viewed as compensation for harm suffered by plaintiffs rather than enrichment at the expense of defendants. The majority’s decision to tax such awards, she contended, was inconsistent with legislative intent and historical practice.