Davidow Articles
The Personal Injury Attorneys Survival Guide To The New
Anti-Subrogation Law
by Lawrence Eric Davidow, Esq.
Managing Partner, Davidow, Davidow, Siegel and Stern, LLP,
Winter
2010.
INTRODUCTION
Subrogation and reimbursement rights were severely curtailed when on November
10, 2009, the New York State Senate and Assembly passed Senate Bill S66002,
as substituted for Assembly Bill A40002 and the bill was signed into law by
Governor Paterson on November 12.(1) This new law eliminates subrogation and
reimbursement rights for certain benefit providers in the context of a settlement,
unless a statutory right of subrogation exists. The law also changed aspects
of the collateral source rule. As such, the new law has altered the New York
Civil Practice Laws and Rules (CPLR) as well as the General Obligations Law
(GOL). It is vitally important for Personal Injury Attorneys to understand
the rationale and impact of this legislation in order to properly advise their
clients.
BREAKDOWN OF THE NEW LAW
The LAW contains six separate parts, A through F, but it is only Part F and its
nine sub-sections that are the subject of this paper. The Preamble introduces
part F and then follows with its nine sections:
AN ACT.....
to amend the civil practice law and rules, in relation to treating
public and private defendants equally when considering the impact
of collateral source payments in tort claims for personal injury,
property damage or wrongful death;
to amend the general obligations law, in relation to protecting
parties to the settlement of a tort claim from certain unwarranted
lien, reimbursement and subrogation claims;
and to repeal certain provisions of the civil practice law and
rules relating to collateral source payments (Part F)
§ 1 -- repeals CPLR § 4545 subdivisions (a) and (b)
§ 2 -- amends CPLR § 4545 subdivision (c) and re-letters it as subdivision
(a)
§ 3 -- re-letters CPLR § 4545 subdivision (d) as subdivision (b)
§ 4 -- repeals CPLR §4111 subdivision (e)
§ 5 -- amends CPLR §4111 subdivision (f) and re-letters it subdivision
(e)
§ 6 -- amends CPLR §4213 subdivision (b)
§ 7 -- adds a new subdivision 4 to General Obligations Law § 5-101
§ 8 -- adds new section § 5-335 to the General Obligations Law
§ 9 -- provides for the effective dates of the above.
COLLATERAL SOURCE RULE
INTRODUCTION
Section 1 of the new law repeals subsections (a) and (b) of CPLR § 4545.
Section 2 amends subsection (c) of CPLR § 4545 and re-letters
it sub-section (a). Section 3 simply re-letters sub-section (d)
to sub-section (b). What are these three new sections all about?
It is all about the Collateral Source rule as it is applied post
verdict.
The purpose of the collateral source rule is to deny a defendant the argument that their liability should be less because some third party (collateral party) has paid or will pay the plaintiff for certain injuries sustained. For example, a defendant who caused injuries to a plaintiff in a car accident would want to argue that the plaintiff's health insurance company already paid for the plaintiff's medical expenses incurred as a result of the accident, and thus the verdict in favor of the plaintiff should be decreased, dollar for dollar, as it would be unfair to allow the plaintiff to collect twice for the same damages. This would be a form of double dipping. In spite of this argument, the collateral source rule prevailed in common law, in New York (2) and throughout the country.(3)
Nevertheless, starting in 1975(4), the New York Legislature started to erode the collateral source rule in an effort to both curb double dipping on the part of the plaintiff and most importantly to reduce rising New York liability insurance costs. In 1975, the Legislature began to place significant limitations on this rule by allowing juries to consider evidence of collateral source payments when determining past economic loss awards in medical malpractice cases.(5) In 1981, the Legislature made this rule mandatory and imposed responsibility for the reductions on the court.(6)
In 1984, CPLR Section 4545 was enacted, both incorporating the above laws as CPLR Section 4545(a)(7) and adding CPLR 4545(b), which extended collateral source offsets topast economic loss awards in personal injury and wrongful death actions brought by public employees against their employers.(8).
In 1985 CPLR Section 4545(a) was revised to require collateral source reductions for both medical and dental malpractice awards, and to apply to future as well as past economic losses(9). In 1986, sudivision (a) was again amended by bringing podiatric malpractice actions within its scope.(10)
Also in 1986, subdivision (c) was also added to CPLR 4545 which provided(11) that “in any action brought to recover damages for personal injury, injury to property or wrongful death, where the plaintiff seeks to recover for the cost of * * * economic loss, evidence shall be admissible for consideration by the court to establish that any such past or future cost or expense was or will, with reasonable certainty, be replaced or indemnified, in whole or in part, from any collateral source”(12)
It is important to note that all three sections were designed to offset only economic losses, such as out of pocket losses for medical care and loss of earnings, not intangible losses like pain and suffering.
An issue arose as to how CPLR Sections 4545 (a), (b) and (c) interrelate. (a) and (c) speak to offsets of past and future costs or expenses while (b) speaks only in the past. Yet the language in (c) seems so sweeping that it effectively repeals or incorporates in (a) and (b), thus in effect causing offsets in (b) to include future costs and expenses. This issue was resolved by the New York Court of Appeals in 1999 in the case of Iazzetti v. City of New York(13), where it held that “the three subdivisions of CPLR 4545 can easily be read together so that all are given effect. Subdivisions (a) and (b) govern collateral source offsets in particular types of actions-medical, dental and podiatric malpractice, in the case of (a), and suits by public employees against their employers, in the case of (b). The subsequently enacted (c), by contrast, governs offsets in all other actions brought to recover damages for personal injury, injury to property or wrongful death. Although (c) purports to apply in ““any action,”” when read in tandem with the other subdivisions of CPLR 4545 it is clear that (c) was meant not to replace (a) and (b), but to complement them.”(14) Therefore, the Court held subdivision (b) stood alone and the defendant City of New York would not be entitled to any offsets for future costs or expenses.
CHANGE TO THE COLLATERAL SOURCE RULE
Now, in 2009, as a result of the new legislation signed by Governor Patterson,
CPLR Sections 4545 (a) and (b) are repealed and (c) stands alone, albeit as
amended and re-lettered to CPLR 4545 (a)(15). Referring back to the preamble
to this new law, it is clear that the intention here was that this was an “AN
ACT to amend the civil practice law and rules, in relation to treating public
and private defendants equally when considering the impact of collateral source
payments in tort claims for personal injury, property damage or wrongful death.” In
other words, in all such cases, whoever the defendant, offsets for past and
future costs and expenses must be considered by the court. Nevertheless, the
new statute specifically exempts life insurance and payments for which there
is a statutory right for reimbursement from the definition of collateral source.
We now have a cleaned up collateral source rule, where the prior three sections
are combined into a single section, CPLR(a).
It is also important to note that the new CPLR (a)(16) has retained the stipulation
that no offset will be allowed for future costs and expenses unless the defendant
can show that the plaintiff is "reasonably certain" to receive such
payment. The purpose of this “reasonably certain” safeguard provision
is to prevent plaintiffs from becoming welfare recipients by virtue of offsets
to their awards based upon speculative or overly optimistic assumptions of collateral
source availability.
CPLR 4545 (c) was also amended to clean up the language referring to the exception
that statutorily recoverable items do not qualify as collateral sources. The
new law simply provides general inclusive language exempting “THOSE PAYMENTS
AS TO WHICH THERE IS A STATUTORY RIGHT OF REIMBURSEMENT.” This better
language but not a real substantive change.
One last amendment to CPLR 4545 (c) is that “ANY COLLATERAL SOURCE DEDUCTION
REQUIRED BY THIS SUBDIVISION SHALL BE MADE BY THE TRIAL COURT AFTER THE RENDERING
OF THE JURY'S VERDICT. THE PLAINTIFF MAY PROVE HIS OR HER LOSSES AND EXPENSES
AT THE TRIAL IRRESPECTIVE OF WHETHER SUCH SUMS WILL LATER HAVE TO BE DEDUCTED
FROM THE PLAINTIFF'S RECOVERY.”
It is also assumed that, since CPLR 4545 (c) has for the most part remained intact
in the new CPLR 4545(a), much of the case law interpreting it will remain in
place. One such case is Kelly v. Seager(17), which held that the collateral source
rule set forth in CPLR 4545 does not apply to subrogation actions seeking to
recover monies paid by an insurer. Interestingly, the Kelly case was brought
by a subrogated property casualty carrier, which suggests that suits concerning
injury to property are different, in spite of the words “injury to property” contained
in the new and old law. The legislative history of this new law may also support
this result regarding property claims.
Section 3 of the new law re-letters CPLR Section 4545 (d) as (b), but makes no
substantive changes. Subdivision (d) was added to CPLR 4545 in 2002 following
the 9-11 attacks and the subsequent outpouring of generosity for the victims
and their families. Subdivision (d) excludes charitable contributions from the
definition of collateral source payments, assuring potential donors that their
contributions will not be used to benefit wrongdoers or insurers.(18)
COORDINATION OF CPLR 4545
INSTRUCTIONS FOR THE JURY: CPLR 4111
Sections 4 and 5 of the new l aw make changes to CPLR Section 4111, the statutory
section that provides instructions to juries regarding verdicts. More specifically,
CPLR section 4111 instructs jurors to not only decide upon whether damages are
appropriate, but if appropriate, to further identify and itemize such damages.
Prior to the new legislation signed by Governor Patterson, CPLR Section 4111,
sub-sections (d), (e) and (f) complemented CPLR 4545, sub-divisions (a), (b)
and (c), correspondingly. With the new legislation repealing CPLR 4545 (a) and
(b), it became necessary to alter CPLR Section 4111 in a complementary manner.
As such CPLR 4111(e) is now repealed (dealing with suits by public employees
against public employers) and CPLR 4111(f) is re-lettered as CPLR 4111 (e).(19)
While CPLR 4545 (a), (b) and (c) were collapsed into a single new section, CPLR
4111 (d), (e) and (f) were not. CPLR (d), which deals with medical, dental and
podiatric malpractice, was retained because the differences therein are significant
regarding how verdicts are itemized following the 2003 revisions to structured
judgments in malpractice actions under Article 50-A of the CPLR.
INSTRUCTIONS FOR THE JUDGE
Sections 6 of the new law make changes to CPLR Section 4213, the statutory section
that provides instructions to judges regarding verdicts. More specifically, CPLR
section 4213 instructs judges to not only decide upon whether damages are appropriate,
but if appropriate, to further identify and itemize such damages, past and present.
Prior to the new legislation signed by Governor Patterson, CPLR Section 4213(b)
contained language, among other things, concerning suits by public employees
against public employers, referencing CPLR 4545. Since the new law repeals these
references, this section had to be amended as well.(20)
In addition, this section had to be amended because
it failed to be earlier amended in the way CPLR 4111(d) was amended,
thereby lacking conformity between jury and bench trials. Therefore,
CPLR (b) was amended to provide that “In a
medical, dental or podiatric malpractice action, commenced on or
after July twenty-sixth, two thousand three, the court's decision
as to future damages shall be itemized in accordance with subdivision
(d) of rule forty-one hundred eleven of this chapter.(21) All
other actions would follow the new CPLR 4111(e).
ANTI-SUBROGATION AND REIMBURSEMENT
THE HISTORY OF THE PROBLEM
The Collateral Source rule of CPLR 4545 solved the problem of a
plaintiff's “double
dipping” and helped keep down liability insurance premiums. In response,
however, benefit providers woke up to the reality that it was getting harder
for them to be reimbursed for their outlays. The legislative priority seemed
to be to help keep liability insurance costs down while pushing health insurance
costs up. Will this emphasis change at some point with health care costs so much
on our minds today?
In any event, benefit providers who have paid costs and expenses for injured parties had some weapons at their disposal. First, they had subrogation rights which could be asserted. Secondly, if properly drafted, they had a contract right in the underlying insurance contract for reimbursement directly from the plaintiff, which could arise to the level of a lien if properly drafted. Over time, health insurance contracts have contained improved language to assert their lien, subrogation and reimbursement rights.
The concept of subrogation is that when an insurer pays the losses of its insured, it automatically obtains the right to step into the shoes of its insured to assert the insured's right to recover from the third party responsible for the underlying loss. There are two types of subrogation: contractual (arising from an express provision in the insurance contract) and equitable (arising by operation of law at the moment the insurer makes payment for the insured).
While the right to subrogation and reimbursement existed, no statute
addressed or limited its use nor provided guidance as to when such
an insurer could intervene to protect its interests in the underlying
action. Furthermore, CPLR Section 4545 (collateral source rule)
only applied to verdicts, not settlements. This led to some confusion
and policy debate, but for a time benefit providers seeking reimbursement
felt emboldened to seek reimbursement from their insured's
settlements, knowing that if the case went to verdict, the plaintiff would not
be entitled to recovery and their only recourse would be to try to recover from
the tortfeasor, which would be more difficult and costly.
These concerns were explored by several cases in recent history,
including two New York Court of Appeals decisions; Teichman(22)
in 1996 and Fasso(23).in 2009 and several other
lower court cases. Teichman involved a medical malpractice action
which was settled before trial, with no mention
in the settlement that it included payment for medical expenses.
Forgoing its subrogation rights to proceed directly against the
tortfeasor, the health insurer sought to intervene in the case
to recover its expenses pursuant to contract. The issue in the
case was whether this intervention was proper. The Court held that “intervention
was proper to permit the insurer to establish its contractual right
to reimbursement of any medical expenses actually included in the
settlement”(24)
Interestingly, the plaintiff in this case argued that CPLR 4545
required that amounts paid and payable by the insurer be “set
off” against the judgement and must
therefore be presumed to have reduced the settlement. However,
the Court held that CPLR 4545 only applied to judgments, not settlements.
This case has been sited for the proposition that intervention
may be proper post settlement. This case opened the floodgates
for benefit providers intervening in personal injury actions.
The Humbach v. Goldstein(25) case in 1997, also concerned an intervention case, but the insurer in that case sought intervention prior to judgment or settlement, unlike inTeichman. In Humbach, the court denied intervention because (1) “intervention of various medical providers could create an adversarial posture between carriers and plaintiffs and could unduly delay the determination of such actions “(26) Further, the court feared that intervention could prejudice the jury into thinking that the plaintiff was already compensated by another source. The Court felt that the proper remedy in this case was to assert a contractual lien at the time of settlement.(27) Regarding any CPLR 4545 arguments, the court offered the following: “The question of whether the defendant's liability insurance carriers should be held ultimately responsible for all of the plaintiff's damages, even for damages specified in CPLR 4545 which have been compensated from collateral sources, is a question best left to the Legislature, and not to the courts.
The Humbach case was the opinion of the Second Department, but other departments have also denied intervention based upon similar policy arguments.(28) In Halloran, the First Department added that “intervention in this action at this time would also be inappropriate since it would likely have the consequence of placing its interests in impermissible conflict with those of its insured.”(29) The Berry case added that “the public interest in assuring the integrity of relations between insurers and their insureds requires that even the potential for conflict of interest in these situations be avoided and militates against allowing an insurer to, directly or indirectly, place its own interests above those of its insured.”(30) TheBerry case also added the policy thought that the insured was promised “health insurance coverage which they understood would indemnify them for certain medical expenses. The intervenors agreed to provide such coverage with the knowledge that, in some instances, sums expended for medical care of the insureds might be recovered from third-party tortfeasors. They assumed the risk, however, that not all such expenses would be so recovered.”
However, the Fourth Department has taken a contrary view, holding that the insurer's interest can arise to the level of a lien,(31) that they have an independent right to intervene without causing conflict or prejudice and that CPLR 4545 does not prevent the insurer from recovering directly from the tortfeasor pursuant to equitable subrogation principles.(32)
In 2009, the Court of Appeals once again spoke on these issues in the Fasso case.(33) This was not an intervention case,(34) but rather one that explored the limits of equitable subrogation. While all parties acknowledged the insurers equitable subrogation right, it was first asserted that the “made whole” doctrine denied the insurer recovery. The “made whole” doctrine was described by the court as follows: “If the sources of recovery ultimately available are inadequate to fully compensate the insured for its losses, then the insurer, who has been paid by the insured to assume the risk of loss, has no right to share in the proceeds of the insured's recovery from the tortfeasor” In this case, however, since the parties settled for $900,000 with available liability coverage of $2 million, the court felt that the insurer could properly proceed against the remaining $1.1 million. The Fact that the injured party settled for less than an amount to completely compensate them for the full extent of their damages did not cause the made whole rule to bar the insurer from pursuing their equitable subrogation claims.
Secondly, the court did not allow the plaintiff and the tortfeasor to settle away the subrogation rights of the insurer, which they attempted to do in their settlement agreement. The court stated that “once an insurer has paid a claim and the tortfeasor knows or should have known that a right to subrogation exists, the wrongdoer and the insured cannot agree to terminate the insurer's claim without its consent and such an agreement cannot be asserted as a defense to the insurer's cause of action.”
This decision to allow the health insurer to have veto power over a settlement was alarming at best. It shifted the balance of power from the plaintiff and defendant to the insurance companies, as the insurance companies could hold the settlement hostage until paid in full.
Nevertheless, the court ultimately allowed the insurer to pursue its equitable subrogation rights but it also took the opportunity to bring to the attention of the legislature that it was time to address all the competing policy issues involved with the subrogation and recovery rights of insurers, especially those concerning intervention and CPLR 4545. The court stated that:
“The question of permissive intervention raises competing policy concerns that are deserving of legislative consideration. Certainly, plaintiffs and defendants need to weigh the benefits and detriments of settlement offers with knowledge of the consequences. But in light of spiraling health care costs and their effect on the availability and affordability of medical insurance, health insurers in this state have increasingly invoked the subrogation doctrine in an effort to protect limited plan assets. As a result, there has emerged an uncertainty regarding how and when health insurers should assert their subrogation claims.
The Legislature considered some of these issues when it codified CPLR 4545, which deals with the collateral source rule. That statute provides that a verdict that includes past medical expenses should be reduced by the amounts paid by an insurer for the plaintiff's medical treatments-to avoid double recovery by a plaintiff-but the Legislature did not address the procedures and means of recovery for the equitable subrogation rights of insurers. Moreover, the collateral source doctrine applies only to verdicts, not settlements, and nothing in the language or legislative history of CPLR 4545 indicates that the Legislature intended to alter the established rules of equitable subrogation. Consequently, the Legislature may wish to reexamine the concept of permissible intervention under CPLR 1013 as it applies to personal injury actions involving a health insurer's claim of equitable subrogation.”(35)
After all these years of uncertainty and competing policy interests, the New York Court of Appeals finally called for the Legislature to address the problems surrounding all these issues. It is with all this background that the Legislature finally enacted a powerful ANTI-SUBROGATION and ANTI-REIMBURSEMENT law to protect all litigants in a personal injury case from the intrusion and costs of subrogation and reimbursement actions.
THE SOLUTION TO THE PROBLEM
The solution
to the problem was to create a new law prohibiting subrogation and reimbursement by “Benefit
Providers,” subject to certain exceptions.
BENEFIT
PROVIDER DEFINED
Section
7 of the new law adds a new definition to § 5-101, sub-division 4 of the
General Obligations, to read as follows: “As used in section 5-335 of
this article, the term "benefit provider" means any insurer, health
maintenance organization, health benefit plan, preferred provider organization,
employee benefit plan or other entity which provides for payment or reimbursement
of health care expenses, health care services, disability payments, lost wage
payments or any other benefits under a policy of insurance or contract with
an individual or group. The law does not apply if this list does not
cover the entity; and if not covered by this list then subrogation and reimbursement
should still be allowed, provided the plan has the necessary language.
ANTI-SUBROGATION
AND ANTI-REIMBURSEMENT
Section
8 of the bill adds a new § 5-335 to New York's General Obligation Laws.
Section A(36) is the meat of the new law and provides that Benefit Providers
no longer have any interest in a personal injury, medical, dental, or podiatric
malpractice or wrongful deathsettlement. In settlement situations
only, the new law strips Benefit Providers of their right of reimbursement
or subrogation, voids any lien, and nullifies any portion of their insurance
contracts to the contrary. It also establishes that no part of the settlement
constitutes payment for costs or expenses that there would otherwise be an
obligation to repay a benefit provider.(37)
The law contains one major exception in that it does not pertain to a Benefit Provider that has a statutory right of reimbursement, such as Medicare, Medicaid Workers Compensation, Longshore and Harbor workers' compensation. Neither New York Law nor ERISA(38) confers any statutory rights to insurers for subrogation or reimbursement relative to any insurance policy or contract. While ERISA governs many insurance plans relevant to this discussion(39), any reimbursement or subrogation language within the plan is contractual in nature, not a statutory protection or mandate within ERISA itself.
Furthermore, assuming ERISA applies, no federal preemption of this new State law should apply because a carve out exists for State laws that regulate insurance.(40) This carve out for insurance was further explained in the Supreme Court of the United State's decision in Kentucky Assoc. of Health Plans v. Miller.(41) The court stated that a state law must be “specifically directed toward the insurance industry” rather than bearing in general on insurers and must “substantially affect the risk pooling arrangement between the insurer and the insured”
It seems reasonable to believe that the new General Obligations Law Section
5-335 will be saved from Federal Preemption under this two prong test. The
law is specifically directed toward the insurance industry in that it is directed
at insurance entities known as “benefit providers”, which
it defines in new GOL Section 5-101, and further regulates the right of such
benefit providers with regard to subrogation, reimbursement and liens. Secondly,
this new law will have a direct impact on the risk pooling arrangement between
the insurer and insured because it alters who will ultimately pay for certain
costs and expenses related to a plaintiff's injuries. Therefore,
preemption under ERISA should not be an issue.
EXCEPTION
FOR ADDITIONAL FIRST-PARTY BENEFITS
The new
GOL Section 5-355 provides(42) that subrogation is still available for “additional
first-party benefits under New York's No-fault law(43).
EXCEPTION
FOR INJURY TO PROPERTY
A careful
reading of this new law seems to indicate that its reach is limited to cases
involving personal injuries, medical, dental, or podiatric malpractice, or
wrongful death, not cases involving injury to property. Furthermore,
the definition of “benefit provider” above, does not include property
casualty providers. As such, it seems that such property casualty providers
who pay claims for their insureds, may still pursue their subrogation and reimbursement
rights without interference by GOL Section 5-335.
EFFECTIVE DATES
Section 9 is the last section of the new law and it provides the effective
dates for all of the above sections.(44) Essentially,
the new law governs all cases in existence, now and into the future, unless
a trial on the issues has commenced or a stipulation of settlement has been
entered prior to November 12, 2009.(45) The only practical exception
to this is that the collateral source rule changes in new CPLR 4545 will only
begin to apply in cases commenced on or after the November 12, 2009.(46)
SEVERABILITY
As with
many laws and contracts, this law ends by stating that should any part of this
law be deemed unenforceable, then the other parts will continue on their own
as good law.(47)
END NOTE
The effect
of this new law is that benefit providers will no longer be at the table to
recoup their outlays when cases settle. One could argue that the downside
of this is that it will have a dramatic effect on their long term budgeting
and thus they will have to make up the loss another way, most likely by raising
premiums. It may prove to be an economic disaster at time in history
when lowering health insurance premiums is on the national agenda. Nevertheless,
with so much money at stake, I would not be surprised to see litigation emerge
attacking this new law or at least pushing the new law to its practical limits. Time
will tell. Nevertheless, this new law is a victory for plaintiffs who
will finally be able to obtain full and fair compensation, and a victory for
all of us who wish to encourage quicker settlements in personal injury cases.
1Also known as Governor's Program Bill #95.
2Healy v. Rennert, 9 N.Y 2d 202 (1961),
3Standard Oil Company of California v. United States, 9 Cir,
153 F 2d 958, affirmed 332 U.S. 301, 67 S.Ct. 1604, 91 L.Ed 2067
4CPLR Section 4010, later repealed but added to CPLR Section
4545.
5L.1975, ch. 109, § 10, enacted as CPLR Section 4010.
6L.1981, ch. 269.
7CPLR Section 4010 was repealed
and reenacted as CPLR 4545(a). L.1984,
ch. 701.
8L.1984, ch. 701, § 2
9L.1985, ch. 294, § 8
10L.1986, ch. 485, § 9.
11among other things
12L.1986, ch. 220, § 36.
13Iazzetti v. City of New York, 94 N.Y.2d 183, 701 N.Y.S.2d
332 (1999).
14Iazzetti v. City of New York, 94 N.Y.2d 183, 189, 701 N.Y.S.2d
332, 336 (1999).
15AMENDMENT OF CPLR § 4545(c). S 2. Subdivision
(c) of section 4545 of the civil practice law and rules, as added
by chapter 220 of the laws of 1986, is amended to read as follows: [(c)]
(A) Actions for personal injury, injury to property or wrongful death. In
any action brought to recover damages for personal injury, injury to
property or wrongful death, where the plaintiff seeks to recover for
the cost of medical care, dental care, custodial care or rehabilitation services, loss of earnings
or other economic loss, evidence shall be admissible for consideration by the
court to establish that any such past or future cost or expense was or will,
with reasonable certainty, be replaced or indemnified, in whole or in
part, from any collateral source [such as insurance
(], except for life insurance[), social security (except those benefits provided under title
XVIII of the social security act), workers' compensation
or employee benefit programs (except such collateral sources entitled by law
to liens against any recovery of the plaintiff)] AND THOSE PAYMENTS
AS TO WHICH THERE IS A STATUTORY RIGHT OF REIMBURSEMENT. If the court finds
that any such cost or expense was or will, with reasonable certainty, be replaced
or indemnified from any SUCH collateral source, it shall reduce the amount of the
award by such finding, minus an amount equal to the premiums paid by the plaintiff
for such benefits for the two-year period immediately preceding the accrual
of such action and minus an amount equal to the
projected future cost to the plaintiff of maintaining such benefits. In order
to find that any future cost or expense will, with reasonable certainty, be replaced or indemnified by
the collateral source, the court must find that the plaintiff is legally
entitled to the continued receipt of such collateral source, pursuant to a
contract or otherwise enforceable agreement, subject only to the continued
payment of a premium and such other financial obligations as may be required
by such agreement. ANY COLLATERAL SOURCE DEDUCTION REQUIRED BY THIS SUBDIVISION
SHALL BE MADE BY THE TRIAL COURT AFTER THE RENDERING OF THE JURY'S VERDICT. THE
PLAINTIFF MAY PROVE HIS OR HER LOSSES AND EXPENSES AT THE TRIAL
IRRESPECTIVE OF WHETHER SUCH SUMS WILL LATER HAVE TO BE DEDUCTED FROM THE PLAINTIFF'S
RECOVERY
16Formally, CPLR (c)
17Kelly v. Seager, 558
N.Y.S.2d 403 (N.Y.A.D. 4 Dept., 1990)
18See miscellaneous materials in Governor's Bill Jacket, Laws
of 2002, ch.672 (N.Y. Legis.Serv., Inc.)
19(e) Itemized verdict
in certain actions. In an action brought to recover damages for personal injury, injury
to property or wrongful death, which is not subject to [subdivisions] SUBDIVISION
(d) of this rule, the court shall instruct the jury that if the jury finds
a verdict awarding damages, it shall in its verdict specify the applicable
elements of special and general damages upon which the award is
based and the amount assigned to each element including, but not limited to,
medical expenses, dental expenses, loss of earnings, impairment of earning
ability, and pain and suffering. Each element shall be further itemized into amounts intended to
compensate for damages that have been incurred prior to the verdict and amounts intended to compensate
for damages to be incurred in the future. In itemizing amounts intended to
compensate for future damages, the jury shall set forth the period of years
over which such amounts are intended to provide compensation. In actions
in which article fifty-A or fifty-B of this chapter applies, in computing said damages,
the jury shall be instructed to award the full amount of future damages, as
calculated, without reduction to present value.
20(b) Form of decision. The decision
of the court may be oral or in writing and shall state the facts it deems essential. In
any action brought to recover damages for personal injury, injury to property,
or wrongful death, a decision awarding damages shall specify the applicable
elements of special and general damages upon which the award is based and the
amount assigned to each element, including but not limited to medical expenses,
dental expenses, podiatric expenses, loss of earnings, impairment of earning
ability, and pain and suffering. In a medical, dental or podiatric malpractice
action, commenced on or after July twenty-sixth, two thousand three, the court's
decision as to future damages shall be itemized in accordance with subdivision
(d) of rule forty-one hundred eleven of this chapter. In any action brought
to recover damages for personal injury, injury to property or wrongful
death, other than a medical, dental or podiatric malpractice action commenced
on or after July twenty-sixth, two thousand three, the court's
decision as to future damages shall beitemized in accordance with
subdivision (e) of rule forty-one hundred eleven of this chapter.
21Note that CPLR 4111 (d) had been amended to comply with a
new system for structured judgments
22Teichman by Teichman v. Community Hosp. Of Western Suffolk,
87 N.Y.2d 514, 663 N.E. 2d 628, 640 N.Y.S.2d 472 (1996)
23 Fasso v. Doerr, 12 N.Y.3d 80 (Feb. 24, 2009).
2487 N.Y.2d 514, 518
25Humbach v. Goldstein,
229 A. D.2d 64, 653 N.Y.S.2d 950 (2nd Dept. (1997), aff'd 91 N.Y. 2d
921 (1998)
26229 A. D.2d 64, 68
27Note that the parties
to this case stipulated that the insurer's contract
had language in it that permitted a lien at the time of settlement or judgment,
facts not found in Teichman, where a lien was denied.
28Halloran
v. Don's 47 West 44 St. Restaurant Corp., 255 A.D.2d 206,
680 N.Y.S. 2d 227 (1st. Dept., 1998); Berry v. St. Peter's Hosp. Of NY,
250 A.d.2d 63, 678 N.Y.S. 2d 674 (3rd Dept., (1998).
29Halloran
v. Don's 47 West 44 St. Restaurant Corp., 255 A.D.2d 206,
680 N.Y.S. 2d 227 (1st. Dept., 1998)
30Berry v. St. Peter's
Hosp. Of NY, 250 A.d.2d 63 at 67, 678 N.Y.S. 2d 674 (3rd Dept., (1998)
31Independent Health Assn. V. Grabnstatter, 254 A.D.2d 722,
678 N.Y.2d 220 (Fourth Dept. 1998)
32Omiatek v. Marine Midland Bank and Independent Health, Intervenor,
9 A.d. 3d 831, 781 N.Y.S.2d 389 (4th Dept., 2004); Kaczmarski v. Suddaby/Independent
Health Assoc., Inc. proposed intervenor, 9 A..D.3d 847, 779 N.Y.S.2d 394 (Fourth
Dept., 2004); and Oakes v. Patel & Health Now New York, Inc., 23 A.D.3d
1023; 803 N.Y.S.2d 455 (4th Dept., 2005).
33 Fasso v. Doerr, 12 N.Y.3d 80 (Feb. 24, 2009).
34All parties stipulated to the intervention.
35 Fasso v. Doerr, 12 N.Y.3d 80, 90 (Feb. 24, 2009)
36§ 5-335. A.
When a plaintiff settles with one or more defendants
in an action for personal injuries, medical, dental, or podiatric malpractice,
or wrongful death,it shall be conclusively presumed that the settlement does not include compensation
for the cost of health care services, loss of earnings or other economic loss to the
extent those losses or expenses have been or are obligated to be paid or reimbursed by a benefit
provider, except for those payments as to which there is a statutory right of reimbursement.
By entering into any such settlement, a plaintiff shall not be deemed to have taken an action in
derogation of an non statutory right of any benefit provider that paid or is obligated to pay
those losses or expenses; nor shall a plaintiff's entry into such settlement constitute a violation
of any contract between the plaintiff and such benefit provider. Except where there is a statutory
right of reimbursement, no party entering into such a settlement shall be subject to
a subrogation claim or claim for reimbursement by a benefit provider and a benefit provider shall
have no lien or right of subrogation or reimbursement against any such settling party, with
respect to those losses or expenses that have been or are obligated to be paid or reimbursed
by said benefit
provider.
37This provisions closes the door on the Teichman case. Teichman
said that CPLR 4545, which reduces an award by the amount of any collateral
source payments, does not apply to settlements. Now all collateral
source payments made by benefit providers are conclusively presumed to not
exist in the context of a settlement. As such, no lien, right of subrogation
or reimbursement would follow.
38ERISA stands for the EMPLOYEE RETIREMENT INCOME SECURITY ACT. This
Federal act governs retirement, health, life and disability benefits for employees.
39Practically every group plan except government and church
plans.
4029 USC 1144(b)(2)(A). Also known as the Savings
Clause.
41123 S.Ct. 1471, 1478 (2003).
42(B) This section shall not apply to a subrogation claim
for recovery of additional first-party benefits provided pursuant to
article fifty-one of the insurance law. The term "additional first-party
benefits",
as used in this subdivision, shall have the same meaning given it in section
65-1.3 of title 11 of the codes, rules and regulations of the State of New
York as of the effective date of this statute.
43See Article
51 of the Ne w York Insurance law and 11 NYCRR Section 650-1.3. The
net result is that APIP subrogation claims are still available.
44S
9. This act shall take effect immediately and shall apply to all actions and
proceedings commenced on or after such date; provided, however, that
sections four through eight of this act shall also apply to any action or proceeding
which was commenced prior to such effective date where, as of such date, either
(a) a trial of the issues has not yet commenced, or (b) the parties
have not yet entered into a stipulation of settlement.
45Governor Patterson signed the bill into law on November
12, 2009.
46Part of the justification for this was well stated
in the New York State Trial Lawyers Association memo in support of this legislation,
to wit: “We
are at least encouraged by the fact that the bill provides for the repeal of
this provision to apply only to cases filed on or after the effective date.
To have the repeal also apply to pending cases would have unjust and egregious
consequences; especially for the thousands of heroic firefighters and other
first responders at Ground Zero who currently have actions pending against
the City of New York for its failure to provide proper protective equipment
resulting in debilitating respiratory illnesses.”
47Severability
clause. If any clause, sentence, paragraph,
subdivision, section or part of this act shall be adjudged by any court of
competent jurisdiction to be invalid, such judgment shall not affect, impair,
or invalidate the remainder thereof, but shall be confined in its operation to
the clause, sentence, paragraph, subdivision, section or part thereof directly
involved in the controversy in which such judgment shall have been rendered.
It is hereby declared to be the intent of the legislature that this act would
have been enacted even if such invalid provisions had not been included herein.
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