Senate Bill S2201

                                 BILL NUMBER:  S2201

 TITLE OF BILL :
An act to amend the civil practice law and rules, in relation to
equalizing the treatment of collateral sources in tort actions, to
repeal subdivisions (a) and (b) of section 4545 of such law and rules
relating to collateral sources in certain tort actions and to repeal
subdivisions (d) and (e) of rule 4111 of such law and rules relating
to itemized verdicts in certain tort actions


 PURPOSE :
This bill will equalize the treatment of collateral sources in tort
actions against public defendants by applying the same standard used
in cases against private defendants. The bill would allow collateral
sources to offset damage awards for future costs or expenses in
actions against public employers (to prevent double recoveries).

 SUMMARY OF PROVISIONS :
To eliminate an anomaly in the treatment of collateral sources in tort
actions, this bill amends Section 4545 of the Civil Practice Law and
Rules by repealing subdivisions a and b, which govern the offset of
damages for collateral sources in medical malpractice actions and
against public defendants, respectively. The bill standardizes the
treatment of collateral sources by leaving in effect subdivision c of
the section, which governs "any action for personal injury, injury to
              

property or wrongful death," and allows all defendants in such actions
to offset against awards for past and future costs and expenses any
amounts which have been or will be replaced by past or future payments
from collateral sources, such as insurance. Currently, while past and
future awards in cases against private defendants may be reduced by
collateral sources, in cases against public employers, under
subsection (b) only past awards may be so reduced.

The bill would standardize the treatment of collateral sources not
only by requiring that they be set off as to past and future awards
regardless of the identity of the defendant, but in certain other
respects as well. Currently, personal injury awards in actions against
public defendants are offset under subsection (b) only by collateral
sources "provided or paid for, in whole or in part, by the public
employer." The offset for collateral sources is reduced in such
actions by the amount of any contributions made by the public employee
for the collateral source benefit. This treatment would be replaced by
the approach taken as to all other defendants under the current
subsection (c), which requires an offset for the most common sources
of collateral sources, whether or not funded by the employer, and
reduces the offset by the amount paid by the plaintiff for premiums
for the two year period immediately prior to the accrual of the
action. The bill would make clear that Section 4545 applies in
wrongful death actions alleging medical malpractice (as it does in all
other wrongful death actions).  The reference to subsection (c) will
be eliminated since it will be the sole remaining provision of Section
4545.

In addition, this bill would repeal subdivisions (d) and (e) of Rule
4111 and amend subdivision (b) of Section 4213. These subdivisions
currently differentiate among medical malpractice actions, actions
against public employers and other tort actions in prescribing the
requirements for itemized verdicts and judicial decisions. With the
repeal of subdivisions (a) and (b) of Section 4545, the distinctions
among such actions would no longer be necessary.

 JUSTIFICATION :
This bill is necessary to eliminate an anomaly created by the Court of
Appeals' recent decision in  IAZZETTI V. CITY OF NEW YORK , 94 N.Y.2d
183 (1999), which interpreted CPLR 4545 to deny a public employer (and
no other defendant) the benefit of any collateral source offset,
including accident disability pension benefits subsidized by the
employer, against future economic damages awarded to employees in tort
actions. All other defendants may continue to use employer-subsidized
accident disability pensions and similar collateral sources to offset
awards for future economic loss.

The various Sections of CPLR 4545 were enacted to eliminate the common
law collateral source rule, which prohibited tortfeasors from reducing
their obligations to plaintiffs by the amount of benefits the
plaintiff receives from other sources, such as insurance. The
statute's purpose is to eliminate the windfall of double recoveries to
plaintiffs which often resulted from the common-law collateral source
rule, while still ensuring that uncompensated losses are fully
compensated.

CPLR 4545 has been repeatedly amended to expand its scope. Originally
enacted as CPLR 4010, to allow the admissibility of evidence
concerning past collateral source payments in medical malpractice
cases, it was amended effective July 1, 1981, to make such a reduction
mandatory and to give the power to make that reduction to the court.
CPLR 4010 was subsequently repealed, and its text transferred to CPLR
4545(q), along with the present text of (b), which extended the class
of cases in which such an offset for past collateral sources was
mandatory to cases brought against public employers. L. 1984, c. 701.
Subdivision (a) of the section was amended by L. 1985 c. 294,
extending the scope of the offset to future losses whose replacement
or indemnification could be demonstrated "with reasonable certainty."
This extension of the scope of the offset was expressly extended to
"any action" in L. 1986, c.  220. Each amendment has expanded the
applicability of the collateral source doctrine to further the policy
determination that it is inequitable to allow a plaintiff double
recovery, particularly of public monies.

Notwithstanding the trend to eliminate the windfalls that result from
the common law rule, and to safeguard public monies, presently all
defendants except public employers may offset against awards for
future costs or expenses any amounts that would with reasonable
certainty be replaced or indemnified.

Public employers' unique inability to offset future economic loss is a
consequence of the Court of Appeals'  IAZZETTI  decision, which holds
that the proper statutory predicate for collateral source reductions
in personal injury and wrongful death actions brought by public
employees against their employers is CPLR 4545(b), rather than CPLR
4545(c). Section 4545 (b) permits an offset only as to past costs and
expenses, in contrast to the subsequently enacted 4545(c), applicable
to all other defendants, which requires an offset as to past and
future costs and expenses. In  IAZZETTI , the Court of Appeals
concluded that public employers are governed exclusively by CPLR
4545(b), and therefore are limited to an offset against past economic
loss.

Three cases, including  IAZZETTI , illustrate the harm public entities
will be caused by this Court of Appeals' decision. In  IAZZETTI ,
plaintiff, a forty-year-old Department of Sanitation employee, slipped
and fell on the floor of the garage where he worked, injuring his
back. As a result, he was retired on an Accident Disability Retirement
pension, which provides him with three-fourths salary benefits, tax
free, for the remainder of his life. Based on plaintiff's life
expectancy of 76, he will receive $1,136,150 from his City pension.
Then, from his personal injury suit against the City, plaintiff was
awarded $1.2 million dollars to compensate him for past and future
lost earnings and loss of ordinary pension benefits, the very same
loss that the City pension will replace.  One million of the $1.2
million was awarded in compensation for future lost earnings and
future lost pension benefits. Since plaintiff was found 20%
responsible for the happening of the accident, he will receive
$800,000 of the $1 million awarded for future economic loss.  Thus, as
a result of the Court of Appeals' decision in this case, the plaintiff
will now receive both $1.1 million in tax-free pension benefits over
the remainder of his life, and an $800,000 tax-free jury award meant
to compensate him for the same loss.

In  CAIAZZO V. CITY OF NEW YORK , plaintiff, a forty-four-year-old
Department of Sanitation employee, injured his back and knee due to
the condition of the floor in his work area. As a result of his
injuries, he was retired on an Accident Disability Retirement of
$10,680 annually. He also receives Social Security Disability payments
of $12,600 each year. In addition, the jury awarded him $3,565,000 in
his personal injury action against the City and allocated $1.1
million, almost one-third of that award, to compensate plaintiff for
future economic loss for 31 years. If the City were a private
defendant, it would have been entitled to a set-off of $721,680
(combined future pension and social security disability payments over
31 years) against the $1.1 million award for future economic loss,
leaving $238,320 in future economic damages to be paid. Under
 IAZZETTI , the $1.1 million jury award stands unreduced by the
$721,680 in tax-free payments plaintiff will receive from his pension
and social security disability payments.

In  HERRERA V. CITY OF NEW YORK , plaintiff, an NYPD detective, was
injured when he was struck by an unmarked police vehicle when he ran
out onto the service road of the eastbound Grand Central Parkway in
pursuit of robbery suspects fleeing on foot. Following the accident,
he was retired on an Accident Disability Retirement pension of
$4,359.18 monthly. He also receives monthly Social Security Disability
benefits of $1,237. After a reduction by the trial judge, plaintiff
recovered a verdict of $3,483,000 in his personal injury action
against the City. The future lost earnings award amounted to $750,000
over a 10-year period. The total of future pension benefits and Social
Security Disability payments to be paid over the same 10 years would
be $690,117. If it were a private defendant, the City would have been
liable to pay $59,882. Under  IAZZETTI , the  HERRERA  plaintiff is
compensated twice for the same loss and receives an additional
$750,000.

As demonstrated above, the Court of Appeals' decision in  IAZZETTI
will be both unfair and costly. Solely because the defendant is a
public employer, plaintiffs receive windfalls by double compensation
for the same economic loss. The City pays twice, first through the
pension, and then through the personal injury award.

Applying  IAZZETTI  to only the three cases discussed above results in
an increase in costs to the City of $2,271,680. There are
approximately 938 cases brought by uniformed service employees
currently pending against the City. These cases pose a potential
liability of $164 million, a substantial portion of which is for
future economic losses that doubly compensate city uniform workers who
are also receiving accident disability pensions.

The Court of Appeals' decision in  IAZZETTI , by narrowly construing
the 1986 amendment to CPLR 4545, has left public employers, and thus
the public fisc, in a position inferior to all other defendants. This
result is solely attributable to the piecemeal enactment and amendment
of this section. The Legislature should correct this anomaly and
standardize the treatment of collateral sources.

 LEGISLATIVE HISTORY :
2007-08, S.4164/A.2989
2005-06, S.1544/A.4354
2003-04, S.622/A.3483.
2001-02, S.2979-A.
2000, S.8037.

 EFFECTIVE DATE :
Immediately.