Collateral Source Reduction In New York
At common law, a defendant was not entitled to any offset or reduction of a jury's verdict based upon collateral sources which the plaintiff may receive (Bryant v. New York City Health & Hosps. Corp., 93 NY2d 592 1999; Oden v. Chemung County Indus. Dev. Agency, 87 NY2d 81, 85-86 1995).
This was altered by statute (CPLR 4545), which allows collateral sources evidence to be presented and taken into consideration by the court in reducing damages.
The statute provides that:
"In any action for medical, dental or podiatric malpractice where the plaintiff seeks to recover for the cost of medical care, dental care, podiatric 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).
If the court finds that any such cost or expense was or will, with reasonable certainty, be replaced or indemnified from any 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." (CPLR 4545 a emphasis added.)
The burden of proof with respect to a collateral source offset is on the defendants (Caruso v. LeFrois Bldrs., 217 AD2d 256, 259 4th Dept 1995; see also, Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C4545:3, at 349).
There may only be a reduction for "those collateral source payments that duplicate or correspond to a particular item of economic loss" (Oden v. Chemung County Indus. Dev. Agency, 87 NY2d, supra, at 88).
In order to obtain an offset from a collateral source, the defendants must prove by clear and convincing proof that it is reasonably certain, which has been interpreted to mean "highly probable," that the benefits will be received. (Caruso v. LeFrois Bldrs., 217 AD2d, at 259; cited with approval in Manfredi v. Preston, 246 AD2d 580 2d Dept 1998.) Since CPLR 4545 is in derogation of the common law, it must be strictly construed (Oden v. Chemung County Indus. Dev. Agency, 87 NY2d, at 85-86).
It should further be noted that "CPLR 4545 was intended to eliminate double recoveries, not provide defendants and their insurers with an 'undeserved windfall.' " (Bryant v. New York City Health & Hosps. Corp., 93 NY2d, supra, at 607.)