Opinion ID: 2074384
Heading Depth: 1
Heading Rank: 6

Heading: Collateral Source Offset

Text: Under the common law, the collateral source rule precludes reducing a personal injury award by the amount of any compensation received from a source other than the tortfeasor ( see, Oden v Chemung County Indus. Dev. Agency, 87 NY2d 81, 85). In 1975, the Legislature limited the rule by amending CPLR 4010 to permit juries in medical malpractice cases to consider evidence of collateral source payments when determining the award for past economic loss (L 1975, ch 109). Over time, the Legislature has continued to trim back the collateral source rule and permit offsets against plaintiffs' recoveries. In medical malpractice cases the Legislature in 1981 made reduction for compensation from collateral sources mandatory, and imposed responsibility for the reductions on the court (L 1981, ch 269). In 1984, when CPLR 4010 was repealed and reenacted as CPLR 4545 (a), the Legislature added subdivision (b), which extended the mandatory offset for collateral source payments to personal injury and wrongful death awards obtained by public employees (L 1984, ch 701). Then, as part of the same reform that produced the structured judgment provisions contained in CPLR articles 50-A and 50-B, the Legislature twice amended CPLR 4545 to broaden its impact and further erode the common-law collateral source rule. Significantly, in 1985 the Legislature for the first time required that collateral sources offset not only past but also future economic losses in medical and dental malpractice actions (L 1985, ch 294, § 8). This amendment required that future awards be offset by those sources of compensation that [would] with reasonable certainty, be available to the plaintiff in the future (Governor's Program Mem, 1985 NY Legis Ann, at 132). Shortly thereafter, in 1986, the Legislature added subdivision (c), which mirrored subdivision (a) for personal injury, property damage and wrongful death actions (L 1986, ch 220, § 36). Pursuant to CPLR 4545 (a) and (c): where the plaintiff seeks to recover    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. These provisions further require that 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], [c]). It is not enough, however, that plaintiff has received or will receive compensation for injuries as a result of the incident giving rise to the lawsuit. CPLR 4545 was intended to eliminate double recoveries, not provide defendants and their insurers with an undeserved windfall. Thus, in Oden (supra, 87 NY2d, at 87), we made clear that only those collateral source payments that actually replace a particular category of awarded economic loss may be used to reduce the injured's judgment, and that a direct correspondence between the item of loss and the type of collateral reimbursement must exist before the required statutory offset may be made. Defendant urges that because Social Security survivor benefits are intended to compensate for the lost economic support of a deceased parent, the Appellate Division in Bryant erred by failing to reduce plaintiff's award for future lost earnings. [7] Plaintiff counters that (1) the Appellate Division correctly concluded that the Social Security Survival Benefits    [did] not duplicate or correspond to what the decedent would have earned had she lived (250 AD2d 797, 798), (2) survivor benefits are in the nature of life insurance, and (3) Social Security benefits are not guaranteed by a contract or otherwise enforceable agreement and therefore can never offset future losses. We agree with defendant. CPLR 4545 authorizes the court to reduce the amount of the plaintiff's award if it finds that any element of the economic loss encompassed in the award was or will be replaced, in whole or in part, from a collateral source ( Oden v Chemung County Indus. Dev. Agency, supra, 87 NY2d, at 83-84). The Social Security Act and its legislative history make plain that child survivor benefits were intended to replace a parent's earnings. Social Security survivor insurance benefits for children are governed by 42 USC § 402 (d) (1), which provides that every child    of an individual who dies a fully or currently insured individual is entitled to benefits provided, at the time of the application the child is unmarried and either under 18, a full-time elementary or secondary school student under 19, or under a disability that began before age 22. Significantly, to obtain child survivor benefits, it must be established that the child was dependent upon the deceased parent (42 USC § 402 [d] [1] [C]). Indeed, the very purpose underlying the Social Security program was to provide a continuing income for a worker and his family when the worker's earnings are cut off by his retirement in old age, his disability, or his death. To accomplish this purpose, the program provides benefits not only for the worker himself but also for those of his relatives whom the worker normally supports or has a legal obligation to support. Benefits are provided for these relatives because they lose support, or a potential source of support, when the worker's earnings are cut off (Report of 1971 Advisory Council on Social Security, HR Doc No. 92-80, 92d Cong, 1st Sess 22 [Apr. 5, 1971]; see also, Califano v Jobst, 434 US 47, 50 [Social Security death benefits were intended to provide persons dependent on the wage earner with protection against the economic hardship occasioned by loss of the wage earner's support]). (Emphasis added.) Because child survivor benefits are intended to compensate for a parent's lost earnings, there is a close correspondence between the collateral source payment and the item of pecuniary loss to be replaced ( Oden v Chemung County Indus. Dev. Agency, supra, 87 NY2d, at 89). If plaintiff had the benefit of her mother's earnings, she would not be entitled to Social Security survivor benefits. Similarly, the jury award for future earnings is predicated on plaintiff's inability to reap the benefits of her mother's financial support. Thus, permitting recovery of the full lost earnings award and Social Security survivor benefits would doubly compensate plaintiff and undermine the legislative goal of eliminating duplicative recoveries. Plaintiff's arguments that CPLR 4545 prohibits reduction of future losses for Social Security survivor benefits are without merit. CPLR 4545 does not exempt from offset collateral sources that are in the nature of life insurance or analogous to life insurance benefits ( see, Krum v Green Is. Constr. Co., 249 AD2d 730, 731). To the contrary, CPLR 4545 (a) and (c) list categories of potential collateral sources that can offset recovery, and where the Legislature intended to exclude a specific type of payment or benefit within those categories thereby exempting them from offsetit did so explicitly ( see, e.g., CPLR 4545 [a], [c] [permitting offset by insurance (except for life insurance), social security (except those benefits provided under title XVIII of the social security act)]). Social Security benefits are among the collateral sources that can reduce recovery for future losses. Only those benefits provided under title XVIII of the Social Security Act cannot be used to offset a plaintiff's award. In specifying that only Social Security benefits under title XVIII of the Social Security Act cannot offset recovery, CPLR 4545 necessarily identifies all other types of Social Security benefitsincluding survivor benefitsas collateral sources that reduce recovery ( see, Matter of 1605 Book Ctr. v Tax Appeals Tribunal, 83 NY2d 240, 245-246 [the interpretative maxim, the expression of one is the exclusion of others, supports the conclusion that what was omitted from the exemptions was not intended to be excluded from the otherwise comprehensive sweep of the statute], cert denied 513 US 811; see also, McKinney's Cons Laws of NY, Book 1, Statutes § 240). Moreover, although CPLR 4545 lists life insurance as a source that may not reduce recovery, the statute specifically classifies it as a particular type of insurance unrelated to Social Security. Likewise, we reject plaintiff's argument that Social Security can never be used to offset future losses. Plaintiff maintains that because Social Security is not provided pursuant to a contract or otherwise enforceable agreement, the court, as a matter of law, cannot determine with the requisite reasonable certainty that the future loss will be replaced or indemnified. The requirement that a collateral source be provided pursuant to a contract or agreement, however, cannot be interpreted as expansively as plaintiff suggests. Such an interpretation would categorically read Social Security out of the statute as a potential source for offsetting future recovery, yet the statute explicitly states that social security (except those benefits provided under title XVIII) is a collateral source that can be used to offset any past or future cost or expense ( see, Governor's Program Mem, 1985 NY Legis Ann, at 132-133; see also, Caruso v LeFrois Bldrs., 217 AD2d 256, 258 [Wesley, J.]). A more reasonable interpretation of the statute, which would give effect to both the words and the intent of the Legislature, would be that Social Security benefits can be used to offset future losses provided that with reasonable certainty they will indemnify plaintiff. [8] Application of the contract or otherwise enforceable agreement requirement should be limited to a situation where plaintiff does not have a protected interest in a government entitlement. Because the trial court and Appellate Division erroneously ruled as a matter of law that Social Security benefits could not offset plaintiff's future lost earnings award, we remit the matter to the trial court for a determination of any factual questions bearing on this issue. As a concluding observation, we note that as CPLR articles 50-A and 50-B reach their 15th anniversary, having generated a good deal of frustration and litigation, it would perhaps be an opportune time for the Legislature to review these enactments to assure that, in actual operation, they are meeting their objectives and notas submissions before us urge egregiously overcompensating or undercompensating anyone. Accordingly, in Bryant, the judgment appealed from and order of the Appellate Division brought up for review should be modified, without costs, and the case remitted to Supreme Court for further proceedings in accordance with this opinion and, as so modified, affirmed. In Depradine, the order of the Appellate Division should be affirmed, with costs. In Bryant v New York City Health & Hosps. Corp. : Judgment appealed from and order of the Appellate Division brought up for review modified, etc. In Depradine v New York City Health & Hosps. Corp.: Order affirmed, with costs.