Opinion ID: 2074384
Heading Depth: 1
Heading Rank: 3

Heading: The Structured Judgment Statutes

Text: Prior to the enactment of CPLR articles 50-A and 50-B, future damage awards were discounted to present value and payable at once, requiring defendants to turn over money immediately and leaving plaintiffs free to enjoy the fruits of those dollars. Responding to a malpractice crisis ( see, Governor's Program Mem, 1985 NY Legis Ann, at 131), the Legislature in 1985 passed CPLR article 50-A which, in medical and dental malpractice actions, requires periodic payments of future awards as opposed to the immediate lump-sum payment of a discounted award. Article 50-B, the counterpart for personal injury, property damage and wrongful death actions, followed in 1986. The dual purpose behind this legislation was to moderate the cost of medical malpractice premiums, while assuring adequate and fair compensation for injured persons (Governor's Program Mem, 1985 NY Legis Ann, at 132; see also, Schultz v Harrison Radiator Div. Gen. Motors Corp., 90 NY2d 311, 317-318). By providing that injured parties receive future damage awards in periodic installments paid over time the Legislature sought to guarantee plaintiffs that compensation for future health care costs, lost earnings and other needs [would] be available to meet those expenses as they [arose] (Governor's Program Mem, 1985 NY Legis Ann, at 132). Concomitantly, defendants would benefit because paying a judgment in periodic installments reduces the overall cost of the judgment by permitting the insurer to retain and invest the balance of the award before the installments come due [and] additional savings [would] result from relieving the defendant from the obligation to make payments toward the plaintiff's future health care and other non-economic expenses in the event of the plaintiff's death ( id., at 132; see also, CPLR 5035 [a]; 5045 [a]). [1] The structured judgment provisions have deservedly been labeled `circuitous,' `vexing,' as `every Judge's nightmare,' and `[a]t best    ambiguous [which] can lead to inexplicable results' ( Bermeo v Atakent, 241 AD2d 235, 242 [citations omitted]). Awards for past damages and attorneys' fees, as well as the first $250,000 of awards for future damages, are immediately payable in a lump sum (CPLR 5031 [b], [c]; 5041 [b], [c]). [2] Defendant is then required to purchase an annuity contract that will provide for the payment of the annual payments of such remaining future damages (CPLR 5031 [e]; 5041 [e]). Further, the annual payment for the first year shall be calculated by dividing the remaining amount of future damages by the number of years over which such payments shall be made and the payment due in each succeeding year shall be computed by adding four percent to the previous year's payment ( id. ). The court, additionally, must enter a judgment for the amount of the present value of the annuity contract that will provide for the payment of the remaining amounts of future damages in periodic installments ( id. ). The present value of the annuity contract shall be determined in accordance with generally accepted actuarial practices by applying the discount rate in effect at the time of the award to the full amount of the remaining future damages, as calculated pursuant to this subdivision ( id. ).