Since the enactment of the Patient Protection and Affordable Care Act (ACA) in 2010, New York courts have grappled with its impact on collateral source offsets in personal injury actions. New York CPLR 4545 addresses how courts should handle damages awarded in personal injury cases when the injured party has received compensation from other sources, for example, insurance, disability payments, or government benefits. Generally, if a plaintiff receives compensation from a collateral source for the same injuries, the amount may be deducted from the damages award. This reduction, known as a collateral source offset, is determined at a post-verdict hearing.
The Appellate Division, Second Department recently encountered a question of first impression regarding the interplay between the ACA and CPLR: “whether a defendant may be entitled to a collateral source hearing pursuant to CPLR 4545 for the purpose of establishing that an uninsured plaintiff’s future medical expenses will, with reasonable certainty, be covered in part by a private health insurance policy, as long as the plaintiff takes the steps necessary to procure the policy.”i
In Liciaga, the plaintiff sought to recover damages for injuries he sustained while conducting a track replacement project on an elevated subway line. The defendants were found negligent and the case proceeded to a trial on damages where the plaintiff was awarded, among other things, $40 million for future medical expenses. The defendants moved to set aside the verdict or, in the alternative, for a collateral source hearing on the issue of future medical expenses. The trial court denied the defendants’ motion and the defendants appealed.
To be entitled to a collateral source hearing, a defendant “must [merely] tender some competent evidence from available sources that the plaintiff’s economic losses may in the past have been, or may in the future be, replaced, or the plaintiff indemnified, from collateral sources.”ii The defendants in Liciaga argued that they were entitled to a collateral source offset because, though the plaintiff was uninsured at the time of his accident, he was eligible for insurance coverage through the ACA.
The Second Department reversed and granted the hearing, holding that, “by showing that the plaintiff could reduce his own future medical expenses by millions of dollars by procuring an insurance policy available to him pursuant to the ACA, the defendant necessarily satisfied its burden of demonstrating that such expenses may be paid by a collateral source.”iii The court relied on the plaintiff’s common law obligation to mitigate damages and the “minimum essential coverage” mandate under the ACA as further support for its conclusion.
It is crucial for legal professionals, insurance carriers, and businesses alike to understand the implications of the Second Department’s decision in Liciaga. This decision enhances defendants’ abilities to offset damages awards, which are increasing at a rapid pace.
If you have any questions regarding the content of this alert, please contact Matthew Larkin, Torts & Products Liability Defense Practice Area chair, at mlarkin@barclaydamon.com; Dan Martucci, associate, at dmartucci@barclaydamon.com; or another member of the firm’s Torts & Products Liability Defense Practice Area.
iLiciaga v. New York City Transit Authority, N.Y. Slip Op. 04257 (2d Dep’t August 21, 2024).
iiNunez v. City of New York, 85 A.D.3d 885, 887¬–88 (2d Dep’t 2011).
iiiLiciaga, at *4.