New York State Court of Claims

New York State Court of Claims
WOOTEN v. THE STATE OF NEW YORK, #2001-013-025, Claim No. 93933, Motion Nos. M-63779, M-63904

A set-off for collateral source payments (CPLR 4545), such as Social Security death benefits, must be sought by Defendant as an affirmative defense, or at the latest, by a request of posttrial motions made within 15 days after an award (CPLR 4405). Judgment is held in abeyance until the award is allocated by Surrogate's Court to determine if a structured judgment is required by CPLR 50-B.
Case Information
TINA WOOTEN, Individually and as Administratrixof the Estate of JAMES A. WOOTEN, Deceased
Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
M-63779, M-63904
Cross-motion number(s):

Claimant’s attorney:
Defendant’s attorney:
Attorney General of the State of New York
BY: EDWARD F. McARDLE, ESQ.Assistant Attorney General
Third-party defendant’s attorney:

Signature date:
November 13, 2001

Official citation:
REVERSED 302 AD2d 70
Appellate results:

See also (multicaptioned case)


On August 27, 2001, I heard oral argument from the parties and reviewed the following papers on Claimant’s motion for an order pursuant to Article 50-B of the CPLR to determine the amount of a judgment to be entered in this case (Motion No. M-63779), and on Defendant’s motion for an order fixing the amount of a set-off (Motion No. M-63904):
1. Notice of Motion, Motion No. M-63779, and Supporting Affirmation of Andrew F. Plasse, Esq. (“Plasse Affirmation”) with Annexed Exhibits

2. Notice of Motion, Motion No. M-63904, and Supporting Affirmation of Edward F. McArdle, Esq., Assistant Attorney General (“McArdle Affirmation”), with Annexed Exhibits

3. Reply Affirmation of Andrew F. Plasse, Esq. (“Plasse Reply Affirmation”), with Annexed Exhibits

4. Defendant’s Memorandum of Law

5. Claimant’s Memorandum of Law

6. Filed papers: Claim; Answer; Decision filed March 28, 2001

This wrongful death action arose on May 2, 1994, when James A. Wooten died of congestive heart failure while he was an inmate of Cayuga Correctional Facility. The claim was brought by his widow, Tina Wooten, as Administratrix of her husband’s estate (Claimant). In a decision dated February 27, 2001, I held that the State was liable for Decedent’s death because it failed to provide adequate medical care. I further determined that the Decedent’s distributees were his estranged wife and his son, James Ronald Benjamin Wooten, now aged seven, who was born out of wedlock to Donna Strohl, the woman with whom Decedent was living at the time he was incarcerated. The following award was made:
Past Wage Related Loss of Support $ 24,000.00
Future Wage Related Loss of Support $138,000.00
Past Household Services Damages $ 4,000.00
Future Household Services Damages $ 34,000.00
Funeral Expenses $ 3,167.28
Past Parental Support $ 10,000.00
Future Parental Support $125,000.00

The awards for wage-related loss were made to the distributees jointly, and the awards for household services damages and loss of parental support were made solely to Decedent’s son. Depending on how the award for future wage-related losses is divided between the distributees, it is possible that the award to Decedent's son could exceed $250,000.00, thus making it necessary for the judgment to be structured (CPLR 50-B). It appears, therefore, that before judgment can be entered, the final distribution must be considered by the Cayuga County Surrogate's Court to determine allocation of the award for wage related losses (see, EPTL 5-4.6). Until such allocation is made, any considerations under CPLR 50-B are premature, because it is possible that no person will receive an award of future damages greater than $250,000.00.
In the event that structuring is necessary, there will be no undue delay because both parties have retained experts who have worked to reach agreement on the terms of any proposed judgment. Those efforts have been largely successful, and the parties agree on all issues except the one that is the subject of Defendant's motion. That issue -- whether there would be a set-off to the benefits to be paid to Decedent's son of an amount representing survivor's Social Security benefits that he will receive in the future -- is one which must be decided whether or not there is to be a structured judgment. Indeed, determination of this issue might well control the question of whether structuring is needed, no matter what distribution is made by Surrogate's Court, as Defendant seeks a set-off of more than $118,000.00 -- enough to reduce the future award to Decedent's son below $250,000.00, even if he were to receive the full amount representing wage-related loss.
CPLR 4545(a) provides that in actions brought for medical, dental or podiatric malpractice where there is a claim for economic loss, evidence may be presented to the court to establish that “any such past or future cost or expense was or will, with reasonable certainty, be replaced or indemnified” from any collateral source. Social Security benefits
are included as an example of such a collateral source, as is insurance other than life insurance, Workers' Compensation, and employee benefit programs. When a court determines that there will be such collateral source payments, the award is reduced by such amount, less certain amounts of any sums paid to secure those benefits. The Court of Appeals has held that survivor benefits paid to children of a deceased parent constitute a collateral source in wrongful death actions, because such payments are made to compensate for the parent’s lost earnings (Bryant v New York City Health & Hospitals Corp., 93 NY2d 592).
Claimant contends that Defendant has waived its right to benefit from the statutory set-off provision because the issue was not raised as an affirmative defense in Defendant’s answer or, alternatively, because it was not raised in a posttrial motion made within fifteen days after the decision was issued.
In New York, only the decision of Bongiovanni v Staten Is. Medical Group, (188 Misc 2d 362, 366-367) addresses this issue directly. In that decision, Justice Joseph J. Maltese of Richmond County Supreme Court held that “any application for a setoff utilizing a collateral source of payments must be either requested verbally immediately after the jury renders a verdict which includes loss of earnings, or as part of the written single posttrial motion contemplated by CPLR 4406 which shall be made within 15 days of the jury verdict in accordance with CPLR 4405.” In other New York decisions, the Second Department has held that a defendant’s failure to timely request a collateral source hearing may constitute a waiver of their right to seek an offset (unfortunately no information was provided about the time or manner of the defendant’s request) (Ventriglio v Active Airport Serv., 257 AD2d 657), and the Third Department has held that the facts supporting a set-off, albeit one of a different nature than the one involved here, are to be considered an affirmative defense or a counterclaim which must be pled in the answer or considered to have been waived (Kivort Steel v Liberty Leather Corp., 110 AD2d 950).
It appears to be common practice in New York for collateral source offsets to be raised as an affirmative defense (see, e. g., Woods v Kurz, 258 AD2d 932 [4th Dept.1999]; Ferrara v Bronx House, 163 Misc 2d 908). This is frequently seen in other jurisdictions as well (see, e.g., Allstate Ins. Co. v Williams, 2001 WL 246055 [Fla App]; Caruso v Baumle, 776 So 2d 371 [Fla App 2001]; State Farm Mut. Auto. Ins. Co. v Clark, 544 So 2d 1141 [Fla App 1989]; Richardson v Calderon, 713 NE2d 856 [Ind App 1999]; Washington v Atchison, Topeka and Santa Fe Ry. Co., 114 NM 56 [1992]; Maguire v Licht, 2001 WL 1006060 [RI Super]). In federal courts, Rule 8 of the Federal Rule of Civil Procedures, which is quite similar to New York’s CPLR 3018, has been held to require that collateral source payments be pled as an affirmative defense (see, Hassan v U.S. Postal Service, 842 F2d 260 [11th Cir., 1988] and cases citing thereto), and some states have statutes that specifically require a set-off be pled as an affirmative defense (Ducote v City of Alexandria, 670 So 2d 1378 [La App 1996], construing LSA-C.C.P. Art. 1005; Matrix, Inc. v Provident American Ins. Co., 658 SW2d 665 [Tex App, 1983], construing Vernon's Ann. Texas Rules Civ. Proc., Rule 94.).
As Defendant has stressed, Connecticut courts do not require, or even permit, collateral source payments to be raised in the pleadings (Sticca v Allstate Ins. Co., 1996 WL 434403 [Conn Super]). The relevant Connecticut statutes are quite different than their New York counterparts, however. The Connecticut collateral source statute provides that evidence as to collateral source payments is not to be presented during the trial, but only at a special hearing held after the finding of liability and awarding of damages (Ct St §52-225a). More to the point, in Connecticut practice, special defenses (which are roughly comparable to affirmative defenses in New York) must be based on facts “that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action" (Grant v Bassman, 221 Conn 465, 472), and consequently Section 10-78 of the Connecticut “Practice Book” (Ct R Super Ct Civ §10-78) expressly prohibits collateral source information from being included in any pleadings
(see, Wicke v Aetna Cas. & Sur. Co., 1994 WL 174273 [Ct Super] [“payments to the plaintiff from collateral sources are not directed to whether a plaintiff has a cause of action, but only to reduce the amount of damages which the plaintiff finally recovers”]). Because of these differences, I do not find that the Connecticut approach is persuasive authority for my determination.
It appears that courts in only two other States have held that collateral source payments, at least those that will be received after the award of a judgment, do not have to be pled as an affirmative defense. In Washington v Atchison, Topeka and Santa Fe Ry. Co. (114 NM 56, supra [1992]) a New Mexico appellate court based its ruling on the “general distaste courts have for allowing double recovery” (id., at 58) and on a 1978 decision of a Florida court, Hamm v City of Milton, (358 So2d 121 [Fla]). The decision in Hamm also stressed the inequity of double recovery and reasoned further that the payment in question would not become a charge against the injured parties until a settlement is reached or a judgment rendered, and that forcing the issue before the jury might “improperly interject the fact of insurance into the case.” Washington (supra) has been followed in Walck v City of Albuquerque (875 P2d 407, 409 [NM App 1994]). It does not appear, however, that any Florida cases have expressly followed the ruling in Hamm (supra), and, as noted above, a number of Florida decisions reveal that raising the matter as an affirmative defense is at least common practice in that state.
It is certainly not inappropriate for defendants to raise collateral source payments as an affirmative defense in this State. CPLR 3018(b) requires that “[a] party shall plead all matters which if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading....” Although the statutory right to set-off for certain collateral source payments is well-known, and a defendant’s recourse to that statute to minimize its liability is not likely to surprise its opponent, raising the matter at the last moment or even beyond the last moment can, as the instant case illustrates, constitute an unwelcome surprise. Furthermore, although the right to set-off exists in statute, the effect of CPLR 4545 is not to “establish the substantive law defining the extent of the duty owed to plaintiff,” which would make the facts necessary to invoke the statute the same as those that must be set forth to adequately state a cause of action (Ferres v City of New Rochelle, 68 NY2d 446 [holding that General Obligations Law §9-103 does not have to be raised as an affirmative defense]).
It is true that “set-off” (or “offset”) is not one of the defenses specifically mentioned in CPLR 3018(b) as requiring assertion by way of an affirmative defense, but “payment” is. It has been held that, while distinguishable, “the defenses of payment and offset” are sufficiently similar that an affirmative defense alleging that the plaintiff has been paid can, in certain situations, be sufficient to place the party on notice that an offset will be claimed (Cammarota v Drake, 285 AD2d 919, 727 NYS2d 809, 810; accord, Beloit Corp. v C3 Datatec, 78 F3d 586, [7th Cir, 1996]; Davis v Odeco, Inc., 1992 WL 125430 [ED La]). In addition, the defendant is the party that carries the burden of proof with respect to a collateral source offset (Caruso v LeFrois Builders, 217 AD2d 256), a traditional test of whether a matter should be pled as an affirmative defense.
There are good reasons for the issue to be acknowledged by the parties as early as possible. As noted in Bongiovanni v Staten Is. Medical Group, (188 Misc 2d 362, supra):
Discovery of collateral sources of payment is not to be done after a jury verdict -- it is to be done in pretrial discovery or it may be elicited at trial, unless it is clearly established pre trial or during the trial that any applicable collateral sources of payments will be addressed in a posttrial hearing as soon after the trial as is practical to the court.

The most logical, and most traditional, way to assure that something on which the defendant bears the burden of proof is included in pretrial discovery is to require that the matter be raised as an affirmative defense. Having the issue before the parties at that early date would also permit the claimant to more reasonably assess the value of his or her claim and allow the parties to conduct more meaningful settlement discussions.
Finally, requiring the matter be raised as an affirmative defense would not place any undue burden on the defendant. Indeed, I am aware that an affirmative defense alleging that the defendant is entitled to set-off of any collateral source payments is routinely included in most of the answers served by the Attorney General, at least in personal injury claims. In any event, failure to include it in the answer would not necessarily be fatal in light of the relative ease with which a party may amend its pleadings (CPLR 3025 [b]) and the fact that raising the issue of collateral source payments almost anytime before the conclusion of trial, or a short while later, is unlikely to be prejudicial (see, e.g., Sorto v South Nassau Community Hosp., 273 AD2d 373 [permitting amendment of answer to assert the affirmative defense of offset]). Furthermore, there is nothing to stop the courts of this State from following Federal practice, which permits a set-off to be made, even if it was not pled, where the facts of a particular case establish that both parties were fully aware the issue was under consideration and relevant discovery was conducted (Hassan v U.S. Postal Service, 842 F2d 260, supra).
In my view, therefore, the wisest practice for a party that intends to assert collateral source payments as an offset against any award is to raise the issue in the answer, as an affirmative defense. If that is not done, an amendment to the answer can be sought when, during the course of discovery, it becomes apparent that there may be such payments and defendant decides to seek an offset. At the latest, the matter should be raised immediately after an award is made, as was held in Bongiovanni v Staten Is. Medical Group, (188 Misc 2d 362, supra).
In the instant claim, Defendant failed to raise the issue of collateral source payments in a timely fashion. It is perhaps understandable that there was no affirmative defense in the answer, because, as defense counsel notes, the claim did not list Decedent’s son as a distributee and there was some uncertainty early on as to whether, in fact, he qualified as a distributee. In part for the same reason, Claimant did not list the Social Security survivor’s benefits in response to Defendant’s initial demand for collateral sources, although, in any event, that response was provided prior to the Court of Appeals decision in (Bryant v New York City Health & Hospitals Corp., 93 NY2d 592, supra). Once it became apparent, however, that Decedent had a young son who was receiving Social Security death benefits and that such benefits could constitute collateral source payments, there was no reason for Defendant to delay or be coy about the fact that a sizeable offset would be sought. (Defendant seeks an offset of $118,149.66, a substantial portion of the $138,000.00 award for future economic loss that was made to both distributees). While defense counsel can point to a question asked during trial and a reference to collateral sources in the posttrial brief, I was present during trial and during pre- and posttrial conferences and know that the possibility of such a significant offset was not raised by Defendant in any serious fashion or contemplated by Claimant’s counsel, until well into the discussions about structuring the judgment.
This Court does not have jurisdiction to determine how the portion of the award that is payable to both distributees should be divided, and depending on how that award is divided by Surrogate's Court, it is possible that neither distributee will receive an award in which future damages exceed $250,000.00. Should that be the case, no structuring of the judgment will be required. Consequently, Claimant's motion is held in abeyance pending a determination from Surrogate's Court. Defendant's motion is denied.

November 13, 2001
Rochester, New York

Judge of the Court of Claims

  1. [1]The statute excepts benefits provided under Title XVIII of the Social Security Act, which deals with Medicare.
  2. [2]This provision reads: “No pleading shall contain any allegations regarding receipt by a party of collateral source payments as described in General Statutes §§ 52-225a and 52-225b.”