In many, if not most medical malpractice actions, the plaintiff’s actual “loss” for past and future lost earnings and medical expenses will be substantially less than what the jury awarded. Awards for past medical expenses are typically based on the total of past medical bills without regard to the plaintiff’s actual out-of-pocket expense, while awards for future lost earnings and medical expenses are based on the findings made by the jury pursuant to CPLR 4111(d): the annual amount in current dollars, the applicable period of years and the applicable growth rates, without regard to disability benefits, private insurance payments or the income taxes that would have been owed. Various statutory provisions, however, allow for reduction of the jury’s awards so that the plaintiff’s recovery more closely coincides with the actual loss, thereby furthering the dual objectives of assuring fair and just compensation to the plaintiff or the decedent’s distributees while avoiding a “windfall” recovery at the defendant’s expense.
The most familiar of these provisions is CPLR §4545, the “collateral source” rule, which provides for reduction of an award for pecuniary loss by the amount of collateral source payments such as insurance or disability benefits. As amended in 2009, CPLR §4545(a) provides in pertinent part that the trial court “shall,” upon finding that an item of economic loss was or will be, with reasonable certainty, replaced or indemnified from any collateral source, reduce the plaintiff’s award accordingly, after making an adjustment to account for any premiums paid by the plaintiff.
