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Oden v. Chemung Cty. Indus. Dev. Agency - 87 N.Y.2d 81, 637 N.Y.S.2d 670, 661 N.E.2d 142 (1995)


Reduction of Award Authorized Where Item of Loss Corresponds to Type of Collateral Reimbursement Reduction in the amount of a plaintiff's award in a personal injury action pursuant to N.Y.C.P.L.R. 4545(c) where any element of the economic loss encompassed in the award was or will be replaced, in whole or in part, from a collateral source, is authorized only when the collateral source payment represents reimbursement for a particular category of loss that corresponds to a category of loss for which damages were awarded. N.Y.C.P.L.R. 4545(c), having been enacted in derogation of the common law, is to be strictly construed, and is to be construed in the narrowest sense that its words and underlying purposes permit. The statute first refers to actions to recover for enumerated and other economic losses and then authorizes the trial court to consider that any "such" losses were or will be replaced from a collateral source. This use of the term "such" suggests 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. The correctness of this construction of the statute is also supported by the policy considerations underlying the common-law collateral source rule and its recent legislative modifications. The chief criticism of the common-law rule, which proscribed the reduction or offset of a personal injury award by the amount of any compensation that the injured party may receive from a source other than the tortfeasor, was that it permitted double recovery. The Legislature's goal of eliminating plaintiffs' duplicative recoveries is served by subtracting from the total award those collateral source payments that duplicate or correspond to a particular item of economic loss.


The present action arises out of a December 1988 incident in which plaintiff Julius Oden, a 48-year-old ironworker, was injured when he was struck by a falling steel column that was apparently dislodged by a small hydraulic crane. Plaintiff sued the owner of the crane, the crane operator, the contract agency that provided the crane operator and the owner and lessee of the work site, alleging various Labor Law and common-law causes of action. Defendants subsequently asserted cross claims against each other, as well as third-party claims against Streeter Associates, Oden's employer. The lower court awarded Oden damages, and defendant sought review, alleging that under N.Y. C.P.L.R. 4545(c), the economic loss portion of plaintiff's award should have been reduced by the value of the disability retirement benefits that Oden expected to receive over his lifetime.


Should the economic loss portion of an award be reduced by the proceeds from any collateral source?




Upon review, the court affirmed the award of damages. It held that the award for economic loss was properly broken down into categories and reductions for collateral source payments made only in those categories that corresponded to analogous collateral source categories. A disability annuity received as a result of an accident could not be said to "replace," pursuant to the terms of the statute, an out-of-pocket medical expense that an employee incurred as a result of accident-related injuries. Accordingly, the lower court properly limited the operation of N.Y. C.P.L.R. 4545(c) by applying plaintiff's anticipated $141,330 disability pension benefits to reduce to zero the $66,000 award for lost ordinary pension benefits, which the disability pension benefits did replace.

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