New York Law Review

Tag: Structured Judgment

  • Desiderio v. Ochs, 100 N.Y.2d 159 (2003): Clarifies Calculation of Structured Judgments in Medical Malpractice

    100 N.Y.2d 159 (2003)

    CPLR Article 50-A requires strict adherence to its formula for structuring judgments in medical malpractice cases, even if the resulting payout exceeds the jury’s initial future damages award, unless the statute’s literal application leads to an absurd result.

    Summary

    In a medical malpractice case, the New York Court of Appeals addressed how to structure a judgment for future damages under CPLR Article 50-A. The defendant hospital argued that mechanically applying the statute resulted in a payout exceeding the jury’s intended award due to the plaintiff’s long life expectancy and significant future care needs. The Court rejected the hospital’s proposed alternative calculation, emphasizing that the statute’s clear language and prior precedents require dividing the total future damages by the number of years of payment and adding a 4% annual increase. The Court affirmed the lower court’s judgment, emphasizing the judiciary’s role in following the legislature’s directive, while urging the legislature to revisit the statute.

    Facts

    Samuel Desiderio sued New York Hospital for malpractice causing severe brain damage at birth. Samuel required a permanent tracheostomy and gastrostomy tube and suffered frequent seizures. The jury awarded damages, including significant amounts for future pain and suffering, equipment, medication, supplies, medical care, nursing care, and therapy. The hospital did not contest liability.

    Procedural History

    The Supreme Court structured the future damages judgment according to the plaintiff’s proposed methodology based on CPLR Article 50-A. The Appellate Division affirmed. The Court of Appeals granted leave to appeal and certified the question of whether the Supreme Court’s order was properly made.

    Issue(s)

    Whether the structured judgment provisions of CPLR Article 50-A should be applied literally, even if the resulting total payout to the plaintiff significantly exceeds the amount of future damages awarded by the jury.

    Holding

    Yes, because the statute clearly mandates how the annuity for future damages should be calculated, and the Court should not substitute its judgment for that of the legislature unless a literal application yields an absurd result.

    Court’s Reasoning

    The Court emphasized the specific statutory procedure in CPLR 5031(e) for structuring the annuity for future damages: dividing the remaining amount of future damages by the number of years of payment and adding 4% to each succeeding year’s payment. The Court rejected the hospital’s argument that this approach should be modified to align the total payout more closely with the jury’s intended award. The Court stated the statute is clear and does not allow for assumptions about how the jury arrived at its verdict or itemization on a per-year basis. The Court referenced Bryant v. New York City Health & Hosps. Corp., 93 NY2d 592 (1999), highlighting that the most direct way to effectuate the will of the Legislature is to give meaning and force to the words of its statutes. The Court also cited Schultz v. Harrison Radiator Div. Gen. Motors Corp., 90 NY2d 311 (1997), holding that a jury may consider an inflationary rate, even though the trial court must apply the 4% additur specified in CPLR 5031(e). The Court recognized the structured judgment provisions represent a balance of various interests, and that while the plaintiff may receive more than the jury award, this alone does not justify disregarding the statutory procedure. Several judges concurred, urging the legislature to revisit the statute to determine if its operation is achieving its intended purposes. Judge Rosenblatt emphasized that the application of Article 50-A, particularly after Schultz, can lead to awards far exceeding plaintiffs’ damages, and Judge Read suggested revisiting Schultz to eliminate potential double-counting for inflation.

  • Love v. State of New York, 85 N.Y.2d 1005 (1995): Post-Judgment Interest on Future Damages in Structured Judgments

    Love v. State of New York, 85 N.Y.2d 1005 (1995)

    Post-judgment interest accrues on awards for future damages when such awards are paid in a structured judgment pursuant to CPLR 50-A.

    Summary

    This case concerns whether post-judgment interest accrues on awards for future damages when such awards are paid out according to a structured judgment under CPLR 50-A. The Court of Appeals held that post-judgment interest does accrue on these awards. The court reasoned that the defendant’s liability for the full amount of the judgment arises at the time of the verdict, and the structured payment provisions merely provide an incremental payment schedule, not a delay of liability. The Court found the rationale in Rohring v. City of Niagara Falls controlling, which addressed post-verdict interest, and found no meaningful distinction in the statutory language between CPLR 5002 and 5003 to justify a different outcome for post-judgment interest.

    Facts

    The plaintiff, Love, received an award for future damages in a medical malpractice action against the State of New York. The judgment stipulated that payments for these future damages would be made according to a structured payment schedule pursuant to CPLR Article 50-A. The specific details of the underlying medical malpractice are not detailed in this decision, but they are the foundation for the award of future damages.

    Procedural History

    The case reached the New York Court of Appeals after a dispute arose regarding whether post-judgment interest should accrue on the portion of the judgment representing future damages that were to be paid out in installments under the structured judgment. The lower courts’ decisions are not explicitly detailed in the Court of Appeals’ memorandum, but the appeal implies a disagreement on the application of post-judgment interest to structured settlements.

    Issue(s)

    Whether post-judgment interest accrues on awards for future damages when those awards are paid in a structured judgment pursuant to CPLR 50-A.

    Holding

    Yes, because the defendant is liable for the full amount of the judgment at the time of the verdict, and the structured payment provisions of CPLR articles 50-A do not delay liability, but merely make payment of the judgment incremental.

    Court’s Reasoning

    The Court of Appeals based its decision on the principle established in Rohring v. City of Niagara Falls, which held that a defendant is liable for the full amount of a judgment at the time of the verdict, even if the judgment is structured for incremental payments. The court stated, “the underlying rationale of Rohring—that a defendant is liable for the full amount of the judgment at the time of the verdict and that the structured payment provisions of CPLR articles 50-A and 50-B do not delay liability, but merely make payment of the judgment incremental (see 84 NY2d, at 69-70)—applies with equal force to postjudgment interest under CPLR 5003 as it does to postverdict interest under CPLR 5002.” The court rejected the argument that differences in the language of CPLR 5002 (post-verdict interest) and CPLR 5003 (post-judgment interest) should lead to a different result. The court effectively extended the logic of Rohring to include post-judgment interest, ensuring consistent treatment of interest accrual in structured judgment scenarios. The policy consideration is that the plaintiff is entitled to compensation for the time value of money, even if the payment is spread out over time.

  • Rohring v. City of Niagara Falls, 84 N.Y.2d 60 (1994): Calculating Attorney’s Fees and Interest on Future Damages

    Rohring v. City of Niagara Falls, 84 N.Y.2d 60 (1994)

    When calculating attorney’s fees and interest on future damages in structured settlements under CPLR Articles 50-A and 50-B, the present value of attorney’s fees should be subtracted from the present value of the future damages award, and interest on the present value of future damages accrues from the date liability is established.

    Summary

    This case addresses the proper method for calculating attorney’s fees and interest on future damages in structured judgments under CPLR Articles 50-A and 50-B. Eric Rohring, injured at a construction site, received a substantial jury award. The court structured the future damages portion. The dispute centered on whether attorney’s fees should be deducted from the gross or present value of future damages and when interest on future damages begins to accrue. The Court of Appeals affirmed the Appellate Division’s ruling that attorney’s fees should be calculated based on the present value of the annuity contract and deducted from the present value of future damages, and that interest accrues from the date liability was established.

    Facts

    Eric Rohring sustained a severe foot injury at a construction site due to a broken safety belt, falling 20 feet. He was employed by Falls Steel Erectors, Inc., on a project for the City of Niagara Falls. The court granted Rohring summary judgment on liability. A subsequent trial awarded him $2,501,311 in damages, which the trial court then structured pursuant to CPLR article 50-B.

    Procedural History

    The Supreme Court determined the present value of attorney’s fees and subtracted that amount from the gross (undiscounted) value of future damages before structuring periodic payments. The Appellate Division disagreed, holding that the present value of attorney’s fees should be subtracted from the present value of future damages. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether attorney’s fees based on future damages should be calculated and deducted from the gross amount of future damages or from the present value of future damages when structuring a judgment under CPLR Article 50-B?

    2. Whether interest on future damages should accrue from the date liability is established or only as future damages are incurred or periodic payments become overdue?

    Holding

    1. No, because the proper methodology is to determine the present value of future damages before attorney’s fees and then reduce that amount by the present value of attorney’s fees. This prevents defendants’ combined payment to plaintiff and counsel from exceeding the jury award.

    2. Yes, because future damages are a debt owed entirely as of the date of the liability verdict, and interest is properly charged against the present value of future damages from that date under CPLR 5002.

    Court’s Reasoning

    Regarding attorney’s fees, the Court recognized the ambiguity in CPLR 5041(c) and (e). It reasoned that Articles 50-A and 50-B are administrative schemes that should not increase defendants’ underlying liability. Plaintiffs are entitled to be made whole, not overcompensated. The Court noted, “Articles 50-A and 50-B are technical administrative schemes intended to regulate and structure payment, and they should not be construed in such a way as to increase the underlying liability owed by defendants.” Subtracting the present value of fees from the present value of damages ensures defendants pay no more than the jury awarded.

    On the issue of interest, the Court relied on the plain language of CPLR 5002, which states that interest shall be recovered “upon the total sum awarded * * * from the date the verdict was rendered”. The Court rejected the argument that interest should only accrue as damages are incurred, stating that the structured judgment schemes of articles 50-A and 50-B do not delay liability, only payment. The Court emphasized, “A defendant’s obligation to a personal injury plaintiff encompasses both past and future damages and becomes fixed as of the date of the liability verdict.”