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FOURTH DEPARTMENT HOLDS THAT COLLATERAL SOURCE OFFSET PURSUANT TO CPLR 4545 MUST BE PLED AS AN AFFIRMATIVE DEFENSE. CPLR 4545 provides that an award for damages for past or future economic cost or expense (like medical bills or lost wages) may be reduced by the amount of any collateral source (like insurance). This statute abrogated the common law rule which precluded the reduction of a personal injury award by payments received by a claimant from other sources. The purpose of the statutory change was to eliminate "double recoveries." A timely application for a collateral source offset is made after damages are awarded but before a judgment has been entered. The Fourth Department recently held that an application for collateral source offset pursuant to CPLR 4545 is an affirmative defense which must be pled pursuant to CPLR 3018(b). Wooten v. State of New York, 2002 WL 31888141 (4th Dept. December 30, 2002). Wooten involved a wrongful death action where the plaintiff brought an action against the State of New York for negligence and medical malpractice. Following a bench trial, the Court of Claims found the State liable and awarded the plaintiff damages. The State applied for an application for a collateral source offset pursuant to CPLR 4545 for an offset of social security benefits. The defendant did not raise collateral sources as an affirmative defense in their answer. The Wooten Court decided that the collateral source offset is an affirmative defense which must be pled. The Court reasoned that 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." Id. The Court further pointed out that under this section of the CPLR, Courts have held that partial defenses and matters that tend to mitigate damages must also be plead affirmatively. The Wooten Court further reasoned that the collateral source offset is similar to the settlement offsets found in General Obligations Law 15-108 because both invoked a statute-based reduction in the verdict and both are presented to and determined by the Court after the verdict is rendered rather than during trial. Since the offset for General Obligation Law 15-108 has been previously held to be an affirmative defense which must be pled, the Court concluded that the collateral source offset must also be pled as an affirmative defense. Although the defendant in Wooten did not plead collateral sources as an affirmative defense, the Court did allow the defendant to amend its answer to assert this defense citing authority which have allowed courts to sua sponte amend answers to conform to the evidence at trial. Two of the five justices dissented in part stating that they did not believe that CPLR 3018(b) required collateral sources to be pled as an affirmative defense. The dissenters reasoned that the purpose of pleading affirmative defenses is to "eliminate surprise and prevent the [claimant] to know (sic) what contentions will be interjected by way of defense to his claim." Id. The dissenters in Wooten, reasoned that the collateral source defense was no surprise to the plaintiff because the defendant had served discovery demands regarding the payment of collateral sources and had adduced evidence at trial relating to the plaintiff's receipt of social security payments. This Appellate Division makes clear that in order for a defendant to reserve his rights for a collateral source offset, it must be pled as an affirmative defense. No longer is a request for collateral source information and an application after judgment sufficient to reserve a defendant's right for these collateral source offsets. Fortunately, the Wooten court has also provided authority which allows defendants to amend their answers to assert this defense. |