On June 12, 2018, the Court of Appeals granted relief to municipalities such as the City of New York that exempt its uniformed service members from the Workers Compensation system.  In Andino v. Mills, 2018 Slip Op 04273, the Court determined that Accident Disability Retirement (“ADR”) benefits paid to an injured service member can be a collateral source that a court must offset against that service member’s damages claim for both categories of future economic loss, earnings and pension benefits.  This will curtail the perceived ‘double dipping’ by injured service members who bring suits for damages arising from injuries that forced them to retire with enhanced accident disability pensions.

CPLR § 4545 sits at the heart of the controversy.  It provides: In any action brought to recover damages for personal injury…or wrongful death, where the plaintiff seeks to recover for…loss of earnings or other economic loss, evidence shall be admissible for consideration by the court to establish that any such past or future cost or expense was or will, with reasonable certainty, be replaced or indemnified, in whole or in part, from any collateral source…

In order to preserve Plaintiff’s right to recover compensation, the statute exempts life insurance and any other benefit for that a plaintiff must repay.  It goes on to state that “if the court finds that such cost or expense was or will, with reasonable certainty, be replaced or indemnified from any such collateral source it shall reduce the amount of the award by such finding” minus an amount intended to compensate plaintiff for the cost of maintaining the benefit.

The Andino Court clarified the holding of Oden v. Chemung County Industrial Devpt. Agency, 87 NY2d 81 [1995] and as a result loosened the defendant’s burden of proving that ADR pension benefits will compensate plaintiff for future earnings and pension benefits he or she will lose as a result of an injury.  In Oden, confronted with the claim brought by an ironworker who was injured at work, the Court of Appeals declined to apply his private sector disability retirement benefits to reduce a jury award for future loss of earnings and health and welfare benefits.  Recognizing that a strict construction of the language of the then applicable version of CPLR § 4545 might err on the side of overcompensating plaintiff, the Court declined to reduce the jury award of future loss of earnings and benefits because defendants failed to show that plaintiff’s accident disability pension corresponded to plaintiff’s future earning capacity and therefore duplicated these awards.  The Court dismissed the “problem of matching up a collateral source to an item of loss [as] a matter of proof and factual analysis” that must be overcome by the party seeking the offset. Id. at 89.  Following Oden, based on the language of CPLR § 4545, defendants were required to prove that the pension benefit “corresponds” to damages awarded at trial to achieve an offset.  This proved to be extremely difficult in practice.

Plaintiffs, particularly those uniformed service members who are eligible to sue their municipal employers for injuries sustained in the line of duty asserted the Oden rule to retain jury awards for loss of earnings and pension benefits while simultaneously collecting enhanced pension benefits that they are entitled to by virtue of being forced to retire due to injuries sustained in the line of duty.  Officer Andino is typical of such a plaintiff.  She was an NYPD officer who was injured while on duty riding in a police vehicle that collided with a New York City Transit Authority vehicle.  Based on a determination that she was no longer fit for employment as a police officer, she was retired with an ADR pension that provided enhanced benefits compared to an ordinary pension. At trial, the jury awarded compensation for items including loss of future earnings and pension.

The Court of Appeals noted that at a post-trial Collateral Source hearing, the Trial Court denied a motion to reduce these awards, finding that the defendants had failed to “establish a sufficient nexus between Andino’s lost earnings and pension and her projected ADR benefits, based on its understanding of this Court’s holding in Oden”.  The Court then set out to correct this understanding.

Defendants argued that Plaintiff’s ADR pension operated to replace the earnings she would no longer receive for such period of time she would have worked but for her injury.  When she would have retired in the ordinary course, her ADR pension operated to replace her ordinary pension.  Andino made the usual counter-argument, based on Oden that her ADR pension benefits did not correlate perfectly with any of the damages awarded by the jury.  She argued, in part, that this is because the greater benefit paid in an ADR pension when compared to an ordinary pension is a “reward for services previously rendered”.  Rejecting Andino’s argument that there was insufficient correspondence between her ADR pension and the jury’s award of future loss of earnings and pension benefits, the Court stated the she “misinterprets” Oden.

Contrary to Andino’s argument, Oden does not require a direct match between the jury’s damage award and the collateral source in the sense that there must be exact dollar equivalence, but only that the collateral source replace a category of loss reflected in the jury award.

The Court agreed that the Oden analysis applied but not the outcome. In cases where ADR benefits are subject to a reduction if the retiree can be gainfully employed and earn an income in excess of the statutory minimum the ADR benefits work as earnings and as a pension. As such they replace two different categories of the reward and should be applied against future loss earnings awards and future pension benefits awards, during the periods in which they represent each respectively.

Hereafter, trial courts should look “to the nature, not the label” of the pension benefit to determine whether a loss will be replaced.  Going further, however, the Court declared that “the Legislature intended ADR benefits to be treated as a collateral source of payment for a [New York] City officer’s economic losses due to injuries incurred in the course of employment”.  It should be noted that the Andino rationale will also be applicable to New York City firefighters and sanitation workers who receive similar benefits as a result of on-duty injuries.

The dissent characterized the majority holding as a repudiation of the holding of Oden.  Though there was no renunciation of the Oden rule by the majority, the declaration that the Legislature intended that an ADR pension should be treated as a collateral source that “must” be applied to offset a jury’s award for future loss of earnings and pension benefits will come as a great relief to municipalities that allow their uniformed employees to bring suits by exempting them from Workers Compensation.