New York 50A Operating Systems and Terms

Code Signing Certificate

The already complicated method for calculating and valuing Awards in cases involving Medical or Dental Malpractice were made more complicated and convoluted when amendments to CPLR 50A were signed into law on June 26, 2003 for cases filed after July 26, 2003. The effect of the amendments is likely to significantly reduce the total value or equivalent payout per case.

Sec.4111 has provided that, in Medical Malpractice Awards, the jury will return the total amount of future damages for wrongful death, loss of services and/or loss of consortium. The jury will not provide periods over which those future damages are to be paid. Therefore, they cannot be discounted, but should be paid as lump sums.

The amendment makes specific that Med/Mal Wrongful Death action future Awards will be paid in lump sums without further reference to the provisions of Sec.5031 of Amended 50A. Similarly, future damages for Loss of Services or Loss of Consortium will also be paid as lump sums in personal injury actions. In any case where all damages are to be paid as lump sums, the payments will be made without further reference to Amended Sec. 5031. Amended 50A Sec. 5031 provides for reduction of Awards for

• Set-off for comparative negligence and settlements
• Litigation Expenses and Attorney Fees
• Liens not the subject of a separate award
• While there is no reference to Collateral Source offsets, there should be no adjustment to any future Awards that are paid as lumpsums.

1.) A change and increase in front end (lump sum) payments from $250,000 overall to the first $500,000 or 35% of future pain and suffering whichever is larger, and 35% of the net present value of all other future Award elements.

2.) Elimination of the 4% annual increase applicable to elements of economic and pecuniary loss. It is retained for future Pain and Suffering but the period for Pain and Suffering is reduced from 10 to 8 years.

3.) The discount rates applicable to future damages are now determined by using " ... the rate in effect for the 10-year United States Treasury bond on the date of the verdict." The United States issues 10-year Treasury notes, and they are of two types regular and inflation indexed. The rates for the latter are two hundred or more basis points lower than the regular notes (e.g. 7/15/03 - rate on indexed 1.875%, 08/15/03 - rate on 10-YEAR regular 4.250%). There are three rates that can be associated with any 10-year note. They are the �stated interest rate' or the face rate of the instrument, the yield at issuance (i.e. face interest X (face value/discounted price)), and the current yield. These rates can vary fairly widely. The 8/15/03 note had a stated rate of 4.25% and a yield at issuance of 4.375%. The August '03 yield on 10 year notes was 4.45%.

Since �rate in effect� does not seem to be further defined, and does not appear to be used by the US Treasury, the choice of rate may be open to question, for that matter so may reference to the type of 10-year bond. [Trial courts seem to have adopted the average daily yield on the date that the verdict is returned as the rate in effect.]

As the original 50A and 50B were silent on how discount rates were determined, the Courts have taken the direction in Amended 50A and applied it to all cases, even those under 50B.

4.) Amended 50A specifies for the first time that any annuity contract provide "...that payments run from the date of the verdict (unless some other date is specified in the verdict)."

5.) Amended 50A formally incorporates the pro-rata reduction of past damages, lump sums and the value of future damages for litigation expenses and fees, with the fee rate determined using the sliding scale of rates.

6.) Application of the sliding scale of contingent fees to the Total of past damages, lump sums and the net present value of remaining future damages, all reduced by pro-rata litigation expenses. The net amounts are then reduced on a pro-rata basis by the contingent fees. The net annual (monthly) payments are similarly reduced.