The statute makes clear that “[h]ealth insurers (other than Medicare and Medicaid) shall be the primary payers of qualifying health care costs of qualified plaintiffs”. It also deprives health insurers of any right of subrogation against the fund to recover these costs. Presumably Medicare and Medicaid will also defer to the Fund for payment of medical expenses on behalf of qualified plaintiffs, although the chance of a qualified plaintiff being Medicare eligible seems a bit remote. Since most settlements of birth injury cases result in the formation of a supplemental needs trust which permits the child to continue to receive Medicaid benefits, there will be a significant shift in the burden of paying these expenses away from Medicaid and to the Fund.

Attorneys’ Fees

The statute provides that the attorneys’ fee shall be paid entirely by the defendant and its insurer including any amount apportioned to future medical expenses in the judgment or settlement. It also provides that “… the portion of the attorney fee that is allocated to the non-fund elements of damages shall be deducted from the non-fund portion of the award in a proportional manner.”  This presumably means that the defendant or insurer must pay all of the damages awarded or provided for in the settlement which are not for future medical expenses and must also pay an attorney’s fee for the portion of the award or settlement that is attributable to future medical expenses. The mathematics involved in applying the sliding scale Judiciary Law fee schedule with the structured judgment provisions of CPLR Art. 50-A and then backing out the portion attributable to the future medical expenses will be frightening for most attorneys who went into law because they were not good at math.

Practice Implications

As stated at the outset, the overall implications of this legislation are difficult to predict. What is certain is that settlement agreements will now have to specifically break out future medical expenses into yearly or monthly payments similar to a structured judgment. The broader question of whether the creation of the Fund will increase or decrease the probability of settling these cases is a much harder call. On the one hand, with the probable elimination of the obligation of payment of the largest component of most awards in birth injury cases insurers may be more willing to go to verdict and take their chances. On the other, the requirement that the insurers pay the attorneys’ fee on the entire award and the possibility that the Fund may suspend enrollment making the defendant or insurer responsible for payment of the future medical expenses, going to trial will retain significant risks for defendants. As stated at the outset, overall the legislation is much less punitive to injured infants and their families than had been feared and plaintiff’s attorneys doing malpractice work of this type may have once again dodged a bullet.

The Court’s Decision in Kash

Writing for the majority, Justice Pine (joined by Justices Fahey and Gorski) reviewed the somewhat tortured history of the Fourth Department’s prior interpretations of §2801-d in its earlier decisions in Goldberg v. Plaza Nursing Home Comp., Inc., 222 AD2d 1082 (4th Dept. 1995) and Doe v. Westfall Health Center, 303 AD3d 102 (4th Dept. 2002), and held: 

Because we conclude that the language of Public Health Law §2801-d is clear and unambiguous, we are required to give effect to its plain meaning. The remedies set forth in section 2801-d “are in addition to and cumulative with any other remedies available to a patient, at law or in equity or by administrative proceedings” (§2801-d [4] [emphasis added]). Therefore, although “plaintiff possessed the right to bring a[n] . . . action predicated upon defendant[s'] negligence” (Goldberg, 222 AD2d at 1084), we conclude that she is not precluded from asserting a separate cause of action under section 2801-d.

The majority deserves credit for correcting an error in interpretation made by a prior panel of the Fourth Department in Goldberg regardless of how painful it may have been to admit the error. The Court’s reversal of Goldberg actually began with its decision in Doe in 2002, when the Court corrected its prior ruling that §2801-d imposed “absolute liability”. The Doe Court ultimately permitted the plaintiff to continue both common law and §2801-d claims simultaneously because, under the facts of that case, the common law claims would have been “difficult to prove”. The majority in Kash, however, went even further. It rejected the Doe holding as well, and recognized that preserving precedent that is clearly wrong must be subordinated to interpreting the statute correctly and as the legislature clearly intended. 

The dissent in Kash, written by Justice Centra, and concurred with by Presiding Justice Scudder, chided the majority for departing from prior precedent in Goldberg and Doe, stating: “We cannot agree with the majority’s conclusion that our prior decisions should be so easily cast aside.” The dissent continued to favor an approach where §2801-d claims would be limited “to those cases in which recovery under a common-law cause of action would prove difficult or inadequate.” However, as the majority emphasized in its criticism of this approach, how would trial courts determine which cases were “difficult” to prove? Since all medical malpractice cases are difficult to prove, how difficult would they have to be to meet this standard? And just as importantly, when would such a determination be made? At the pleading stage? After discovery? The dissent’s proposed solution would, in the words of the majority, be “unworkable.” 

Ruling Helps Victims of Nursing Home Abuse Protect and Enforce Their Rights

Section 2801-d was enacted to provide incentives to nursing home patients to protect and enforce their rights in civil court as a way to combat what was perceived by the legislature as rampant abuse of these elderly patients. These incentives were deemed necessary because awards of damages for elder abuse in nursing homes under the common law were likely to be so low as to provide a disincentive to prosecute those claims.

Twenty-five years later, the same disincentives are still very much present. Thus, §2801-d is as necessary now as it was then to provide benefits not available under the common law, including attorneys’ fees, punitive damages, and exempting any recovery from Medicaid eligibility consideration. The result will be to encourage more civil actions to remedy and recover for nursing home abuses. After Kash, it appears that Public Health Law §2801-d is now fully available to injured residents of nursing homes in all judicial departments in New York State. Before the Fourth Department’s decision in Kash, it was the only judicial department that had restricted the use of §2801-d. 

Unfortunately, the plaintiff Gertrude Kash died last week at the age of 90 of complications caused by the injuries she sustained in a nursing home three years ago. She was a wonderful and courageous woman. She lived long enough to learn of the outcome of her appeal and was proud that the efforts made in her case might help other victims of nursing home neglect or abuse in the future.

It was the intent of the Legislature to supplement the rights of nursing home patients under existing law. Subsection (4) of the statute specifically states that “[t]he remedies provided in this section are in addition to and cumulative with any other remedies available to a patient, at law or in equity or by administrative proceedings.” Public Health Law §2801-d(4). Moreover, unlike common law claims, the Legislature provided that the amount of any damages recovered by a patient under the statute “shall be exempt for purposes of determining initial or continuing eligibility for medical assistance [Medicaid]” and “shall neither be taken into consideration nor required to be applied toward the payment or part payment of the cost of medical care or services available under” Medicaid. Public Health Law §2801-d(5). Thus, any damages recovered by a patient under the statute do not affect Medicaid eligibility and are not subject to recoupment by Medicaid. This is not the case with damages recovered in ordinary negligence or medical malpractice claims.

Two cases from same court with different results

In 1995, the New York State Appellate Division Fourth Department held in Goldberg v. Plaza Nursing Home Comp., Inc., 222 AD2d 1082 (4^th Dept. 1995) that patients were not entitled to a remedy under §2801-d if they had a viable common law negligence claim arising out of the same injury. This result was followed by most other courts in the state for seven years until 2002, when the same court decided Doe v. Westfall Health Center, 303 AD3d 102 (4^th Dept. 2002). Doe was a notorious case in which a comatose nursing home patient was raped and impregnated by one of her care givers. The lower court had dismissed the plaintiff’s claim under Public Health Law §2801-d, relying on Goldberg. On appeal, the Fourth Department reversed the trial court and reinstated the plaintiff’s Public Health Law claim. In doing so, the Court specifically overruled Goldberg “insofar as we determined therein that summary judgment dismissing the Public Health Law cause of action was appropriate despite doubt concerning the efficacy of the remaining common law cause of action.”

Doe v. Westfall – Almost universally followed since 2002

Since 2002, when the Fourth Department decided Doe, the other three Judicial Departments of the New York State appellate court have all held – expressly or implicitly – that the private right of action granted to nursing home patients by Public Health Law §2801-d may be brought together with claims of negligence and/or medical malpractice arising out of the same injury. These cases are consistent with the apparent intent of the Legislature to provide remedies in §2801-d(4) that “are in addition to and cumulative with any other remedies available to a patient.” Zeides v. Hebrew Home for the Aged at Riverdale, Inc., 300 AD2d 178 (1^st Dept. 2002); Ward v. Eastchester Health Care Center, LLC, 34 AD3d 247 (1^st Dept. 2006); Young v. Patterson, 17 AD3d 667, 667-668 (2^nd Dept. 2005); Fleming v. Barnwell Nursing Home and Health Facilities, Inc., 309 AD2d 1132 (3^rd Dept. 2003).

In addition, there are at least nine published and unpublished lower court cases supporting this view. See Morisette v. Terence Cardinal Cooke Health Care Center, 8 Misc.3d 506 (NY Co 2005); Pasqua v. Bon Secours New York Health System, Inc., 13 Misc.3d 1036 (Bronx Co 2006); Sullivan v. Our Lady of Consolation Geriatric Care Ctr., 236 NYLJ 119 (Suffolk Co 2006); Washington v. Asfaw, 15 Misc.3d 1107A (NY Co 2007); Passet v. Menorah Nursing Home, Inc., 16 Misc.3d 1117A (Kings Co 2007); Marshall v. Leppard, 17 Misc.3d 1103A (Nassau Co 2007); Bush v. Cobble Hill Health Center, Inc., 17 Misc.3d 1135A (Kings Co 2007); Osborne v. Rivington House, 19 Misc.3d 1132A (NY Co 2008); and Yakkay v. Asher, 239 NYLJ 59 (NY Co 2008). The Morisette case, in particular, contains an outstanding discussion of the legislative history and intent behind §2801-d. Morisette, 8 Misc.3d at 509-514.

Fourth Department should clarify this issue in Kash v. Jewish Home of Rochester

This issue will again be presented to the Appellate Division Fourth Department in Kash v. The Jewish Home of Rochester, which is scheduled for oral argument in early December of 2008. The Kash case involves claims for negligence and medical malpractice against the nursing home and its staff doctors who initially allowed a patient to fall twice and then failed to detect the spinal cord injury suffered by the patient as a result. The patient became permanently paralyzed before the spinal cord injury was finally diagnosed days after her second fall. The trial court denied plaintiff’s motion to amend the complaint on the ground that the Goldberg case bars claims under §2801-d where the plaintiff also has a viable claim for negligence. In so holding, the trial court implicitly found that the Doe case did not overrule Goldberg in all instances.

Limitations of a common law remedy due to the effect on Medicaid eligibility

Neither Goldberg nor Doe discussed the explicit benefit conferred by the Legislature in §2801-d that any damages recovered from the nursing home under the statute shall not be considered toward the patient’s future Medicaid eligibility. This is a major benefit of the §2801-d claim since without it, most plaintiffs who recover damages will lose their Medicaid eligibility and become private pay patients.

Plaintiff in Kash, represented by Faraci Lange, LLP of Rochester, New York, has focused on this aspect of the §2801-d claim in her appeal. Plaintiff is attempting to demonstrate that if nursing home patients are confined to bringing common law claims alone, they will be deprived of the benefit of those claims because of Medicaid eligibility rules. Such a result would be absurd. Any monetary damages recovered by a patient under a common law claim would in effect be paid right back to the same nursing home where the patient’s injury occurred, only at the higher private pay rate. Conceivably, nursing homes could benefit financially from their own neglect. According to plaintiff’s appeal in Kash, this is expressly why the Legislature enacted §2801-d – to encourage private rights of action by nursing home patients in order to discourage nursing home patient abuse. A vital component of that remedy is § 2801-d(5), which was meant to avoid the conceivably anomalus result of putting more money into the pockets of nursing home whose patients are neglected or abused.