Provides for a limitation of damages in certain personal injury cases and other civil actions; repealer

This measure is intended to ensure that the aforementioned cost savings are realized by the municipalities, farmers, landowners and professionals who are currently insured for the unreasonable liability presently imposed by New York's statutes.

Summary of specific provisions

Section one adds a new Article 50-C to the Civil Practice Law and Rules establishing a $250,000 cap on non-economic damages (pain & suffering awards) in all personal injury actions, except in cases of willful, wanton or gross negligence,

Sections two through five amend sections 240 and 241 of the Labor Law, and repeal section 241-a of such law, to modify the provisions of the "Scaffold Act" to eliminate the existing absolute liability standard and deem a person's culpable conduct relevant in any action for damages sustained as a result of an injury, and to deem compliance with Occupational Safety and Health Administration (OSHA) rules as prima facie proof of compliance with Labor Law scaffolding requirements.

Section six amends section 388(3) of the Vehicle and Traffic Law (vicarious liability) to define as an "owner" a person who leases a vehicle for a continuous period of 12 months or more, thereby removing the Statute's applicability to vehicle lessors.

Sections seven and eight amend subdivisions 2, 3 and 4 of section 9 of the Court of Claims Act, and add a new section 9-a to such act, respectively, to expand the jurisdiction of the Court of Claims to actions against counties, cities, towns, villages, school districts and special districts.

Section nine adds a new Article 16 to the CPLR to limit the liability of a person found jointly liable to that person's equitable share of a judgement, thereby eliminating joint and several liability.

Section ten amends the Real Property Tax Law by adding a new section 1181 to exempt a tax district (county, city, etc.) from liability for pre-existing environmental contamination of a property it acquired through a tax foreclosure unless the tax district physically caused or contributed to the environmental contamination.

Section eleven adds a new Article 4-A to the General Municipal Law to limit liability for injuries sustained at public recreational facilities (a facility owned by a municipality or school district for recreational use by the public such as skiing or golf) to those cases where the municipality of public entity acted willfully, wantonly or with gross negligence.

Section 12 expands the current medical malpractice certificate of merit to a case requirement in CPLR 3012-a to include any action against a professional as defined by Education Law, Title 8. In addition, the certificate of merit filed by a person suing a professional for negligence shall include an affidavit signed by another professional who is in the same profession as the defendant professional. This affidavit must conclude that there is a reasonable basis for the lawsuit.

Section 13 expands the limited exemption of a property owner from liability under General Obligations Law ("GOL") Section 9-103 to a property owner who makes their premises available to others for any recreational use and to include owners of underdeveloped and/or land used in agricultural production.

Section 14 repeals and substitutes a new CPLR Section 214-d to establish a prohibition on lawsuits against architects, engineers or construction professionals brought and more than ten years after completion of the allegedly defective structure designed or supervised by the architect, engineer or construction professional that is the subject of the lawsuit. if an injury occurs during the tenth year of the completion of the structure the injured party may bring their lawsuit within one year after the injury.

Sections 15 and 16 make changes to various CPLR sections to conform them to this bills provisions.

Section 17 amends GOL Section 9-103 by adding a new subdivision 1-a to limit liability of a farm or "u-pick" operation for injuries incurred while a person was picking and buying agricultural products. The farmer or "u-pick" operation is only liable in those cases where the injuries are caused by a condition involving an unreasonable risk of harm when (a) the owner/operator knew, or should have known, about the condition or risk; and (b) the owner/operator either failed to

take reasonable care to make the condition safe or to provide a warning.

Section 18 amends the GOL by adding a new article la-B to establish an "Equine Activity Safety Code," hereinafter "code." The Code provides An exemption from liability of a horse facility operator for an injury of a participant in horse riding offered by the facility if the injury results from the inherent risks of equine activities. This exemption does not apply and liability will attach if one of the following five criteria are met:

(1) The horse facility Operator ("operator") provided the equipment, the operator knew or should have known that the equipment was faulty, and the faulty equipment caused the injury;

(2) The operator provided the equine (horse, pony, mule or donkey) and failed to reasonably determine both the participant's ability to safely engage in the equine activity and such participant's ability to manage the particular equine;

(3) The equine participant sustains injuries due to a dangerous latent condition on the operator's land or facilities that the operator knew, or should have known, about;

(4) The operator acts, or fails to act, in a manner constituting willful or wanton disregard for the participant's safety; or

(5) The operator intentionally injures the participant.

Section 19 amends the CPLR by adding a new section 214-f to require that a product liability action must be brought within ten years after the allegedly defective product is delivered to the first buyer. There are three exceptions to this ten year product liability limitation period:

1) If a defendant makes an express written warranty for the product that is longer than ten years;

2) If the injury resulting from an allegedly defective product occurs within the ten year time period but less than two years before such period expires, then the action may be brought within two years after the injury; and

3) If this measure reduces the period during which a product liability action could have otherwise been commenced pursuant to law, then such a claimant shall have one year after this section's effective date to commence the action.

Section 20 amends the CPLR by adding a new article l4-5 to establish three specific defenses in product liability cases. These three defenses are: 1) Post-manufacture changes - evidence of actions taken by the product manufacturer or seller after an event, which if taken previously would have rendered the event less likely to occur, is inadmissible to prove a product defect;

2) Sealed containers - a defense that may be used only by a party in the action who did not manufacture the product and such product was

obtained and sold by the party in a sealed container or under conditions whereby the party had no reasonable opportunity to inspect the product; and

3) state of the art design - a product liability claimant alleging defective design must prove that, when the product left defendant's control, there was a feasible alternative design that would have prevented the harm without substantially impairing the usefulness or desirability of the product to users.

Section 21 amends the Labor Law by adding a new section 742 to give an employer immunity from liability when such employer makes or receives a good faith reference with accurate information concerning a current or former employee's job performance.

Section 22 is a severability clause. Section 23 is the effective date.

Justification

Existing law encourages excessive litigation and a concomitant drain on public and private resources, This bill restores balance to the civil justice system.

$250,000 Pain and Suffering Award Cap

"The cost of the U.S. tort system grew by 14.3% in 2001, the highest single-year percentage increase since 19861' This finding, from a Tillinghast-Towers Perrin study (U.S. TORT COSTS: 2002 UPDATE, TRENDS AND FINDINGS ON THE COSTS OF THE U.S. TORT SYSTEM) c firms what doctors, municipalities and businesses have been arguing for many years -- the tort system is out of control. The same study estimates that by 2005, tort costs could approach $1,000 per U.S. Citizen. The most significant, contributing factor in this depressing equation is the lottery represented by pain and suffering awards, where the compensation afforded a victim often has little to' do with the actual damage suffered by that victim's injuries but rather by the theatrical skills of the lawyer representing the victim and the venue where the action is heard.

This legislation seeks to control the cost of the tort system by eliminating the possibility for outrageous pain and suffering awards. Victims are in no way limited for receiving compensation for medical expenses, lost wages and other compensatory awards and are further permitted to exceed the $250,000 pain and suffering cap if there is a finding of gross negligence on the part of the defendant.

Clear and convincing evidence on the effect of pain and suffering award caps is available from the State of California, which in 1975 enacted the Medical Injury Compensation Reform Act (MICRA). This law placed a cap of $250,000 on medical malpractice pain and suffering awards. Since the enactment of that statute, California's medical malpractice insurance market has been largely stable and physicians there pay among the lowest rates nationally for medical malpractice insurance. Notably, there is no access-to-justice crisis in California, simply a rational system for dealing with medical malpractice cases.

Scaffold Act Revisions

New York is, the only state in the country with a law that holds property owners and building contractors absolutely liable for workplace injuries involving falls. The effect on our housing market has been devastating.

A study issued by the Washington, DC-based American Insurance Association found that for New York State, outside of New York City, loss costs averaged 232 percent more than other states, with the Scaffold Act responsible for at least one-third of this excess, or 77'percent. Most insurance carriers that used to be engaged in the business of insuring contractors have abandoned the New York market and recent premium increases have been as high as 600 percent. Some contractors cannot find coverage at any price. This translates into an extra $6,000 to $10,000 in the cost of building a home, effectively eliminating building construction jobs and affordable housing options for many. The reforms contained in this legislation simply place New York in line with most other states by deeming compliance with OSHA requirements as meeting Labor Law standards and removing the absolute liability standard so that, for instance, a.person who reports to work intoxicated and fails to take required safety precautions cannot gain the same recovery as one who is injured through no fault of his own.

Vicarious Liability

The intent of the vicarious liability statute, originally enacted by Chapter 534 of the laws of 1924, was to ensure that.a person injured by the negligent (authorized) driver of a motor vehicle was- afforded a means of compensation from a financially responsible party -- the owner of the motor vehicle. The vicarious liability statute was enacted 35 years prior to the Motor Vehicle Financial Security Act (Chapter 775 of the Laws of 1959, and expanded by Chapter 305 of the Laws of 1995), which requires bodily injury and property damage liability coverage from, motor vehicles registered and operated in New York State. No-fault insurance originated in the 1970s.

The vicarious liability principle may have served a public policy purpose at one time, but has been eclipsed by the time and events since its enactment. For instance, the practice of leasing vehicles did not gain mainstream currency until the 19805 and was certainly non-existent at the time of the statute's original enactment. Further, the financial security requirements now in place did not exist in the 1920s, meaning that an injured party may not have had any means of financial recourse at that time.

The presence of the vicarious liability statute has led to consequences unintended by its framers here in New York and in two other nearby states that have similar statutes. It was reported (WALL STREET JOURNAL, January 22, 2003) that a vicarious liability suit was settled in Rhode Island against Chase Manhattan Automotive Finance for $15 million and that in 2002 General Motors Acceptance Corporation spent $50 million settling these cases in New York state alone. similar stories emanate from Connecticut. As a result, leasing fees are rising and, in some cases, leasing companies are contemplating the abandonment of the New York market. These actions would cause severe harm to New York citizens who choose to lease vehicles and effectively force many auto dealers out of business.

All vehicles driven on New York's public highways must be insured for personal injury and property damage liability. Compensation is available to those injured' through the negligence of drivers. No viable rationale exists to impose additional, unlimited liability on lenders in circumstances where the driver of a leased vehicle (defined as a vehicle leased for a continuous period of 12 months or more) is negligent simply because the title remains vested in the leasing company. Further, most lease contracts call for higher than Minimum levels of liability insurance (usually $100,000/$200,000/$500,000) to be maintained by the lessee.

Joint and Several Liability Reform

Current New York State Law, in general requires full joint liability of two or more defendants found responsible for harm to a plaintiff even if one of the defendants has an extremely low portion of liability. For example, in an auto accident where defendant A is 15% liable with defendant B 85% liable, the plaintiff can choose to collect the entire 100%. of the award from defendant A. Reasons for this could include defendant B's insolvency and/or defendant A's wealth. This measure corrects the basic unfairness of the present rule, by limiting each defendant's share of the award to the actual share of liability as determined by a jury or court.

Expanding the Jurisdiction of the Court of Claims Municipalities. (counties, cities, towns, villages and special districts) and school districts have noted for years that they are frequently hit with excessive and costly jury verdicts because of their perception by the public as a "deep pocket" with large financial resources.

By placing all personal injury and property damage actions against these parties in the Court of claims where the actions will be heard and decided by a judge, this bill should result in substantially more equitable verdicts against such parties. That result should, in turn, reduce insurance premiums paid by these localities, and ultimately lead to lower taxes imposed for these expenses.

Municipal Liability Relief - Contaminated Property Acquired by Tax Fore closure

Citizens of every community that contains environmentally contaminated real property share the common goal of wanting the property cleaned and restored to a usable condition. Title holders of environmentally contaminated parcels often stop paying real property taxes and walk away, knowing neither, leaders or municipalities are likely to foreclose on the property due to the assumption of liability for cleanup and remediation.

While the merits of limiting the liability of lenders that foreclose are worthy of an examination, it is clear that no public policy is served by holding municipal taxpayers responsible in the event of tax foreclosure, where the municipal entity has not caused or contributed to the contamination.

Municipal Liability Relief - Recreational Facilities

Municipalities are tempting targets for lawsuits because it is assumed they have unending deep pockets to pay judgments. Residents of the Town of Greenfield in Saratoga County found out otherwise in 1995 when a jury awarded $3.7 million for medical expenses and pain and suffering to a resident who had an accident while tobogganing on town-owned property. The town was insured for only $1 million. As a result of this and similar verdicts, thousands of children are unable to sleigh ride and engage in other sports programs that earlier generations took for granted.

Recreation of almost any nature involves an inherent degree of risk. Before citizens are asked to forgo recreation and issue bonds to pay multi-million dollar award judgments, a finding of gross negligence on the part of the municipality must be established. Combined with other provisions in this legislation which will direct these suits to the Court of Claims, balance will have been restored to the civil justice system.

Certificates of merit.

This Provision is designed to ensure that a plaintiff's counsel in a professional malpractice or negligence case has consulted with at least one professional in the same field as the defendant to determine that the plaintiff has a reasonable basis to bring the case. It should be noted that persons will not be prevented from bringing a lawsuit, but without a favorable opinion from a knowledgeable professional as to the suit's viability, it is anticipated that frivolous suite may be terminated before the large costs of discovery and trial are incurred.

Landowner Recreational Liability

Currently, section 9-103 of the General Obligations Law extends to some landowners a limited immunity from liability to keep premises safe by the use of others for a series of enumerated, recreational activities. The existing law would be strengthened under this bill by reaffirming the legislature's intent, incorporating specific definitions of lands used in agricultural production and undeveloped premises, specifying that the statute applies to these types of properties (whether or not a farm) and expanding the scope of the law to include all recreational activities, rather than only those specifically identified in the statute.

Architects, Engineers and Design Professionals

By establishing a ten year limitations period, with exceptions, within which a claimant may sue an architect or construction professional for work on a structure, this legislation ensures reasonable access to the court system for those harmed while also ensuring that architects and construction professionals are not hit with costly verdicts many years after their work on a structure and frequently when such professionals no longer carry malpractice insurance. This is clearly unfair and would be corrected by this provision.

Farm U-Pick and Horseback Riding Operations

Without question, working farms have provided the people of this State with the enjoyment and the fondest memories of gathering apples and berries for grandma's delicious pies; picking out the largest pumpkin in the patch, bringing home the perfect Christmas tree and horseback riding in the country. "U-pick" farms and riding stables provide an escape from the hustle and bustle of urban lifestyles and provide a chance to see the richness of our agricultural landscapes. However, the increasing threat of frivolous lawsuits bolstered by a policy of open-ended liability, has discouraged family farms and stables from opening their homes to the public. The litigious environment created by the present tort system has raised the cost of insurance premiums to unreasonably high levels and needs to be reformed.

"U-pick" farms and riding stables do not seek blanket immunities from liability. Farms and equine facilities should be held responsible for their own acts of gross negligence. However, as a matter of fairness, individuals who take part in "u-pick" activities or horseback riding assume certain risks. Without this type of reform, our farms are truly defenseless against frivolous lawsuits of the "slip and fall" variety. This gradual disappearance of our rural heritage and agricultural landscapes would be unforgivable. At least 30 other states have passed or are considering legislation nearly identical to the proposal advocated for equine activities. In addition, essential reform for "u-pick" operations is supported by 70% of New Yorkers, according to a 1997 statewide Zogby poll.

Product Liability

The basic reforms in product liability law set forth in this measure, including a ten year statute of limitations and three defenses including no admissibility of evidence of post-injury product modifications to prove fault, should help restore balance to the expanded product liability that 'has been created by court decisions in this state over the past two decades. It should also be noted that a 1997 statewide Zogby poll found general product liability reform was supported by 59 of New Yorkers.

Prior legislative history

A7054 of 2003/2004 - Held for consideration in Judiciary A4869 of 2005/2006 - Referred to Judiciary

Fiscal implications for state and local governments

Small cost to state in connection with expanding the jurisdiction of the Court of Claims. Overall savings to taxpayers due to a. reduction in the hidden taxes they pay to support the tort system in New York will be substantial. The Tillinghast-Towers Perrin study estimates that nationally, the u.S. tort system cost every citizen $721 in 2001. The number is certainly greater in New York. If this legislation were enacted, and tort taxes could be reduced by the modest amount of 300 per citizen, the savings to New Yorkers would be approximately $5.4 billion.

Effective date

Immediately, except that the provisions establishing award caps, limiting vicarious liability expanding the jurisdiction, of the Court of Claims and eliminating joint and several liability shall take effect 180 days after enactment; the provisions

establishing a statute of repose for architects; engineers and design professionals shall take effect on the first day of January subsequent to enactment; the provisions establishing the equine activity safety code shall take effect 30 days after enactment; and provided that all of the act's provisions shall apply only to causes of action commenced on or after the effective date of each applicable section.