Dermatossian v. New York City Transit Authority

• Decision Date: 27 March 1986
• Citation: 501 N.Y.S.2d 784,492 N.E.2d 1200,67 N.Y.2d 219
• Parties: , 492 N.E.2d 1200 Joseph DERMATOSSIAN et al., Respondents, v. NEW YORK CITY TRANSIT AUTHORITY, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 784

501 N.Y.S.2d 784

67 N.Y.2d 219, 492 N.E.2d 1200

Joseph DERMATOSSIAN et al., Respondents, v. NEW YORK CITY TRANSIT AUTHORITY, Appellant.

Court of Appeals of New York.

March 27, 1986.

Steve S. Efron, New York City, Albert C. Cosenza and John A. Murray, Brooklyn, for appellant.

Paul F. McAloon, New York City, for respondents.

OPINION OF THE COURT

HANCOCK, Judge.

Plaintiff, Joseph Dermatossian, ¹ recovered a judgment, following a jury verdict, for injuries allegedly sustained on May 5, 1980 when he struck his head on a defective ² grab handle as he stood up to leave defendant's bus. Although no proof of actual negligence was adduced, the court, over defendant's objection, submitted the case to the jury on the theory of res ipsa loquitur. The defense was that no accident had occurred on defendant's bus and that plaintiff must have hurt himself elsewhere. The Appellate Division affirmed, without opinion, 109 A.D.2d 1106, 487 N.Y.S.2d 451, and we granted leave to appeal.

Two questions are presented: (1) whether the court erred in admitting evidence of defendant's payment of no-fault "first-party benefits" ³ as an admission by defendant that plaintiff sustained injuries on the bus and; (2) whether there was sufficient proof that defendant maintained exclusive control over the grab handle so as to warrant submission of the case to the jury under the theory of res ipsa loquitur. For reasons hereinafter stated, we agree with defendant's contentions on both points. Accordingly, the order should be reversed and the complaint dismissed.

I THE TRIAL PROCEEDINGS

At the commencement of the trial, in the absence of the jury, plaintiff's counsel sought permission to prove that defendant had paid $30,000 to $40,000 in no-fault first-party benefits to plaintiff. Defense counsel objected and the court reserved decision. During cross-examination of plaintiff, defense counsel inquired about an entry in an emergency room hospital record for May 10, 1980 when plaintiff received treatment for injuries to the left side of his face. The history of the injury as given by plaintiff to the admitting nurse was: "States fell in street--tripped on hole--onto [left] side of face." On redirect examination, when plaintiff's counsel again offered to prove payment of no-fault benefits, the court received the evidence, finding it to be relevant to the issue of whether the accident had occurred on defendant's bus. Over defendant's continued objection, the court allowed plaintiff to testify that defendant had paid his medical expenses and part of the earnings plaintiff claimed to have lost as a result of the May 5, 1980 accident. In admitting the evidence, the court told the jury to consider defendant's payment of benefits as bearing only on whether the accident occurred on the bus--not whether defendant was legally responsible for the injuries. ⁴

To corroborate its position that plaintiff had not been injured on the bus and had sustained the injuries in some other manner, defendant proved that plaintiff never reported the accident to the bus driver or other employee, and that its first knowledge of the accident was on June 6, 1980 when it received plaintiff's notice of claim. During the colloquy concerning admission of the payment no-fault benefits, defendant argued that payment was irrelevant and could not constitute an admission since the benefits were paid prior to the discovery of the history given by plaintiff in the May 10, 1980 hospital record.

II ADMISSIBILITY OF PAYMENT OF NO-FAULT BENEFITS

Evidence, albeit logically and technically relevant, is not necessarily admissible. It will be excluded "if it is too slight, remote, or conjectural to have any legitimate influence in determining the fact in issue" (Richardson, Evidence § 147 [Prince 10th ed]; see, 21 N.Y.Jur., Evidence, § 161). The claimed basis for admitting proof that no-fault benefits were paid here was that it was probative of a critical fact in issue--the fact on which defendant's liability depended--that plaintiff was injured on the bus. The evidence was offered and received on the theory that it constituted an admission by conduct that plaintiff was hurt on the bus because presumably defendant would not have made payment if it were not so. The proof should have been excluded. The payment of no-fault benefits, in response to plaintiff's facially valid sworn claim that he had been hurt on the bus, proved nothing more than that, at the time of payment, defendant had determined that there was no valid basis for challenging the truth of plaintiff's assertions (11 NYCRR 65.11[k][3] ) and, thereby, avoiding its statutory obligation to pay first-party benefits promptly after loss is incurred. (Insurance Law § 5106[a].) Plaintiff's argument to the contrary is based on a misconception of an insurer's obligations under the No-Fault Law and, particularly, when and how an insurer must pay first-party benefits to a "covered person".

By statute, an insurer, or self-insurer as in the instant case, is liable for the payment of first-party benefits to persons "for loss arising out of the use or operation" of a motor vehicle (Insurance Law § 5103[a][1] ). Payment of first-party benefits must be made "as the loss is incurred" and such benefits are overdue if not paid within 30 days after the claimant supplies proof of the fact and amount of loss sustained (Insurance Law § 5106[a] ). Any overdue payment bears interest at a rate of 2% per month, and an insurer is liable for the attorney's fees incurred by the insured in securing payment of a valid overdue claim (Insurance Law § 5106[a]; 11 NYCRR 65.15[g], [h] ).

Under the regulations promulgated by the Insurance Department, insurers must adhere to the following guidelines in processing claims:

"(1) Have as your basic goal the prompt and fair payment to all automobile accident victims.

"(2) Assist the applicant in the processing of a claim. Do not treat the applicant as an adversary.

"(3) Do not demand verification of facts unless there are good reasons to do so. When verification of facts is necessary, it should be done as expeditiously as possible.

"(4) Hasten the processing of a claim through the use of a telephone whenever it is possible to do so.

"(5) Clearly inform the applicant of the insurer's position regarding any disputed matter.

"(6) Respond promptly, when a response is indicated, to all communications from insured's, applicants, attorneys and any other interested persons" (11 NYCRR 65.15[a] ).

It is readily apparent that in the usual case, like the one here, where a self-insurer has no reason to deny the no-fault claim at the time payment is due, the fact of payment cannot in any sense be taken as a concession that the claim is legitimate. Insurers are admonished not to "treat the applicant as an adversary" and not to "demand verification of facts unless there are good reasons to do so." Consequently, benefits are paid with only limited opportunity to investigate a claim. A claimant to receive payment need only file a "proof of claim" (11 NYCRR 65.11[k][3] ), and the insurers are obliged to honor it promptly or suffer the statutory penalties. Thus, under the circumstances here, the probative value, if any, of the payment of first-party benefits was so slight and conjectural that it should not have been admitted.

There are, moreover, compelling reasons of policy supporti our holding that the proof that benefits were paid should have been excluded. A rule permitting the use of such evidence against insurers would work against the primary purpose underlying the No-Fault Law--to assure claimants of expeditious compensation for their injuries through prompt payment of first-party benefits without regard to fault and without expense to them (see, Memorandum of State Executive Dept, 1977 McKinney's Session Laws of N.Y., at 2448, 2450; see also, Licari v. Elliott, 57 N.Y.2d 230, 237, 455 N.Y.S.2d 570, 441 N.E.2d 1088). To implement this legislative aim of curtailing delay and reducing expense in the adjustment of motor vehicle accident claims, the regulations (see, 11 NYCRR 65.15) are written to encourage prompt payment of claims, to discourage investigation by insurers, and to penalize delays. Permitting evidence in a personal injury lawsuit of the fact that the defendant (if self-insured) or its insurer had paid the plaintiff the statutorily obligated first-party benefits would unquestionably frustrate the very purpose of the No-Fault Law by discouraging insurers from making prompt and voluntary payment of claims. We hold, therefore, that proof of defendant's payment of no-fault benefits to plaintiff was also inadmissible for reasons of policy.

Invoking policy reasons to exclude the proof here finds ample legal precedent in analogous situations (see, e.g., Smith v. Satterlee, 130 N.Y. 677, 29 N.E. 225 [holding that an offer to compromise or settle a pending controversy is not an admission of fact]; Getty v. Town of Hamlin, 127 N.Y. 636, 27 N.E. 399 [excluding evidence of repairs made after an accident as an admission of negligence]; Grogan v. Dooley, 211 N.Y. 30, 105 N.E. 135 [holding offer to pay medical bills inadmissible, since such an offer might be construed as a voluntary act of benevolence, not inconsistent with a claim of freedom from negligence]; see also, Cover v. Cohen, 61 N.Y.2d 261, 270, 473 N.Y.S.2d 378, 461 N.E.2d 864; Caprara v. Chrysler Corp., 52 N.Y.2d 114, 122-125, 436 N.Y.S.2d 251, 417 N.E.2d 545; see generally, Richardson, Evidence §§ 148, 225 [Prince 10th ed.]; 2 Wigmore, Evidence § 283; 4 Wigmore § 1061 [3d ed.] ).

Moreover, as defendant correctly notes, if an insurer's conduct in paying a no-fault claim could be deemed an admission in the claimant's subsequent action for damages, an insurer would have to choose between two courses of action, both potentially harmful: either pay the no-fault claim and risk having the fact of payment held against it later as a concession on some point...