Lisa M. Oakes, Individually and as Executrix of the Estate of Daniel C. Oakes, Deceased, Respondent,v.Rajnikant Patel, M.D., et al., Appellants.

Brief

N.Y.February 14, 2013

0 To be Argued by: AMY ARCHER FLAHERTY Estimated Time for Argument: (30 Minutes) STATE OF NEW YORK Court of Appeals LISA M. OAKES, Individually and as Executrix of the Estate of DANIEL C. OAKES, Deceased Plaintiffs-Respondents, vs. RAJNIKANT PATEL, M.D., SATISH K. MONGIA, M.D., and KALEIDA HEALTH as Successor In Interest to MILLARD FILLMORE HOSPITALS d/b/a MILLARD FILLMORE SUBURBAN HOSPITAL, Defendants-Appellants. Appellate Division Docket Number: CA 10-00367. Erie County Index No.: I-2000/9788. BRIEF FOR DEFENDANT-APPELLANT KALEIDA HEALTH as Successor In Interest to MILLARD FILLMORE HOSPITALS d/b/a MILLARD FILLMORE SUBURBAN HOSPITAL DAMON MOREY LLP Attorneys for Defendant-Appellant Kaleida Health as Successor in Interest to Millard Fillmore Hospitals d/b/a Millard Fillmore Suburban Hospital Avant Building, Suite 1200 200 Delaware Avenue Buffalo, New York 14202-2150 Telephone: (716) 856-5500 Facsimile: (716) 856-5510 MICHAEL J. WILLETT AMY ARCHER FLAHERTY Of Counsel Date of Completion: June 20, 2012 BATAVIA LEGAL PRINTING, INC.— Telephone (866) 768-2100 1 Disclosure Statement Pursuant to Section 500.1(f) of the Rules of the Court of Appeals Kaleida Health is a not-for-profit corporation providing health care services in western New York. It does not have a parent corporation. The following is a listing of Kaleida Health’s subsidiaries and affiliates: Millard Fillmore Gates Hospital Millard Fillmore Suburban Hospital Buffalo General Hospital DeGraff Memorial Hospital The Women and Children’s Hospital of Buffalo Millard Fillmore Ambulatory Surgery Center, Inc. Waterfront Health Care Center, Inc. Deaconess Skilled Nursing Facility VNA Home Care Services [LHCSA] Visiting Nursing Association of Western New York, Inc. [CHHA] Kaleida Health Foundation The Women & Children's Hospital of Buffalo Foundation Kaleida Properties, Inc. Southtowns Venture LLC Kaleida WNYI, LLC Children’s Hospital Homecare LTHHCP High Street Professional Building, Inc. Family Pharmaceutical Services, L.L.C. Northtowns Venture LLC Millard Fillmore Surgery Center, LLC MFHS Managed Care, Inc. Gethsemane Manor Housing Development Fund Company, Inc. Westlink Corporation PrimeLink, L.L.C. HealthLink, L.L.C. WestLink IPA, L.L.C. Kaleida MCO, L.L.C. General Physician, P.C. General Physician Sub I PLLC 2 Community Medical, P.C. Kaleida IPA, LLC. 3 Status of Related Litigation (1) There is a related action that was filed by the County of Cattaraugus against the defendants. The action is pending in New York State Supreme Court, Erie County (Index No.: 9788/2000) assigned to the Hon. Timothy J. Drury. The action seeks recoupment of monies paid by the County, through its Department of Social Services, for care and treatment provided to Mr. Oakes for injuries related to his aneurysm. The amount sought by the County is approximately $850,000. The action is ongoing as to Kaleida Health and Rajnikant Patel, MD. It is in the discovery phase with no trial date set. Satish Mongia, MD has reached an agreement with Cattaraugus County settling its action against him. (2) There is an ongoing proceeding in the Commonwealth Court of Pennsylvania pertaining to the liquidation of the PHICO estate. Kaleida Health, by virtue of a proof of claim filed December 5, 2007, filed a claim with the Liquidator. The Liquidator is in the process of attempting to resolve unresolved claims in order to effectuate the closure of the PHICO estate. Kaleida Health is a claimant with an unresolved claim. Kaleida Health has objected to the notice of determination issued by the Liquidator relative to the value of its claim upon the PHICO estate. The Liquidator appointed a referee for the purpose of recommending to the Commonwealth Court the appropriate disposition of Kaleida 4 Health’s objections to the notice of determination. Discovery is ongoing. It is anticipated that the referee will issue a recommendation to the Commonwealth Court following the completion of such discovery. Plaintiffs, by virtue of proofs of claim filed March 13, 2003, filed a claim with the Liquidator. Plaintiffs are in possession of information relative to the status of this claim. (3) In November 2009, Kaleida Health filed in the Commonwealth Court of Pennsylvania an expedited petition to enforce the Oakeses’ proofs of claim. The plaintiffs filed an answer and new matter in response. Counsel for the parties have continually stipulated to an extension of time for Kaleida Health to respond to the new matter. The stipulation stems from the order of Supreme Court, Erie County (Drury, J.), filed February 12, 2010, and subsequently upheld by the order of the Appellate Division, entered March 9, 2010, which stayed the enforcement proceeding while this appeal is pending. 5 Table of Contents Page Disclosure Statement Pursuant to Section 500.1(f) of the Rules of the Court of Appeals ...................................................................... 1 Status of Related Litigation ................................................................................. 3 Table of Contents ................................................................................. 5 Table of Cases and Authorities ............................................................................... 7 Preliminary Statement ................................................................................ 12 Questions Presented ................................................................................. 14 Statement as to Jurisdiction and Reviewability ...................................................... 16 Statement of Facts ................................................................................ 22 Argument Point I The Appellate Division Erred in Ruling That Kaleida Health’s Motion for Leave to Amend its Answer to Include the Affirmative Defenses of Release and General Obligations Law §15-108 was Properly Denied. ....... 41 Point II The Appellate Division Erred in Refusing to Review the Appropriateness of the Trial Court’s Additur on the Ground, Raised Sua Sponte by the Appellate Division, That the Defendants had Failed to Preserve the Issue. .................................................................. 55 Point III The Trial Judge Erred in Precluding the Proposed Expert Testimony on the Measure of Damages. .......................................... 67 6 Point IV There was Insufficient Evidence to Support the Verdict as to Dent Neurologic Institute and Kaleida Health’s Vicarious Liability for Dent Neurologic Institute. ....................................................... 71 Conclusion ................................................................................ 75 7 Table of Cases and Authorities Cases Page Adams v. Genie Industries, Inc. 14 NY3d 535 (2010) ............................................................................ 64, 65 Allstate Ins. Co. v. Gross 27 NY2d 263 (1970) ................................................................................... 47 Beck v. Spinner’s Recreational Center, Inc. 78 AD3d 1695 (4th Dept. 2010) ............................................................... 68, 69 Bedwell Co. v. D. Allen Bros., Inc. 2006 Phila. Ct. Com. Pl. LEXIS 459 (2006) ............................................ 47, 48 Bleiler v. Bodnar 65 NY2d 65 (1985) ................................................................................... 71 Brugnoli v. United States Natl. Ins. Co. 284 Pa Super 511, 426 A2d 164 (1981) .......................................................... 48 Carlos v. W.H.P. 19 LLC 301 AD2d 423 (1st Dept. 2003) ...................................................................... 63 Cohen v. Hallmark Cards 45 NY2d 493 (1978) ................................................................................... 71 Edenwald Contracting Co. v. City of New York 60 NY2d 957 (1983) ................................................................................ 49 Evans v. S .J. Groves & Sons Co. 315 F2d 335 (2d Cir. 1963) ............................................................................. 70 Feed Prods. North, Inc. v. Reliance Ins. Co. of Illinois, Inc. 2005 US Dist. LEXIS 14888 (D. Minn. 2005) ............................................... 46 First Financial Insurance Co. v. Jetco Contracting Corp. 1 NY3d 64 (2003) ................................................................................... 48 8 Flaherty v. Fromberg 46 AD3d 743 (2d Dept. 2007) ......................................................................... 71 Geraci v. Probst 15 NY3d 336 (2010) ................................................................................... 61 Gonya v. Commissioner, New Hampshire Ins. Dept. 153 NH 521, 899 A2d 278 (2006) ................................................................... 46 Gross v. Kubel 315 Pa 396, 172 A 649 (1934) ........................................................................ 48 Hartford Ins. Co. v. County of Nassau 46 NY2d 1028 (1979) ................................................................................... 47 Jiggetts v. Grinker 75 NY2d 411 (1990) .................................................................................. 45 Koehler v. Swartz 48 NY2d 807 (1979) ................................................................................... 71 Koken v. Reliance Ins. Co. 586 Pa 269, 893 A2d 70 (2006) ......................................................... 42, 43, 44 Lowe v. State of New York 35 AD3d 1281 (4th Dept. 2006) ....................................................................... 71 Lyons v. McCauley 252 AD2d 516 (2d Dept.), lv. denied 92 NY2d 814 (1998) ............................ 71 Matter of Knickerbocker Agency, Inc. (Holz) 4 NY2d 245 (1958) .................................................................................... 45 Matter of Natural Resources Defense Council, Inc. v. New York City Dept. of Sanitation 83 NY2d 215 (1994) ................................................................................... 45 McCahill v. New York Transp. Co. 201 NY 221 (1911) ................................................................................... 68 9 McIntosh v. State of New York 7 AD3d 890 (3rd Dept. 2004) ......................................................................... 50 McMahon & Co. v. Bass 250 AD2d 460 (1st Dept.) lv dismissed in part and denied in part 92 NY2d 1013 (1998) ..................... 41 Mihileas v. State of New York 266 AD2d 866 (4th Dept. 1999) .............................................................. 68, 69 Misicki v. Caradonna 12 NY3d 511 (2009) ............................................................................ 63, 65 Monahan v. Weichert 82 AD2d 102 (4th Dept. 1981) ........................................................................ 67 Murray v. City of New York 43 NY2d 400 (1977) ................................................................................... 53 Murray v. City of New York 51 AD3d 502 (1st Dept.), lv. denied 11 NY3d 703 (2008) ............................. 50 Nichols v. American Casualty Co. 423 Pa 480, 225 A2d 80 (1966) ...................................................................... 47 Oakes v. Patel 87 AD3d 816 (4th Dept.) lv granted 87 AD3d 1414 (4th Dept. 2011) ................................. 37, 38, 39, 40 O’Connor v. Graziosi 131 AD2d 553 (2d Dept.), lv denied 70 NY2d 613 (1987) ............................ 62 Perlin v. King 36 AD3d 495 (1st Dept. 2007) ........................................................................ 63 Peterson v. Minden Beef Co. 231 Neb 18, 434 NW2d 681 (1989) ................................................................ 46 Pettus v. Missouri Ins. Guaranty Assn. 731 SW2d 527 (Mo. App. 1987) ..................................................................... 46 10 Quain v. Buzzetta Constr. Corp. 69 NY2d 376 (1987) ................................................................................. 21 Reed v. City of New York 304 AD2d 1 (1st Dept.), lv denied 100 NY2d 503 (2003) .............................. 62 Rivera v. Lincoln Ctr. for Performing Arts, Inc. 16 AD3d 274 (1st Dept. 2005) ........................................................................ 63 Shepherd v. New York City Transit Auth. 129 AD2d 574 (2d Dept. 1987) ....................................................................... 51 Spiegel v. Goldfarb 66 AD3d 873 (2d Dept.), lv denied 15 NY3d 711 (2010) .............................. 71 Stajano v. United Technologies Corp. 5 AD3d 260 (1st Dept.), lv denied in part and dismissed in part 3 NY3d 736 (2004), cert. denied 544 US 1068 (2005) ................................... 50 Steinhauser v. Hertz Corp. 421 F2d 1169 (2nd Cir. 1970) ......................................................................... 69 Stephenson v. Hotel Employees and Restaurant Employees Union Local 100 of the AFL/CIO 6 NY3d 265 (2006) ................................................................................... 71 Stewart v. Olean Medical Group, PC 17 AD3d 1094 (4th Dept. 2005) ............................................................... 68, 69 Trustees of Amherst College v. Ritch 151 NY 282 (1897) ................................................................................... 42 Wells v. Shearson Lehman/American Express, Inc. 72 NY2d 11 (1988) ................................................................................ 41 Whalen v. Kawasaki Motors Corp. 92 NY2d 288 (1998) ................................................................................ 49 11 Statutes and Other Authorities 1 Newman, NY Appellate Practice § 2.02 ................................................................ 58 CPLR 5501(a)(3) .................................................................................... 20 CPLR 5501(c) ............................................................................ 61, 62 CPLR 5602 (a)(1)(i) ................................................................................... 16 Ch 266, 1986 NY Laws 470 (McKinney) .................................................................. 61 Governor’s Mem approving L 1986, Ch 682, 1986 NY Laws, at 3184 .................... 62 Insurance Law § 3420(d) ................................................................................... 48 Pennsylvania Insurance Department Act 40 P.S. §§ 221.1-221.63 ........................................................................... 42, 43 12 Preliminary Statement This is an appeal by defendant, Kaleida Health, as successor in interest to Millard Fillmore Hospitals d/b/a Millard Fillmore Suburban Hospital (hereinafter “Kaleida Health”) from an order of the Appellate Division, Fourth Judicial Department, entered August 19, 2011, which affirmed a judgment of the Supreme Court, County of Erie, after a jury trial in a medical malpractice action. The Appellate Division erred in its affirmance of the judgment and in the affirmance of several non-final orders or rulings which, together, require a reversal or modification of the judgment. The Appellate Division erred in reaching the conclusion that certain releases executed by the plaintiffs in connection with the liquidation proceeding involving the defendant’s insurer were null and void. The conclusion reached by the Appellate Division had the effect of affirming an order which denied Kaleida Health’s motion, inter alia, to amend its answer to assert the affirmative defenses of release and General Obligations Law §15-108. The releases were not, however, null and void. Instead, the releases were voluntarily executed by the plaintiffs when plaintiffs were represented by counsel. As will be discussed below, the plaintiffs were not, as a matter of law, prejudiced by the assertion of the defenses and Kaleida Health’s motion should be granted and the releases enforced. Furthermore, the evidence presented at the 2008 trial was insufficient to support a finding of liability as to Dent Neurologic Institute and, as 13 such, a new trial is required as to apportionment of fault. The Appellate Division also erred in affirming the order of the trial court which upheld the preclusion of defendant’s experts relative to the underlying condition of the plaintiff, Daniel Oakes, despite the fact that this evidence was pertinent to the measure of plaintiffs’ damages. Accordingly, a new trial is also required as to plaintiffs’ damages. Additionally, the Appellate Division erred in concluding that Kaleida Health had failed to preserve an objection to the trial court’s additur. Kaleida Health objected to the setting aside of the jury’s verdict from the 2008 trial, as well as to the additur directed by the trial court. Kaleida Health should be given the opportunity to stipulate to an appropriate additur. In sum, Kaleida Health should be permitted to amend its answer to assert the defenses of release and General Obligations Law §15-108 and the releases voluntarily executed by the plaintiffs should be fully enforced as written. There should be a new trial on apportionment of fault among the defendants as there was insufficient evidence at the 2008 trial with respect to the finding of liability as to Dent. Kaleida Health should be given the opportunity to stipulate to an appropriate additur relative to the damages proved at the 2008 trial. At any new trial, the defendants should be permitted to present expert proof relative to Mr. Oakes’s underlying condition. 14 Questions Presented 1. Are the releases voluntarily executed by the plaintiffs in connection with the liquidation of the PHICO estate null and void in circumstances where PHICO issued a reservation of rights with regard to a portion of the claim against Kaleida Health, the insured, but did not disclaim coverage with regard to any portion of the claim? The Appellate Division answered this question “yes.” It is respectfully submitted that this question should be answered in the negative. 2. Assuming that the releases voluntarily executed by the plaintiffs were not null and void, does any claim of prejudice fail as a matter of law, thereby entitling Kaleida Health to amend its answer and to enforce the releases? The Appellate Division did not reach this question. It is respectfully submitted that this question should be answered in the affirmative. 3. Did the defendants preserve for appellate review the issue of the appropriateness of the amount of the trial court’s additur? The Appellate Division answered this question “no.” It is respectfully submitted that this question should be answered in the affirmative. 4. Were the defendants entitled to present evidence at the second trial on damages concerning the effects of the underlying medical condition of plaintiff Daniel Oakes? 15 The Appellate Division answered this question “no.” It is respectfully submitted that this question should be answered in the affirmative. 5. Was the evidence of negligence against the non-party, Dent Neurologic Institute, for which defendant Kaleida Health was vicariously responsible, sufficient to create a jury question? The Appellate Division answered this question “yes.” It is respectfully submitted that this question should be answered in the negative. 16 Statement as to Jurisdiction and Reviewability This Court has jurisdiction of the instant appeal pursuant to CPLR 5602 (a)(1)(i). The Appellate Division, Fourth Judicial Department granted defendants’ motions for leave to appeal to this Court by order entered September 30, 2012 (4a-5a). The appeal is thus taken by permission of the Appellate Division in an action which originated in Supreme Court from an order which finally determined the action but which was not appealable as of right. The Appellate Division, in granting leave, certified the following question: ”Was the order of this Court entered August 19, 2011, properly made?” (4a). The Appellate Division’s August 19, 2011 order affirmed a judgment in favor of the plaintiffs which was entered in the office of the Clerk of the County of Erie on December 23, 2009 (18- 31). On appeal to this Court, the following issues are raised by Kaleida Health: 1. Did the Appellate Division err as a matter of law in reaching the conclusion that certain releases executed by the plaintiffs in connection with a liquidation proceeding involving the defendant’s insurer were null and void in circumstances where the insurer issued a reservation of rights with regard to a portion of the claim against the insured, but did not disclaim coverage with regard to any portion of the claim? 17 The conclusion reached by the Appellate Division, that the releases executed by the plaintiffs were null and void, had the effect of affirming the order entered October 31, 2008 which denied Kaleida Health’s motion, inter alia, to amend its answer to assert the affirmative defenses of release and General Obligations Law § 15-108 (12051-12057). The non-final order was brought up for review by Kaleida Health’s appeal from the judgment (5-7). The issue is one of law which was preserved by the motion to amend the pleadings made by Kaleida Health (11721- 11829), by its appeal from the order denying the motion to amend (SR764-765)1, by its appeal from the final judgment (5-7) and by the arguments made to the Appellate Division regarding the error made by Supreme Court in denying the motion to amend (SR43-51, SR454-460). The non-final order necessarily affected the final judgment inasmuch as a reversal of the order entered October 31, 2008 would necessarily require a modification of the final judgment. 2. Assuming that the releases voluntarily executed by the plaintiffs were not null and void, does any claim of prejudice fail as a matter of law, thereby entitling Kaleida Health to amend its answer and to enforce the releases? 1 Kaleida Health moved to withdraw this appeal prior to entry of the final judgment (SR737- 785). The Appellate Division granted the motion and dismissed the appeal without prejudice (SR 535-537). 18 This is also an issue of law which is reviewable by this Court. Kaleida Health preserved this issue by its motion to amend the pleadings (1172- 11829), by its appeal from the order denying the motion to amend (SR764-765)2, by its appeal from the final judgment (5-7) and by the arguments made to the Appellate Division regarding the error made by Supreme Court in denying the motion to amend (SR43-51, SR454-460). The non-final order necessarily affected the final judgment inasmuch as a reversal of the order entered October 31, 2008 would necessarily require a modification of the final judgment. 3. Did the Appellate Division err as a matter of law in refusing to review the appropriateness of the trial court’s additur on the ground, raised sua sponte by the Appellate Division, that the defendants had failed to preserve the issue? This issue is an issue of law. Kaleida Health preserved the issue when it opposed the plaintiffs’ motion to set aside the jury’s verdict and to award additur (11501-11557), appealed from the trial court’s order granting additur (SR11753- 11755), refused to stipulate to the additional amounts and proceeded to a second trial on damages (12343 et seq.) and appealed from the judgment (5-7), including within its brief argument that the additur was unwarranted and excessive (SR1-43, SR65-70). A reversal or modification of trial court’s order setting aside the 2008 2 Id. 19 verdict and ordering a new trial unless Kaleida Health agreed to the additur imposed by the trial court would necessarily affect the final judgment. A reversal of that order would have reinstated the original damage determination reached by the jury following the 2008 trial. A modification of the order would have allowed the defendants the opportunity to agree to an appropriate additur, one that increased the verdict to the minimum amount the jury should have reached based upon the evidence presented at the 2008 trial. The refusal of the Appellate Division to consider the question of the appropriateness of the amount of the trial court’s additur led directly to the Appellate Division’s review of the appropriateness of the verdict following the 2009 trial where the Appellate Division was, at that juncture, charged with reviewing the verdict while employing a different standard, namely, whether the 2009 verdict deviated from reasonable compensation in that it was more than the maximum amount the jury could have awarded. The inordinate additur itself was a result of an error by the trial court in failing to apply the appropriate standard for an increase in the amount of the award, one that increased the verdict to the minimum amount the jury should have reached based upon the evidence presented at the 2008 trial. The order granting a new trial on damages in the event that Kaleida Health did not agree to the inordinate additur necessarily affected the final judgment as the scope of the issues re-tried in 2009 differed from those tried in 2008, namely, only certain elements of damages were 20 re-tried, an additional element of damages (loss of household services) was tried and found (22037-22048, 28734-28737) and defendants were precluded from presenting expert testimony to distinguish between the injuries caused by the aneurysm itself and those caused by the alleged failure of the defendants to diagnose the aneurysm on a timely basis. 4. Did the Appellate Division err as a matter of law in affirming the trial court’s order which precluded the defendants from presenting evidence at the second trial on damages concerning the effects of the underlying medical condition of the plaintiff, Daniel Oakes, including evidence that Mr. Oakes would have sustained injury, even if the alleged malpractice had not occurred? This issue is an issue of law which was preserved by Kaleida Health’s opposition to the motion made by the plaintiffs to preclude the defendants from presenting testimony at the 2009 re-trial concerning Mr. Oakes’s underlying condition (12202-12218). The issue was also preserved by the arguments made by Kaleida Health in its briefs to the Appellate Division (SR70-72, SR472-473). Kaleida Health objected to the ruling made by the trial court to preclude the expert testimony and to bar defendants from cross-examination of plaintiffs’ experts (12203, 12282-12283). CPLR 5501(a)(3). 21 5. Did the Appellate Division err as a matter of law in ruling that the evidence of negligence against the non-party, Dent Neurologic Institute, was sufficient to create a jury question? This issue is an issue of law which was preserved by Kaleida Health’s appeal from the judgment (5-7) and the inclusion of this issue in its brief to the Appellate Division (SR63-65, SR465-468). The issue is one which may be reviewed by this Court inasmuch as the appeal is taken by permission of the Appellate Division. Such grant of leave is permitted by the Constitution when required in the interest of substantial justice and brings before this Court every reviewable issue in the case. The grant of leave by the Appellate Division is thus different from a grant of leave by this Court upon motion by the appellant. Cf. Quain v. Buzzetta Constr. Corp., 69 NY2d 376 (1987). 22 Statement of Facts I. Background This action arises from medical treatment provided by the defendants to the plaintiff, Daniel Oakes, beginning July 21, 1998. On July 18, 1998, Mr. Oakes became ill while driving (4152-4153). He vomited and complained of severe pain in his head (4152-4153). He subsequently sought treatment from the defendants, Dr. Patel and Dr. Mongia, and from other physicians. On July 23, 1998, Mr. Oakes had a CT scan of the head and a CT scan of the sinuses performed at Millard Fillmore Suburban Hospital (“MFSH”) (3775-3776). The CT scans were read as normal. After Mr. Oakes suffered a stroke on August 7, 1998, the plaintiffs brought suit against Kaleida Health, Dr. Patel, Dr. Mongia and others, alleging that the defendants had failed to timely diagnose and treat a condition of a cerebral aneurysm. After discovery, the case proceeded to trial in April 2008. II. The 2008 Trial The expert testimony at the trial established that Mr. Oakes had a brain aneurysm in July 1998 located in the pericallosal artery (5197). As noted above, Mr. Oakes had become ill on July 18 (4152-4153). He sought treatment from Dr. Patel on July 21 (4159-4164). Dr. Patel diagnosed a condition of sinusitis (4165- 4172). On July 23, another physician, Dr. Stephen Sobie, ordered CT scans of the head and sinuses, which were performed at MFSH (4186-4193, 4199). MFSH is 23 operated by Kaleida Health. Kaleida Health had in place an agreement with Dent Neurological Institute (“Dent”) wherein Dent, through its physicians, highly- skilled neuroimagers, read the head CT scans for patients of MFSH (6655). If a head CT was performed after hours at MFSH, the hospital had in place a procedure to electronically transmit the images to a Dent neuroimager for interpretation (2506-2507, 2521, 3072, 6655). After interpretation, the results would be called into the ordering physician, but no written report would be generated at that time for a head CT read as normal (9250). A formal interpretation and report would subsequently be done and dictated by a Dent neuroimager (2535-2536). By the time of trial, neither the Dent neuroimager who read the images the evening of July 23, 1998 (Dr. Vernice Bates) nor the neuroimager who subsequently read the images (Dr. Laszlo Mechtler) recalled the event. Both physicians read the images at the 2008 trial and testified that the head CT was normal (8317, 8696). The absence of a writing setting forth the interpretation of July 23 and the absence of a formal report setting forth the subsequent interpretation allowed plaintiffs to present expert proof that the system in place at the hospital was negligently created or negligently carried out (4692-4700, 4800) and then to argue that it was possible that the head CT scan was not read. Mrs. Oakes testified that the plaintiffs were told that the CT scan was normal (4211-4212). The plaintiffs advised Dr. Patel of this information when they 24 returned to him on July 30 (4221). Dr. Patel thought that Mr. Oakes had the flu (1428). On August 3, Mr. Oakes saw Dr. Mongia, a neurologist (2111). Mr. Oakes told Dr. Mongia that he had had a steady headache for three weeks (2125-2128). Dr. Mongia thought that he had a migraine and ordered an EEG to be performed on August 11, and an MRI, to be performed on August 14 (2159, 2160, 2183-2184, 2190). As noted above, Mr. Oakes had a stroke on August 7, 1998 (1519-1520). The expert witnesses called by the plaintiffs were critical of the care rendered by Kaleida Health, Dr. Patel and Dr. Mongia. The plaintiffs’ expert diagnostic radiologist, Dr. James J. Abrahams, and the plaintiffs’ expert neurologist, Dr. Alan Jacobs, stated that the head CT scan was abnormal and revealed the existence of a subarachnoid hemorrhage (4703, 5195, 5197). Dr. Abrahams was also critical of the manner in which the head CT was interpreted and reported. He testified that the issuance of a verbal report of the head CT scan, reporting a normal finding, without an accompanying written report, was a departure from accepted standards of medical practice (4692-4700). Dr. Jacobs agreed with Dr. Abraham’s interpretation of the CT scan, and testified that there were certain treatment options if the head CT scan had been read as abnormal, although those options all involved risk, including that of a stroke (5202-5203, 25 5212, 6773). Dr. Jacobs acknowledged that there was significant morbidity accompanying the diagnosis of a subarachnoid hemorrhage (6786-6787). Dr. Jacobs also testified that Dr. Mongia’s treatment had deviated from accepted standards of care (5283). According to Dr. Jacobs, Dr. Mongia should have reviewed all of the previous testing of Mr. Oakes, and ordered an MRI urgently (5213-5285, 5292). Another expert, Dr. Shryl Sistrunk, testified that Dr. Patel had departed from the standard of care by failing to diagnose the subarachnoid bleed (5396-5397). Dr. Sistrunk stated that Dr. Patel should not have relied on the patient for information about the CT, and should have referred Mr. Oakes to an emergency department or to a neurologist for a spinal tap (5446). Kaleida’s expert, Dr. Frederick Cohn, defended that the manner in which the head CT scan and the related information were communicated to Dent-affiliated physicians. He testified that the system in place at the hospital met accepted standards of care (8807-8809). Dr. Cohn disagreed with the opinions of the plaintiffs’ experts with regard to the alleged need for completion of a written CT scan report (8810-8811). Dr. Cohn was of the opinion that the head CT scan of July 23, 1998 contained no evidence of hemorrhage or other abnormality (8818- 8819). The area identified as blood by Dr. Abrahams was actually streak artifact, beam hardening or scar from an old infection or an injury (8829-8830). This 26 opinion agreed with testimony of the two physicians, Dr. Bates and Dr. Mechtler, who had reviewed the scan in 1998. Because Dent was not a party to the action at the time of the 2008 trial, there were no pleadings setting forth the allegations against Dent or the physicians affiliated with Dent.3 After all of the trial evidence was received, attorneys for the plaintiffs and Kaleida Health agreed that no expert proof had been presented to the jury as to Dent and argued to the trial judge that, because no expert proof had been presented, the question of Dent’s negligence should not be submitted to the jury (10109-10114). Counsel for Dr. Patel argued that, as expert proof had been presented as to Dr. Bates and Dr. Mechtler, their alleged negligence should be submitted to the jury (10112). As for Dent, counsel for Dr. Patel argued only that the question of Dent’s negligence should be submitted to the jury as the physicians were affiliated with Dent (10112-10113). Counsel for Dr. Mongia joined in Dr. Patel’s argument (10113). Ultimately, the trial court decided to submit the question of the alleged negligence of Dent as a primary tortfeasor to the jury (22043), as well as the question of the alleged responsibility of Kaleida Health for any negligence on the part of Dent (22040). The medical testimony showed that Mr. Oakes had a severe right brain stroke and paralysis secondary to it (6648). Mr. Oakes had impairments with 3 Defendants’ CPLR 5531 statement sets forth the procedural history of the case as it pertains to Dent (1a-2a). 27 regard to ambulation, ability to bathe and groom, and bowel and bladder control (6660). While it was alleged that Mr. Oakes had cognitive deficits, his treating physician acknowledged that he had not administered any neuropsychological testing to measure the claimed deficits (6661, 7109-7111). The jury found that Kaleida Health, Dent, Dr. Patel and Dr. Mongia were negligent and that the negligence of those physicians or entities was the cause of injury to Mr. Oakes. The jury found that the neuroimagers affiliated with Dent, Dr. Bates and Dr. Mechtler, were not negligent. The jury apportioned liability as follows: 5% to Dr. Patel, 1% to Dr. Mongia, 75% to MFSH and 19% to Dent (22044). Kaleida was found to be vicariously responsible for the negligence of Dent (22040). Damages were awarded as follows: $2,000,000 for the past pain and suffering of Mr. Oakes, $1,800,000 for future supportive living expenses, $560,000 for past and future lost wages, $553,500 for various future medical and related expenses, and $210,000 for past and future loss of consortium for Mrs. Oakes (22037-22048). The verdict totaled $5,123,500. III. Motion Following the 2008 Trial After the trial, the plaintiffs moved to set aside the verdict on damages as inadequate (10711-10732). The motion was vigorously opposed by all of the defendants, who argued that no increase in the amount awarded by the jury was warranted (11474-11519). In a decision dated August 5, 2008, the trial court 28 granted the plaintiffs’ motion to set aside certain portions of the verdict as inadequate (11683-11710). The trial court ordered a new trial unless the defendants, within 20 days, agreed to the following:  a five-fold increase of the award to Mr. Oakes for pain and suffering, from $2,000,000 to $10,000,000;  a more than doubling of the award for future supportive living expenses for Mr. Oakes, from $1,800,000 to $3,900,000;  an increase in the award to Mrs. Oakes for loss of consortium by a factor of more than 15, from $210,000 to $3,500,000. (11704-11708). An order was entered September 26, 2008 giving effect to the decision (11711-11719). None of the defendants stipulated to the trial court’s inordinate additur, thereby registering their disagreement with the amount of the additur. Additionally, Kaleida Health took issue with the ruling by filing a notice of appeal from the order which set aside the jury’s award and directed additur. (Kaleida Health has separately submitted to this Court its motion to the Appellate Division to withdraw its appeal and the subsequent order of the Appellate Division which dismissed its appeal without prejudice and has asked this Court to take judicial notice of the same). Because none of the defendants agreed to the inordinate 29 additur, the trial court subsequently ordered a new trial on those items of damages set aside, with the damages-only trial to commence on March 16, 2009. IV. The Defense of Release The PHICO Coverage At the time of the medical treatment at issue in this litigation, Kaleida Health was self-insured for the first $2,000,000.00 in damages arising from each medical incident (11776). For loss amounts above $2,000,000.00, Kaleida Health was insured on a policy of excess/umbrella insurance issued by PHICO Insurance Company (“PHICO”) (11776, 11778-11829). This coverage had a liability limit of $25,000,000.00 per incident (11778). On February 1, 2002, some 15 months after this action was commenced, the Commonwealth Court of Pennsylvania declared PHICO to be insolvent and ordered it into liquidation (11754-11765). The order established a procedure for submission of claims by persons who might have claims against PHICO insureds (11760-11765). April 1, 2003 was set as the deadline for the submission of claims (11760). The order made reference to the detailed statutory program that governed the liquidation of insolvent insurance companies (11754-11765). The relevant provision of the Pennsylvania statutes required a claimant to make an election of remedies. As explained by the Office of Liquidations, 30 Rehabilitations and Special Funds (the “Statutory Liquidator” or “Liquidator”), in a notice provided to all claimants, including the plaintiffs: You are a third party claimant if you have a claim against a PHICO insured which may be covered by the insured’s insurance policy. You may either file a claim with the Statutory Liquidator or pursue legal action against the insured to attempt to recover on your claim. If you choose to file a claim with the Liquidator, filing of this claim shall operate as a release of the insured’s liability to you on that cause of action up to the amount of applicable policy limits. If coverage is avoided by the Liquidator, this release becomes null and void. (11771) (emphasis in original). The notice also explained that payment of a claim would first be the responsibility of the guaranty association in the state where the insured resided (11770). Claims not covered by a guaranty association would become claims against the estate of PHICO (11770). The Plaintiffs’ Claim On or about March 13, 2003, each of the plaintiffs executed, and then filed, a proof of claim against PHICO, based upon their claims of medical malpractice against Kaleida Health (11743-11744). Immediately above the signature of each plaintiff was found the following language, printed in bold type: If the foregoing Proof of Claim alleges a claim against a PHICO insured (third party claim), the undersigned hereby releases any and all claims which have been or could be made against such 31 PHICO insured based on or arising out of the facts supporting the above Proof of Claim up to the amount of the applicable policy limits and subject to coverage being accepted by the Liquidator, regardless of whether any compensation is actually paid to the undersigned. (11743-11744). The plaintiffs were represented by their current counsel at the time of execution of the proofs of claim. Pursuant to those proofs of claim, and the governing Pennsylvania statutes, the plaintiffs exercised an election to pursue a claim against the estate of PHICO, rather than a claim in the courts against Kaleida Health, with respect to all amounts above Kaleida’s $2,000,000.00 self-insured retention. Ultimately, because of the $1,000,000.00 in coverage provided by the New York Liquidation Bureau (11981), the proofs of claim, including the releases, were applicable to all amounts sought that were in excess of $3,000,000.00. The Liquidator received the plaintiffs’ fully executed proofs of claim on March 21, 2003 (11989). The plaintiffs secured “Class B” status, which entitled them, upon submission of the evidence necessary to document their claim, to a percentage recovery from the PHICO estate (11990). This meant that the plaintiffs released Kaleida Health from all liability above $3,000,000, unless coverage for their claim was not accepted by the Liquidator. 32 The Motion to Amend the Answer Counsel for Kaleida Health did not receive copies of the proofs of claim filed by the plaintiffs until May 29, 2008 (11726). By this time, the first trial had already been conducted and liability determined. The proofs of claim were provided to Kaleida Health’s counsel by PHICO (11726). Copies were then forwarded to Kaleida Health (11777). By notice of motion dated June 25, 2008, Kaleida Health moved for leave to serve an amended answer (11721-11723). In the proposed amended answer, Kaleida Health asserted the affirmative defenses of release and of General Obligations Law §15-108 (11724-11730). Kaleida Health also sought a conditional order of dismissal with respect to all claims within the PHICO coverage (11724-11725). In its papers, Kaleida Health pointed out that the plaintiffs clearly were not prejudiced, because they were already aware of the release issue, having voluntarily executed the proofs of claim (11726-11727). Kaleida Health sought no more than to enforce the choice that the plaintiffs had already made, to proceed in the liquidation proceeding, rather than in the New York courts, with respect to all claims above Kaleida Health’s self-insured retention, up to the excess policy limit of $25,000,000.00 (11728-11729). Kaleida Health asserted that the motion was not late, since the acceptance of coverage, 33 which would make the release effective, would not occur until after entry of judgment (11729). The plaintiffs opposed the application, alleging that Kaleida Health had delayed in seeking the amendment, with the result that the plaintiffs had been prejudiced (11864-11892). The prejudice allegedly included - an inability to conduct discovery concerning the validity of the release; - prejudice in the conduct of the trial, where the plaintiffs had sought to establish liability on the part of Kaleida Health to the greatest extent possible; - prejudice with respect to the plaintiffs’ ability to pursue funds from the PHICO liquidation. (11804-11877). The plaintiffs also argued that the release was invalid, principally since the Statutory Liquidator had yet to accept coverage, and because of “mutual mistake” (11884-11888). In a decision dated September 23, 2008, the trial court denied the application (12040-12050). The court cited both procedural and substantive grounds. The court was of the opinion that Kaleida Health should have moved pursuant CPLR 4404(a) to set aside the verdict, rather than moving pursuant to CPLR 3025(b) (12044-12048). The trial court took the position that the papers submitted did not identify a proper procedural vehicle for granting the requested relief (12044-12048). As an alternative ground, the trial court found that the 34 plaintiffs would be prejudiced by the granting of the requested relief (12048). According to the court, there were two areas of possible prejudice (12048-12050). First, the plaintiffs did not have an opportunity to conduct discovery (12048). Second, the plaintiffs would be placed at a disadvantage should a new trial be necessary, because they have spent a huge amount of money and time preparing and presenting this case already. Were a re-trial to occur, the defense would have the advantage of the discovery of plaintiffs’ witnesses’ trial testimony and the plaintiffs may well have to obtain new expert witnesses. (12049). The motion was therefore denied (12050). The Liquidator ultimately accepted coverage for the claims of the plaintiffs (11989). That acceptance was subject only to a reservation of rights, which pertained only to any judgment in favor of the plaintiffs against Kaleida Health based upon Kaleida Health’s vicarious liability for the actions of Dent (11989). The Liquidator never disclaimed coverage with regard to any portion of the plaintiffs’ claim against Kaleida Health. This is an important point, in light of the Appellate Division’s decision on the appeal. See, pp. 44-47, infra. There was a partial disclaimer by the New York Liquidation Bureau, which informed Kaleida Health that it would not provide coverage for that portion of the judgment which represented Kaleida Health’s responsibility for the negligence of Dent (11981– 11983). The Liquidator never asserted such a disclaimer. 35 V. The 2009 Trial Prior to the 2009 trial on damages, counsel for Dr. Mongia served an expert disclosure concerning the anticipated testimony of an expert neurosurgeon (12179- 12183). The expert was to testify about the probable outcome for Mr. Oakes, had his aneurysm been diagnosed prior to August 7, 1998 (12179-12180). The testimony was to include the treatment options available had there been an earlier diagnosis and the risks associated with those options (12180). The obvious purpose of such testimony was to allow the jury to assess the potential outcomes had the alleged delay in diagnosis not occurred, in order that it might determine which injuries were attributable to the underlying condition of Mr. Oakes, in recognition of the fact that damages in a case involving a patient with a pre- existing condition are measured by the extent to which the condition is aggravated by the medical treatment. The plaintiffs sought to preclude the proposed testimony (12161-12169). The trial court granted the motion, reasoning that the proposed testimony concerned the issue of proximate cause, which had been resolved during the 2008 trial (12278-12282). In addition to precluding the proposed testimony of the defense expert, the trial court also precluded the defense from questioning the plaintiffs’ experts on cross examination regarding damages attributable to the underlying condition (12282). The ruling had the effect of prohibiting the 36 defendants from attempting to introduce any evidence that Mr. Oakes would have had adverse effects from the aneurysm itself, even if timely diagnosed. At the conclusion of the 2009 trial, the jury awarded the following amounts: - $4,720,000 to Mr. Oakes for custodial care and supportive services in the future; - $5,600,000 to Mr. Oakes for past pain and suffering; - $4,000,000 to Mr. Oakes for future pain and suffering; - $1,500,000 to Mrs. Oakes for past loss of services and society; - $150,000 to Mrs. Oakes for loss of household services; and - $750,000 to Mrs. Oakes for loss of services and society in the future; (28734-28737). Post-trial motions were subsequently brought by the defendants to set aside the jury’s award as excessive. Also, Kaleida Health’s appeal from the order setting aside the 2008 jury verdict and directing additur was, at this time, approaching the Appellate Division’s nine-month deadline for perfecting the appeal. So as not to be deemed to have abandoned the issues on appeal from the order, Kaleida Health made a motion to withdraw the appeal. Kaleida Health requested that such withdrawal be without prejudice so that the matters raised, including the granting of the plaintiffs’ motion to set aside the jury’s verdict and awarding additur, could 37 be pursued on an appeal from the final judgment. The Appellate Division granted the motion and dismissed the appeal without prejudice. The Appellate Division’s order thereby preserved Kaleida Health’s ability to appeal from the order setting aside the 2008 jury verdict and awarding additur from the final judgment. Kaleida Health’s post-trial motion was denied by decision dated July 21, 2009 (17875-17895) and by order entered October 1, 2009 (17896-17900). Following the denial, the parties worked to put in place the judgment, a process which took many months and included numerous appearances and motions before the trial court. A judgment in favor of the plaintiffs was entered in the Office of the Erie County Clerk on December 23, 2009 (18-31). Kaleida Health appealed from the judgment (5-7). Kaleida Health perfected its appeal in October 2010. VI. The Appeal By order entered August 19, 2011, the judgment in favor of the plaintiffs was affirmed in its entirety by a majority of the justices on the Appellate Division. Oakes v. Patel, 87 AD3d 816 (4th Dept.), lv granted 87 AD3d 1414 (4th Dept. 2011). The Appellate Division held that the releases executed by the plaintiff were null and void because the liquidators for PHICO had “avoided, or announced that they would avoid” coverage of that portion of the claim against Kaleida Health that arose from its vicarious liability for the negligence of Dent. Id. at 818-819. The 38 Appellate Division did not address the fact that there had not been a disclaimer, but merely a reservation of rights. With regard to the issues raised by the defendants arising from the trial court setting aside items of damages from the first trial, the court’s majority ruled that the issue of the trial court’s additur had not been properly preserved “because defendants did not challenge the court’s additur before, during or after the second trial and did not raise that issue on appeal.” Id. at 819. The majority ruled that the actions of the defendants in opposing plaintiffs’ motion to set aside the 2008 verdict as inadequate, in refusing to stipulate to the additur and proceeding to a second trial on damages, in filing an appeal to the Appellate Division from the order imposing the additur, and in raising the issue of the improper additur in their appeal to that court, were not sufficient to constitute an objection to the amount of the trial court’s additur. As a result of this ruling, the majority never reached the merits of the argument that additur, in any amount, was unwarranted and excessive. Had such a review been undertaken by the Appellate Division, the Appellate Division would have been required to review the proof to determine if the trial court increased the award to the minimum amount the jury should have reached based upon the evidence presented at the trial. There was a dissent on this point from Justice Peradotto. Justice Peradotto pointed out that the defendants had repeatedly taken the position that the original verdict amount should have been left 39 in place. Id. at 823. This argument was made in the post-trial motion, in the refusal to stipulate to the proposed additur, and on appeal. According to Justice Peradotto, “That contention necessarily encompasses the argument that an additur in any amount would be inappropriate” (emphasis in original). Id. at 823. In those circumstances, there could be no additional requirement placed upon the defendants to “challenge” the amount of the additur in order to preserve the issue for review. After declining to review the merits of the additur argument, the majority went on to consider whether the amounts awarded by the jury following the 2009 damages-only trial deviated from reasonable compensation as excessive. The standard for the Appellate Division’s review at this juncture was whether the verdict deviated from reasonable compensation in that it was more than the maximum amount the jury could have awarded. The majority concluded that the damages awarded at the 2009 trial were not excessive.4 Id. at 819. There was a dissent on this point from Justice Smith. In the opinion of Justice Smith, the maximum amounts that a jury could award as a matter of law, based on the evidence at the 2009 trial, were $2,000,000 for past pain and suffering, $3,500,000 for future pain and suffering, $200,000 for past loss of services, $300,000 for 4 It is also worth noting that when the Appellate Division undertook this review and the majority reached the conclusion that the verdict following the damages-only trial was not excessive, it did so without adhering to the mandate of CPLR 5522, which required it to set forth in its decision the reasons(s) for its decision. 40 future loss of service; and $3,000,000 for future custodial care and supportive services. Id. at 820. In the opinion of Justice Smith, the maximum amount a jury could have awarded was $10,123,500. The majority did not address the issues of the sufficiency of evidence as to Dent or the expert testimony precluded by the trial court, simply ruling that the remaining issues raised by the defendants were without merit. Id. at 820. By order granted September 30, 2011, the Appellate Division granted defendants’ motions for leave to appeal to this Court. The Appellate Division certified the following question: “Was the order of this Court entered August 19, 2011 properly made?” Mr. Oakes died on February 27, 2012 of causes unrelated to the aneurysm. By order filed March 28, 2012, Lisa M. Oakes, executrix of the estate of Daniel C. Oakes, was substituted for the plaintiff, Daniel C. Oakes. 41 Argument Point I The Appellate Division Erred in Ruling That Kaleida Health’s Motion for Leave to Amend its Answer to Include the Affirmative Defenses of Release and General Obligations Law §15-108 was Properly Denied. The Appellate Division correctly found that the proofs of claim executed by the plaintiffs in the liquidation proceeding with respect to PHICO contained releases that were applicable to all claims against Kaleida Health up to the amount of the applicable policy limits of the PHICO coverage, subject to coverage being accepted by the Liquidator. The Appellate Division erred, however, in ruling that the releases were null and void. The error was caused by the Appellate Division’s mistaken conclusion that the Liquidator had avoided, or announced that it would avoid, coverage of part of the claim against Kaleida Health. There is no doubt that the proofs of claim included releases. “A release is a provision that intends a present abandonment of a known right or claim.” McMahon & Co. v. Bass, 250 AD2d 460, 461 (1st Dept.), lv dismissed in part and denied in part 92 NY2d 1013 (1998). In determining whether a particular instrument constitutes a release, a court is to look to the language of the instrument in order to determine the intent, without resort to extrinsic evidence, unless the court determines as a matter of law that the language is ambiguous. See, Wells v. Shearson Lehman/American Express, Inc., 72 NY2d 11, 19 (1988). This Court has 42 held that when the word “release” is used in connection with the word “claims”, there is no meaning other than that of waiver, surrender or relinquishment. Trustees of Amherst College v. Ritch, 151 NY 282, 338 (1897). The proofs of claim executed by the plaintiffs here clearly stated that they were “releas[ing] any and all claims” against Kaleida Health up to the limits of the PHICO coverage (11743-11744). The proofs of claim thus constituted releases as a matter of law. The releases were executed in connection with the liquidation of an insurer pursuant to the Pennsylvania Insurance Department Act (the “Act”). 40 P.S. §§ 221.1-221.63. The Act, which was based upon a model act of the National Association of Insurance Commissioners (“NAIC”) adopted in a number of states, established a comprehensive program governing all events connected with the insolvency of an insurance company. See, Koken v. Reliance Ins. Co., 586 Pa 269, 280, 893 A2d 70, 76-77 (2006). The Act had the purposes of (1) providing for early detection of any potentially dangerous condition in an insurer; (2) improving methods for rehabilitating insurers; (3) enhancing efficiency and economy in the liquidation process; (4) equitably apportioning any unavoidable loss; and (5) lessening the problems of interstate rehabilitation and liquidation by facilitating cooperation between states in the liquidation process. Id. at 290-291, 893 A2d at 82-83. 43 An important feature of the Act was the requirement that a plaintiff make a choice between pursuing his or her claim against the insured in a court proceeding and presenting the claim in the liquidation proceeding. Id. at 293-295, 893 A2d at 84-86. While this may be a difficult decision for such a plaintiff, the election is made necessary “by the unfortunate and uncontrollable fact of the insolvency, a fact which affects the plaintiff and the insured alike”. Id. at 294, 893 A2d at 85. As noted in the Koken decision, a plaintiff has an ample opportunity before making the election to determine whether the insured is individually financially responsible such that it may be to the plaintiff’s advantage not to seek relief in the liquidation. Id. at 295, 893 A2d at 85. Alternatively, if the insured is judgment-proof or of doubtful solvency, the plaintiff can pursue the claim in the liquidation proceeding. Id. at 293-294, 893 A2d at 85. The Act fixes the point of the plaintiff’s decision at the time that the plaintiff files the proof of claim, which formalizes the election to seek relief via the liquidation proceeding. Id. at 294-295, 893 A2d at 85. That filing creates an expectation of security on the part of the plaintiff, as well as the insured policy holder. Id. at 294-295, 893 A2d at 85. Accordingly, Section 221.40(a) of the Act provides that the filing of a claim “shall operate as a release of the insured’s liability to the third party on that cause of action in the amount of the applicable policy limit”. 40 P.S. § 221.40(a). It is this provision that enforces the election 44 made by a plaintiff. The plaintiff then participates in the apportionment of the insolvent insurer’s assets. Legal uncertainty and litigation are minimized due to the fact that the plaintiff may no longer proceed in court with respect to the claim submitted in the liquidation proceeding. See, Koken v. Reliance Ins. Co., supra, at 293, 893 A2d at 85. In the instant matter, of course, the PHICO insurance liquidation concerned the damages claims of the plaintiffs only to the extent that they exceeded $3,000,000.00, because of the $2,000,000.00 self-insured retention of Kaleida Health and the fact that the New York Liquidation Bureau was responsible for the next $1,000,000.00 in damages. The plaintiffs were thus permitted to proceed in New York State Supreme Court with regard to their liability claims against Kaleida up to $3,000,000.00. That submission of a claim in a liquidation proceeding has the automatic effect of releasing the insured is compelled by the use of the word “shall” in Section 221.40(a). In Koken, the Pennsylvania Supreme Court noted that “shall” had been uniformly interpreted by the courts as denoting a mandatory, rather than a permissive or discretionary, instruction. 586 Pa at 288, 893 A2d at 81. In the context of Section 221.40(a), this meant that the proof of claim unambiguously constituted a release. As the court stated, [V]iewing the section as a whole, the term plainly bears its usual, mandatory meaning. Certainly, there is not 45 textual ambiguity: “the filing of the claim shall operate as a release”. Moreover, the fact that the provision goes on to list a single circumstance where the release may be rendered null and void – “if the insurance coverage is avoided by the Liquidator” – merely reinforces that, in other instances, the imperative, absolute effect controls. Therefore, under the statute’s plain meaning, when a third-party POC [proof of claim] is filed in an insurance liquidation, that very filing acts as a release of the insured’s liability to the third party on that action in the amount of the applicable policy limit. Id. at 289, 893 A2d at 82. This Court likewise applies a mandatory meaning to the term “shall” in a statute. See, e.g., Matter of Natural Resources Defense Council, Inc. v. New York City Dept. of Sanitation, 83 NY2d 215 (1994); Jiggetts v. Grinker, 75 NY2d 411 (1990). Accordingly, there cannot be any doubt that the proofs of claim executed by the plaintiffs were intended to, and did, operate as releases of their claims against Kaleida Health that fell within the coverage of the PHICO policy. The comprehensive statutory scheme for resolving claims against insolvent insurers in Pennsylvania is similar to that followed in New York. As mentioned above, New York and numerous other states have enacted comprehensive statutes governing the liquidation of insurance companies. See, Matter of Knickerbocker Agency, Inc. (Holz), 4 NY2d 245 (1958). These provisions are exclusive in their operation and are designed to furnish a complete procedure for the protection of the rights of all interested parties. Id. at 250. Given the strong public policy 46 expressed by the enactment of such statutes, there is no reason why this Court should not enforce the election of remedies made by the plaintiffs when they filed their proofs of claim in the liquidation proceeding in Pennsylvania. Numerous other states apply similar principles in situations where a claimant elects to pursue a claim in an insurance company liquidation proceeding, rather than pursuing that claim in court. Courts routinely enforce such elections, dismissing lawsuits against insured entities in situations where the plaintiffs in those lawsuits have elected to forego litigation and proceed in the liquidation proceedings. See, e.g., Gonya v. Commissioner, New Hampshire Ins. Dept., 153 NH 521, 899 A2d 278 (2006); Peterson v. Minden Beef Co., 231 Neb 18, 434 NW2d 681 (1989); Pettus v. Missouri Ins. Guaranty Assn., 731 SW2d 527 (Mo. App. 1987); Feed Prods. North, Inc. v. Reliance Ins. Co. of Illinois, Inc., 2005 US Dist. LEXIS 14888 (D. Minn. 2005). As discussed in those cases, the filing of proofs of claim, such as those filed by the plaintiffs here, unambiguously provides for the dismissal of all portions of the claims that fall within the insurance coverage. The Appellate Division based its erroneous failure to enforce the releases upon its conclusion that the Liquidator had sought to avoid coverage for a portion of the plaintiffs’ claims. The conclusion was flawed, however, because there was never a disclaimer by the Liquidator. In fact, the Liquidator affirmatively accepted 47 coverage for the claims of Daniel and Lisa Oakes (11989). The PHICO Liquidator merely asserted a reservation of rights with respect to that portion of the claim that arose from Kaleida Health’s vicarious liability for alleged negligence of Dent. It is settled law in this State that a reservation of rights is not a disclaimer and does not constitute a denial or avoidance of coverage. See, e.g., Hartford Ins. Co. v. County of Nassau, 46 NY2d 1028 (1979); Allstate Ins. Co. v. Gross, 27 NY2d 263 (1970). As this Court has found on multiple occasions, a reservation of rights has no relevance to the question of denial of coverage. The sole purpose of such a reservation is that of establishing that an insurer will not be held to have waived a coverage defense merely because it provided a litigation defense to its insured. See, Hartford Ins. Co. v. County of Nassau, supra. That purpose has no relevance in the matter at bar, where Kaleida Health was self-insured for the first $2,000,000.00 of liability and provided its own defense. Pennsylvania’s interpretation of a reservation of rights letter mirrors that of New York. Under Pennsylvania law, an insurer that questions its coverage obligations may protect its rights under the policy by timely issuing a reservation of rights which fairly informs the insured of the insurer’s position. See, Nichols v. American Casualty Co., 423 Pa 480, 225 A2d 80 (1966); Bedwell Co. v. D. Allen Bros., Inc., 2006 Phila. Ct. Com. Pl. LEXIS 459 (2006). By issuing a reservation of rights letter, the insurer puts the insured on notice of what the insurer believes 48 are its existing rights under the policy. The insurer is then free to provide a defense to the insured without being subject to a claim that its action in doing so causes it to be estopped from later attempting to disclaim coverage. See, Brugnoli v. United States Natl. Ins. Co., 284 Pa Super 511, 426 A2d 164 (1981). It does not give rise to a disclaimer or any conflict of interest between the insurer and insured at that point. Bedwell Co. v. D. Allen Bros., Inc., supra, at 5-6. In both New York and Pennsylvania, an insurer that wishes to disclaim coverage must do so within a reasonable time. In New York, this obligation is imposed by Insurance Law § 3420(d), which obligates an insurer to notify a policy holder in writing of its decision to disclaim as soon as reasonably possible after it learns of the ground for disclaimer. See, First Financial Insurance Co. v. Jetco Contracting Corp., 1 NY3d 64 (2003). Similarly, in Pennsylvania, an insurer is given a reasonable amount of time in which to investigate and determine whether it desires to avail itself of any coverage defense that may be found to exist. See, Gross v. Kubel, 315 Pa 396, 172 A 649 (1934). An insurer that does not disclaim within a reasonable time forfeits its right to do so. Gross v. Kubel, supra. To date, there has been no disclaimer, despite the passage of much more than a reasonable period of time. Kaleida Health’s liability for the negligence of Dent was established when the jury rendered its verdict in the 2008 trial on April 7, 2008. The reservation of rights letter was not issued until August 27, 2008. 49 There has never been a disclaimer since that time. PHICO has not avoided coverage for the plaintiffs’ claim. To the contrary, the record shows that the Liquidator accepted coverage of the Oakes’s claims. There has been no avoidance of coverage at all. Accordingly, there was no reason for the Appellate Division to find the releases null and void. Similarly, there is no reason why this Court should not grant the motion to amend the answer and enforce the releases voluntarily executed by the plaintiffs. The trial court’s conclusion that there was no procedural vehicle for enforcement of the releases is contradicted by the decisions of this Court holding that an answer may be amended to raise a defense at any time, even after trial. See, Whalen v. Kawasaki Motors Corp., 92 NY2d 288, 293 (1998); Edenwald Contracting Co. v. City of New York, 60 NY2d 957, 959 (1983). The Appellate Division essentially ruled that the proposed amendment was without merit, a conclusion that was, as discussed above, completely erroneous. The plaintiffs will undoubtedly argue, as they did before the trial court, that they would be prejudiced by the granting of Kaleida Health’s application. This argument would be specious. The sole basis for Kaleida Health’s proposed amendment is an election made voluntarily by the plaintiffs at a time when they were represented by the same attorneys who represent them in this appeal. 50 Courts have generally permitted amendments where the non-moving party is on notice of the facts upon which the proposed amendment is based, as is the case here. See, e.g., Murray v. City of New York, 51 AD3d 502 (1st Dept.), lv denied 11 NY3d 703 (2008); McIntosh v. State of New York, 7 AD3d 890 (3rd Dept. 2004); Stajano v. United Technologies Corp., 5 AD3d 260 (1st Dept.), lv denied in part and dismissed in part 3 NY3d 736 (2004), cert. denied 544 US 1068 (2005). In Murray, the Appellate Division, First Department, affirmed the Supreme Court’s granting of a motion to amend an answer to include the affirmative defense of collateral estoppel. The Court observed that, because of its participation in the prior litigation, the plaintiff could not have claimed to have been surprised or prejudiced that the defendants would seek to assert the defense of issue preclusion. In McIntosh, the issue was whether the Supreme Court had correctly permitted the petitioner to add a new cause of action arising out of certain actions taken by the Division of Military and Naval Affairs, a State agency. The Appellate Division, Third Department, ruled that leave to amend was properly granted since proof pertaining to the amendment was already in the possession of the respondents. In Stajano, the appeal was from an order that granted leave to the defendants to amend their answers to include certain government contractor defenses. The Appellate Division, First Department, concluded that the plaintiffs were not prejudiced by the grant of leave for defendants to amend their answer 51 since they had been on notice for more than 10 years of the government contractor defenses. See also, Shepherd v. New York City Transit Auth., 129 AD2d 574 (2d Dept. 1987) (since plaintiffs had knowledge of facts underlying the affirmative defense prior to commencement of the action, they could not claim that they were surprised or prejudiced by the granting of leave to interpose the defense). In this case, the plaintiffs were clearly fully aware of the facts underlying the proposed amendment since they had executed the proofs of claim upon which the defenses to be added by amendment were based. The plaintiffs, with the assistance of counsel, elected, with knowledge of the consequences, to pursue certain of their claims in the Pennsylvania liquidation proceeding, rather than in the courts of the State of New York. The proof of claim forms signed by the plaintiffs included language, prominently displayed, that advised them that signing the forms would release their claims against Kaleida Health that fell within PHICO’s coverage. The plaintiffs had also received correspondence from the Liquidator that provided a full explanation of the effect of execution of a proof of claim. In these circumstances, the plaintiffs clearly cannot claim to have been surprised or prejudiced. Certainly, the plaintiffs knew that Kaleida Health would assert the defense of release at some point in the litigation. Kaleida Health did so, predictably, once its counsel was provided with copies of the proofs of claim. The plaintiffs’ claim of prejudice fails as a matter of law. 52 Before the trial court, the plaintiffs claimed to have been prejudiced by the inability to conduct discovery on the release issue. They also argued that they would have somehow altered their trial strategy if they had known that Kaleida Health was going to assert the defense of release. These arguments are meritless. With regard to the discovery issue, the plaintiffs failed to specify the discovery that they intended to seek. In fact, none was needed. Kaleida Health had no involvement in the decision of the plaintiffs to pursue a remedy in the liquidation proceeding, rather than in the New York State courts. The plaintiffs themselves are the best sources of information regarding the reasoning for their election. In any event, their reasoning is irrelevant since the releases were, in fact, executed. Notably, no affidavit was submitted from either Mr. Oakes or Mrs. Oakes on this issue. The effect of the execution of the proofs of claim is a matter of statutory and decisional law of which plaintiffs’ counsel was certainly aware. The plaintiffs also failed to outline what their “alternative theory of the case” would have been. The plaintiffs did not outline any change of strategy that would have been pursued if the motion to amend the answer had been filed at an earlier time. In these circumstances, the plaintiffs’ claim of prejudice is specious and fails as a matter of law. 53 Given the fact that the plaintiffs cannot establish prejudice, there is no need for this Court to remit the matter to the trial court for a decision on the motion to amend. This Court may simply grant the motion and enforce the election made by the plaintiffs. The circumstances are similar to those presented in Murray v. City of New York, 43 NY2d 400 (1977). Murray involved an application made by the defendant to amend its answer to assert the defense of the exclusivity of workers’ compensation as a remedy. In holding that the motion was correctly granted by the trial court and improperly reversed at the Appellate Division, this Court pointed out that there was no operative prejudice since proof regarding the employment relationship had been admitted into evidence at trial with the acquiescence of the plaintiff. Because the plaintiff could not claim surprise or prejudice, this Court held that it was an abuse of discretion as a matter of law on the part of the Appellate Division to disturb the trial court’s granting of the motion to conform the pleadings to the proof. This Court ordered that the original judgment be reinstated, having disposed of the prejudice issue. The case at bar presents analogous circumstances. Here, there was no prejudice as a matter of law because the defenses at issue arose from a voluntary election that the plaintiffs made at a time when they were represented by counsel. As stated above, the Appellate Division erred in ruling that the motion for leave to amend was properly denied because, in the Appellate Division’s view, the 54 Liquidator avoided or sought to avoid coverage. It is therefore clear that the defenses to be added by amendment were meritorious and the plaintiffs were not prejudiced. This Court should therefore direct the entry of an order granting a motion to amend the answer and limiting the liability of Kaleida Health to no more than $3,000,000.00, representing its self-insured retention of $2,000,000.00 and the $1,000,000.00 for which the New York Liquidation Bureau is responsible. All amounts in excess of $3,00,0000.00 were subject to the releases executed by the plaintiffs. 55 Point II The Appellate Division Erred in Refusing to Review the Appropriateness of the Trial Court’s Additur on the Ground, Raised Sua Sponte by the Appellate Division, That the Defendants had Failed to Preserve the Issue. Following the 2008 trial, plaintiffs moved to set aside the $5.1 million dollars awarded to them by the jury as inadequate. Kaleida Health opposed plaintiffs’ motion, arguing to the trial court that the damages awarded did not deviate from reasonable compensation given the proof presented at trial (11501- 11577). The trial court did not agree and granted plaintiffs’ motion. The trial court set aside the damages awarded by the 2008 jury for Daniel Oakes’s past and future pain and suffering, Daniel Oakes’s future supportive living expenses, and Lisa Oakes’s past and future loss of consortium (11711-11719). The trial court also granted plaintiffs’ motion for additur and increased the damages awarded to an amount more than triple the amount of the original verdict (from $5.1 million to $17.8 million) (11711-11719). The trial court further ordered that a new trial be held with respect to the items of damages set aside unless defendants agreed to the highly increased amounts (11711-11719). Kaleida Health registered its disagreement with the trial court’s decision to set aside the damages verdict and to grant additur by filing a notice of appeal from the order (SR 753-755). Under the rules of the Appellate Division, Kaleida Health was required to perfect the appeal within nine months of service of notice of the 56 appeal or risk having the issues deemed abandoned. 22 NYCRR §§ 1000.2(b). Kaleida Health’s appeal from the order was the only avenue available to it at that time to register its disagreement with the trial court’s ruling. Kaleida Health further registered its disagreement with the additur by advising the trial court that it would not stipulate to the increased sums. Thereafter, the trial court scheduled a trial on those items of damages set aside with the damages-only trial to commence on March 16, 2009. Kaleida Health did not perfect its appeal from the order setting aside the damages verdict and granting additur. There was insufficient time to have the appeal heard and decided prior to the scheduled re-trial, the order itself was appealable from the final judgment and Kaleida Health had already determined that an appeal would be necessary from the final judgment as it intended to seek review on an appeal from the final judgment of the trial court’s order denying the motion to amend its answer (SR741). The damages-only trial went forward on March 16, 2009 as scheduled by the trial court. The nine-month deadline for perfecting the appeal from the order setting aside the damages verdict and granting additur was approaching at the time post-trial motions relative to the 2009 damages-only trial were being heard and decided. In response, Kaleida Health made a motion to the Appellate Division to withdraw its appeal without prejudice. Kaleida Health specifically advised the Appellate Division in its motion papers that it was withdrawing the appeal so as 57 not to abandon the issues raised by the appeal and was, instead, seeking to preserve them for consideration on an appeal from the final judgment (SR 739-742). The Appellate Division granted Kaleida Health’s motion and dismissed without prejudice the appeal from the order setting aside the jury’s verdict and awarding additur (SR 535-537). Kaleida Health’s post-trial motion was denied. The judgment was subsequently entered. Kaleida Health appealed from the final judgment and perfected its appeal in October 2011. In its brief to the Appellate Division, Kaleida Health recounted the procedural history of the case, including the trial court’s inordinate additur, the fact that it had refused to stipulate to the highly increased amount of the verdict and that it had proceeded to the only option left to it at that time — a damages-only trial on those items of damages set aside by the trial court. Kaleida Health argued to the Appellate Division that the trial court erred in setting aside the damages verdict, as the amount awarded by the 2008 jury did not deviate from reasonable compensation. Kaleida Health argued that additur in any amount, including those amounts directed by the trial court, was not warranted given the proof presented by the plaintiffs at the 2008 trial (SR28, SR65-70, SR468-471). The Appellate Division found that the trial court properly set aside damages awarded to Daniel Oakes for pain and suffering and future supportive living expenses, and to Lisa Oakes for past and future loss of consortium. The majority 58 did not address the issue of the appropriateness of the amount of the trial court’s additur for these items of damages, deeming a challenge to the amount of the additur unpreserved for review. The preservation issue was raised sua sponte by the Appellate Division majority. At no time prior to the issuance of the Appellate Division’s August 19, 2011 order did counsel for the plaintiffs argue that a challenge to the amount of the additur directed by the trial court was not preserved for appellate review (SR 291-298) . Had the issue been raised by the plaintiffs on appeal to the Appellate Division, Kaleida Health would have addressed the issue of preservation by showing that it was without merit given the steps Kaleida Health had taken to preserve the issue for appellate review. Instead, the Appellate Division’s ruling creates new and strict requirements for the review of jury awards. The requirements are contrary to the principles which underlie the preservation doctrine. The requirements are contrary to the Appellate Divisions’ charge to review the sufficiency of jury awards and the rulings of other courts which have reviewed them. The requirements are contrary to rules of fair play in the circumstances of the case at bar. Certain basic principles underlie the doctrine of issue preservation. See generally, 1 Newman, NY Appellate Practice § 2.02. The doctrine has two primary purposes. The first is that the requirement that issues be raised initially in the trial court rather than for the first time on appeal guarantees the opposing party 59 a chance to respond with admissible evidence and pertinent legal argument. Id. The second purpose is that of promoting error-free litigation by requiring the litigants to afford the court a timely opportunity to avoid or correct error in the conduct of the trial. Id. Kaleida Health alerted the trial court on multiple occasions of its disagreement with the additur. In the first instance Kaleida Health opposed plaintiffs’ motion to set aside the verdict as inadequate. In opposition to the motion Kaleida Health argued that there was a basis in the evidence heard at trial for the jury’s verdict and that the verdict should not be set aside by the trial court. Obviously, the clear message in Kaleida Health’s opposition to the motion was that no amount of additur was warranted. Notwithstanding Kaleida Health’s opposition, the trial court chose to set aside the verdict and ordered a new trial unless Kaleida stipulated to substantial increases in the damages. Second, Kaleida Health refused to stipulate to the additional amounts set forth in the trial court’s order. It is highly significant that New York law affords a party, such as Kaleida Health here, the opportunity to either stipulate to the additur or opt for a new trial on the issue of damages. Had Kaleida been in agreement as to the amount of the additur, it would have simply stipulated to the increased amount directed by the trial court. That it refused to stipulate to the increased amounts, and instead chose a new trial, is a clear statement that the amount of the additur was unacceptable and excessive in the 60 view of Kaleida Health. Indeed, there could not be a more clear statement of Kaleida Health’s disagreement with the additur than its choice to subject itself to another trial, this one of several weeks’ duration devoted entirely to the issue of plaintiffs’ damages. Kaleida Health’s disagreement with the amount of the additur was further evidenced by the fact that it filed an appeal from the order setting aside the first verdict on the ground of inadequacy. It later withdrew that appeal, but only after the Appellate Division agreed that such withdrawal would be without prejudice, allowing Kaleida Health to address the issue of the additur on an appeal from the final judgment. That issue was addressed on appeal, with Kaleida Health arguing that the jury verdict should have been allowed to stand. Kaleida Health’s position that the jury verdict should be reinstated is once again a clear statement of its disagreement with the amount of the additur ordered by the trial court. No amount of additur was warranted. This argument necessarily included a disagreement with the amount of the additur contained in the trial court’s order. The Appellate Division’s majority’s conclusion that the amount of the trial court’s additur was not preserved for its review was error. The issue was preserved by an appeal from the order setting aside the jury’s 2008 verdict and directing additur, by the continued preservation of that issue by the subsequent dismissal of the appeal without prejudice prior to the appeal being deemed abandoned, by 61 Kaleida Health’s refusal to stipulate to the inordinate additur, and by arguments made by Kaleida Health in its appellate brief. All of these actions by Kaleida Health were more than sufficient to alert the Appellate Division to the relevant question and sufficiently preserved the legal issues for its review. See, Geraci v. Probst, 15 NY3d 336 (2010). Indeed, Justice Peradotto, in her dissent, found the issue to be preserved, both by the actions of Kaleida Health and by the arguments made in its appellate brief. The Appellate Division’s refusal to review the appropriateness of the trial court’s additur has imposed a new barrier to a review of a damages verdict which conflicts with the intentions of the Legislature when it amended CPLR 5501(c) in 1986. Prior to the amendment, the standard for altering a verdict was that it “shocked the conscience”. The 1986 amendment relaxed this standard, substituting the lighter finding that an award “deviates materially from what would be reasonable compensation”. The entire purpose of the amendment was that of allowing for increased appellate review of verdicts alleged to be excessive or inadequate. The Legislative Findings and Declarations found that the “shock the conscience” standard was an insufficient check on damage awards, which prompted the Legislature to adopt a standard “inviting more careful appellate scrutiny”. Ch 266, 1986 NY Laws 470 (McKinney). In signing the legislation, Governor Mario Cuomo stated, 62 This will assure greater scrutiny of the amount of verdicts and promote greater stability in the tort system and greater fairness for similarly situated defendants through the State. Governor’s Mem approving L 1986, Ch 682, 1986 NY Laws, at 3184. A number of courts have recognized that the 1986 amendment of CPLR 5501(c) was intended to “relax the former standard of review and to facilitate appellate changes in verdicts”. O’Connor v. Graziosi, 131 AD2d 553, 554 (2d Dept.), lv denied 70 NY2d 613 (1987). The amendment was part of a series of tort reform measures triggered by an insurance crisis arising out of spiraling costs and excessive verdicts, necessitating measures designed to give reviewing courts greater authority to review jury awards. See, Reed v. City of New York, 304 AD2d 1, 5 (1st Dept.), lv denied 100 NY2d 503 (2003). The refusal of the Appellate Division to review the appropriateness of the additur directed by the trial court is inconsistent with the legislative history and purpose of CPLR 5501(c). The conclusion reached by the majority, that the amount of the trial court’s additur was not subject to review, is contrary to the actions of similarly-situated courts reviewing questions pertaining to the sufficiency of verdicts. Appellate Divisions have consistently reviewed the sufficiency or insufficiency of a verdict and have adjusted the verdict pursuant to the authority vested in them by CPLR 5501(c) to comport with the minimum amount which could have been awarded (the standard of review for an increase in an award) or the maximum 63 amount which could have been awarded (the standard of review for a decrease in an award) without reliance upon arguments made by counsel that the relative increase or decrease directed by the trial court was itself excessive or inadequate. See, e.g., Perlin v. King, 36 AD3d 495 (1st Dept. 2007); Rivera v. Lincoln Ctr. for Performing Arts, Inc., 16 AD3d 274 (1st Dept. 2005); Carlos v. W.H.P., 19 LLC, 301 AD2d 423 (1st Dept. 2003), including the briefs submitted by the parties in support of their positions. Brought to its logical conclusion, the Appellate Division’s majority’s ruling will require parties challenging a motion to set aside a damages award and for additur or remittitur to specify a particular sum to which the verdict should be adjusted. Given that the sum would have to be specified before a ruling had been made on the motion to set aside the award, such a requirement will serve to undercut the parties’ position that no increase or decrease is warranted. Once alternative amounts are set forth by parties, the same parties will be perceived to have conceded that an adjustment of the verdict is warranted. Moreover, it was manifestly unfair to Kaleida Health for the Appellate Division’s majority to decide a significant legal issue, the appropriateness of the trial court’s additur, on a ground not raised by any party. This manner of deciding appeals was condemned by this Court in Misicki v. Caradonna, 12 NY3d 511 (2009) wherein this Court declined to decide the applicability of a provision of the Labor Law on grounds not raised by any party. As this Court noted, 64 For us now to decide this appeal on a distinct ground that we wrinkled out wholly on our own would pose an obvious problem of fair play. We are not in the business of blindsiding litigants, who expect us to decide their appeals on rationales advanced by the parties, not arguments their adversaries never made. A contrary conclusion will confirm the creation of a trap for countless parties and their counsel; such a trap will be open to any party who has challenged the fact of any additur or remittitur, but who has not advocated alternative amounts. This type of trap was rejected by this Court in its decision of Adams v. Genie Industries, Inc., 14 NY3d 535 (2010), and should likewise be rejected here. In Adams, this Court expressed its disapproval of a legal rule which unfairly barred a party from raising a legitimate appellate issue simply because the party had made an unrelated agreement on the amount of damages. In Adams, this Court overruled previous case law which held that a party who had stipulated at a trial or appellate court to a reduction in damages in lieu of a new trial on the cause of action waived appellate review of all issues. The prior cases had held that a party that stipulated to a modification of damages was barred from any appeal, even on unrelated liability issues. This Court observed in Adams that the former rule had “operate[d] as a trap; parties stipulating to additur and remittitur are likely not to foresee the counterintuitive result that all their appellate claims will be forfeited”. 14 NY3d at 541-542 (emphasis in original). Defendants here could also not 65 foresee the counterintuitive conclusion reached by the Appellate Division. Especially given that the Appellate Division, the very court which found the issue unpreserved, had granted defendants’ application to withdraw the appeal from the non-final order which had been filed so that the same appeal could be pursued on an appeal from the final judgment. The preservation requirements created by the Appellate Division in this case are contrary to the reasoning and principles of fairness recognized by this Court in Misicki and Adams. A defendant who has consistently argued, in multiple proceedings, that a damages determination by a jury was appropriate and should not be set aside could not reasonably anticipate that a court would rule that an objection to a specific amount of additur had been waived. Clearly, the defendants here put the amount of the additur in dispute on multiple occasions. They objected to the relief sought by the plaintiffs, they refused to stipulate to the amount determined by the trial court, and they pursued on appeal arguments that the additional damages determined by the trial court were completely inappropriate. Such arguments certainly encompassed a claim that the amount of the additur was excessive. For all of the foregoing reasons, the Appellate Division erred as a matter of a law in refusing to review the appropriateness of the amount of the trial court’s additur. The amount of the additur should be reviewed to determine whether the 66 amount comports with the minimum amount which could have been awarded to plaintiffs for the injuries established at the 2008 trial. As Justice Peradotto indicated in her dissent, the defendants were denied the opportunity to stipulate to an appropriate additur with respect to those elements of damages set aside. Defendants should be given this opportunity. 67 Point III The Trial Judge Erred in Precluding the Proposed Expert Testimony on the Measure of Damages. As numerous courts have recognized, the question of the causal relationship between a defendant’s conduct and a plaintiff’s injury is particularly difficult in medical malpractice cases. See, e.g., Monahan v. Weichert, 82 AD2d 102 (4th Dept. 1981). The reason for that is that almost every person treated by a doctor or hospital is already sick when he or she first seeks treatment. Id. at 107. There always exists the possibility that it was the progression of the original condition, rather than the defendant’s conduct, that caused the ultimate damage. Id. This is exactly such a case. Prior to treatment by any of the defendants, Mr. Oakes had a serious medical condition, a brain aneurysm. No one has claimed that any defendant caused the brain aneurysm. The proposed expert testimony to be submitted by the defendants at the 2009 damages trial was intended to distinguish between the injuries caused by the aneurysm itself, and those caused by the alleged negligent failure of the defendants to diagnose the aneurysm on a timely basis. Accordingly, the question involved the measure of damages recoverable which would be limited to the extent to which Mr. Oakes’s original condition (caused by the aneurysm) was worsened due to the failure to diagnose the condition before his August 7 stroke. 68 This Court and the Appellate Divisions have recognized that a defendant must always be permitted to present evidence as to whether the pre-existing condition caused the ultimate damage. See, e.g., McCahill v. New York Transp. Co., 201 NY 221 (1911); Stewart v. Olean Medical Group, PC, 17 AD3d 1094 (4th Dept. 2005); Mihileas v. State of New York, 266 AD2d 866 (4th Dept. 1999). The issue in McCahill was whether a condition of delirium tremens was brought on by the accident for which the defendant was responsible, or was the result of a pre- existing condition of alcoholism. This Court held that, even if there was no issue as to proximate cause for liability purposes, the evidence as to the cause of the condition was still “an important element in fixing damages”. McCahill v. New York Transp. Co., supra, at 224. The case of Beck v. Spinner’s Recreational Center, Inc., 78 AD3d 1695 (4th Dept. 2010), involved, as did the instant matter, a trial on damages. In that case, there was no issue as to proximate cause and the defendants conceded that they were responsible for the plaintiff’s burn injuries. They argued, however, that the incident did not cause the plaintiff’s spinal injuries. The Appellate Division, Fourth Department, held that the jury was entitled to credit the testimony of the defendant’s expert in determining that spinal injuries were not caused by the incident. Obviously, in order to be in a position to credit the testimony of a defense expert, the jury must first hear the testimony. Testimony as to whether the 69 defendant’s conduct was responsible for a particular item of damages is always relevant at a damages trial, even when the issues of negligence and proximate cause have been decided, as Beck illustrates. In Stewart, involving a medical malpractice claim against a gynecologist, the Appellate Division ruled that a jury must be instructed to award only those damages proximately caused by the defendant’s negligence, and not those caused by the patient’s pre-existing illness. 17 AD3d at 1096. In Mihileas, the claimant had a pre-existing condition of varicose veins, which, under certain conditions, could naturally progress to venous insufficiency. The Appellate Division held that the claimant could only recover for the increased pain and suffering caused by the defendant’s acts, and not for the natural progression of the disease. Similar principles have been expressed by the federal courts in New York. Steinhauser v. Hertz Corp., 421 F2d 1169 (2nd Cir. 1970), dealt with the question of responsibility for the development of a condition of schizophrenia. The defendants wished to show that the plaintiff had pre-existing psychotic tendencies that might have caused her to develop schizophrenia in any event. The Second Circuit held that the defendants were entitled to explore that possibility and “ ‘an appropriate discount should be made for the damages that would have been suffered even in the absence of the defendant’s negligence’ ”. 421 F2d at 1173- 70 1174 (quoting Evans v. S .J. Groves & Sons Co., 315 F2d 335, 347-348 [2d Cir. 1963]). It is evident from the foregoing that the trial judge’s preclusion order was serious error. At the 2009 damages trial, the defendants could be held responsible only for the damages attributable to the injuries caused by their conduct. They were not responsible for the damages that would have resulted in any event from the aneurysm itself. The proposed testimony from the neurosurgical expert was crucial evidence on the issue of the damages for which the defendants were responsible. Similarly, it was of vital importance to the defendants that they be permitted to cross-examine the plaintiffs’ experts on the issue of the damages that Mr. Oakes would still have sustained, even if the aneurysm had been diagnosed at an earlier time. There was simply no justification for the trial judge’s ruling, or for the decision of the Appellate Division affirming it This serious error entitles Kaleida Health to a new trial on the issue of damages. 71 Point IV There was Insufficient Evidence to Support the Verdict as to Dent Neurologic Institute and Kaleida Health’s Vicarious Liability for Dent Neurologic Institute. Evidence is legally insufficient to support a verdict if “there is simply no valid line of reasoning and permissible inferences which could possibly lead rational men to the conclusion reached by the jury on the basis of the evidence presented at trial.” Cohen v. Hallmark Cards, 45 NY2d 493, 499 (1978). Accord, Stephenson v. Hotel Employees and Restaurant Employees Union Local 100 of the AFL/CIO, 6 NY3d 265 (2006). The action at bar was one for medical malpractice. See, Bleiler v. Bodnar, 65 NY2d 65 (1985); Spiegel v. Goldfarb, 66 AD3d 873 (2d Dept.), lv denied 15 NY3d 711 (2010). In such a case, plaintiffs were required to establish that the defendants deviated from accepted medical practice and that such deviation proximately caused plaintiffs’ damages. Flaherty v. Fromberg, 46 AD3d 743 (2d Dept. 2007); Lowe v. State of New York, 35 AD3d 1281 (4th Dept. 2006). Further, expert testimony was necessary to establish a deviation from accepted standards of medical care and to establish proximate cause relative to each defendant and relative to Dent as the issues were beyond the ken of the ordinary juror. Koehler v. Swartz, 48 NY2d 807 (1979); Lyons v. McCauley, 252 AD2d 516 (2d Dept.), lv denied 92 NY2d 814 (1998). 72 In the trial of this action, no party disputed that the action was one for medical malpractice. No party disputed that the issues were beyond the ken of the ordinary juror and that expert testimony was necessary to establish the claims. Expert testimony was in fact presented by the plaintiffs to establish deviations from accepted medical practice by the physician defendants, by Dent-affiliated physicians, Drs. Mechtler and Bates, and by MFSH. Plaintiffs presented no expert proof that Dent was negligent or deviated from accepted standards of medical care. Plaintiffs presented no expert proof that any role Dent had in the interpretation or reporting of the CT scan deviated from other, similarly situated entities. The defendants, Dr. Patel and Dr. Mongia, similarly did not present such proof. At the close of proof at the 2008 trial, counsel for both Kaleida Health and plaintiffs made applications to the trial judge requesting that, because no proof had been presented as to Dent, that Dent not be included on the verdict sheet (10109-10114). Counsel for Dr. Patel and Dr. Mongia argued only that the question of Dent’s negligence should be submitted to the jury as the physicians who read the head CT scan were affiliated with Dent (10112-10113). The affiliations of Drs. Bates and Mechtler to Dent were no basis for a finding of liability as to Dent. However, the applications of Kaleida Health and plaintiffs were denied and Dent was placed on the verdict sheet. Dr. Bates and Dr. Mechtler were also placed on the verdict sheet. The jury found Dent 19% at fault. The jury found no negligence on the part of Dr. Bates or 73 Dr. Mechtler. Inasmuch as the physicians affiliated with Dent were found not to be negligent, the finding of negligence on the part of Dent did not rest upon their actions or inaction, but wholly upon some action or inaction on the part of Dent. However, no expert proof was presented at trial to establish that Dent was negligent or deviated from accepted standards of care. In the absence of such proof, there was simply no valid line of reasoning to support the jury’s verdict as to Dent. On appeal to the Appellate Division, counsel for the plaintiffs and counsel for Dr. Patel and Dr. Mongia argued that expert proof had been presented at the 2008 trial which established deviations from accepted standards of care by Dent. A review of the testimony relied upon, in particular, that of plaintiffs’ experts, Dr. Abramson and Dr. Jacobs, and that of Dr. Nigam’s expert, Dr. Lutnick, reveals that these experts did not testify as to deviations from accepted standards of care by Dent as an entity or primary tortfeasor. The testimony relied upon consists of responses to questions posed to these witnesses which were not directed at care, treatment, or services provided by Dent, but were, instead, directed at care or services provided by the hospital or by physicians affiliated with Dent, including Drs. Bates and Mechtler, whom the jury found not negligent (4697-4701, 4894, 6907, 9329-9343). There was simply insufficient evidence to support a finding of negligence against Dent. Inasmuch as no proof was presented at trial to establish 74 that Dent, as an entity, was negligent or that Dent, as an entity, deviated from accepted standards of care, there is simply no valid line of reasoning to support the jury’s verdict as it pertains to Dent. As Dent was improperly included on the verdict sheet, there was no basis for a finding that Kaleida Health was vicariously liable for Dent. Accordingly, there should be a new trial on the issue of the apportionment of fault. 75 Conclusion Plaintiffs released Kaleida Health from claims against it which fell within the scope of its insurance coverage through PHICO. This Court must therefore reverse the order of the Appellate Division which denied Kaleida Health’s motion to amend its answer. Depending upon the resolution of the remaining issues, this Court should direct entry of an order granting Kaleida Health’s motion to amend the answer and modifying the judgment to limit the liability of Kaleida Health to no more than $3,000,000.00, representing Kaleida Health’s self-insured retention of $2,000,000 and the $1,000,000.00 in coverage provided by the New York Liquidation Bureau. With respect to the remaining issues, the incorrect submission to the jury of the issue of the liability of Dent and Kaleida Health’s vicarious liability for the liability of Dent mandates that there be a new trial on the issue of apportionment of fault. Should this Court determine that the liability findings should stand, the amount of the trial court’s additur must be reviewed and Kaleida Health given an opportunity to stipulate to an appropriate additur, one that increases the damages award to the minimum amount the jury could have awarded to the plaintiffs, based on the evidence presented at the 2008 trial. Finally, this Court should find that the Appellate Division incorrectly concluded that the preclusion of defendants’ expert 76 from the testifying at the 2009 re-trial on damages relative to Mr. Oakes’s underlying condition was proper and direct that such proof be admissible at any re- trial relative to damages. Dated: Buffalo, New York June 20, 2012 Respectfully submitted, DAMON MOREY LLP By ____________________________________ Amy Archer Flaherty Attorneys for Defendant-Appellant Kaleida Health d/b/a Millard Fillmore Suburban Hospital The Avant Building – Suite 1200 200 Delaware Avenue Buffalo, New York 14202-2150 Telephone: (716) 856-5500 Michael J. Willett, Esq. Amy Archer Flaherty, Esq. Of Counsel 1704375