Court of Appeals: Supreme Court's Granting of Motion To Preclude Evidence Of Expert Witness's Interest In Defendant's Insurance Carrier Was Proper

The Court of Appeals examined a question faced often by counsel in matters where the existence of a defendant's liability insurance is at risk of being raised when examining a witness as to his or her interest in a liability insurance carrier connected to the defendant. The Court of Appeals found that the Supreme Court, in a dental malpractice jury trial, had not erred in allowing defendant's motion to preclude plaintiff's counsel's cross-examination of an expert witness as to his shareholding in the defendant dentist's malpractice liability insurer in Salm v Moses 2009 NY Slip Op 07479.

In granting the defendant's counsel's in limine motion to preclude this questioning of the witness, who with the defendant also had an interest in the defendant's insurance carrier, the Supreme Court had found that the probative value of the questioning was outweighed by the prejudicial effect of revealing the existence of the insurance. First Department affirmed and was affirmed in turn by the Court of Appeals.

"Although cross-examination is a matter of right (see Matter of Friedel v Board of Regents of Univ. of State of N.Y., 296 NY 347, 352 [1947]), it is well settled that its scope and manner are left to the sound discretion of the trial court (see Bernstein v Bodean, 53 NY2d 520, 529 [1981]; Feldsberg v Nitschke, 49 NY2d 636, 643 [1980], rearg denied 50 NY2d 1059 [1980]). Therefore, absent an abuse of discretion, a trial court's determination is beyond our review.

Evidence that a defendant carries liability insurance is generally inadmissible (see Leotta v Plessinger, 8 NY2d 449, 461 [1960], rearg denied 9 NY2d 688 [1961]; Simpson v Foundation Co., 201 NY 479, 490 [1911]). The rationale underlying this rule is twofold. First, "it might make it much easier to find an adverse verdict if the jury understood that an insurance company would be compelled to pay the verdict" (Loughlin v Brassil, 187 NY 128, 135 [1907]). Second, evidence of liability insurance injects a collateral issue into the trial that is not relevant as to whether the insured acted negligently. Although we have acknowledged that liability insurance has increasingly become more prevalent and that, consequently, jurors are now more likely to be aware of the possibility of insurance coverage, we have continued to recognize the potential for prejudice (see Oltarsh v Aetna Ins. Co., 15 NY2d 111, 118-119 [1965]; see also Barker and Alexander, Evidence in New York State and Federal Courts § 4:63, at 260-261 [5 West's NY Prac Series 2001] ["Because the prejudice quotient is obvious, the rule barring such evidence is one of the least controversial in the law of evidence"]).

The rule, however, is not absolute. If the evidence is relevant to a material issue in the trial, it may be admissible notwithstanding the resulting prejudice of divulging the existence of insurance to the jury. For example, we have held that evidence that a defendant insured a premises is relevant to demonstrate ownership or control over it (see Leotta, 8 NY2d at 462). Likewise, it was proper to allow cross-examination of a physician regarding the fact that the defendant's insurance company retained him to examine the plaintiff in order to show bias or interest on the part of the witness (see Di Tommaso v Syracuse Univ., 172 App Div 34, 37 [4th Dept 1916], affd without opn 218 NY 640 [1916]).

Here, we perceive no abuse of discretion in Supreme Court's evidentiary ruling. Such evidence may be excluded if the trial court finds that the risk of confusion or prejudice [*3]outweighs the advantage in receiving it (see Kish v Board of Educ. of City of N.Y., 76 NY2d 379, 384-385 [1990]). In this case, plaintiff speculated during the colloquy that a verdict in defendant's favor could result in a $100 benefit — at the time of the expert's death, disability or retirement — based on the expert's shareholder status in OMSNIC. The trial court's finding that any such financial interest was likely "illusory" and that the possibility of bias was attenuated was reasonable on this record. Absent a more substantial connection to the insurance company — or at least something greater than a de minimis monetary interest in the carrier's exposure — the court did not engage in an abuse of discretion in precluding the testimony. We note that a voir dire of an expert outside the presence of the jury can better aid the court in exploring the potential for bias. "

Because plaintiff's counsel did not seek that the witness be cross-examined in the absence of the jury, it was held that the Supreme Court was correct in granting the motion before hearing the evidence in question and reserving its decision.