The collateral source rule prevents a defendant from deducting compensation from a plaintiff’s damages that have already been paid by other sources. Some states have modified or eliminated the rule, allowing evidence of collateral payments to be considered during a trial. Some collateral sources have subrogation clauses that allow them to collect money paid to the plaintiff if they win a lawsuit.
The collateral source rule, also called the collateral source doctrine, is a legal rule related to compensation made to plaintiffs in a lawsuit by parties other than the defendant, including insurance companies, workers’ compensation, and others. agencies. These parts are called collateral sources. The rule mandates that a defendant, if found liable, may not deduct from the amount awarded in damages to the plaintiff any monies already paid by collateral sources. The doctrine also prohibits the acceptance into the court record of any evidence that damages have been paid by another source. Instituted in 1854, the purpose of the rule was to prevent a person who caused an injury from benefiting from the plaintiff’s insurance coverage.
Many tort reform advocates oppose this doctrine, arguing that it allows a plaintiff to obtain a double recovery. The plaintiff is reimbursed for the same expenses twice, collecting from both the collateral source and the defendant. Some states have modified or even eliminated the collateral source rule. These reforms allow judges to notify the jury of the prior award, reduce the award by the amount already awarded, or prevent the plaintiff from suing for damages that have already been paid. Opponents of the reform claim that the at-fault party should not be able to avoid liability for damages, even if other sources have paid the bills.
In 2006, a national survey revealed that 38 states had changed the collateral rule to allow evidence of collateral payments in medical liability cases. Of the 38 states, 20 states allowed the jury or judge to consider any collateral payments during a trial. Another 14 states ordered that award reductions be considered after trial. Six states allowed evidence to be considered after a jury verdict but before a final judgment was rendered by the court. Some changes to the collateral rule make a distinction between private collateral sources, for which the plaintiff had to pay a premium, and public sources like Medicare and Medicaid.
Some collateral sources have subrogation clauses in their contracts with consumers, which allow the company to collect some or all of the money the company paid the consumer if that consumer wins a lawsuit. Subrogation means that the insurance company has the right to sue the defendant along with the plaintiff. If the plaintiff prevails in court, the insurance company can collect that part of the damages that makes up what the insurance company has already paid. The surrogate company can also sue a plaintiff who receives a settlement to recover money contributed on behalf of the insured.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
