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The Collateral Source Rule

September 04, 2018

Posted in Bad Faith Insurance

If you have suffered personal injuries due to the negligence of another party, such as in an auto accident or in some other circumstance, and you have medical insurance that has paid some or all of your resulting medical expenses on your behalf, the wrong doer cannot claim that such medical insurance payments should reduce the amount of damages you claim against the wrongdoer.

This is an application of California’s collateral source rule, whereby plaintiffs in personal injury actions can recover full damages even though they already received compensation for their injuries from such “collateral sources” as medical insurance.(Arambula v. Wells (1999) 72 CalApp4th 1006, 1009). The general rule is that damages recoverable against a private third party wrongdoer are not reduced by the amount of payments received from a source wholly independent of the wrongdoer. The plaintiff receives the insurance money or other benefits pursuant to an independent contract to which the defendant wrongdoer is in no way privy, and in respect to which defendant’s wrongful acts can give him no equities. (Helfend v. Southern California Rapid TransitDistrict, 2 Cal3.d 1 (1970).

The collateral source rule has been held to apply to disability benefits, (Benich v.Market Street Railway Co., 29 Cal.App.2d 641 (1938); Hume v. Lacy 112 Cal.App.2d147 (1952); Sabella v. Southern Pacific Co. 70 Cal.2d 311 (1969)), health insurance(Gergich v. Shilling, 97 Cal.App.2d 641, 650 (1950)) and worker's compensation Baroniv. Rosenberg, 209 Cal.4 (1930); Paolini v. City and County of San Francisco, 72Cal.App.2d (1946); Ferrario v. Conyes, 19 Cal.App.2d 58 (1937).

If you bring a case and introduce evidence of insurance payments or other payments for your loss by someone other than the defendant, be sure to bring a motion at the commencement of trial — a motion known as a “motion in limine” — to exclude evidence of this collateral source.

Contact The Law Office of Bennet M. Cohen, P.C. to arrange a consultation with our San Francisco, CA denied insurance claims attorney.

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