The Collateral Source Rule

If you have suffered personal injuries due to the negligence of another party, suchas in an auto accident or in some other circumstance, and you have medical insurance thathas paid some or all of your resulting medical expenses on your behalf, the wrongdoercannot claim that such medical insurance payments should reduce the amount of damagesyou claim against the wrongdoer.

This is an application of California’s collateral source rule, whereby plaintiffs inpersonal injury actions can recover full damages even though they already receivedcompensation for their injuries from such “collateral sources” as medical insurance.(Arambula v. Wells (1999) 72 CalApp4th 1006, 1009). The general rule is that damagesrecoverable against a private third party wrongdoer are not reduced by the amount ofpayments received from a source wholly independent of the wrongdoer. The plaintiffreceives the insurance money or other benefits pursuant to an independent contract towhich the defendant wrongdoer is in no way privy, and in respect to which defendant’swrongful 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 otherpayments for your loss by someone other than the defendant, be sure to bring a motion atthe commencement of trial -- a motion known as a “motion in limine” -- to excludeevidence of this collateral source.


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