The Collateral Source Rule

What is the Collateral Source Rule?

The collateral source rule is a rule of evidence that provides that if an injured party received some compensation for his injuries from a source other than the tortfeasor/defendant, evidence of such compensation is inadmissible. Thus, such compensation will not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor/defendant.

In California, there is no specific statute that excludes collateral source evidence. There is, however, a pervasive public policy that California is a proponent of the collateral source rule.

How it Applies to Medical Providers

Medical providers in California are an exception to the collateral source rule. In fact, California codified the collateral source exception with regard to medical providers in California Civil Code section 3333.1.

So when a medical provider is sued by an injured party, they can introduce evidence of reimbursement of plaintiff by insurance companies or other sources. If the medical provider loses the lawsuit, the damages owed by them could potentially be reduced by the amount that plaintiff recovered from other sources.

How it Applies to Government Entities

While there is a collateral source exception for medical providers, the same is not true for governmental entities. The collateral source rule applies to governmental entities in the same manner that it applies to all other defendants. So, in a lawsuit against a public entity for personal injury, the entity may not introduce evidence of payments to the plaintiff from any insurance providers or other similar source. California specifically codified the collateral source rule with regard to governmental entities in Government Code section 985.

Governmental entities have another option, though. Government Code section 985 allows them to file a post-trial motion requesting a reduction of the judgment by the amount of medical expenses that were covered by the Plaintiff’s private insurance provider or other private medical program. The court may, after considering the totality of the circumstances, determine what portion of those payments shall be reimbursed to the private insurance provider, used to reduce the verdict, or accrue to the benefit of the plaintiff.

If the plaintiff’s injuries were covered by a publicly funded medical insurance provider such as Medi-Cal or AFDC, then the court will, upon the filing of a timely and proper motion by a public entity, order reimbursement from the judgment to the provider.

Conclusion

Full recovery against a medical provider or public entity may be difficult, if not impossible. It is best to seek the consultation of an experienced personal injury attorney in your area to determine what amount of damages you may be entitled to.