Collateral Source Evidence

I’m Katelyn Holub, an attorney focusing on personal injury law in northwest Indiana.

Welcome to Personal Injury Primer, where we break down the law into simple terms, provide legal tips, and discuss personal injury law topics.

In today’s podcast, we discuss an evidentiary rule called the Collateral Source Rule.

The Collateral Source Rule deals with the admissibility of collateral source evidence in personal injury or wrongful death actions.

The rule is based on a statute.

The rule addresses whether the court in a civil trial for injuries or death can admit evidence of:

• payments of life insurance or other death benefits;
• insurance benefits for which the Plaintiff or members of the Plaintiff’s family have paid directly; or
• payments made by:

(i) the state or the United States

Here is how the rule comes into play.

Suppose a mom and a child are in a car crash caused by a semi-tractor trailer’s negligence where a load of logs breaks loose and slams into the car. The mom dies, and the surviving parent and severely injured child sue the trucking company.

Now suppose the mom had life insurance of $1,000,000, and the child is a beneficiary.

Without the collateral source rule, the trucking company could offer evidence of the $1,000,000 policy. The trucking company could then argue the child is now a millionaire, so the child suffered no real damage in losing their mother.

As reprehensible as that argument is, without the collateral source rule, proof of the insurance policy and payment would be admissible.

Suppose, in the same case, the injured child fractured their spine and incurred $1,000,000 in hospital bills, but because the family had health insurance, all the bills got paid.

Again, as bad as it sounds, proof of payment of those hospital bills would come into evidence without the collateral source rule. Proof of bill payments would permit the logging company to argue that the child’s medical charges were paid. So it should not be held legally responsible for any harm the crash caused the child.

The law recognizes that such proof of collateral payments really has no place in a trial.

The trucking company did not pay the life insurance premiums or the health insurance premiums. The family paid those premiums.

In a typical personal injury case, a plaintiff’s medical expenses may be paid by several collateral sources, including medical payments coverage under automobile insurance, private health insurance, or government programs such as Medicare, Medicaid, or Health Care for the Indigent (HCI) or under the Affordable Care Act.

Defendants in personal injury litigation frequently seek to reduce a plaintiff’s recoverable damages by introducing evidence of these collateral source payments.

Such attempts are contrary to the letter and the spirit of the Indiana Evidence Rules and the Collateral Source Statute.

A civil trial’s goal is to assess damages and tally up the harms levied against the victim.

Defendants often argue that the collateral source rule permits a plaintiff to make a double recovery. But nearly every health insurance policy has a provision requiring reimbursement if money is received from the wrongdoer. This precludes a double recovery.

As noted, the purpose of a civil trial is to place a value on harms suffered by the victim.

The jury is not charged with adding up compensation received or determining whether such compensation has to be paid back.

Such issues are handled after the jury assesses damages and determines fault.

I hope you found this information helpful. If you are a victim of someone’s carelessness, substandard medical care, a product defect, work injury, or another personal injury, please call (219) 736-9700 with your questions. You can also learn more about us by visiting our website at DavidHolubLaw.com – while there, make sure you request a copy of our book “Fighting for Truth.”