The Collateral Source Rule: Recovering for Medical Expenses After Reimbursement

August 24, 2018

If you have been seriously injured in an accident that resulted from the negligent, reckless, or wrongful misconduct of another party, then Pennsylvania law may give you a right of action to sue and recover damages for the suffered losses.  Many plaintiffs with legitimate claims are concerned about their right of recovery, however, given the likelihood that many of their losses will be reimbursed thanks to their insurance coverage.

Simply put, injured plaintiffs may be confused as to whether they are entitled to damages if the losses giving rise to such damages are actually covered by a third-party source (i.e., through insurance or other benefits).  For example, if you are injured in a slip-and-fall accident, then you may have significant medical expenses — perhaps $300,000 in total, considering various treatments and surgeries and rehabilitative engagements over a multi-year period.  Now, what if all your medical expenses were covered by your insurer?  In total, then, your out-of-pocket medical expenses would be zero.  Claiming the pre-reimbursement expenses as a loss is entirely within your rights as an injured claimant, but this can be confusing for first-time plaintiffs.

Pennsylvania imposes the collateral source rule, which — as in many other states — heavily favors the injured plaintiff by prohibiting the introduction of evidence regarding third-party reimbursements and benefits that cover the losses at-issue.

Let’s take a look at the basics for a clearer understanding.

Basics of the Collateral Source Rule in Pennsylvania

Stated succinctly, the collateral source rule prevents the introduction of evidence relating to third-party reimbursement or benefits.  Such evidence is inadmissible, and even if it were admitted, the jury would not be allowed to consider it when making their damages determination.

Returning to our previous $300,000 slip-and-fall accident example, the defendant would not have a right to introduce evidence of your health insurance coverage, and how it covered all of your out-of-pocket expenses.  The jury would therefore have no clue as to whether or not your losses were reimbursed.

The collateral source rule — in Pennsylvania and in those others states in which the rule perpetuates — is intended to encourage intelligent risk planning.  Plaintiffs who purchase insurance coverage should not be punished for doing “the right thing” and minimizing the risks imposed by a catastrophic injury (and subsequent losses).

The Collateral Source Rule and Financial Windfalls

The collateral source rule undeniably leads to a financial windfall in situations where the plaintiff is able to secure third-party reimbursement (or benefits) as well as damages pursuant to a lawsuit brought against the defendant.  This is not necessarily an unjust result, however.  If the jury were allowed to consider evidence of third-party reimbursement (in contravention of the collateral source rule), then they might give the defendant a financial windfall — arguably a more unjust result.  If the defendant’s liabilities were reduced by the fact that the victim smartly invested in adequate health insurance coverage, for example, then that would unfairly benefit the defendant while punishing the plaintiff.

Schedule a Free and Confidential Consultation With a Skilled Doylestown Injury Attorney

Here at Drake, Hileman & Davis, PC, our team of attorneys boasts decades of experience representing injury victims in a range of personal injury disputes, including those that involve substantial third-party reimbursement and benefits.  We understand how to effectively navigate the complexities of injury litigation in Pennsylvania, particularly in cases where the possibility of a plaintiff “double recovery” may make the defendant more hostile or aggressive.

Unlike many other injury litigation firms in Pennsylvania, we are deeply committed to comprehensive, client-oriented advocacy, and this approach to litigation has brought us a number of successes over the years.  Call (610) 433-3910 to schedule a free and confidential consultation with an experienced Doylestown injury attorney at Drake, Hileman & Davis, PC today.