The collateral source rule in a personal injury case disallows evidence that the claimant received compensation for damages from sources other than the defendant. Under the rule, any evidence that the plaintiff’s medical bills were paid by other sources such as medical insurance, workers’ compensation, Medicaid, or other sources is generally not admissible in court. By prohibiting such evidence of payments, the collateral source rule protects the injured party by preventing his/her damages from getting reduced by the amount of payments from third-party sources.
How the Collateral Source Rule Impacts Personal Injury Claims
In most personal injury cases, the collateral source rule applies to medical payments made by an insurance company for treatments associated with injuries. The collateral source rule permits the injured person to receive compensation from his/her insurance company, as well as the defendant who’s responsible for the injuries. The rule also prohibits jury members from considering any payments for damages other than payments made by the defendant.
The collateral source rule raises legal concerns about the impact of the collateral source benefit on tort recovery. Critics of the collateral source rule argue that an injured person should not receive a double recovery. Advocates of the rule argue that the at-fault party should be responsible for the cost of negligent behavior, and the injured party’s compensation for injuries should not be reduced because he/she purchased insurance prior to the injury. In most cases, the collateral source rule prevails regardless of the type of breach, type of loss, or type of collateral benefit.
A number of state legislatures have passed laws reforming the collateral source rule. These reforms may add up to narrow or broad exceptions to the rule. In Illinois, the collateral source rule has a long-standing history dating back 150 years. Today, it continues to have a major impact on claims and compensation for damages in personal injury cases. In most cases, Illinois courts uphold the collateral source rule and do not reduce damages owed by the defendant to the plaintiff for injuries.