What Is the Collateral Source Rule?
The Colorado collateral source rule states that even if an insurance policy or another collateral source pays your medical expenses, the defendant will be liable for the full amount of your medical bills. The collateral source rule aims to hold at-fault parties liable for their actions, even if someone else has already paid for the victim’s medical bills. If you had $10,000 in medical bills and your auto insurance policy gave you $10,000 to cover them, the defendant would still owe you $10,000 because of the collateral source rule.
The reasoning behind the collateral source rule is to place accountability with the party that caused the accident, regardless of whether someone else has already paid part or all of the victim’s expenses. It will be the defendant’s job to pay back the insurance company or other collateral source that initially reimbursed the plaintiff. The collateral source rule brings justice to the person or entity that caused the accident. Otherwise, the defendant would get off without having to pay anything for his or her negligence – or paying very little to cover the victim’s out-of-pocket expenses alone. The collateral source rule maintains a fair case outcome.
How Does the Source Rule Affect Medicaid/Medicare Benefits?
The collateral source rule will not get in the way of you receiving Medicaid or Medicare benefits for your personal injuries and medical bills. Your health insurance provider will still pay for your bills as it would under normal circumstances. However, Medicaid/Medicare will expect reimbursement for the amount it paid to cover your medical bills from the at-fault party. It will be the defendant’s responsibility to pay Medicaid/Medicare benefits back on your behalf.
You will not receive reduced benefits or compensation from your insurance company because of the collateral source rule. Medicare/Medicaid will give you the same amount of coverage. If you win a settlement or verdict against a defendant, it will become the defendant’s responsibility to repay your health insurance provider.
How Do Uninsured/Underinsured Motorists Affect the Source Rule?
If an uninsured or underinsured motorist causes your accident, your collateral source case may look a little different. Instead of the defendant’s insurance company repaying your medical and out-of-pocket expenses, this burden may fall to your own insurance company. It will be your auto insurer that compensates you and repays the collateral source for covering your medical bills, not the defendant’s insurance company. If the defendant has insurance, but not enough to cover your needs, your insurance provider will fill the gaps.
In an uninsured/underinsured motorist case, it is always wise to consider whether a third party also played a role in causing your accident. If your seatbelt did not properly protect you from injury, for example, you may have a claim against the seatbelt manufacturer. A successful third-party claim could mean someone else’s insurance company reimbursing Medicare/Medicaid or another collateral source rather than your own. Speak to an attorney about your rights if an uninsured/underinsured motorist caused your recent accident.
The Supreme Court Case
The case of Arnold Calderon v. American Family Mutual Insurance Co. (AMFAM) was elevated to the CO Supreme Court in last month. The other driver in the accident, who was at-fault, was uninsured. Calderon’s auto insurance policy with AMFAM included a $300,000 limit for Uninsured Motorist/Underinsured Motorist (UM/UIM) coverage and $5,000 in “Med Pay” coverage. AMFAM paid $5,000 for his medical bills directly to the providers under MedPay; however, they disputed the UM/UIM claim. Calderon filed suit and a jury in a CO District Court awarded him $68,338, which was reduced by $5,000 for the amount already paid.
Colorado MedPay (MPC) Insurance
Beginning in 2009, auto insurance providers in Colorado were required to offer $5,000 in MedPay coverage within their policies. Drivers must “opt-out” of coverage, otherwise the plan and added premium will be in force. This coverage is designated for paying driver and passenger(s) medical, hospital and rehab costs regardless of fault.
Provisions in the UM/UIM Policy
The AMFAM policy states that claimants may not receive multiple payments for the same loss. Amounts paid under UM/UIM will have a reduction to account for any other payments made in the policy. Coverage limits will not be reduced below any minimums that the law requires.
The Appeals Case
The CO Appeals Court affirmed the lower court ruling which allowed for the $5,000 reduction. They found that an insurer may reduce payments under the UM/UIM coverage by an amount equal to what was already paid under MedPay. Otherwise, they found that this would be a case of “double recovery”.
The CO Collateral Source Rule
Under common law, compensation received from an alternate or collateral source did not affect the damages that a plaintiff could recover. This prevented the defendant from benefitting due to the plaintiff’s insurance. The CO statute does limit receiving “double” compensation in personal injury matters. Damage awards must have a deduction to account for funds received from another individual, business, etc. This limitation does not apply if the source of compensation that the plaintiff receives is based on a contract entered into.
Supreme Court’s View
The tortfeasor in the case is the uninsured driver that caused the action. The collateral source exception rule explains that when the plaintiff’s other source of funds was based on a contract that they are enrolled; the tortfeasor may not reduce it accordingly. In this case, AMFAM is effectively in the role of the tortfeasor (uninsured driver); therefore, is also prevented from applying a reduction.
When Should You Contact a Denver Personal Injury Attorney?
Insurance companies do not have an obligation to tell you about the Colorado collateral source rule. Instead, they may try to tell you that since you have insurance that has already covered your losses, the defendant does not owe you anything, or only owes for your out-of-pocket expenses. This is not the case. The law in Colorado holds the defendant financially responsible for your medical expenses regardless of whether a collateral source has already paid them.
You may need a Denver personal injury attorney to assist if the defendant’s insurance company is making it difficult for you to receive payment for your medical bills. Insurance claims adjusters do not want to help you. Instead, they want to save money by convincing you to settle for as little as possible. A lawyer can take over claim negotiations to ensure that the insurance company does not take advantage of you.
Have the reckless or careless actions of another driver caused you severe injuries? In Colorado, injury victims are eligible to recover financial retribution from those responsible. The Law Firm of Jeremy Rosenthal has acted as a champion on behalf of those who have experienced such hardship and losses by aggressively pursuing these cases. Contact the office today for a free initial consultation at (303) 825-2223.