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What Is the Collateral Source Rule and How Does it Affect My Injury Case?

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What is the collateral source rule?

Under Virginia law, the collateral source rule means that at trial, the insurance defense lawyers cannot talk about the fact that an injured victim’s medical bills, wage loss, or medications may have been paid for by someone else. For example, in a car crash case, if the plaintiff’s medical bills have been paid for by his/her health insurer, a Workers’ Compensation insurance company, or their car liability coverage for medical payments (MedPay), the other side is not allowed to talk about it.

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After a car crash, dog bite attack or other injury, medical bills pile up. The insurance companies often delay, deny or reduce why the doctors and hospital charge for treatment.

Payments by the following are considered collateral sources:

1. Health insurance company
2. Workers’ Compensation insurance company
3. Auto liability insurance company
4. Short and/or long-term disability insurance company
5. Social Security administration under the federal disability plan
6. Wage continuation despite time loss from work by an employer

What is the rationale for this?

The law in Virginia takes the position that a defendant should not profit by virtue of the injured plaintiff having the foresight, and making the payments, in order to have health, workers’ comp, automobile liability or other coverages in place. It seems manifestly unfair that if the injured victim pays $3,800 a year for health insurance, such that his insurance pay 80% of the bills after a crash, that the unsafe driver who caused the accident should get the benefit of those payments. The law generally takes the position that between the negligent unsafe individual and the innocent, injured victim, the one who is at fault should bear the cost of the harms and losses.

While certain federal government ERISA plans and other insurance may have a “payback” provision (sometimes called “subrogation” in legal terms), Virginia’s anti-subrogation law helps the injured plaintiff to retain the amount of his/her verdict or settlement in many cases.

Generally, in trials, the word “insurance” is not allowed to be mentioned. In fact, the only mistrial that has ever occurred in Herndon injury lawyer Doug Landau’s 36-year career so far happened in the Arlington Circuit Court after not one, not two, but three witnesses all mentioned the word “insurance” and Judge Kendrick declared a mistrial. When that “hit and run” car crash case was re-tried some months later, attorney Landau’s clients received a favorable verdict.

The practical effects of the collateral source rule:

At trial, is the medical bills total $48,000 and insurance has paid $42,000, the plaintiff is not restricted to only presenting $6,000 for that aspect of his/her losses. Under Virginia law, the plaintiff gets to put the full, gross amount of the medical bills on the board and into evidence before the jury. So, in this instance, the plaintiff would be able to present the full $48,000 and a verdict by the jury, IF they found that the bills equating that amount are reasonable, causally related to the accident and by referral from a doctor.

While this is the law in the Commonwealth of Virginia, for cases in other states, you should check with counsel to make sure what the rules are with respect to the amounts of medical bills, wage loss and other harms that you wish to submit to a jury for consideration in making their verdict in your favor.

If you or someone you know has been in a car crash, suffered from a dog attack, or have been injured in some other fashion that was not your fault, please contact us at once by phone (703-796-9555) or email here on our Abrams Landau, Ltd. website. We look forward to helping you and your loved ones right away as there are strict legal time limits for these kinds of cases.