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August 31 - Newsblog #1
Your Injury Attorneys in the News: Homeowner and Wife Sue over Police Shooting
September 7 - Newsblog #2
Your Injury Attorneys in the News: Homeowner’s Possession of Handgun Legal Under 2nd Amendment
September 14 - Newsblog #3
Your Injury Attorneys in the News: if a Government or Government Agency is at Fault, You Can Sue
September 21 - Newsblog #4
Your Injury Attorneys in the News: Lawsuit Against Police Department Invokes the Civil Rights Act
September 28 - Newsblog #5
Your Injury Attorneys in the News: a Clear Line from the Action – or Inaction – to the Injury
October 12 - Newsblog #6
Your Injury Attorneys in the News: Police Insensitivity Turns Traffic Stop into a Travesty
October 19 - Newsblog #7
Your Injury Attorneys in the News: Police Who Abuse Power Must Be Held Accountable, Law Professor States
October 26 - Newsblog #8
Your Injury Attorneys in the News: Holding Overly Aggressive Police Accountable
November 2 - Newsblog #9
Your Injury Attorneys in the News: Brown Vs. Impd Case About Much More Than Punishment or Money
November 9 - Newsblog #10
Your Injury Attorneys in the News: Improper Medical Diagnosis and Care Resulted in Loss of an Eye
November 16 - Newsblog #11
Your Injury Attorneys in the News: Medical Malpractice Claims Have a Front End and a Back End
November 30 - Newsblog #12
Your Injury Attorneys in the News: Truths About Medical Malpractice
December 7 - Newsblog #13
Your Injury Attorneys in the News: Yes, You Can Sue City Hall
December 14 - Newsblog #14
Your Injury Attorneys in the News: Slip and Fall Changes Two Lives Forever
December 28 - Newsblog #15
In the News: Ramey & Hailey Year in Review
January 4 - Newsblog #16
In the News: Teen’s Sexual Abuse Case Calls Attention to the Problem
January 11 - Newsblog #17
In the News: Parents of Survivor Sue Parents of Shooter
January 18 - Newsblog #18
In the News: Erin Brockovich Teams Up with Indiana Moms
January 25 - Newsblog #19
Your Injury Attorneys in the News: Case Settled in Favor of Catastrophic Slip and Fall Injury Victim
January 31 - Newsblog #20
In the News: Wrongful Death Lawsuit Filed Against Rehab Facility
February 8 - Newsblog #21
In the News: Nurse Arrested in Sexual Abuse Case
February 15 - Newsblog #22
In the News: Running the Clock on Indiana Medical Malpractice
February 22 - Newsblog #23
In the News: to Repeal or Not to Repeal – Indiana Legislators Rule “not”
March 1 - Newsblog #24
In the News: Helping Physicians Keep Helping
March 8 - Newsblog #25
In the News: Parents of Brain-damaged Infant Sue Hospital
March 15 - Newsblog #26
In the News: Owner of Gun Wins Decision
March 22 - Newsblog #27
In the News: Indiana House Passes Long Term Care Protections Bill
April 5 - Newsblog #28
In the News: Slip-and-fall Victim Wins Right to Sue Dollar Tree
April 12 - Newsblog #29
In the News: Inspection Report Shows Vets Harmed at 52 Nursing Homes
April 19 - Newsblog #30
In the News: Sandwich Diversion Causes Fatal Two-semitrailer Crash
April 26 - Newsblog #31
In the News: Does Premises Liability Cover Goose Attacks?
May 10 - Newsblog #32
Two-week-old N.y. Verdict Offers Takeaways for Slip and Fall Victims
May 17 - Newsblog #33
In the News: Barrel Blast Triggers Wrongful Death Lawsuit
May 24 - Newsblog #34
In the News: when a Product Manufacturer is Not at Fault
May 31 - Newsblog #35
In the News – College Doc’s Sexual Abuse of Students Coming to Light
June 7 - Newsblog #36
In the News – One Week, Four Motorcycle Accidents
June 14 - Newsblog #37
List of Troubled Nursing Homes Released
June 21 - Newsblog #38
In the News: Kansas No-caps Ruling Changes Personal Injury Climate
June 28 - Newsblog #39
In the News: Jury Awards $10.5 Million for Pain and Suffering in Birth Injury Case
July 5 - Newsblog #40
In the News: More Indicted in Last Year’s Duck Boat Tragedy
July 17 - Newsblog #41
In the News: Richard Hailey on Litigation Team for Lawsuit Vs. Tesla
July 24 - Newsblog #42
In the News: Malpractice Lawsuit Yields Largest Award in History
August 28 - Newsblog #43
In the News: Trucks V. Passenger Cars – Score 18:116. Everybody Loses

Litigation Newsletter

Collateral Source Rule

In addition to laws passed by legislatures, there exists a body of principles derived from court decisions and other judicial sources called the “common law.” Courts frequently rely on common law in deciding cases. One common law principle often followed in civil lawsuits, such as personal injury lawsuits arising out of auto accidents, is the “collateral source” rule.

The Collateral Source Rule

Under certain circumstances, the law allows individuals to sue for damages when injured as a result of the wrongful action, or “tort,” of another. One often stated goal of such litigation is to make the injured party “whole” again, i.e., to compensate for all damages suffered as a result of the tort. The collateral source rule is an exception to this goal, in that it may allow the injured party to recover more than his or her damages. Simply stated, the rule is that damages received by an injured party from a source wholly independent of the wrongdoer (and thus “collateral”) should not be deducted from damages owed by the wrongdoer (defendant) to the injured party (plaintiff).

For example, plaintiffs injured in auto accidents may be compensated by their own health or auto insurance carrier, receive government benefits, or be given money by relatives or an employer, to assist with any resulting financial crisis, but these amounts do not reduce the damage award against the defendant. Courts have even held that the rule can apply to discounts given by health providers, i.e., the health provider agrees to accept less than full payment. The discount can be treated as a collateral source, and the defendant may be assessed the full amount of the plaintiff’s health care, regardless of the discount.

While this may result in double recovery for a plaintiff, the rule reflects a judicial determination that the wrongdoer should compensate the victim for all damages caused and not be allowed a “windfall” as the result of a contract or relationship the victim may have with a third party. In the event that a windfall exists, the plaintiff should receive the benefit of it, not the defendant.

Application of the Collateral Source Rule

The exact nature and application of the collateral source rule can vary from state to state and even among different courts in the same jurisdiction. The rule may be applied:

  • To determine what damages are includable in a judgment.
  • To exclude evidence of payment to the plaintiff from a collateral source.

The reasoning behind exclusion of evidence about collateral source payments includes that it is irrelevant, as it cannot reduce any judgment for damages against the defendant, and may have a prejudicial effect on the jury, which may be unwilling to allow double recovery to the plaintiff. Courts have, however, created exceptions to the rule against admitting collateral source evidence, when it is relevant to some other contested issue in the case. Examples include:

  • To rebut testimony of a plaintiff or other party that the plaintiff was hurt financially as a result of the incident, e.g., was forced to return to work prematurely.
  • To impeach testimony that the plaintiff was forced to pay for his or her own medical care.
  • To show that the plaintiff continued to work, instead of being out of work, as claimed.

Case Law Examples on Admissibility of Collateral Source Evidence

In a 1970 Ohio Supreme Court case, the court ruled that testimony about payments from an employer while the plaintiff was convalescing from a car accident were barred by the collateral source rule. The plaintiff’s direct testimony was that she had “lost” wages. The defendant then questioned the plaintiff about payments from her employer to rebut the testimony that the wages were “lost” and to impeach her credibility. The trial court allowed the testimony, over objections, and the jury found for defendant. The Ohio Supreme Court ordered a new trial because of the prejudice in allowing testimony about collateral source payments from the plaintiff’s employer.

However, in a case decided by the court of appeals in the First Federal Circuit, the court affirmed the admissibility of questions to a Mother of a six-year old plaintiff regarding collateral insurance payments. The Mother’s testimony had created a false impression that medical expenses were causing financial hardship to the family. The court of appeals held that this put the existence of financial hardship at issue and the defendant had the right to establish that there were collateral payments from an insurance company to rebut the financial hardship claim.

Collateral Source Reforms

There have long been critics of the collateral source rule. A plaintiff collecting twice for the same damages has bothered many. Insurance companies have asserted out that they (and their customers) often pay for the windfall and the needlessly inflated damage awards.

Along with caps on damage awards and limits on fees charged by lawyers, reform (or abolition) of the collateral source rule has become part of a general movement towards “tort reform” in many state legislatures, as well as at the federal level. As a result, more than one-half of U.S. states have passed laws modifying the collateral source rule. These laws vary widely in breadth and details, but most include one or more of the following:

  • Allowing for introduction of evidence regarding collateral sources of payment, either before or after an award or judgment, and allowing the evidence to affect the judgment.
  • Mandatory or discretionary reduction of any judgment by amounts received from collateral sources.
  • Allowing a defendant to petition the court for reduction of an award because of collateral source payments.
  • Allowing reduction only for judgments over a certain amount.

Many of these state laws also create broad exclusions for evidence of certain types of collateral sources. Others limit applicability to certain types of cases, such as medical malpractice cases.

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  • Introduction to Tort Reform
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