Collateral source rule
Encyclopedia
The collateral source rule, or collateral source doctrine, is an American case law
Case law
In law, case law is the set of reported judicial decisions of selected appellate courts and other courts of first instance which make new interpretations of the law and, therefore, can be cited as precedents in a process known as stare decisis...

 evidentiary rule that prohibits the admission of evidence that a victim's damages were or will be compensated from some source other than the damages awarded against the Defendant. For example, in a personal injury action, evidence that the Plaintiff's medical bills were paid by medical insurance, or by Workers' Compensation
Workers' compensation
Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence...

, is not generally admissible.

The collateral source doctrine has come under attack by "tort reform
Tort reform
Tort reform refers to proposed changes in common law civil justice systems that would reduce tort litigation or damages. Tort actions are civil common law claims first created in the English commonwealth system as a non-legislative means for compensating wrongs and harm done by one party to...

" advocates. They argue that if the Plaintiff's injuries and damages have already been compensated, it is unfair and duplicative to allow an award of damages against the tortfeasor. As a result numerous states have altered or partially abrogated the rule by statute
Statute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...

.

However, the collateral source doctrine dates back to 1854, and is intended to promote justice and to assess remedies for fault against the tortfeasor, rather than allowing him to avoid responsibility for setting the losses in motion. In addition, many insurance or other payment sources that do pay for damages gain a lien
Lien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation...

 or subrogation
Subrogation
Subrogation in its most common usage refers to circumstances in which an insurance company tries to recoup expenses for a claim it paid out when another party should have been responsible for paying at least a portion of that claim....

 interest in the ultimate recovery. This means that the injured person must pay back his health insurer before he collects anything. If evidence of the collateral source is admitted and the fact-finder reduces the award to compensate for the already-paid damages, this can result in undercompensation for the injury, as the lien holder will generally attempt to recover the full value of any lien, thus leaving the plaintiff uncompensated for lost earnings, pain, anguish, or other non-economic damages.
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