Bucci & Dix

The Collateral Source Rule

The collateral source rule provides that a tort victim is entitled to recover from the wrongdoer the entire amount of his damages, regardless of whether he has already been compensated for those damages from another source, usually insurance.  For example, in a car accident case, the injured party's medical bills are often paid by his health insurance.  Notwithstanding this fact - which a jury is not allowed to know at trial - the victim may still recover again the entire amount of his medical bills from the wrongdoer, plus additional damages for pain and suffering.  In other words, the law does not allow a defendant to reduce a verdict against him by the amount a plaintiff has already received for his injuries from his insurance company.

Thus, the plaintiff in many personal injury actions has a "double recovery" because his medical bills are paid by his health insurance, and he then recovers the entire amount of those medical bills again from the Defendant.  The reason this happens is because a windfall is going to happen somewhere, and the law prefers that the victim receive the windfall, not the wrongdoer (and not private health insurance).

The collateral source rule is designed to balance two competing policies of tort law:  1) a plaintiff is entitled to compensation that makes him whole, but no more; and 2) a defendant is liable for all the damages he proximately causes.  Acuar v. Letorneau, 260 Va. 180 (2000).  When the victim of a car accident has private health insurance, either he will receive a double recovery or the wrongdoer will not be required to pay for the damages he has caused.  Courts have resolved this conflict by allowing the plaintiff the double recovery, ensuring that those who commit a wrong are required to pay for it, and maintaining the deterrent effect such a rule creates.