Collateral Source Rule - Unfair Tort Law?
Tort reform organizations often paint a very erroneous picture when it comes to injury settlements. They make it seem that every stubbed toe is worth a million dollars, or that getting insulted or getting your feelings hurt is practically a guarantee of an enormous financial settlement.
As personal injury attorneys who practice in the Washington, D.C. area, we can tell you with great certainty that that is not the case. While we do our best to secure the most compensation for injuries that we can for our clients, getting to that point is not the walk in the park that the tort reformers describe.
There is an important aspect to injury verdicts or settlements which many people are unaware, and this is that quite often, an injury settlement has strings attached. It is not simply a big bag of money or an enormous cardboard check that is handed over to the victim as soon as he or she walks out of the courtroom. For one thing, your insurance company might need to be paid.
As an example, let’s say for the sake of argument that you are walking across Wisconsin Avenue and you get hit by a car that ran a red light. The ambulance takes you to the hospital and you get treated. If you are like most injury victims, the last thing on your mind is sorting out which insurance company is going to pay for what. You simply hand over your insurance card and let them get on with it.
Once you recover and decide to pursue legal action against the person who hit you, that’s when things get tricky. If you end up winning a settlement or a judgment against the driver, your health insurance company will often place a lien on your personal injury settlement or judgment in order to recoup their costs for your medical treatment. The idea is that your insurance company rightly believes that since another party was at fault, they paid for medical services that they were under no legal obligation to pay for.
The legal term for this process is called subrogation, and it is a fairly common occurrence in injury cases. What is fortunate about the process is that insurance companies are only allowed to be reimbursed for what they paid for in medical expenses, and not all of what you received for medical expenses in your settlement or judgment. So if your insurance company paid $9,000 in medical expenses and you received $20,000 for medical expenses in your settlement, the insurance company is only allowed to file a lien for the $9,000 that they actually paid.
The question that many of you might be asking is “Why would I get a settlement for $20,000 in medical expenses if it only cost the insurance company $9000?” The answer to that question is that under Maryland law, there is an evidentiary rule that prohibits the admission of evidence that a victim will be compensated from a third party in a tort case. This prevents the person who was responsible for the injury from saying “What’s the big deal? He got his bills paid for. No harm, no foul, right?”
This part of Maryland law is known as the “Collateral Source Rule,” and it is a very important element of what the attorneys at Greenberg and Bederman are trying to do for our clients. When we represent an injury victim, our intention isn’t to simply get the bills paid and nothing more. The vast majority of our clients have been injured due to the negligence of someone else. They were hit by a driver that wasn’t paying attention, or their doctor made an easily preventable negligent error.
The Collateral Source Rule has been in place for as long as we can remember, and it is, of course, one of the main targets of tort reform organizations everywhere. They argue that it is unfair for a defendant to have to pay more for medical expenses that what the victim’s insurance companies paid, to which we say hogwash. For one thing, insurance companies carry negotiating weight that individuals do not. An insurance company that brings thousands of patients to hospitals and clinics can very easily ask for a lower price, while individuals carry no weight whatsoever. Nor do insurance companies negotiate lower prices on behalf of their patients. They do so on behalf of themselves. And again, a tort case is not simply a tit for tat accounting of dollars and cents. It is a legal way of both rectifying financial damages and bringing the responsible parties to account for their actions. It is important to remember that the driver hit you, not Blue Cross Blue Shield. And the Collateral Source Rule is the courts way of recognizing that.
If you or a loved one has been injured in an accident, contact Greenberg and Bederman for a free legal consultation today.
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