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Exploring Colorado’s Collateral Source Rule: What Injury Victims Should Know

On Behalf of | Nov 20, 2024 | Firm News

When you’re injured due to someone else’s negligence, the compensation you receive can make a critical difference in covering medical bills, lost wages, and other damages. However, if you’ve received payments from your insurance company or other sources, you might wonder how that affects your legal claim. In Colorado, this issue is addressed by the collateral source rule, a legal principle designed to ensure fairness in personal injury cases.

What Is the Collateral Source Rule?

The collateral source rule governs how payments from third-party sources—like insurance or government benefits—impact a plaintiff’s compensation in a lawsuit. Essentially, it prevents a defendant from reducing their liability by arguing that the plaintiff has already received compensation from other sources.

For example:

  • If you were hurt in a car accident and your health insurance covered $20,000 in medical bills, the defendant cannot use this as a reason to pay you less for your injuries.

The rule ensures that negligent parties are held accountable for the harm they cause, regardless of the victim’s financial safeguards.

Colorado’s Take on the Collateral Source Rule

Colorado applies a modified version of the collateral source rule, outlined in Colorado Revised Statutes §13-21-111.6. This approach balances fairness for plaintiffs while preventing double recovery in certain situations.

Here’s how it works:

During Trial

  • Evidence of collateral source payments is not introduced to the jury during the trial.
  • This ensures the jury focuses only on the defendant’s liability and the total damages caused by their negligence, without being influenced by external compensation.

Post-Verdict Considerations

  • After a verdict is reached, the court can consider collateral source payments and decide whether the plaintiff’s damages award should be reduced.
  • However, the law protects some payments from being deducted, such as:
    • Out-of-pocket payments made by the plaintiff.
    • Payments subject to subrogation, meaning the third-party payer (e.g., your insurance company) has the right to recover those funds from the plaintiff’s settlement or award.

This two-step process ensures accountability while addressing the potential for double recovery.

Why the Collateral Source Rule Is Important

The collateral source rule protects injury victims from being unfairly penalized for having insurance or other benefits. Without it, defendants could use a plaintiff’s financial planning or employment benefits as an excuse to minimize their responsibility.

At the same time, Colorado’s approach prevents excessive recoveries, balancing the interests of plaintiffs, defendants, and insurers.

Common Questions About the Collateral Source Rule

  • Does the rule apply to all types of cases?
    No, the rule primarily applies in personal injury cases. Other claims may have different rules regarding collateral sources.
  • What is subrogation, and how does it affect my case?
    Subrogation occurs when your insurance company pays for your damages and then seeks reimbursement from your settlement or award. Because subrogation rights protect insurers, these payments are excluded from post-verdict deductions.
  • Can the rule affect settlement negotiations?
    Yes. Understanding how the collateral source rule applies in your case can influence how much compensation you’re likely to recover and how the opposing party approaches settlement talks.

How a Lawyer Can Help

Navigating the complexities of Colorado’s collateral source rule requires in-depth knowledge of personal injury law. An experienced attorney can help ensure your compensation fully reflects your losses and advocate for your rights against defendants who may try to minimize their liability.

At Law Offices of Clifton Black, we’re committed to helping injury victims understand their legal options and recover the maximum compensation they deserve. If you have questions about how the collateral source rule might affect your case, contact us today for a free consultation.

Don’t let the complexities of the law stand in the way of your recovery. We’re here to guide you every step of the way.

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