When you’re injured in a car crash or another type of accident, you may incur extensive medical bills and other damages. Often, injured parties receive coverage for a portion of these expenses through health insurance, workers’ compensation, or other third-party benefits.
At Casares Injury Law, we frequently guide clients through these situations and help them understand whether a court will reduce the damages owed because someone else already paid for some losses. Colorado’s collateral source rule provides the answer to this question.
What is the Collateral Source Rule?
The collateral source rule is a legal doctrine that protects personal injury plaintiffs from having their compensation reduced simply because they received help from an outside source. The philosophy behind the rule is that the at-fault party should not benefit from you having insurance or other financial support.
The rule ensures that negligent individuals and entities are held fully accountable for the harm they cause and that injury victims receive the full sum awarded by a jury or court.
How the Collateral Source Rule Works in Colorado
Colorado applies the collateral source rule in two stages:
- During trial (evidentiary phase)
- After trial (post-verdict reduction phase)
These procedures are governed by Colorado Revised Statutes § 13-21-111.6.
1. During Trial
During trial, the jury cannot hear evidence that your medical bills or other losses were paid by a collateral source like private insurance. This protects the fairness of the trial and ensures the jury calculates damages based solely on the actual harm suffered, not whether the plaintiff already received partial compensation.
2. Post-Trial
After the jury issues a verdict, the court may reduce the award to reflect amounts paid by collateral sources if these sources do not have a legal right to reimbursement (i.e., subrogation). Subrogation rights typically come from insurance contracts or statutes.
If the collateral source has subrogation rights, then the court cannot reduce the jury’s award.
If the collateral source does not have subrogation rights, then the judge may reduce certain economic damages (like medical expenses) to prevent double recovery.
For example, suppose you are awarded $100,000 for medical expenses by a jury. However, your private health insurance already paid $70,000 of those costs.
If your insurer has no subrogation rights, the judge may reduce your award by $70,000 to avoid a double recovery. If your insurer has subrogation rights, then you are entitled to the full $100,000 to reimburse the insurer.
Exception for Workers’ Comp Cases
In 2021, the Colorado Supreme Court created a narrow exception to collateral source protections in workers’ compensation cases. In Delta Airlines v. Scholle and Gill v. Waltz, the Court ruled that defendants can extinguish a plaintiff’s right to recover past medical expenses in a third-party injury lawsuit by settling directly with the plaintiff’s workers’ compensation carrier.
Injured victims may still pursue other damages not covered by the workers’ compensation settlement, including non-economic damages.
Contact Our Experienced Castle Rock Car Accident Lawyer for Help After an Injury
The collateral source rule helps maintain fairness in personal injury claims. Without it, negligent parties could shift the financial burden onto insurance companies or even the victim, thereby avoiding full accountability for their actions.
After an accident, an experienced Castle Rock car accident attorney can help you navigate insurance coverage, subrogation rights, and Colorado’s collateral source rule. Contact Casares Injury Law in Castle Rock today to schedule a free consultation to understand your rights. We’ll help ensure that collateral sources are properly addressed and your rights are protected at every stage of litigation.