Woodland Hills personal injury attorney Barry P. Goldberg is often confronted with situations where there are multiple sources of insurance recovery for his clients. Many clients do not realize that the “Collateral Source Rule” may reward them for having their own insurance— even if that may involve a “double recovery.” Recently, the collateral source rule has been under attack particularly in the context of medical billing and awards of past medical expenses. However, the rule has been used successfully in other areas such as property damage and underinsured motorist coverage.
The collateral source rule “provides that if an injured party received some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor.” (Hrnjak v. Graymar, Inc. (1971) 4 Cal.3d 725, 729, emphasis added; Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1, 6 (Helfend).) The rule “expresses a policy judgment in favor of encouraging citizens to purchase and maintain insurance for personal injuries and for other eventualities. Courts consider insurance a form of investment, the benefits of which become payable without respect to any other possible source of funds. If we were to permit a tortfeasor to mitigate damages with payments from plaintiff’s insurance, plaintiff would be in a position inferior to that of having bought no insurance, because his payment of premiums would have earned no benefit.” (Helfend, supra, at p. 10, emphasis added.)
The collateral source rule applies in property damage cases (Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 40.) Many insurers contend that they are liable only for items such as unpaid property damage deductibles. However, such a position violates a policy behind the collateral source rule, namely that the tortfeasor “should not be able to avoid payment of full compensation for the injury inflicted merely because the victim has had the foresight to provide [herself] with insurance.” (Helfend, supra, 2 Cal.3d at p. 10, emphasis added.)
The collateral source rule “is intended to ensure that the right of an injured party to be fully compensated for all his or her damages is protected, even if in some instances it entails that party obtaining double recovery from both the insurer and the wrongdoer.” (Miller, supra, 103 Cal.App.4th at p. 379, emphasis added.)
Notwithstanding the Collateral Source Rule, “double recovery” by plaintiffs occur infrequently because, upon payment, the insurer is subrogated to the rights of the insured as against the defendants who caused the injury, or the insurer may seek a refund from its insured. Only by consulting with an experienced personal injury attorney will most well insured plaintiffs learn whether the rule inures to their benefit and they may obtain a larger recovery than they thought possible.