A: This is a rule that says that someone who brings a lawsuit seeking compensation for injuries that were caused by someone else's wrongdoing cannot recover twice for those same damages.
Here's exactly what I mean.
In a lawsuit involving claims of negligence, medical malpractice or wrongful death we will often claim that as a result of the wrongdoing or death, the victim incurred medical expenses solely as a result of the wrongdoing.
Let's say that your medical expenses totaled $20,000.
Let's also say that you have health insurance and that your health insurance company paid all of your medical expenses. That means you did not have to pay any money out of your own pocket. Your health insurance company was legally obligated to pay for your medical bills. Since you did not actually incur any out-of-pocket expenses for your medical bills, you would not be able to get reimbursed for those $20,000 in medical bills.
The reasoning behind that is simple.
If you had no health insurance, and instead had to pay the $20,000 out of your own pocket, then it makes absolute sense that you could claim that the person who caused your injuries was now obligated to repay you the $20,000 in your medical bills.
The collateral source rule simply turns that common sense into a rule of law. Basically, it says that you cannot recover your expenses if somebody else paid for them.
There are many nuances and complexities to this particular rule. However, the bottom line is very basic. If you had to pay money out of your own pocket for medical expenses, then you are entitled to get repaid if you are successful in your lawsuit.
If someone else such as a health insurance company, Medicare or Medicaid paid your medical bills, then you would not be entitled to receive compensation that reimbursed you for those bills. Some of the complexities arise when agencies like Medicare and Medicaid then demand to be repaid the amount of money that they paid on your behalf out of the proceeds of your lawsuit.