Maryland Collateral Source Rule Explained
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Maryland’s collateral source rule provides those injured in an accident the right to recover the full value of the cost of treatment and other economic losses, even to the extent that those values exceed out-of-pocket costs.
The Effect of the Collateral Source Rule on Jury Awards
Juries are instructed that they are not to reduce an award for past and future medical expenses and loss of earnings because they believe the plaintiff has or will receive reimbursement or payment from another source, such as a health insurance policy or paid sick days from an employer.
Policy Objectives Shaping the Collateral Source Rule
The collateral source rule is based on two main policy objectives. First, the tortfeasor (the person who committed the wrongful act causing personal or financial loss) should not obtain a windfall because the victim maintains an insurance policy and second it encourages people to maintain insurance policies.
The Effect of the Collateral Source Rule on Insurance Payouts
The rule often comes up in the context of an automobile accident or other personal injury case. Generally, there will be some type of collateral source that covers all or part of the medical expenses for an injured party. This might be health insurance or a Personal Injury Protection (PIP) policy. With PIP, the plaintiff does not have to reimburse the carrier for monies paid out to cover medical bills.
A health insurance policy is contractual and generally the insurer will have a lien on the settlement of a plaintiff’s case. With health insurance, there is usually a negotiated rate between the provider and the insurance company. This means whereas if you are paying out of pocket a specific medical procedure might cost you $1,500, the hospital only charges the insurance company $600. The patient may pay only a $10 deductible. In making a claim against the defendant, the patient is entitled to be reimbursed the full $1,500, that is the retail cost of the procedure. The insurance company may have a lien for the $600 they paid the hospital, which means essentially that $900 goes into the plaintiff’s pocket.
Exceptions to Maryland’s Collateral Source Rule
There are some exceptions to the collateral source rule. For instance, evidence of a collateral source payment may be introduced where the plaintiff claims, falsely, that bills from an accident left them impoverished. There, evidence of a collateral source payment may be admissible for impeachment purposes. It seems, however, that the plaintiff could avoid these pitfalls by simply being truthful about their circumstances. In medical malpractice cases, a plaintiff may recover economic damages only for the amount paid for medical expenses, as opposed to the market value of those services rendered.
Insurance Adjusters Often Ignore the Collateral Source Rule
If you are negotiating your own personal injury case (a really bad idea), then you can be certain that some adjusters will try to discount the value of your claim based on payment from collateral sources. This may result in a settlement offer that is significantly less than you would expect if you are represented by a competent attorney.
Injured from a Car Accident in Maryland? Get Help Now.
Feeling confused about who’s to blame after a Maryland car accident? Medical bills and car repairs add stress to an already difficult situation.
Baldwin Briscoe & Steinmetz can help. Our Maryland car accident lawyers understand the intricacies of the collateral source rule. We’ll analyze the details of your case and fight for the compensation you deserve. Schedule a free consultation today to discuss your options.
This article is intended to provide general information only and is not legal advice. If you have specific questions about your situation, you should seek the advice of an attorney.
