Virginia courts follow the common law doctrine known as the collateral source rule in personal injury cases based on motor vehicle accidents and defective products. This is a good thing for plaintiffs, accident victims, and injured employees with both workers compensation and third party liability claims.
The article below explains the collateral source rule in Virginia and how you can use it to maximize your personal injury settlement and the income and benefits you receive following an accident caused by someone else’s negligence. Keep reading to learn more. And contact Richmond personal injury attorney and car accident lawyer Corey Pollard for a free consultation if you have more questions or are looking for top-quality legal help.
In personal injury cases Virginia bars defendants from seeking to limit damages because the plaintiff has insurance. This principle is known as the collateral source rule.
As stated by the Supreme Court of Virginia in Walthew v. Davis, 201 Va. 557, 563 (1960):
It is well settled that damages recovered for personal injuries or death caused by the negligence of another cannot be reduced by reason of the fact that the injured party or his estate has been partly compensated for the loss by the proceeds of an insurance policy.
Virginia codified the common law collateral source rule in the 1970s. Virginia Code Section 8.01-35, entitled “Damages for loss of income not diminished by reimbursement,” states:
In any suit brought for personal injury or death, provable damages for loss of income due to such injury or death shall not be diminished because of reimbursement of income to the plaintiff or decedent from any other source, nor shall the fact of any such reimbursement be admitted into evidence.
A negligent party or her insurance carrier, therefore, may not deduct from the settlement or verdict owed an injury party any amount of the benefits the injured party received from the injured party’s contractual arrangement with the injured party’s private health insurance carrier. The injured party may need to negotiate the medical and health care provider liens to net more money from the personal injury settlement or verdict, but that doesn’t require the negligent party’s involvement or permission.
In Acordia Insurance v. Genito Glenn, L.P., 263 Va. 377 (2002) the Supreme Court of Virginia used the following explanation found in the Restatement (Second) of Torts to describe the reason for the collateral source rule:
If the plaintiff was himself responsible for the benefit, as by maintaining his own insurance or by making advantageous employment arrangements, the law allows him to keep it for himself. If the benefit was a gift to the plaintiff from a third party or established for him by law, he should not be deprived of the advantage that it confers.
A negligent party may not benefit from an injured party’s receipt of compensation or medical treatment from other sources.
No. The collateral source rule applies to more than health insurance payments.
Though health insurance coverage is often the collateral source involved in personal injury and motor vehicle accident cases, the source may be someone or something else. For example, an employer, workers compensation insurance carrier, friend, or family member may provide medical payments, disability benefits, sick-leave payments, voluntary salary payments, or other kinds of help to a person injured in an accident. The collateral source rule applies to these types of payments and benefits.
As stated by the Supreme Court of Virginia in Schickling v. Aspinall, 235 Va. 472 (1988):
In the early cases, the collateral compensation involved was money paid the plaintiff by his own insurer. Later cases have applied the rule to social security benefits, public and private pension payments, unemployment and workers’ compensation benefits, vacation and sick leave allowances, and other payments made by employers to injured employees, both contractual and gratuitous.
No matter the collateral source, the negligent party and its insurance carrier may not use receipt of such benefits to diminish the amount they owe the injured party. The collateral source rule puts on the negligent person the full burden of his or her wrongdoing.
Proof of compensation from a collateral source, including insurance, is not admissible in personal injury trials in Virginia.
Virginia Rule of Evidence 2:411, entitled “Insurance,” states:
Evidence that a person was or was not insured is not admissible on the question whether the person acted negligently or otherwise wrongfully, and not admissible on the issue of damages. But exclusion of evidence insurance is not required when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.
The exceptions found in this evidentiary rule usually apply to subrogation cases, not negligence actions. For example, the negligent party’s insurance carrier may sue the defendant driver to recover the funds paid to you in a personal injury action. In this type of suit evidence of insurance may be admissible.
The collateral source rule applies to Virginia workers compensation in that a negligent party may not deduct the receipt of workers comp benefits, including the payment of lifetime medical treatment, temporary total disability, and permanent partial disability, from the amount owed to the plaintiff in a third-party negligence action.
The collateral source rule, however, is inapplicable to Virginia workers compensation claims in that the employer and its insurance carrier have a workers compensation lien against the proceeds from a personal injury or product liability action brought in circuit court.
As stated by the Court of Appeals of Virginia in Wood v. Caudle-Hyatt, Inc., 18 Va. App. 391 (1994) (citations omitted):
An employee injured in the course of employment by a negligent third party may pursue a common law remedy against the tort-feasor and a claim for compensation benefits under the Workers’ Compensation Act, but may obtain only one full recovery for the injury. If the employee pursues both remedies, at such time that the employee makes a claim for workers’ compensation benefits, the “claim … shall operate as an assignment to the employer of any right to recover damages,” and the employer shall be subrogated to [the right to recover damages] in his own name or in the name of the injured employee.”
Put simply, a workers compensation insurance carrier may use the receipt of income from a personal injury action to decrease the amount owed to an injured worker. But a personal injury insurance carrier may not use the receipt of income from a workers compensation action to decrease the amount owed to the injured worker in a third party case.
There are, however, ways to reduce the amount of the workers comp lien and minimize the effect of the collateral source rule in work injury claims. Make sure you contact an experienced Virginia workers compensation attorney before settling a workers comp case when you have a pending negligence action in civil court. One mistake may cost you tens of thousands of dollars in benefits.
We get results for injured employees and accident victims across Virginia. If you have a question about the collateral source rule, or just want help dealing with the insurance carrier on your own, contact us today. You have nothing to lose.