You and two friends get rear-ended and injured in a car accident. You have good health insurance. One friend has Medicaid. The other has no health insurance at all.
You end up paying relatively minimal copays and deductibles. Your Medicaid friend pays almost nothing out of pocket (except for, maybe, a nominal copay for prescription medication). Your uninsured friend has bills piling up, is worried for her credit score and doesn’t know how much longer she can handle the mounting debt.
How does the law treat each of you when you recoup medical expenses from the driver who rear-ended you, either at trial or through settlement?
Colorado law follows the collateral source rule.
Under this rule, even if your medical expenses are paid by some type of insurance (i.e., paid by a collateral source), the defendant is liable for the full amount of your reasonable and related medical bills regardless of who paid them or what discount from the billed amount may have been obtained.
If you and your friends each had $5,000 in medical bills, the defendant owes you each $5,000 for those bills, no matter who has insurance or what amount insurance actually paid.
The reasoning behind this rule is as follows:
- Why should the defendant get to pay you less just because you have your life together and you pay your insurance premiums?
- The insurance company and Medicaid are still going to want reimbursement for what they paid for your medical treatment. Once you settle with the defendant, you’ll have to work out payment with them.
Remember, if you are trying to work with the defendant’s insurance company to settle the claim on your own, the insurance adjustor has no obligation to tell you about the collateral source rule. They’ll tell you that, since you have insurance, they will only recognize the amounts you paid out-of-pocket or maybe what your insurance company paid to your medical providers.
Insurance adjustors are not there to help you. Their job is to pay as little as they can get away with.
If you are trying to handle your case alone and wonder whether you’re getting a good deal, give the experienced attorneys that deal with car crashes at Bell & Pollock the opportunity to review your case and offer a legal game plan.