For decades, the collateral source rule has been a target of tort reform on both state and national levels.1 The rule, which at common law prohibits the introduction of evidence regarding collateral payments received by the claimant in a suit for damages, has sparked a long-standing debate. Its proponents cite its potential to align the costs of injury with tortfeasors and to deter tortious conduct, while its opponents claim that the rule results in double recovery for claimants and inflated insurance costs. The result of this debate has been varied treatment of the rule, with some states following the common law rule, some limiting its application, and some abrogating it in full. Calls for tort reform have been widely influential throughout the states. Most states have already limited or abrogated the rule, and it is possible that other states as well as the federal government may follow suit.
The application of the collateral source rule has become more complicated since the passage of the Patient Protection and Affordable Care Act, which contains a provision establishing an individual mandate to obtain health insurance. While the insured plaintiff may have benefitted from the collateral source rule before the Affordable Care Act was passed, now an uninsured claimant may benefit under the rule. Under the common law collateral source rule, evidence that a plaintiff has chosen to shirk his obligation to purchase insurance must be excluded. The rule’s ban of insurance evidence may have the result of protecting—as opposed to penalizing—uninsured claimants. The decision to forgo insurance that may have covered the uninsured claimants’ medical expenses is hidden from the jury, whose members presumably have complied with the mandate. Under the new health care law, both insured and uninsured plaintiffs stand to gain from the use of the collateral source rule. This outcome may provide an additional incentive for states and the federal government to limit or change the common law rule.
Although commentators have put forth many arguments both supporting and opposing the use of the collateral source rule, they have proposed fewer models for its revision. This Comment will provide a model for updating and partially abrogating the collateral source rule in personal injury cases. It will examine the effect that the model will have on the outcome of these cases and the fulfillment of new policy goals in the wake of health care reform. Part I will explain the current state of the collateral source rule and will provide an overview of how it has been changed across the states. Part II will summarize the debate surrounding the elimination of the rule. Part III will address how the Affordable Care Act has changed this debate. Part IV will evaluate the consequences of modifying the collateral source rule in personal injury cases. Finally, Part V will provide a model for limiting the rule.