The collateral source rule, or collateral source doctrine, is an American

case law Case law, also used interchangeably with common law, is a law that is based on precedents, that is the judicial decisions from previous cases, rather than law based on constitutions, statutes, or regulations. Case law uses the detailed facts of ...

evidentiary rule that prohibits the admission of evidence that the plaintiff or victim has received compensation from some source other than the damages sought against the defendant. The purpose of the rule is to ensure that the wrongful party pays the full cost of the harm caused, so that future harmful conduct is thereby deterred or, at least, fully included in the defendant's cost of doing business. Subrogation and indemnification principles then commonly provide that the person who paid the initial compensation to the plaintiff or victim has a right to recover any double recovery from the plaintiff or victim. For example, in a personal injury action, evidence that the plaintiff's medical bills were paid by medical insurance, or by

workers' compensation Workers' compensation or workers' comp is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her emp ...

, is not generally admissible and the plaintiff can recover the amount of those bills from the defendant. If the plaintiff then collects the amount of medical bills from the defendant, that amount is then typically paid by the plaintiff to the insurance carrier under principles of subrogation and indemnification. The collateral source doctrine has come under attack by

tort reform Tort reform consists of changes in the civil justice system in common law countries that aim to reduce the ability of plaintiffs to bring tort litigation (particularly actions for negligence) or to reduce damages they can receive. Such changes ...

advocates. They argue that if the plaintiff's injuries and damages have already been compensated, it is unfair and duplicative to allow an award of damages against the

tortfeasor A tort is a civil wrong, other than breach of contract, that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with crim ...

. As a result some states have altered or partially abrogated the rule by

statute A statute is a law or formal written enactment of a legislature. Statutes typically declare, command or prohibit something. Statutes are distinguished from court law and unwritten law (also known as common law) in that they are the expressed wil ...

. Proponents of the rule note that without it, the wrongdoer ortfeasorgets the benefit of the injured party carrying insurance or obtaining minimal benefits through government programs and obtains a form of subsidy where the wrongdoer does not pay the full cost of their wrongful conduct but instead transfers some of that cost nsurance premiumsto the victims causing insurance rates to be higher. Nevertheless, some courts have held that the rule ought not to provide a safe haven in a contract action for an unfaithful contracting party.See ''Dominion Res., Inc. v Alstom Power, Inc.'', 825 S.E. 2d 757, 297 Va. 262 (2019).

References

United States evidence law Judicial remedies Legal doctrines and principles Tort law {{law-term-stub