Phantom Damages Reform

Problem

The collateral source rule keeps important information relevant to the determination of damages from reaching the jury. It allows plaintiffs to be compensated twice for the same injury.

ATRA's Position:

ATRA supports permitting the admissibility of evidence of collateral source payments at trial or requiring awards to be offset by the amount paid to plaintiffs by collateral sources, less the amount paid by the plaintiff to secure the benefit.


Opposition Opinion:

The personal injury bar’s argument in support of the collateral source rule – that a plaintiff should not be penalized for having insurance – fails to take into account the fact the jury should full information when making as determination about damages.

Phantom Damages Reform – S.B. 251

Montana|2021

Addresses both the definition of recoverable damages and the evidence

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Addresses both the definition of recoverable damages and the evidence admissible to establish the value of medical treatment. Establishes that the reasonable value of past treatment cannot exceed the amounts actually paid to the provider. For future treatment or services that have been rendered but are still owed, the reasonable value cannot exceed the amounts necessary to satisfy the charges. Admissible evidence to show the value of past medical treatment under the bill includes only the sums paid to satisfy the providers’ charges; amounts discounted or written off cannot be considered. Evidence addressing the value of treatment for which payment is still owed or future medical care cannot include figures exceeding what providers would receive if the claims were submitted to a health insurer or government-sponsored program that covers the plaintiff. Finally, the bill abrogates the common law collateral source rule as it applies to medical expense damages.


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Unchallenged

Phantom Damages Reform – S.F. 2338 (2020)

Iowa|2020

Limits the evidence offered to prove past medical expenses to

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Limits the evidence offered to prove past medical expenses to the amounts actually paid to satisfy the bills that have been satisfied and the amounts actually necessary to satisfy the bills that have been incurred but not yet satisfied.  Provides that, except in certain medical malpractice actions, in an action brought to recover damages for personal injury, the damages that may be recovered by a claimant for the cost of medical care shall not exceed the amounts actually paid to the health care providers who rendered treatment and any amounts necessary to satisfy the charges that have been incurred but not yet satisfied.


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Unchallenged

Medical Liability Reform- Collateral Source Rule: H.B. 2292 (2006)

Washington|2006

Provided for the admissibility of evidence that the plaintiff has

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Provided for the admissibility of evidence that the plaintiff has already been compensated for the injury from any source except for the assets of the plaintiff, plaintiff’s representative, or the plaintiff’s immediate family.  Plaintiff may also present evidence of an obligation to repay any compensation.


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Unchallenged

Evidence Admissibility Reform: H.B. 2023 (2011)

Oklahoma|2011

Outlines procedures for unpaid medical bills for personal injury cases. 

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Outlines procedures for unpaid medical bills for personal injury cases.  Allows for payment to be made at the level of actual payment, not what was charged.


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Unchallenged

Collateral Source Rule Reform: SB 323 (1987): Or. Rev. Stat. § 18.580.

Oregon|1987

Permits a judge to reduce awards for collateral source payments,

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Permits a judge to reduce awards for collateral source payments, excluding life insurance and other death benefits, benefits for which plaintiff have paid premiums, retirement benefits, disability benefits, pension plan benefits, and federal social security benefits.


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Collateral Source Rule Reform: SB 281 (2003).

Ohio|2003

Provides for awards in medical malpractice cases to be offset

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Provides for awards in medical malpractice cases to be offset by collateral source payments, unless the source of the reimbursement has a mandatory self-effectuating federal right of subrogation or a contractual or statutory right of subrogation.


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Collateral Source Rule Reform: HB 350 (1996).

Ohio|1996

Permits the admissibility of evidence of collateral source payments, including

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Permits the admissibility of evidence of collateral source payments, including workers’ compensation benefits, but only if there is no right of subrogation attached or the plaintiff has not paid a premium for the insurance.  The comprehensive 1996 tort reform law violated the doctrine of separation of powers and one-subject provision of the State Constitution.  State ex rel. Ohio Academy of Trial Lawyers v. Sheward, 715 N.E.2d 1062 (Ohio 1999).


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Challenged and Struck Down

Held unconstitutional by the Ohio Supreme Court in Ohio Academy of Trial Lawyers v. Sheward, August 1999.

Collateral Source Rule Reform: HB 1 (1987).

Ohio|1987

Provides for awards to be offset by payments of collateral

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Provides for awards to be offset by payments of collateral source benefits that have been paid or are likely to be paid within 60 months of judgment, unless the source of reimbursement has a subrogation right.  The statute providing offset of collateral source benefits received by a plaintiff violated the right to jury trial, due process, equal protection, right to open courts, and right to meaningful recovery provisions of the State Constitution.


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Challenged and Struck Down

Sorrell v. Thevenir, 633 N.E.2d 504 (Ohio 1994).

Collateral Source Rule Reform: HB 567 (1987).

Montana|1987

Permits the admissibility of evidence of collateral source payments, unless

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Permits the admissibility of evidence of collateral source payments, unless the source of reimbursement has a subrogation right under state or federal law.   Requires a court to offset damages over $50,000.


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Collateral Source Rule Reform: HB 700 (1987).

Missouri|1987

Permits the admissibility of evidence of collateral source payments, but

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Permits the admissibility of evidence of collateral source payments, but provided that a defendant who presents collateral source payments as evidence waives his right to a credit against the judgment for that amount.


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Collateral Source Rule Reform: HB 5154 (1986).

Michigan|1986

Permits the admissibility of evidence of collateral source payments after

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Permits the admissibility of evidence of collateral source payments after the verdict and before judgment is entered.  Permits courts to offset awards, as long as a plaintiff’s damages are not reduced by more than the amount awarded for economic damages.  The statute providing for the admissibility of collateral source payments in personal injury actions did not constitute an unconstitutional taking of property and did not violate the equal protection or right to jury trial provisions of the State Constitution.  Heinz v. Chicago Road Investment Co., 549 N.W.2d 47 (Mich. App. 1996), appeal denied, 567 N.W.2d 250 (Mich. 1997).


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Collateral Source Rule Reform: SB 2078 (1986): Minn. Stat. Ann. § 548.36.

Minnesota|1986

Permits the admissibility of evidence of collateral source payments only

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Permits the admissibility of evidence of collateral source payments only for the court’s review.  Provides for awards to be offset by collateral source payments, unless the source of reimbursement has a subrogation right.  The statutory provision allowing a court to offset collateral source payments was not unconstitutionally vague and did not violate the due process, equal protection, or right to remedy provisions of the State Constitution.  Johnson v. Farmers Union Central Exchange, Inc., 414 N.W.2d 425 (Minn. App. 1987).


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Collateral Source Rule Reform: HB 551 (1988).

Kentucky|1988

Mandates that juries be advised of collateral source payments and

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Mandates that juries be advised of collateral source payments and subrogation of rights of collateral payers.  The statute allowing the admission of evidence of collateral source payments in personal injury actions violated the separation of powers provision of the State Constitution.  O’Bryan v. Hedgespeth, 892 S.W.2d 571 (Ky. 1995).


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Collateral Source Rule Reform: HB 2693 (1988).

Kansas|1988

Permits the admissibility of evidence of collateral source payments, where

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Permits the admissibility of evidence of collateral source payments, where damages exceed $150,000.  Provides for awards to be offset when the court assigns comparative fault.  The statute allowing evidence of collateral source benefits where claimant demands judgment for damages in excess of $150,000 violated the equal protection provision of the State Constitution.  Thompson v. KFB Insurance Co., 850 P.2d 773 (Kan. 1993).


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Challenged and Struck Down

The $150,000 threshold for the admissibility of collateral sources into evidence was held unconstitutional by the Kansas Supreme Court in Thompson v. KFB Insurance Company, Case No. 68452 (1993).

Collateral Source Rule Reform: SB 394 (1986)

Indiana|1986

Permits the admissibility of evidence of collateral source payments from

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Permits the admissibility of evidence of collateral source payments from sources other than life insurance, other insurance for which the plaintiff or members of the plaintiff’s family have paid directly, or payments made by the United States or any of its agencies or subdivisions.  Provides for awards to be offset at the court’s discretion.  Permits a court to instruct a jury to disregard tax consequences of its verdict.


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Challenged and Upheld

Patchett v. Lee, Case No. 29S04-1610-CT-549 (Ind. Oct. 21, 2016).

Collateral Source Rule Reform: HB 745 (1990): Idaho Code Ann. § 6-1606.

Idaho|1990

Permits the admissibility of evidence of collateral source payments.  Provides

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Permits the admissibility of evidence of collateral source payments.  Provides for awards to be offset to the extent that they include double recoveries from sources other than federal benefits, life insurance, or contractual subrogation rights.


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Collateral Source Rule Reform: SB S1 (special session) (1986): Sunset provision (SB 1529) enacted in 1991.

Hawaii|1986

Provides for the payment of valid liens (arising out of

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Provides for the payment of valid liens (arising out of claims for payments made from collateral sources for costs and expenses arising from an injury) from special damages recovered.  Prevents double recoveries by allowing subrogation liens by insurance companies or other sources.  Allows third parties to file a lien and collect the benefits paid to the plaintiff from the plaintiff’s award. The reform does not affect the amount of damages paid by the defendant to the plaintiff.


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Collateral Source Rule: H.B. 1 (1987)

Georgia|1987

Permits the admissibility of evidence of collateral source payments.

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Permits the admissibility of evidence of collateral source payments.


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Challenged and Struck Down

The statute authorizing admission of collateral sources of recovery available to plaintiffs seeking special damages for tortious injury violated the State Constitutional requirement of impartial and complete protection to person and property.  Denton v. Con-Way Southern Express, Inc., 402 S.E.2d 269 (Ga. 1991).

Collateral Source Rule Reform: SB 465 (1986):

Florida|1986

Provides for awards to be offset with broad exclusions.  The

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Provides for awards to be offset with broad exclusions.  The collateral source rule reform is unconstitutional.  Smith v. Department of Insurance, 507 So.2d 1080 (Fla. 1987).


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Challenged and Upheld

Collateral Source Rule Reform: SB 67 (1986)

Colorado|1986

Permits the admissibility of evidence of collateral source payments.  Provides

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Permits the admissibility of evidence of collateral source payments.  Provides for awards to be offset with broad exclusions.


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Unchallenged

Collateral Source Rule Reform: (1987)

Alabama|1987

Permits the admissibility of evidence of collateral source payments.  The

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Permits the admissibility of evidence of collateral source payments.  The collateral source rule reform in civil tort cases did not violate the right to trial by jury, or the due process, equal protection, access to courts, or right to a remedy provisions of the State Constitution, or the principle of separation of powers.


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Challenged and Upheld

Marsh v. Green, 782 So. 2d 223 (Ala. 2000).

Collateral Source Rule Reform: SB 337 (1986)

Alaska|1986

Permits the admissibility of evidence of collateral source payments.  Provides

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Permits the admissibility of evidence of collateral source payments.  Provides for awards to be offset, less any amount paid by the claimant to secure the benefit, e.g., insurance premiums.


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Challenged and Upheld

Reid v. Williams, 964 P.2d 453 (Alaska 1998).