Arizona Legislature Looks To Limit Collateral Source Rule

The Collateral Source Rule is a concept in common law that prohibits the admission of evidence that a injured party’s damages were or will be compensated from some source other than the damages awarded against the Defendant.  A typical example is when the injured party uses their own medical insurance to cover their doctor bills.  Under the collateral source doctrine, the defendant cannot use evidence of these payments to reduce his/her exposure to the injured person.  Thus if the injured party incurs $10,000.00 in medical bills and his/her medical insurance pays $5,000.00, that person is still entitled seek recovery of the entire $10,000.00.  This concept dates back to 1854.

However, the Arizona Legislature has recently taken to abrogate the Collateral Source Rule by limiting its applicability.  Recently the State House passed HB2239, which would allow the defendant to introduce evidence of money or benefit that will be payable to the injured party or on the injured party’s behalf as a result of the injury the defendant caused.  The injured person would then have the opportunity to introduce evidence that he/she is still obligated to repay those bills.  Ultimately the new statute would allow the judge/jury to consider any collateral source funds when determining the amount of the injured person’s damages.

Along with this bill, the Arizona House is considering HB2238, which would permit the recovery of reasonable expenses that were paid or that the claimant is obligated to pay.  The statute would define reasonable medical expenses as those that were actually paid by the injured party, his/her insurance or any other collateral source.  Keep in mind that every insurance company has different schedule rates, blue cross may not pay as much for an emergency room visit as Cigna.  Thus the result is an equity.  This would be more prevalent with the uninsured.

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