Collateral Source Rule

The collateral-source rule has been described as an “entrenched precept” in Oklahoma law. Dippel v. Hunt, 1973 OK CIV APP 17, 517 P.2d 444, 447. “In a tort action, if reimbursement has been made to the injured party for the damages sustained from a source wholly independent of and not in behalf of the wrongdoer, such reimbursement can not inure to the benefit of the wrongdoer nor lessen the damages recoverable from him, and evidence of the reimbursement is inadmissible.” Porter v. Manes, 1959 OK 239, 347 P.2d 210, 211 (syllabus) (automobile property-damage paid, but not by or on behalf of defendant); see also, Denco Bus Lines v. Hargis, 1951 OK 11, 229 P.2d 560 (medical bills paid by employer of woman injured in bus collision).

The Denco court stated, “Upon commission of a tort it is the duty of the wrongdoer to answer for the damages wrought by his wrongful act, and that is measured by the whole loss so caused and the receipt of compensation by the injured party from a collateral source wholly independent of the wrongdoer does not operate to lessen the damages recoverable from the person causing the injury.” Id. at 561. “It has long been the rule in this jurisdiction …” Witt v. Martin, 1983 OK CIV APP 33, 672 P.2d 312, 317.

Plaintiffs are entitled to their full damages

The measure of damages for tort actions “… is the amount which will compensate for all detriment proximately caused thereby, whether it could have been anticipated or not.” 23 O.S. §61. Expenses paid by other than a defendant, remuneration such as employee fringe benefits, Social Security or Medicaid, and even services gratuitously provided to a plaintiff are sources collateral to the defendant, who will neither get credit for them nor be allowed to introduce them into evidence. As summarized by the New Hampshire Supreme Court, the rationale behind the collateral source rule is “… a tort-feasor should not be allowed to escape the consequences of his wrongful act merely because his victim has received a benefit from a collateral source which would constitute a windfall to the defendant wrongdoer.

The effect of insurance premiums

It is also pointed out that in many instances the plaintiff has paid for these benefits in the form of insurance premiums or concessions in the wages he received because of such fringe benefits. If such considerations are not present and the payments are gratuitous, it is maintained that the maker of these payments did not intend to relieve the tort-feasor of any liability, but rather to aid the plaintiff by doing him a favor…. It is also argued that the collateral source rule is designed to offset the inability of ordinary damages to adequately compensate an injured accident victim.” Moulton v. Groveton Papers Co., 323 A.2d 906, 909 (N.H. 1974). A plaintiff is “… permitted to make a full recovery against the tortfeasor himself, even though this gives the plaintiff a double recovery or even a recovery for losses he never had at all.” D. Dobbs, Handbook on the Law of Remedies § 8.10, at 581 (1973); Quinones v. Pennsylvania General Ins. Co., 804 F.2d 1167, 1171 (10th Cir. 1986).

As explained in Quinones, “The rule evolved around the commonsense notion that a tortfeasor ought not be excused because the victim was compensated by another source, often by insurance. The collateral source rule removes the disincentive otherwise faced by potential victims to insure against harm or to accept gratuitous compensation from sources other than the tortfeasor for fear that the tortfeasor will not then be required to pay.” Id. (In Quinones, the collateral source rule did not apply since the insurance company was the defendant and had previously paid medical bills. Id. at 1172.)

Employer as defendant

When a plaintiff’s employer is sued, the employer may not get credit for benefits paid under its self-insurance fund. See, Handy v. City of Lawton, 1992 OK 111, 835 P.2d 870. In that case an off-duty police officer was accidentally shot by an officer on duty. The defendant city claimed the plaintiff’s health insurance was payment by or on its behalf and not a collateral source. The court found: “If the fund is for general hospital and medical coverage upon which the insured may make a claim without regard to liability on the part of the employer, the policy is a fringe benefit, and is part of the employee’s income.

The collateral source rule prohibits a set-off of benefits received thereunder by the employee. However, if the fund is viewed as a contribution by the employer to a fund to protect it from liability or an express provision in the collective bargaining states that a set-off is allowed then the benefits may offset the judgment.” Id. at 874-875.

Government benefits

In Burk Royalty Co. v. Jacobs, 1963 OK 273, 387 P.2d 638, 640, damages for release of salt-water and oil on the plaintiffs’ land were not reduced by the fact the landowners were under a federal contract providing compensation and prohibiting harvesting or grazing certain portions of the land.

Gratuitous payments to the plaintiff

Employers may extend benefits to employees as “perks” of their employment. If a plaintiff does not lose wages or sick leave as a result of her injuries by virtue of the fact her employer allows her to take leave without penalty of any kind, a defendant is not entitled to reap the reward of the employer’s generosity toward its employee. The plaintiff is entitled to claim loss of earnings or lost time as an element of damages. See, OUJI-CIV.3d 4.1. In Keispert v. Williams, 1958 OK 270, 333 P.2d 514, 519, the rule applied although the plaintiff — disabled for a month and on sick leave — continued to receive his regular salary as a police officer.

In Huey v. Stephens, 1954 OK 222, 275 P.2d 254, 257 (overruled on other grounds, Hayward v. Ginn, 1957 OK 11, 306 P.2d 320, 324), the plaintiff’s employer advanced all his medical bills and continued to pay his wages for the entire period following the accident until the trial. The court noted “…even if the medical services to the plaintiff had been rendered gratuitously, that still would not have eliminated such item from the measure of his damages.” Id. at 257-258.

Health insurance: “Records relating to an injured party’s private medical insurance coverage are not relevant to the issues in a personal injury action. Such insurance is a collateral source which may not inure to the benefit of the defendant and it is inadmissible at trial.” Nitzel v. Jackson, 1994 OK 49, 879 P.2d 1222, 1223.

Remarriage after a wrongful death

The collateral source rule provides the rationale for not allowing evidence of a spouse’s remarriage after a wrongful death. Kimery v. Public Service Co. of Oklahoma, 1977 OK 60, 562 P.2d 858, 859. The remarriage is not considered mitigation of damages, but a collateral source that should not be of concern to a jury.

Subrogation interests

A defendant receives no benefit from the fact an insurer or other entity may be subrogated to the proceeds of a recovery. “… [I]t is really none of the tortfeasor’s concern what rights might exist between the tortfeasor’s victim and the latter’s own insurance carrier, save to avoid subjection to more than one judgment …” Dippel, 517 P.2d at 448. A claimant’s action against a city was not a subrogation claim in Salazar Roofing & Const., Inc. v. City of Oklahoma City, 2010 OK 34, — P.3d —-, 2010 WL 1543740. The tortfeasor city in that case argued it should only pay the plaintiff’s deductible after Salazar’s private insurance covered property damage. The court found the insurance “a collateral source of indemnity”. Id. at ¶3.

Uninsured motorist insurance

Defendants cannot get credit for insurance paid for by the plaintiff. As stated in Weatherly v. Flournoy, 1996 OK CIV APP 109, 929 P.2d 296, 298-99, “Based on the development of the collateral source rule in Oklahoma, and having reviewed the law of other jurisdictions, we find that a tortfeasor may not set-off any amount he is found to owe the injured party by any amount the injured party may have received from his own uninsured/underinsured motorist policy. The tortfeasor should not benefit from a policy held and paid for by the injured party.”

The court further explained, “In Chambers v. Walker, 653 P.2d 931 (Okla.1982), the uninsured motorist carrier, relying on a clause in its contract which allowed a set-off against any workers’ compensation benefits its insured received, sought reduction in the amount of its coverage. The Chambers court recognized the unfairness of permitting an insurer to deny to an insured the benefit of a certain type of coverage for which the insured had paid premiums. … The Chambers court found that the contract clause reducing the amount of uninsured motorist payments by the amount paid by workers’ compensation void as violative of legislation in favor of uninsured motorist coverage and because such a set-off could render the uninsured motorist coverage lower than the amount required by statute.” Weatherly, 929 P.2d at 298.

Workers’ compensation

Workers’ compensation is insurance for the benefit of employees. In Witt v. Martin, 1983 OK CIV APP 33, 672 P.2d 312, 316, the defendants were not entitled to a credit for worker’s compensation benefits received by the plaintiff. In that case, the plaintiffs wanted to have workers’ compensation mentioned to the jury “… because they thought it more of an advantage to show the extent of disability found by the workers’ compensation court”, but difficulties resulted that would have been avoided if the rule had been properly followed: “Workers’ compensation is a collateral source and may not be considered to lessen the damages recoverable from the injury-causing tortfeasor.” Id.

In contrast, although the Governmental Tort Claims Act, 51 O.S. §151 et seq., makes governmental entities liable as private persons are liable, it exempts government entities from liability if injuries have been covered by workers’ compensation. 51 O.S. §155(14); Gladstone v. Bartlesville Independent School Dist. No. 30 (I 30), 2003 OK 30 66 P.3d 442, 452. In another twist regarding workers’ compensation, the collateral source rule is codified 85 O.S. §45(A) and an employer is not given a credit for expenses paid by other types of insurance procured by a workers’ compensation claimant. See, Blythe v. University of Oklahoma, 2003 OK 115, 82 P.3d 1021, 1027-1028.

Post-trial procedure to recoup expenses paid by the defendant

When a defendant pays some of a plaintiff’s expenses prior to trial, they are not collateral sources and the defendant will rightfully get credit for those payments. See, Overturff v. Hart, 1975 OK 13, 531 P.2d 1035, 1037. In that case, a passenger’s medical bills were paid from the defendant driver’s medical payments insurance. The court pointed out, “The funds came from an insurance policy that was procured by the defendant and for which a premium was paid.” Id. In a post-verdict hearing in Baker v. Barnes, 1997 OK CIV APP 77, 949 P.2d 695, 696, the defendants were given credit for medical expenses and lost wages they paid before trial. “Such a post-trial procedure has long been recognized in this State as a proper means for the court to prevent double recovery by the plaintiff or, if payment came from a collateral source, a windfall to the defendant. See, e.g., Overturff … (court properly granted defendant/tortfeasor’s post-trial motion for credit against verdict for medical expenses paid pre-litigation by defendant’s insurer) … Accordingly, we find that Appellees did not waive any right to credit, and properly raised the issue in response to [the plaintiff’s] post-verdict motion for costs, fees, and interest.” Id.

Discretion of the court to admit evidence for other reasons

The trial court in Rucker v. Mid Century Ins. Co., 1997 OK CIV APP 47, 945 P.2d 507, 511. did not abuse its discretion in allowing a “limited inquiry” to show medical bills had been paid when the plaintiff opened the door by testifying she was stressed because the family was getting calls from bill collectors. COCA quoted from a Third Circuit case: “[T]he collateral benefit rule cannot be made a springboard from which a plaintiff may go forward with affirmative evidence that he returned to work while he was still ailing, because of financial need and then seek immunity from cross-examination regarding it.” Id. In Robinson v. Borg-Warner Protective Services Corp., 2001 OK 59, 31 P.3d 1041, 1044-45, admission of an ex-husband’s health insurance information was within the sound discretion of the trial court on the issue of the wife’s credibility when she claimed to still be married in order to use the insurance.

Jury Instructions

A jury instruction stating a damage award was not to be reduced by amounts received in health insurance benefits was adequate to protect the plaintiff’s rights. The trial court’s instruction to the jury stated: “Documents have been admitted into evidence showing that the Plaintiff received health insurance benefits for certain medical expenses. You are instructed that a wrongdoer who commits a tort is liable for the whole loss caused by his actions, and any compensation received by the injured party from a collateral source, wholly independent of the wrongdoer, will not lessen the damages recoverable from the wrongdoer. You are instructed that the amount of any health insurance benefits received by Barbara Robinson should not be deducted from any actual damage amount you may award to her.”

Id. If a collateral source is mentioned at trial, such an instruction would be in order. In Witt, the court noted allowing evidence of workers’ compensation caused problems that could have been avoided: “Whatever else may be said about the procedure followed in this case, the problems it generated clearly demonstrate, it seems to us, that the best way to avoid them is to keep evidence of workers’ compensation payments out of the lawsuit. After all, it is inadmissible.” Witt, 672 P.2d at 317.

–Lynn B. Mares