Thursday, March 31, 2011

Court Ruling on Personal Injury Damages Still Stands -- For Now

A Legislative attempt to overturn a decision of the Colorado Supreme Court has died in committee, ending attempts, at least for now, to decrease the amount an injured plaintiff may recover in a personal injury lawsuit.

The Bill was HB 1106, and the Supreme Court decision was Volunteers of America v. Gardenswartz, a decision handed down in November 2010. Gardenswartz considered whether an injured plaintiff was entitled to recover damages for the full amount of medical expenses incurred, or whether the plaintiff's recovery should be limited to any discounted amount actually paid by a third-party insurance company. The court held that in accordance with Colorado's collateral source rule (C.R.S. 13-21-111.6), the plaintiff is entitled to recover in full.

Under the collateral source rule, the jury is not to consider other sources of payment, such as health insurance, to which the plaintiff may be entitled in determining the amount of damages to award. After that determination has been made, however, the court is to reduce the verdict by the amount received from that collateral source. The statute goes on, however, to provide an exception for benefits paid as a result of a contract entered into between the plaintiff and the third party. This exception allows the plaintiff to receive insurance benefits without reducing the liability of the defendant in a civil case.

The point of the collateral source rule is to make sure that a guilty, negligent defendant is not allowed to benefit from the fact that the plaintiff had insurance but instead should be liable for the entire amount of damages caused. Likewise, the plaintiff should not be penalized for purchasing insurance but instead should be entitled to a full recovery of damages.

The intent of HB 1106 was to make clear that the common law collateral source rule is abrogated (abolished) in Colorado and to overturn Gardenswartz so that a plaintiff cannot recover compensatory damage awards for medical expenses that exceed the amount ultimately accepted by the health care provider.

HB 1106 was introduced in the House on January 21 and assigned to the Judiciary Committee. It passed the House and was introduced into the Senate on March 25, where it was referred to the Senate Committee on Local Government. A vote to move the bill out of committee failed, effectively killing the bill for consideration in this session (technically it is postponed indefinitely). This issue may not go away, however, and could resurface.

We will continue to monitor this bill and other legislative developments that impact the ability of persons injured due to another's negligence or wrongful conduct to obtain a full and fair recovery of the damages caused. If you or a loved one requires legal assistance in a case of medical malpractice in Colorado, please contact Paulsen & Armitage, LLC.