People injured in automobile accidents may have multiple sources of compensation, such as health insurance and other forms of coverage. But when the victim also sues a driver responsible for the crash, how does the compensation from collateral sources affect an award of damages?

In some states, the rule is that defendants may not use evidence of collateral source payments to attempt to reduce the money they are required to pay under a judgment. The existence of those payments cannot even be revealed to the jury. Connecticut takes a different approach. It requires a judge, after a jury verdict, to reduce the award to reflect other compensation the plaintiff may have received from a collateral source.

Under Connecticut’s collateral source rule, the judge must reduce an award of economic damages — that is, costs of medical care, rehabilitative services, custodial care and loss of earnings — by an amount equal to the total compensation the plaintiff may have received from other sources in consequence of the injury.

Collateral sources may include health insurance, disability insurance and other private coverage, such as personal injury protection (PIP) from the plaintiff’s own auto insurance policy. They include workers’ compensation benefits for accidents occurring on the job, and public health insurance benefits like Medicaid and Medicare.

The purpose of Connecticut’s collateral source rule is to prevent a plaintiff from gaining a windfall due to double recovery. There are, however, important exceptions that impact how and to what extent the rule applies:

1. Subrogation— The economic damages award may not be reduced by collateral sources where the plaintiff's insurance company has subrogation rights against the defendant (meaning the insurer can seek to recover its payments directly).
2. Comparative negligence — The economic damages award may not be reduced by the amount attributable to the plaintiff’s percentage of negligence (since the award is already reduced by that percentage under the comparative negligence rule).

Understanding the collateral source rule is important for plaintiffs and defendants when negotiating settlements. Both sides should consider the potential reduction in jury awards due to the rule. For plaintiffs, this may mean seeking a higher settlement to mitigate the rule’s effect. With the assistance of a qualified personal injury attorney, plaintiffs can gather and present evidence to demonstrate the full extent of their injury-related damages, which can help drive their claim for a higher settlement.

Gesmonde, Pietrosimone & Sgrignari, L.L.C. in Hamden and East Haven represents Connecticut residents who have been injured in accidents caused by other people’s negligence. Please call 203-745-0942 or contact us online to set up a meeting with one of our attorneys.