Colorado employs a very broad collateral source rule that allows personal injury plaintiffs to claim the full amounts charged by their health care providers as damages, but prohibits defendants from introducing at trial the amounts actually paid by the plaintiff's insurer. Specifically, the collateral source statute, C.R.S. § 13-21-111.6, states that:
In any action by any person or his legal representative to recover damages for a tort resulting in death or injury to person or property, the court, after the finder of fact has returned its verdict stating the amount of damages to be awarded, shall reduce the amount of the verdict by the amount by which such person, his estate, or his personal representative has been or will be wholly or partially indemnified or compensated for his loss by any other person, corporation, insurance company, or fund in relation to the injury, damage, or death sustained; except that the verdict shall not be reduced by the amount by which such person, his estate, or his personal representative has been or will be wholly or partially indemnified or compensated by a benefit paid as a result of a contract entered into and paid for by or on behalf of such person. The court shall enter judgment on such reduced amount. (Emphasis added.)
Effectively, this means the amounts paid to a plaintiff from a collateral source reduce the amount of the verdict. The reduction, however, is applied by the court after the jury verdict. Thus, in almost all instances, evidence of payments from a collateral source is not permitted during the trial.
Further, the statute's "contract exception" bars a defendant from attempting to reduce a plaintiff's damages award for any benefit the plaintiff received as a result of a contract entered into and paid for by or on behalf of the plaintiff. This means there is no post-trial offset for payments made by a plaintiff's private health insurer. See Wal-Mart Stores Inc. v. Crossgrove, 276 P.3d 562, 565 (2012). Because insurance and/or other types of benefits that a plaintiff either purchases or obtains through their employer are covered by the contract exception, additional benefits that stem from these arrangements also cannot be used to reduce or offset a plaintiff's jury award.
In practice, this means that even where the plaintiff's health insurance carrier has an agreement with the plaintiff's care providers to pay discounted rates for the provider's services, the discounted rates are not admissible at trial - even for the purpose of disputing or establishing the reasonable value of the services provided. See Crossgrove, supra. Rather, the plaintiff is entitled to recover the full amount of the medical expenses as billed, without any reduction or offset for the amounts that were actually paid by the insurance carriers for such services. See Gardenswartz, supra. The same rule applies to Medicaid, Medicare, unemployment and disability payments made on a plaintiff's behalf. See Smith v. Kinningham, 328 P.3d 258, 261-262 (2014); Technical Comp. Services v. Buckley, 844 P.2d 1249, 1254 (1992); Van Waters v. Keelan, 840 P.2d (1992); Dept. of Human Services v. State Personnel Board, 371 P.3d 748, 757 (2016).
In the Delta Airlines and Gill cases, however, the Colorado Supreme Court holds that a settlement between a workers' compensation insurer and a third-party tortfeasor for all past medical expenses paid as a result of an on-the-job injury extinguishes the plaintiff-employee's claim to recover damages for those past medical expenses from the third-party tortfeasor. Because the injured employee need not present evidence of either billed or paid medical expenses in the absence of a viable claim for such expenses, the collateral source rule is not implicated.
This means that if the insurer for the third-party alleged tortfeasor can settle with the plaintiff's workers' compensation insurer, the plaintiff may be precluded from being able to present those medical expenses (whether it is the amount billed or the amount paid) at trial against their insured/alleged third-party tortfeasor. As the workers' compensation carrier typically pays substantially less than the billed amounts, settling with them directly could save insurers significant money, as well as aid in the defense of and exposure to the insureds at trial with respect to damages.
While the legislature eventually may enact a law to nullify these rulings, and presumably the plaintiff's bar will advocate for such, for now, the rulings appear to be welcome news and good law for defendants and their insurers.
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