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Is a defendant’s liability to you reduced by payments you’ve received from other insurer?

The answer is that almost payments that you receive from people, insurers, etc. other than the defendant are inadmissible and cannot be used by the defendant to reduce the defendant’s liability to you. This rule is called the collateral source rule, and it prohibits the defendant from benefiting from payments that you have received from other sources.

In tort actions, “it is the position of the law that a benefit that is directed to the injured party should not be shifted so as to become a windfall for the tortfeasor…. [I]t is the tortfeasor’s responsibility to compensate for all harm that he causes, not confined to the net loss that the injured party receives.” Restatement (Second) of Torts § 920A comment (b), p. 514. “Our tort law allows every person to recover the damages that result from torts committed to them. [Cits.] It is generally recognized … that ‘(t)he “prophylactic” factor of preventing future harm has been quite important in the field of torts. The courts are concerned not only with compensation of the victim, but with admonition of the wrongdoer. When the decisions of the courts become known, and defendants realize that they may be held liable, there is of course a strong incentive to prevent the occurrence of the harm.’ ” Denton v. Con–Way Southern Express, Inc., supra, 261 Ga. at 42, 402 S.E.2d 269.1.

Amalgamated Transit Union Local 1324 v. Roberts, 263 Ga. 405, 406, 434 S.E.2d 450, 451 (1993).

Accordingly, in a tort action brought by appellee against the driver of the automobile, the collateral source rule would clearly be applicable and appellee would be entitled to an undiminished recovery of any and all wages that he may have lost as the result of his physical injury. “The wrong-doer may show, in defense to a claim for lost time, that no time has been lost; and this of course is right and just, because if no time has been lost, no compensation is due from anybody on account of lost time. But if time has been lost as the result of a tort, sound sense, common justice, and it may be public policy would demand that the tort-feasor be prohibited from making a defense founded upon the proposition that he has been guilty of a wrong,—it may be a grievous and outrageous wrong,—but that some third person, not only not in sympathy with the wrong-doer, but despising him and his act, has, from some worthy motive, paid to the injured person an amount which, if it had come from the wrong-doer, would have equaled the damages which would have been assessed against him.” Nashville, Chattanooga and St. Louis R. Co. v. Miller, 120 Ga. 453, 457(3), 47 S.E. 959 (1904). “Some have argued that the plaintiff might get a windfall if a jury is denied the right to know about the collateral sources, however, ‘(i)f there must be a windfall, it is usually considered more just that the injured person should profit, rather than let the wrongdoer be relieved of full responsibility for his wrongdoing. (Cit.)’ [Cit.]” Denton v. Con–Way Southern Express, Inc., supra, 261 Ga. at 46, fn. 5, 402 S.E.2d 269.

“The principle that a party’s liability is not reduced by payments or other benefits received by the injured party from collateral sources is less compelling [, however,] in the case of a breach of contract than in the case of a tort.” Restatement (Second) of Contracts § 347 comment (e), p. 116. This is true because of the inapplicability of the “prophylactic” factor as a consideration in contract cases and the countervailing applicability of the principle that “no one should profit more from the breach of an obligation than from its full performance.” 22 AmJur 2d Damages § 568, p. 641. Thus, “[i]t has been held that the collateral source rule does not apply *408 to pure breach of contract cases. [Cit.]…. ‘(I)t is basic to the law of contracts that the measure of damages is the plaintiff’s injury, rather than the defendant’s culpability.’ ” City of Miami Beach v. Carner, 579 So.2d 248, 253–254 (Fla.App.1991). Unlike a tort action wherein the “prophylactic” factor is applicable, damages in a breach of contract case are awarded solely “as compensation for the injury sustained and ‘(a)n injured party can not be placed in a better position than he would have been in if the contract had not been breached.’ [Cit.]” Gainsville Glass Co., Inc. v. Don Hammond, Inc., 157 Ga.App. 640, 644(1), 278 S.E.2d 182 (1981).

Amalgamated Transit Union Local 1324 v. Roberts, 263 Ga. 405, 407-08, 434 S.E.2d 450, 452 (1993).

Dealing with collateral source evidence at trial requires experienced and alert counsel. Be wary of defense efforts to “subtly” introduce evidence that you have received payments from other sources.

Remember that this type of evidence can be extremely damaging to a plaintiff’s case. It affects the amount of recovery, but perhaps more importantly, it affects your credibility to the jury.

If you have a questions about your personal injury or car wreck case, contact The Sessions Law Firm today.



About the Author

Ben Sessions, Attorney at Sessions Law Group
Ben Sessions

I work to provide exceptional service, attention, and results to each of my clients. Most of clients come to me because they are in a completely overwhelming situation. They need someone that will do more than address their legal problems.


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