Arizona still follows the Collateral Source Rule in tort cases. The Collateral Source Rule provides, in general, that a defendant may not introduce evidence that a collateral source unconnected with the defendant (for example, plaintiff’s health insurer) paid for plaintiff’s medical care or that a healthcare provider accepted a reduced amount for plaintiff’s medical care. The general purpose for the Collateral Source Rule is to prevent a tortfeasor from deriving any benefit from the fact that a plaintiff happened to exercise foresight in protecting themselves by procuring health insurance.
Arizona courts have explained that the reasoning behind the Collateral Source Rule is that a tortfeasor should not escape liability simply because the injured party purchased their own insurance. Further, courts have described that the Collateral Source Rule addresses the competing goals of ensuring that a tortfeasor pays only that amount to the plaintiff to make him/her whole and ensuring that the tortfeasor pays for his/her wrong and does not obtain an advantage by the happenstance that a plaintiff has another source of reimbursement. Since when an injured party receives compensation from another source, either the victim or the tortfeasor will receive a windfall, an Arizona public policy favors providing the victim with that windfall.
As far as applicability is concerned, for the Rule to apply, the compensation paid to a plaintiff must be fully independent of the defendant. The most common application of the Rule in Arizona takes place when an injured plaintiff has some or all of their medical expenses covered by health insurance. That plaintiff, despite payment in full or in part by the health insurer, is able to “board” that amount in the ensuing lawsuit. Moreover, the Collateral Source Rule allows a plaintiff to claim as damage the full billed amount of the medical services he/she received, even if a healthcare provider accepted a reduced amount for those services pursuant to an agreement with the plaintiff’s health insurer. In fact, a defendant is unable to present evidence that neither the plaintiff nor the health insurer would ever have to pay the full billed amount.
Moreover, as it relates to lost wages, the Collateral Source Rule prevents a defendant from showing that the plaintiff received unemployment compensation and similar benefits due to lost time from work.
It should be noted that a defendant’s insurer is not a collateral source because it is not fully independent of the defendant. Therefore, any payments made by the defendant’s insurer to the plaintiff are admissible in the lawsuit. In addition, the Collateral Source Rule does not preclude a defendant from arguing that the medical amounts billed are unreasonable or the care rendered was not necessary. A defendant is still able to present those arguments in the lawsuit.
Thomas Rubin & Kelley has extensive experience in defending a wide variety of negligence actions. Please do not hesitate to contact Brian Rubin (brubin@trkfirm.com) or Michael Kelley (mkelley@trkfirm.com), should you need assistance with any of your Arizona claims.