Letter: More on Collateral Source Rule

May I offer some random and (hopefully) unbiased thoughts abut the Collateral Source rule discussion in the December and January issues of TBJ? By way of disclosure, I am primarily an injury defense lawyer. The comments I share are mine alone and not that of any other person or entity.

Otto von Bismarck is credited for noting that laws, like sausage, are enjoyed best if not seen made. Verdicts in injury cases share that trait. We ask jurors to ignore so much: seat belt use or nonuse, auto insurance, health insurance and the reality that prevailing plaintiffs must pay their lawyers. Still, Tennessee juries get it right — we lack the sort of runaway verdicts some states have and are anything but a liberal venue.

Unintended ramifications flowing from revision of the Collateral Source rule include juror confusion as to the real "cost" of health care, impact on reimbursement to health carriers and verdicts that fail to meet the goal of our tort system. That goal is to return the plaintiff to the position that s/he would have occupied had no tort occurred.

Discussions about innocence or punishment miss the mark. Punishment is saved for special cases involving fraud, recklessness, intentional wrongs and similar conduct and would remain a remedy even if the Collateral Source rule were changed.

Should the Collateral Source rule be abrogated, the corresponding changes that I suggest would become necessary to preserve the end of fair but not excessive compensation would include:

  1. Admissibility of health and liability insurance at trial — if we are shelling out the corn, let's shell out all of it. Introducing health insurance without revealing indemnity coverage is not likely to lead to fairer verdicts, which should be our goal.
  2. While we are at it, make reasonable attorney's fees a compensable element of damages — if the goal is compensation, two-thirds of the damages is one-third inadequate. Courts determine the reasonableness of legal fees frequently and have the know-how to discourage overpayment or underpayment.
  3. Remove reimbursement and subrogation from the tort process, either by eliminating reimbursement rights entirely or bifurcating subrogation from the injured plaintiff's individual case. Kentucky lawyers or those representing members of the Armed Forces may need to help us understand how to accomplish this.
  4. I would yield to smarter lawyers to suggest fair distinctions between plaintiffs who self-fund collateral sources for economic loss avoidance from those whose benefits were not individually procured.
  5. Since insurers and governmental entitles set health insurance rates in reliance on the expectation of some subrogation success, any change should allow a lengthy phase-in period to allow actuarial study and rate revisions to occur.

Confused? I know that I am. I would urge fair-minded lawyers and lawmakers from all perspectives to consider Collateral Source rule revision only as a part of a comprehensive consideration of a tort system that simply is not broken.
— Kreis White, Nashville