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Medicare Is Now Officially an Exception to the Collateral Source Rule

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Under Colorado’s collateral source rule (C.R.S. §§ 10-1-135(10)(a) and 13-21-111.6), when an injured plaintiff receives compensation for their loss from a source other than the defendant, the court must reduce the amount of awarded to the plaintiff by the amount received from the collateral source. 
 
For example, if the plaintiff’s wealthy aunt or uncle paid the medical bills incurred by the plaintiff after an accident, the court will reduce the verdict against the defendant by the amount paid by the aunt or uncle.  This prevents a windfall to the plaintiff. 
 
However, this rule does not apply if the money comes to the plaintiff as a result of a contract he/she entered into – such as an insurance policy. 
 
The Court of Appeals has now officially expanded this “contract exception” to the collateral source rule to include payments made by Medicare.  The Court also affirmed prior case law placing similar payments from Medicaid and Social Security under this exception.  The case, Forfar v. Wal-Mart Stores, Inc., 2018 COA 125, will be considered for certiorari by the Colorado Supreme Court, but as of today, payments from Medicare, Medicaid, and Social Security cannot be used to reduce the verdict amount payable to a plaintiff in a personal injury lawsuit. 
 
For more information, please contact Steve Phillips at (303) 894-8948.

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