Personal Injury Accident Compensation is Debated

“Tort reform” continues to be a hot issue in the Arizona Legislature. One of the most interesting battles involves an attempt to eliminate the longstanding "collateral source rule."

The effect of this rule in lawsuits involving injuries is to prevent consideration of other sources of reimbursement that an injured person may have because of his or her injuries.

For example, if your spouse is killed in a car accident by a careless driver and you receive proceeds from your spouse's life insurance policy, these funds cannot be considered by the judge or jury deciding your case.

A companion rule prevents judges and juries from considering funds available to the careless party in an accident with which to compensate the injured person or the survivors for their losses. In other words, if the party at fault in a car accident has automobile liability insurance, the judge or jury cannot be told about it.

The justification for the collateral source rule is that prudent people who buy their own insurance protection should not be penalized by having their claims reduced when they are injured or killed by someone's careless or intentional act.  Likewise, the party at fault should not be allowed to benefit from his victim's independent financial protection.

Those who favor the collateral source rule say that where two insurance premiums were paid (one for the victim's life insurance and one for the careless party's liability insurance) each claim should be paid without regard for the other.

Preventing consideration of the careless party's liability insurance is justified on the basis that claims should be considered on their own merits. Judges and juries should not be influenced by the availability or amount of insurance available to pay claims.

An intriguing aspect of the debate in the Legislature is that many of those who want to eliminate the collateral source rule insist on keeping the rule that forbids any consideration of the careless party's liability insurance. They want judges and juries to-be told about the victim's insurance; they do not want them to be told about the careless party's insurance.

This strikes me as being unfair to injured victims of accidents. If insurance must be considered in valuing claims, then all of it should be considered in every case. That brings to mind a trite expression: What's good for the goose is good for the gander.