The New Troika On The Block

I wrote a couple days ago about the collateral source rule, and said a new state law taking effect August 11, 2010 reinforces this rule. The collateral source rule says that the amount of damages paid to a plaintiff by a defendant can not be reduced by payments the plaintiff has received from other sources ("collateral sources") such as the plaintiff's medical insurance.

There's another insurance company profit-boosting gimmick that Colorado is clamping down on starting in August. It's along the same lines as the collateral source rule, and involves insurance companies trying to take back money from a settlement - money that rightfully belongs to you.

This one is called the "made whole doctrine." Let's say you're injured in a crash, get medical treatment and the medical bills are paid by some form of insurance (such as health insurance or auto policy medical payments coverage). Until now, the insurer that paid the medical bills has been allowed to take from your settlement the amount it paid for your medical treatment. It's a clause called subrogation, buried deep in your policy fine print, and insurance companies seldom miss a chance to enforce it.

There's a problem with this, though: It's unfair to you. You paid a premium (or a portion of it, through your employer) for health insurance. The health insurer shouldn't be allowed to reduce - or eliminate completely - any money you receive in a settlement just so they can get paid back for insurance benefits you already paid for.

There's a third element to this troika, too, called the common fund doctrine. This says that if an insurance company does make a demand to be paid back from third party funds, they are required to pay their share of the attorney fees. That means you get more of the final settlement.

These three concepts - collateral source rule, made whole doctrine and common fund doctrine - have now been strengthened, and the benefits go exactly where they belong: to victims injured through no fault of their own.

The procedures, deadlines and paperwork to ensure you get these benefits are complex, and I'd be happy to go through them with you. Give me a call at (303) 758-4777 and we can set a time to talk.