Maryland has a rule called “collateral source,” which allows people injured by someone else’s negligence recover the value of expenses even if those expenses have been paid through another source. That’s a little confusing, so we’ll give a few examples:
You are rear-ended by another car while you are waiting at a stoplight. You go to the hospital and an orthopedist, and accumulate $10,000 worth of medical expenses. As part of your automobile insurance premiums, you get $10,000 in personal injury protection (PIP). That means all of your medical bills are paid by your automobile insurance.
When you make a claim against the negligent driver’s insurance company, you can ask for the full value of your medical expenses ($10,000), even though it was all paid for by your insurance.
You are driving straight through a green light, but another driver negligently makes a left-hand turn in front of you, causing you to collide into him. You were flown to shock trauma, and had total medical expenses of $100,000. You have private health insurance, however, and your insurance company paid $60,000. The medical providers waived the rest of the bill.
When you make a claim against the other driver’s insurance company, you can still ask for the full value of your medical expenses–$100,000. It does not matter than you didn’t pay a penny, or that the insurance company paid less than the billed amount.
As described in example 2, you are involved in an automobile collision. You miss a month from work because of your injuries. You missed time from work equaling $7,000. You were able to use a combination of sick time and vacation pay to ensure that you did not miss any paychecks.
When you make a claim against the other driver’s insurance company, you will be able to recoup the full value of your lost wages, even though you received the same amount of money that you would have otherwise received.
Rationale Behind Collateral Source
There are many good reasons to keep the collateral source rule.
First, if the negligent driver was allowed to cause an injury and not have to pay for it, they would receive a windfall. All things being equal, someone who causes injury to another should have to pay for what they’ve done.
Second, the accident victim usually doesn’t receive these benefits (paid medical expenses or lost wages) at no cost. Instead, the victims have to pay insurance premiums, or use vacation or sick time that they would have been able to use in other circumstances. So, the victim does suffer a loss, and that loss should be compensated.
Third, many insurance companies (including medical assistance and Medicare) have a right to be paid back when they make payments for injuries caused by a negligent driver. In short, if you receive money from a negligent driver, the insurance company is often entitled to their money back (lawyers can usually negotiate that amount down).
Finally, the rule has a side benefit—when people hire lawyers to help them deal with an accident claim, they will have to pay a fee to the attorneys. The United States doesn’t have “loser pays” rules in litigation, so the victim is almost never going to get exactly what they deserve. The collateral source rule sometimes helps to even the playing field.
Insurance companies know that most people injured in automobile accidents don’t know the law of collateral source, and this is something they use to their advantage to in negotiating Maryland automobile accident settlements for less than their full value. They will tell you that your medical bills were already totally or partially paid, and that they are only responsible for what’s left over. That’s not the law in Maryland.
If you have questions after an automobile accident in Maryland or West Virginia, contact our personal injury lawyers at 1-800-776-4529, or send us some brief information about your automobile accident to us through our online portal. We can help you to determine the value of your auto case.
More Maryland Automobile Accident Information
- Maryland Insurance 101: Personal Injury Protection (PIP)
- Maryland Insurance 101: Uninsured/Underinsured Motorist Coverage (UM/UIM)
- What’s My Maryland Automobile Accident Worth?
- Ingerman & Horwitz: Main Auto Accident Webpage