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What is the Collateral Source Rule in Maryland?


Maryland and Washington, DC are among the jurisdictions that operate under the Collateral Source Rule. The rule applies to situations where the plaintiff in a personal injury case receives compensation from third-party sources for injuries caused in an accident, medical malpractice, or other adverse event caused by the negligence of another.

The rule says liable wrongdoers may not use evidence of third-party compensation, like insurance payments already issued to the victim, to automatically reduce the money they are required to pay under the settlement. They may not even inform the jury of third-party collateral payments made in relation to the claim.

What is fair to victims?

Some argue that under this rule, the plaintiff can receive double compensation, first from the insurance company and then from the liable party. This results in a windfall exceeding what is needed to cover their medical bills and make them whole.

But others argue that one-third or more of the money a victim receives from the court or through legal settlement must go to compensate his or her attorney for litigation of the case. So the additional money, beyond what their insurance company paid, still qualifies as compensation for their losses to make them whole again.

Also, in instances where the third-party compensation came from an insurance company, most likely the victim paid premiums over a long period of time to have that coverage in place.

Liable wrongdoers should not take advantage of thoughtful financial planning on the part of their victim to reduce their obligations. Experienced medical malpractice attorneys are watchful for any invalid reductions in the value of the claim owed to their client

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