The collateral source rule, or collateral source doctrine, is an American case law evidentiary rule that prohibits the admission of evidence that the plaintiff or victim has received compensation from some source other than the damages sought against the defendant. The purpose of the rule is to ensure that the wrongful party pays the full cost of the harm caused, so that future harmful conduct is thereby deterred or, at least, fully included in the defendant's cost of doing business. Subrogation and indemnification principles then commonly provide that the person who paid the initial compensation to the plaintiff or victim has a right to recover any double recovery from the plaintiff or victim. For example, in a personal injury action, evidence that the plaintiff's medical bills were paid by medical insurance, or by workers' compensation, is not generally admissible and the plaintiff can recover the amount of those bills from the defendant. If the plaintiff then collects the amount of medical bills from the defendant, that amount is then typically paid by the plaintiff to the insurance carrier under principles of subrogation and indemnification.

Read the full article on Wikipedia →