South Carolina has long recognized the common law collateral source rule. The rule provides that any compensation received by an injured party from a source independent of the tortfeasor cannot be applied to reduce damages owed by the wrongdoer. The rule applies to both gratuitous and nongratuitous payments and compensation, whether from insurance, employment, family or some other contractual agreement. The purpose of the rule has been clearly articulated – it is designed to provide the injured party the benefit of any windfall rather than allow the tortfeasor to profit by wrongful acts. Now, the court reminds that the rule is not and never was intended to be available as a shield to a tortfeasor. But could change be in sight? Felicia Gibbs, et al. v. John Doe; Heartland Express, 2018 WL 5013596 (October 16, 2018).
The collateral source issue came before the court in Gibbs on a motion in limine filed on behalf of Heartland Express, Inc. (“Heartland”). Following an automobile accident, Heartland anticipated Plaintiff would testify there were gaps in her medical treatment because she had no insurance coverage and could not otherwise afford care. Heartland moved to exclude all references to insurance and to Plaintiff’s ability to pay medical costs, relying on the collateral source rule in support of its position. Balancing the probative value of the evidence at issue, the court ruled Plaintiff could testify that gaps in her treatment were the result of her inability to pay. However, finding issues regarding health insurance may confuse or mislead the jury, the court ruled Plaintiff could not testify concerning her lack of coverage.
At the risk of reading more into the court’s opinion than intended, could this be a small first step toward collateral source reform, already undertaken in the vast majority of states? There are myriad variations of collateral source reform. Some states will allow evidence of the collateral source, along with evidence of the cost to secure the benefits; some allow proof of collateral benefits, but not in instances where payments to the injured are subject to subrogation, and other jurisdictions allow recovery only for amounts that exceed the collateral source. Still other states allow evidence of certain types of benefits, while others have applied reform to only certain types of cases.
Indeed, thought of change may be overly ambitious; careful consideration of this opinion can lead the reader to reasonably conclude it is nothing greater than an examination of and ruling as to an offensive use of the collateral source rule. Hopefully, however, it may lead to further discussion of whether some degree of reform is desirable, thus leading to greater transparency and avoidance of any windfall.