EVIDENCE OF COLLATERAL SOURCE PAYMENTS

MICRA Primer: Collateral Source Payments

When the California Legislature passed the Medical Injury Compensation Reform Act in 1975, it was in response to a crisis in health care delivery caused by rising medical malpractice insurance costs. Insurers were leaving the state and physicians were closing their offices.

MICRA’s limit on awards of non-economic damages to $250,000 for medical malpractice cases is its most widely-known component. But there are other laws contained within MICRA that also further the Legislature’s goal of keeping professional liability protection affordable so that Californians’ access to health care stays strong.

One of those is contained in California Civil Code Section 3333.1, and deals with “collateral sources” that is, payments made for the same injury from a source other than the one being sued. Section 3333.1 provides that a defendant in a medical malpractice action may introduce evidence of any amount payable to the plaintiff as a result of the personal injury being litigated. Such payments may be pursuant to the U.S. Social Security Act, any state of federal income disability or workers’ compensation act, any health, sickness, or income-disability insurance, accident insurance, or other contract that will pay for or reimburse the costs of health care services.

Importantly, the law provides that such sources may not later go after the plaintiff to recover, out of the medical malpractice award or settlement, the amount those outside sources paid the plaintiff for the injury. (Since MICRA’s passage, the courts have limited this aspect of the law as it applies to federally-funded programs, such as Medi-Cal, that expressly authorize recoupment of such benefits from a plaintiff’s tort recovery.)

It is important to note that the law simply allows the defendant to introduce evidence of such collateral payments. It does not actually require the jury or arbitrator to subtract the collateral source payment from the amount to be awarded. Further, the law allows the plaintiff to introduce evidence of the original cost of what is frequently insurance coverage, such as premiums. Even with such limitations, Section 3333.1 frequently operates, as intended, to prevent a plaintiff from making a double recovery for an injury.

In passing this section of MICRA, the Legislature weighed the availability of health insurance in 1975 versus the exodus of medical malpractice insurers from the state. By keeping coverage costs for physicians reasonable, it is a decision that continues to help patients obtain health care today.