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The Collateral Source Rule Protects Citizens of Wisconsin


At Eisenberg Law Offices, we feel a responsibility to educate the citizens of Wisconsin about a bill proposed by the Republicans in the State House and Senate. This bill threatens to negatively impact the financial recovery of individuals involved in accidents. This bill would significantly alter Wisconsin’s collateral source rule.

What Is the Collateral Source Rule?

The long-standing collateral source rule says that if you are injured and you have insurance, you benefit from that insurance, not the person who harmed you. For example, suppose you broke your leg due to the negligence of another individual. As a result, you pay a portion of your medical bills and the insurance company pays the remainder. You receive this benefit because you dutifully purchased health insurance and paid your premiums.

Under the collateral source rule, the injured party receives the full value of the amount of your medical expenses.  For example, if the hospital charges $50,000 and your health insurer pays only $25,000 to settle the outstanding bill, you still get to collect the entire $50,000 from the person or his/her insurance company as compensation for your medical expenses in your accident claim.   

Currently, the judge would not allow the defendant to introduce evidence at trial that your health insurer only paid $25,000.  The new law would allow the insurance company to argue that you should only receive $25,000 because that’s all you actually had to pay for medical expenses even though the actual reasonable value of those expenses was $50,000.  You would then potentially lose compensation of $25,000.   This penalizes those of us who exercised responsibility in purchasing health insurance. 

A person who was injured and does not have health insurance would not be penalized.   A drunk driver that hits you shouldn’t benefit by having your claim reduced because you were prudent enough to purchase health insurance.

What do lawmakers propose?

The proposal, AB-539/SB-405, would mean that in the example case above, the at-fault parties insurance company would reap the rewards of your years of paid insurance premiums. Think it ends there? Think again! If a person died in an accident and received life insurance benefits, that could also be factored into the benefit negotiations. Ultimately, this bill would reward the insurance companies that represent at-fault parties at the cost of the citizens of Wisconsin. Responsible individuals who purchase insurance and pay their premiums will be penalized for their prudent actions.

Stand up for the rights of the citizens of Wisconsin: Oppose AB-539/SB-405.