13-21-111.6. Civil actions - reduction of damages for payment from collateral source.
Statute text
In any action by any person or his legal representative to recover damages for a tort resulting in death or injury to person or property, the court, after the finder of fact has returned its verdict stating the amount of damages to be awarded, shall reduce the amount of the verdict by the amount by which such person, his estate, or his personal representative has been or will be wholly or partially indemnified or compensated for his loss by any other person, corporation, insurance company, or fund in relation to the injury, damage, or death sustained; except that the verdict shall not be reduced by the amount by which such person, his estate, or his personal representative has been or will be wholly or partially indemnified or compensated by a benefit paid as a result of a contract entered into and paid for by or on behalf of such person. The court shall enter judgment on such reduced amount.
History
Source: L. 86: Entire section added, p. 679, 3, effective July 1.
Annotations
ANNOTATION
Annotations
Law reviews. For article, "Recovery of Interest: Part I -- Personal Injury", see 18 Colo. Law. 1063 (1989). For article, "Set-Off Under the Contribution and Collateral Source Statutes", see 21 Colo. Law. 1421 (1992). For article, "Partial Settlements in Multiparty Tort Actions: The Latest Chapter", see 22 Colo. Law. 2529 (1993). For comment, "Settlements with Nonparties: A Closer Look at Colorado's Collateral Source and Contribution Statutes", see 66 U. Colo. L. Rev. 195 (1995). For article, "Recovery of Medical Expenses by Insured Medical Malpractice Victims", see 33 Colo. Law. 113 (July 2004).
This section sets forth a general rule that damages for which a claimant has been wholly or partially indemnified or compensated by another cannot be recovered in a tort action against the tortfeasor involving the same injury. Miller v. Brannon, 207 P.3d 923 (Colo. App. 2009).
The clear and plain meaning of this section is that a determination of liability is not required for a setoff; the only requirement is that compensation made be in relation to the injury or damage sustained. U.S. Fid. & Guarantee Co. v. Salida Gas Serv. Co., 793 P.2d 602 (Colo. App. 1989).
The intent of this section is to prevent double recovery by an injured party. U.S. Fid. & Guarantee Co. v. Salida Gas Serv. Co., 793 P.2d 602 (Colo. App. 1989); Montoya v. Grease Monkey Holding Corp., 883 P.2d 486 (Colo. App. 1994).
This section does not apply to payments made by settling tortfeasors, but only to payments from collateral sources independent of any alleged tort liability. Montoya v. Grease Monkey Holding Corp., 883 P.2d 486 (Colo. App. 1994); Smith v. Vincent, 77 P.3d 927 (Colo. App. 2003).
Intent of this section was not to deny compensation to which a claimant was entitled under a contract the claimant or someone on the claimant's behalf entered into and paid for with the expectation of receiving the contract benefits in the future. The purpose of excluding such contractual benefits is to allow recovery to a claimant who contracted for and purchased, either directly or indirectly, some type of insurance or other protection against accident-induced losses without penalizing the person for prudence and thereby providing a windfall for a culpable tortfeasor. Van Waters & Rodgers, Inc. v. Keelan, 840 P.2d 1070 (Colo. 1992); Frost v. Schroeder & Co., Inc., 876 P.2d 126 (Colo. App. 1994).
The intent of the contract exception of this section is to ensure that a defendant does not receive a windfall by avoiding payment of damages because the plaintiff had the foresight to purchase insurance, or enter into a contract that compensates the plaintiff for injury caused by the defendant. When, however, the payor of the compensation pursuant to the contract is also liable for the plaintiff's judgment, the rationale for the contract exception disappears. In such a case, offset pursuant to this section is required. Colo. Permanente Medical Group, P.C. v. Evans, 926 P.2d 1218 (Colo. 1996); Levy v. Am. Family Mut. Ins. Co., 293 P.3d 40 (Colo. App. 2011).
This section controls over 13-50.5-105, since it was passed last. U.S. Fid. & Guarantee Co. v. Salida Gas Serv. Co., 793 P.2d 602 (Colo. App. 1989).
This section and 13-50.5-105 must be reconciled, if possible, to give effect to both sections. Therefore, 13-50.5-105 should apply when a percentage of negligence has been attributed by the fact finder to the non-party while this section should control if the fact finder attributes no fault to the non-party. Gutierrez v. Bussey, 837 P.2d 272 (Colo. App. 1992).
Medicare does not preempt application of this section or 10-1-135. Forfar v. Wal-Mart Stores, Inc., 2018 COA 125, 436 P.3d 580.
Collateral source rule is not applicable to personal injury protection benefit payments (PIP). A jury instruction to not award damages for losses that are eligible for coverage under the Colorado Auto Accident Reparations Act (former 10-4-701) sets forth a proper statement of the law. Martinez v. Shapland, 833 P.2d 837 (Colo. App. 1992) (decided under law as it existed prior to the 2003 repeal of 10-4-713).
Under the common law collateral source rule, evidence of the amount paid by third-party payors, and conversely, the amount discounted (or written off) from the billed amount due under a contract between the third-party payor and the provider, is inadmissible, even to show the reasonable value of services rendered, because these payments and discounts constitute collateral sources. Crossgrove v. Wal-Mart Stores, Inc., 280 P.3d 29 (Colo. App. 2010), aff'd, 2012 CO 31, 276 P.3d 562; Forfar v. Wal-Mart Stores, Inc., 2018 COA 125, 436 P.3d 580.
Colorado's common law collateral source rule is not limited to protecting merely the cash amounts paid to providers for services rendered; rather, the rule is broad enough to encompass the amount by which a medical provider's bill is discounted pursuant to a contractual arrangement between the provider and third-party payor. Crossgrove v. Wal-Mart Stores, Inc., 280 P.3d 29 (Colo. App. 2010), aff'd, 2012 CO 31, 276 P.3d 562.
This section does not address the evidentiary prohibition of the collateral source rule; however, the admission of the evidence is still prohibited by the common law collateral source rule. Crossgrove v. Wal-Mart Stores, Inc., 280 P.3d 29 (Colo. App. 2010), aff'd, 2012 CO 31, 276 P.3d 562; Forfar v. Wal-Mart Stores, Inc., 2018 COA 125, 436 P.3d 580.
Collateral rule does not apply when a workers' compensation insurer resolves its subrogation claim with the third-party tortfeasor because the injured employee no longer has a claim for damages arising out of past medical expenses covered by workers' compensation. Therefore, there is no reason to present evidence of either amounts billed or amounts paid for medical services. Delta Airlines, Inc. v. Scholle, 2021 CO 20, 484 P.3d 695; Gill v. Waltz, 2021 CO 21, 484 P.3d 691.
This section has no effect until the finder of fact returns a verdict; accordingly, it has no impact on the admissibility of evidence during trial. Because the general assembly spoke with exactitude in altering the application of the collateral source rule after the verdict is received from the fact finder, but expressed no intention to alter the jury's function in assessing the damages, this section does not abrogate the common law rule prohibiting evidence of collateral sources at trial. Crossgrove v. Wal-Mart Stores, Inc., 280 P.3d 29 (Colo. App. 2010), aff'd, 2012 CO 31, 276 P.3d 562.
The contract exception to the collateral source rule applies to PIP benefits of an automobile insurance policy. Because the Colorado Auto Accident Reparations Act (former 10-4-701 to 10-4-726) ("no-fault insurance act"), under which losses resulting from an automobile accident that were eligible for PIP coverage under an insurance policy were not recoverable in a tort action against the tortfeasor who caused the losses, was repealed before the automobile accident occurred, the contract exception to the collateral source rule applied to plaintiff's claim for lost earnings. Miller v. Brannon, 207 P.3d 923 (Colo. App. 2009) (decided under law as it existed prior to the 2003 repeal of 10-4-713).
There is nothing in the language of the contract exception that would exclude PIP benefits because the no-fault insurance act required a person to purchase such benefits. Miller v. Brannon, 207 P.3d 923 (Colo. App. 2009) (decided under law as it existed prior to the 2003 repeal of 10-4-713).
The contract exception applies to medicare benefits for which the plaintiff has qualified through social security disability insurance (SSDI), as a result of his contributions to social security. Forfar v. Wal-Mart Stores, Inc., 2018 COA 125, 436 P.3d 580.
The scope of this section is not entirely clear. Therefore, the courts must look beyond the plain language to determine legislative intent. The court is to look at the object sought to be attained by the general assembly and at the legislative history. Van Waters & Rogers, Inc. v. Keelen, 840 P.2d 1070 (Colo. 1992).
A settlement accompanied by a release or covenant not to execute falls within the scope of the "contract" exception. Simon v. Coppola, 876 P.2d 10 (Colo. App. 1993).
Collateral source rule is not applicable to benefits under a fire and police pension plan contract. This section was part of sweeping legislation designed to limit amounts that plaintiffs can recover. However, legislative history indicates that the exemptions to the collateral source rule include benefits received under a fire and police pension plan contract, regardless of whether consideration paid for benefits is in the form of money or services. Van Waters & Rogers, Inc. v. Keelen, 840 P.2d 1070 (Colo. 1992).
Disability benefits paid to a state employee by the public employees' retirement association constitute a collateral source and are not required to be offset from the employee's base pay damage award. Dept. of Human Servs. v. State Pers. Bd., 2016 COA 37, 371 P.3d 748.
The contract exception to this section applies to a contract between plaintiff's insurer and health care providers that decreased the amount actually paid for plaintiff's medical care and thereby inured to plaintiff's benefit. The trial court erred by reducing plaintiff's damages award by the amount in excess of the medical bills actually paid on plaintiff's behalf. Tucker v. Volunteers of Am. Colo. Branch, 211 P.3d 708 (Colo. App. 2008), aff'd sub nom. Volunteers of Am. v. Gardenswartz, 242 P.3d 1080 (Colo. 2010).
Under the collateral source rule, a plaintiff may recover damages for the full amount of medical expenses incurred. Volunteers of Am. v. Gardenswartz, 242 P.3d 1080 (Colo. 2010).
The discounted medical rates paid by plaintiff's insurance company are a direct result of his health insurance contract. Therefore, tortfeasor may not claim these discounts to reduce its liability for the medical care plaintiff received. Volunteers of Am. v. Gardenswartz, 242 P.3d 1080 (Colo. 2010).
This section is subject to former 10-4-713 (1) of the no-fault insurance act, which prohibits recovery of PIP benefits in tort actions, notwithstanding that such benefits may qualify as "benefit[s] paid as a result of a contract entered into and paid for by" the plaintiff. Martinez v. Shapland, 833 P.2d 837 (Colo. App. 1992) (decided under law as it existed prior to the 2003 repeal of 10-4-713).
Benefits that result from an employment contract are protected by the exception clause of this section. An employee's services are something of value given in exchange for an employment contract and its derivative benefits. Disability payments received as part of the compensation for such services are entitled to the same protection against offset as proceeds from private insurance contracts. Van Waters & Rogers, Inc. v. Keelan, 840 P.2d 1070 (Colo. 1992).
When the jury assigns fault to a settling party as a nonparty pursuant to this section, the trial verdict shall be reduced by an amount equal to the cumulative percentage of fault attributed to the settling nonparties. The amount to be reduced from the trial verdict shall be calculated by multiplying the total percentage of liability attributed to the settling nonparties by the total trial verdict awarded the plaintiff. Smith v. Zufelt, 880 P.2d 1178 (Colo. 1994).
However, the amount of a solatium award made under 13-21-203.5 may not be reduced according to general principles of pro-rata liability. Smith v. Vincent, 77 P.3d 927 (Colo. App. 2003).
Trial court erred in an action for negligence for gas explosion that destroyed the home of insurance company's client by not allowing the judgment against joint tortfeasors to be offset by the amount paid to the insurance company by a plumbing company, even though the plumbing company was found not to be negligent. U.S. Fid. & Guarantee Co. v. Salida Gas Serv. Co., 793 P.2d 602 (Colo. App. 1989).
Unemployment compensation benefits are not deductible by employer to mitigate damages in an action for damages for breach of an employment contract. Tech. Computer Serv. v. Buckley, 844 P.2d 1249 (Colo. App. 1992).
Court was correct in ordering that any future payments paid to homeowners from homeowners' warranty insurance policy should be credited against judgment under collateral source rule. Howard v. Wood Bros. Homes, Inc., 835 P.2d 556 (Colo. App. 1992).
The indirect payment of insurance premiums by real property purchasers through the sellers pursuant to a wrap-around agreement is a contract entered into and paid for by or on behalf of the purchasers that falls within the exception clause in this section. The trial court erred in setting off the insurance proceeds against the jury verdict in favor of the purchasers. Frost v. Schroeder & Co., 876 P.2d 126 (Colo. App. 1994).
SSDI benefits should not be set off against Uninsured/underinsured motorist (UM/UIM) insurance benefits because SSDI benefits arise from a "contract entered into and paid for" by the injured party. Barnett v. Am. Family Mut. Ins. Co., 843 P.2d 1302 (Colo. 1993).
Medicaid benefits are subject to the contract exception in this section in post-verdict proceedings. Pressey v. Children's Hosp. Colo., 2017 COA 28, 488 P.3d 151.
Damages cap under the Health Care Availability Act (HCAA) is not in conflict with the contract exception in this section and is thus applicable in post-verdict proceedings to reduce damages in medical malpractice actions under 13-64-302. The contract exception applies to "any action...to recover damages for a tort"; the HCAA is silent on application of the contract exception; and nothing on the face of either statute makes them inconsistent. Pressey v. Children's Hosp. Colo., 2017 COA 28, 488 P.3d 151.
Workers' compensation benefits may not be offset against UIM coverage. This section is not implicated because workers' compensation benefits are received as a result of an employee's contract with his or her employer and therefore fall within the express statutory exception for benefits "paid as a result of a contract entered into and paid for by or on behalf of such person." Adamscheck v. Am. Family Mut. Ins. Co., 818 F.3d 576 (10th Cir. 2016).
Nothing in this section would impermissibly limit an insured's recovery of UM/UIM coverage, where insurer aggregates amounts received by insured from all parties liable for his or her injuries. Carlisle v. Farmers Ins. Exch., 946 P.2d 555 (Colo. App. 1997).
Benefits paid pursuant to employment contract are not subject to statutory setoff. Combined Com. Corp. v. Pub. Serv. Co., 865 P.2d 893 (Colo. App. 1993).
In a contract case, the common law collateral source rule applies rather than this section. Yeiser v. Ferrellgas, Inc., 214 P.3d 458 (Colo. App. 2009), rev'd on other grounds, 247 P.3d 1022 (Colo. 2011).