Wrongful Death Settlement Results in Collateral Source Rule Analysis

Bardsley v. Geico, Appellate Case No. 2012-20-6390

            Recently, in Bardsley v. Geico, a wrongful death suit that involved a Maserati flying through a Greenville home, a falal injury to the Plaintiff’s husband, and a 3 million dollar settlement, the Supreme Court of South Carolina clarified that the Collateral Source Rule only applies to a “wrongdoer/tortfeasor.”   The result supports precedence which goes limit the exposure of underinsured (UIM) carriers where an insured has additional coverage available from more than one policy of insurance.  

            What is the Collateral Source Rule and how might it affect you?  First, the rationale behind the Rule is to ensure that any monetary windfall goes to a victim rather than a tortfeasor. The collateral source rule provides that compensation which an injured party received from a source wholly independent of a wrongdoer will not reduce the damages for which the wrongdoer is liable.  Citizens & S. Nat’l Bank of S.C. v. Gregory, 320 S.C. 90 (1995).  This rule applies where an injured party seeks compensation from two sources for the same injury; where assets available from the two sources is adequate to cover the injured party’s loss, and where the “wrongdoer” seeks to deduct or reduce the amount she is liable for by the amount previously paid by an independent source.  In sum, the Collateral Source Rule bars a tortfeasor from reducing his liability by the amount of any underinsured (UIM) payments made to a plaintiff.  Under this scenario and under the Collateral Source Rule, compensation from an injured party’s own insurance policy for injury X, may not be used by a wrongdoer to reduce the amount she owes the injured party, even where payment results in duplicative paymenst for the same injury.

            The Rule loses traction for an insured where the insured has multiple policies of insurance and each policy adequately covers the insured’s loss.  For instance, where an injured party has two underinsured (UIM) policies, those policies generally will only pay for their share of the loss, and depending on the circumstances, the amount of loss covered by each policy will be reduced by any amount previously paid as compensation for the same injury.  The takeaway: generally, the courts will not impose the Collateral Source Rule on parties unnconnected to the wrongdoer or tortfeasor. 


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