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The Collateral Source Rule

Kansas Law

Under the law of Kansas, when an injured party seeks damages in court for personal injury, that person is entitled to recover his or her medical expenses. The fact that some of the medical expense was paid for by another source, such as the injured party’s own insurance or Medicare generally doesn’t matter. This is because, in Kansas, the law follows the “collateral source” rule.

The collateral source rule, recognizes that payment of medical expenses by a third-party insurer (namely, the “collateral source” of payment) is a benefit bestowed upon the injured party, usually through his or her payment of premiums, such that the realized benefit should not then be captured by the wrong doer. Historically, a collision victim could recover the full amount of the medical billing for a hospital stay even though his health insurance company paid the bill. It thought that, after all, simply because the injured party had the foresight and prudence to pay for and acquire health insurance coverage, there was no good reason to allow a wrong doer to capture the benefit of the injured party’s good judgment and foresight in having obtained insurance coverage.

The collateral source rule is still a viable doctrine under Kansas law, but, its application has been modified by several recent changes in our law. One of the influences operating on the rule is the Kansas Supreme Court’s handling of the Martinez case.

In that case, the Kansas Supreme Court decided that the collateral source doctrine does not bar the defendant in a personal injury case from showing that the health care provider accepted a lesser amount in payment of the medical bill. When insurance has paid a medical bill, the original billing is usually discounted because of agreements which carriers typically have with health care providers and entities. It is also something of a distraction away from what the reasonable value of the service is since, in the abstract, at least, the amount billed should be the reasonable value of the service provided.