A recent Federal Court decision has clarified the long-standing law doctrine known as the “Collateral Source Rule.” The Collateral Source Rule prohibits insurance companies from reducing amounts that can be recovered by injured parties due to other benefits they may receive.
In the matter of Smith v. Progressive Speciality Ins. Co., 2016 WL 626754 (W.D. Pa. 2/17/16), a Plaintiff was struck by a negligent vehicle operator and injured. She collected the liability limits from the responsible party and then sought payment from her own insurance company in the form of underinsured motorist (UIM) benefits that she had paid premiums for. Her UIM insurer, Progressive, in an attempt to avoid making payment, alleged that the Plaintiff was precluded from recovering UIM benefits for lost wages in the amount of the Social Security disability benefits that she received. In other words, Progressive sought to offset Smith’s recovery of benefits that it had accepted premium payments for by benefits that Smith earned by paying Social Security taxes over her lifetime. The Court rejected Progressive's attempt upon determining that the Social Security Disability benefits were a collateral source that the insurance company could not rely upon in reducing its ultimate responsibility.
This is a prime example of the lengths that insurance companies will go to in attempting to avoid making appropriate payments. If you have questions or concerns about the potential impact that your receipt of Social Security or other benefits may have upon your recovery, you should consult with an experienced attorney. Call ACA Law at 570-348-0200 with your questions. We fight for what’s right.