What is a collateral source rule?

A collateral source rule is a legal principle in the state of North Carolina that states that any benefits or payments received by the plaintiff from a third source such as an insurance company should not be subtracted from a settlement or award from the defendant in a lawsuit. This rule essentially bars the defendant from reducing the amount of a settlement or award due to the plaintiff due to any other money the plaintiff may have already received. This rule is designed to protect plaintiffs from facing unfair reduced awards in court. The collateral source rule applies to a wide range of cases from medical malpractice, personal injury, and wrongful death claims. This legal principle is especially important in medical malpractice cases where the plaintiff may have received large medical bills from a third party insurance company. The collateral source rule can be beneficial to plaintiffs in North Carolina by ensuring they receive the full amount of the award or settlement regardless of money they have received from a third party. The rule also helps deter possible misconduct from defendants. If a defendant knew that a plaintiff was already receiving payments from a third party, the defendant might be less likely to offer a fair settlement or award. Therefore, the collateral source rule in North Carolina ensures that plaintiffs are protected from facing a reduced settlement or award due to third party payments.

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What is a collateral source rule?

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