Origin of the Collateral Source Rule in Maryland

In City Pass v. Baer, 90 Md. 97 (1899), Plaintiff in a suit for injuries sustained in attempting to board a trolley car. The Court of Appeals of Maryland found that any sick benefits received by the injured plaintiff from any source other than the defendant were not to be considered by the jury in arriving at their verdict.

In recent years, the collateral source rule has come under attack by critics who argue that the collateral source rule gives plaintiffs a double recovery because the plaintiff is often not responsible for paying back all or sometimes even any of the medical bills. This analysis has some merit. But juries are not informed that a plaintiff’s attorney will receive typically 40% of the award under most contingent fee agreement case that go to trial. Accordingly, plaintiffs rarely receive full compensation for injuries.

This is a rule not only in Maryland but, to some extent, most states. But there has been a movement in some states to get rid of the rule. New Hampshire has eliminated the rule entirely.

For a complete history of the collateral source rule, review Helfend v. Southern California Rapid Transit District, 2 Cal. 3d 1(1970). The court in Helfend, further explains that the collateral source rule is “partially serves to compensate for the attorney’s share and does not actually render a `double recovery’ for the plaintiff.” We share this view.

• History of the collateral source rule in Maryland
• I like the collateral source rule. I think it makes good sense not to punish people for carrying insurance. Some people disagree and you can see that articulated here.
• Many states are turning on this rule. Tennessee took this shot in 2013.
• In 2018, the 11th Circuit ruled that a litigation investment company providing medical care to the victim was admissible at trial. Wait what? Apparently, the court found that the funding arrangement for medical treatment — no bill if you lose — was evidence was intended to show that ML Healthcare Services may have given biased testimony and inflated the bills. This would be true of any treating doctor with an unpaid bill, right? Hard to understand the wisdom in violating the collateral source rule for this reason.