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Eliminating ‘double dipping’ rule could reduce rates

WEEKEND EDITION

August 21 - 22, 2004

It is possible under certain circumstances for a motorist injured in Nevada to "double dip" by collecting money from both his own insurer and the other driver's insurer to pay the same medical bills.

Under Nevada's so-called collateral source rule, an injured motorist who has medical coverage as part of his insurance premium can have his medical bills paid for by his own insurer, then pocket additional money from the other driver's insurer for the same bills.

The Nevada Supreme Court upheld this rule in 1996, stating that the insurer for the guilty driver may not argue in court that the injured driver has already collected medical payments from his own insurer.

The court argued that if the injured driver was forced to reveal medical payments from his own insurer, it would unduly influence the jury and make it likely that jurors would reduce the plaintiff's award of damages.

Las Vegas attorney Jim Crockett said he believes the rule -- which dates back to English common law -- is applied in considerably less than 20 percent of the bodily injury claims that wind up in court.

"The law says that if you choose to pay for medical coverage out of your own pocket the defendant shouldn't be able to benefit from that," Crockett said. "That's why the collateral source rule exists."

But Robert Feldman, secretary/treasurer of the Nevada Insurance Council, said auto insurance rates could be sharply reduced if this law was eliminated by the Nevada Legislature. He argued that more than 50 percent of all injured motorists who file bodily injury claims benefit from double dipping.

"If we didn't have that collateral source rule, that would help the insurance companies because they wouldn't have to be paying off all of these claims," Feldman said. "The problem is that the trial attorneys will fight this to the death."

Spokesmen for several insurance research organizations said they did not know the precise number of states that apply a collateral source rule to auto insurance claims. But Bob Hartwig, chief economist for the Insurance Information Institute in New York City, said he was certain that the vast majority of states employ that rule in some form.

He said that in some states where double dipping is allowed, there are also exceptions to the collateral source rule that can make it difficult for an injured motorist to collect money for medical payments from both insurers. Nevada is not one of those states.

"We know that there are at least 21 states where the judge can reduce the jury award or where the jury can be informed that there has already been some kind of recovery by the plaintiff," Hartwig said.

There have been several failed legislative attempts in Nevada to either eliminate the rule or reform it so that juries could have knowledge of medical payments already collected by the injured motorist.