North Carolina Supreme Court Rules on Collateral Source Rule

Charlotte Personal Injury Attorney Matt Arnold answers the question: “What can you sue for in a personal injury case?”


The collateral source rule in North Carolina states that a plaintiff’s award in a personal injury suit can not be reduced by amount that is received by third-party sources. For example, if you are in a car accident and are injured, you might receive payment from the insurance company for medical bills. In a personal injury suit, the amount paid by the insurance company could not be reduced from the overall award amount. Recently, the North Carolina Supreme Court expanded the application of the collateral source rule.


car-wreck-Charlotte-Monroe-Lake-Norman-Personal-Injury-Lawyers-266x300In Hairston v. Harward, the court ruled that the collateral source rule also applies to uninsured/underinsured motorist benefits that a victim of an accident might receive. In the case before the court, the plaintiff and defendant collided at an intersection. The defendant had an auto insurance policy that had a $100,000 liability limit. Additionally, the plaintiff had his own auto policy that also included $250,000 in uninsured/underinsured motorist coverage. The plaintiff sued the defendant for negligence. The plaintiff was awarded $263,000 in damages, which the judge reduced by $30,000. In addition to the proceeds from the lawsuit, the plaintiff received $145,000 through the uninsured/underinsured motorist policy. The defendant argued that the uninsured/underinsured motorist amount should be subtracted from the overall award. The trial court agreed, and the appeals court affirmed, but the Supreme Court reversed the decision.


The main rationale behind the decision of the court was because of public policy. Supreme Court Justice Sam J. Ervin IV stated that “a decision that a plaintiff must credit the payment that he or she receives as a result of the decision to purchase coverage against the judgment entered against the  defendant whose negligence caused the plaintiff’s injuries strikes us as likely to discourage North Carolina citizens from purchasing uninsured motorist coverage, a result that would have obvious deleterious consequences.” The court does not want to discourage drivers from obtaining additional insurance coverage because of the fear of not being able to receive compensation through a personal injury suit.


While the court can not reduce the award amount because of the uninsured/underinsured motorist policy, insurance companies may still be able to be seek reimbursement for the amount paid to you. Through a process called subrogation, insurance companies can seek reimbursement for the amount paid out that they might now not be required to pay. In the case presented before the court, the plaintiff’s uninsured/underinsured motorist insurance company waived their right to subrogation and did not seek reimbursement from the plaintiff.


If you have been injured and are considering a personal injury suit, contact the personal injury attorneys at Arnold & Smith, PLLC. We are here to help you seek the award that you are entitled to under the circumstances of your case. Recovering from an accident can be difficult, let us help you through the process of receiving the funds necessary to get you on the road to recovery. Contact us today. Now taking cases throughout the Charlotte region with offices in Uptown Charlotte, Mooresville and the new location under renovation in Monroe, call us at 704-370-2828 or click here for additional resources.







The skilled personal injury attorneys at Arnold & Smith, PLLC are dedicated to maximizing the financial recovery and obtaining justice for every personal injury client injured by another party’s negligence. The issues our personal injury clients may be facing include, but are not limited to, slip and fall injuries, wrongful death, product liability, catastrophic injuries, dog bite claims, car and truck accident injuries, motorcycle injuries, traumatic brain injury (TBI), nursing home negligence, spinal cord injury, boating accidents, and defective medical device injury. Our personal injury attorneys understand the devastating impact such an injury can have on a person’s life, and that the effects so often go beyond physical pain and suffering. The personal injury attorneys at Arnold & Smith, PLLC are dedicated to helping clients determine the strength of their claims, and to aggressively pursuing the means necessary to achieve the best possible end result for each client’s particular situation.





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